Changes in the TV Ecosystem April 2020 Jack Davison, Executive Vice President © 3Vision 2020 Strictly Confidential Not to be distributed to 3rd parties Our Services Strategy Research Rights Negotiation Business Development Plotting a course Uncover intelligent insights The right content. Grow where your ambitions for success On your terms lead Proposition development Market research Free and pay programming Market analysis Business model evolution Trend analysis SVOD, AVOD, TVOD and EST Lead generation Competitor analysis Tracking tools Linear channel carriage Partnership negotiation Show Tracker Third party apps 2 Syndicated Research Show Tracker Tracking all US and selected international scripted series across 20+ parameters in 14 markets, including data on 1st and 2nd window sales of 450+ TV series available on 280+ services Untangle the complex acquisition ecosystem with our Territory USA, Australia, Brazil, China, Canada, France, Germany, India, Italy, Mexico, Poland, Spain, Sweden, UK monthly data drops and Origin Production origin of the show Producer & Distributor All Production companies and the company selling rights to the show quarterly Show Tracker reports Genre A combination of 18 possible genres to provide a clear view - e.g. Drama, Comedy, Crime Format A sub-genre of Serial or Procedural for Drama titles and Single-Cam or Multi-Cam for Comedy titles Annual Season & Renewal Year when the show is released and the renewal status of a show Show Season & No. Episodes Season in the show’s run and number of episodes Service Name & Type Name and type of service that has licensed the show - Broadcast (free and pay) / VOD Service Owner The corporate owner of a service Window First and second window deals tracked Dates Date of first broadcast or VOD availability & date of US broadcast of the final episode of the show’s season Catch-up Number of episodes live at any one point- e.g. In-season-stacking, rolling 5 etc. Digital Access Temporary download rights where applicable Transactional Rights EST/Rental services and season pass limitations Original Branding Detailing where ‘Original’ labelling has been Included by an SVOD Service 3 Our Clients We’ve worked with global players from every corner of the content industry… Pay TV platforms Mobile Operators Broadcasters Producers Distributors VOD operators Trade Associations Technology Companies 4 Industry Webinar Five themes… Direct to Pay TV Free TV Advertiser Content Consumer Innovation Innovation VOD (AVOD) Distribution 5 Industry Webinar In a crowded market for discussion SkinnyPayTV Aggregation AI Consolidation Social CoProductions DirectTo Targeted SecondWindows ConsumerAVOD Recommendations Addressable ReBundling SVOD StitchedChannels Discovery VirtualPayTV Short-formBVOD 6 Industry Webinar With significant COVID-19 impacts to consider Pros Cons 5 Linear TV viewing!32% YOY - 16-34s !33%1 US linear TV Ad sales forecast "20% in 1H20 SVOD usage growing, 1st-time installs of 39% decline in Ad Spend across all media, 6 Netflix’s app!57% in Italy2 + _ 24% of buyers pausing all spend through Q2 YouTube, Twitch, Mixer & Facebook Live Production delays to shows (expected in Streaming!66% in Italy3 2020) hitting up-fronts and schedules HBO Now TV viewing !65%, movie!70%4 Pay TV shaving and cutting may get worse BVOD climbing - iPlayer viewing!30% YOY Loss of Sports impacting all stakeholders 7 Sources: (1) BARB (UK), (2) Sensor Tower, (3) StreamElements, (4) Company Releases, (5) Magna Global (6) IAB Industry Webinar With Netflix quietly announcing Q1’20 results Netflix Subscriber Adds (Millions) 8 N. America 7.0 EMEA 6 LatAm AsiaPac 4.7 4.4 4 4.0 3.6 3.3 3.1 2.9 2.9 2.5 2.5 3 2.3 1.9 2.0 2.0 2.0 1.9 2.0 1.7 1.7 1.7 1.8 1.5 1.6 1.6 1.5 1.5 1.5 1.5 1.5 1.5 1.5 1.3 1.3 1.2 1.2 1.1 1.1 1.1 1.0 0.9 1.0 1.0 0.7 0.8 1 0.5 0.6 0.6 0.6 0.6 0.3 -0.1 -1 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18 Q1'19 Q2'19 Q3'19 Q4'19 Q1 '20 8 Sources: Netflix Releases Industry Webinar Five themes… Direct to Pay TV Free TV Advertiser Content Consumer Innovation Innovation VOD (AVOD) Distribution 9 Direct-to-Consumer 2019 was a big years for D2C and more is to come... Apple TV+ Disney+ HBO Max Peacock Apple Inc. Walt Disney Company WarnerMedia (AT&T) Comcast (NBCU) Nov 1st 2019 Nov 12th 2019 May 27th 2020 Apr 15th 2020 (Beta) US$5 US$7 $15 $0 Peacock Free w/Ads Free for 12 months with any Selected bundles with international Added to selected HBO $5 Peacock Premium w/Ads Apple hardware purchase and domestic partners subscriptions for free in US (free to Comcast Subs) $10 Peacock Premium Ad-Free ($5 for Comcast subs) 10 Direct-to-Consumer Peacock starting to strut… Only available to Xfinity X1 and Flex customers in Beta, with a full rollout coming in July 11 Direct-to-Consumer Many players extending, evolving and adjusting their business models Multiple Motivations Wall Street pressure Strong segment/diaspora Younger skewing Territorial expansion Free TV extension Pay TV extension Pay TV failures 12 Direct-to-Consumer VOD Aggregation - not just Apple and Amazon - a key area and not likely to be one winner Roku Pay TV Varied Characteristics Google Mobile Telco Hardware Revenues Service Revenues Billing Content Bundles Exclusive Content Original Content Amazon OTT TV Multi-device Integration ‘Powered by’ Solutions Services Funnel Smart Discovery Fixed Connectivity Mobile Connectivity Apple Smart TV 13 Direct-to-Consumer Partnerships…. Disney have approached partnerships differently, leveraging their current position and establishing relationships with operators in key territories and bundling with some operators whilst having merely a retail relationship in others France UK UK Germany Spain Italy Canal+ O2 Sky Deutsche Telekom Movistar (Telefonica) Telecom Italia Exclusive Exclusive Non-Exclusive Exclusive Exclusive Exclusive Distribution partner Mobile Telco partner Distribution partner Distribution partner Distribution partner Distribution partner Bundled in selected Six months free for new and Six months free, then €2 Three months free then Long Retailed through Canal+ Movistar Fusion bundles and upgrading customers Retailed through Sky saving for TV, fixed-line and term saving of €3 with added to new “Cine” pack Bundled in Ciné Séries Pack mobile subs* TIMVision & Fibre bundles £2 off for existing subs discounted for six months 14 * DT Magenta TV OTT Subs do not get a discounted price for Disney+ but can benefit from the 6M free promo Industry Webinar Five themes… Direct to Pay TV Free TV Advertiser Content Consumer Innovation Innovation VOD (AVOD) Distribution 15 Pay TV Innovation Pay TV under threat, but it still dominates in absolute terms and trends and regionality are key Global Pay TV and OTT Video Revenues 270 Pre-Pandemic numbers illustrate the pressures on Pay TV Global numbers disguise regionality but all forms of pressure 216 Revenues (US$B) Revenues Historically Pay TV has survived recessions well 162 Unprecedented conditions we are in now may change this 108 Competitive market is completely different SVOD Pay TV Sport stoppage (although not long term) unique 54 0 2010 2012 2014 2016 2018 2020 2022 2024 16 Source: 3Vision Analysis of DTVR Data (June 2019) Pay TV Innovation Pay TV is evolving radically and the concept itself is changing Content Features & Functionality Linear to On Demand Long-term contract to Pay as you Go Sales & Marketing Communication Bundles Wholesaler to Wholesaler and Retailer Tiers & Tariffs 3rd Party Service Bundles Full Fat Pay TV to a la carte and Skinny Pay TV 17 Pay TV Innovation Evolving Pay TV proposition - current priorities very VOD focused Pay TV Operator Priorities in Europe and Latin America 3rd Party SVOD 71% Better TV Everywhere/Multiscreen 57% Increased & Enhanced Catch-up 54% Improved 4K Content 39% Extended Library Content VOD 38% Skinny Bundles/VPTV 30% Varied Packaging (inc. cheaper) 27% More Channel Exclusivities 23% 18 Source: 3Vision Platform Survey 2019 Pay TV Innovation Service provision OTT with thinner or no hardware requirements - ready to change quicker 19 Pay TV Innovation Virtual Pay TV seeing limited growth internationally after flattening out in the US Some new initiatives, but it remains largely limited and not fully functional in many cases 20 Pay TV Innovation Re-Aggregation can take many forms 21 Industry Webinar Five themes… Direct to Pay TV Free TV Advertiser Content Consumer Innovation Innovation VOD (AVOD) Distribution 22 Free TV Innovation A lot of areas for focus - rebalancing business away from a reliance on traditional advertising Increasing non-traditional viewing Developing advanced advertising initiatives Exploring new models for consumption Maintaining access to content Enhanced Catch-up Targeted Advertising Digital Box Sets Production Investment Premium Services Co-Production Alliances (SVOD and/or Ad Free) Short Form Content Joint Venture Services 23 Free TV Innovation Free TV extending, collaborating or enhancing with OTT services 24 Free TV Innovation Enhancing catch-up offer Global Free TV Broadcast Channel Exhibition (inc-US) 4% 9% 10% 39% 47% 66% 76% shows offered with enhanced catch-up 39% 29% 15% 18% 15% 9% 2016/17 2017/18 2018/19 Less than Rolling 5 Rolling 5 In-Season-Stack In-Season-Boxset 25 Source: Source: 3Vision Show Tracker (September 2019) Includes 1st season in first window only for 12 global markets Free TV Innovation Selected AVOD Boxset exclusives from the last six months Market Show Service Local Premiere Blood & Treasure 10 Play 30-Mar-20 Beecham House 10 Play 29-Mar-20 Reverie 9Now 26-Mar-20