Rapat Pimpinan Telkom GroupRapat Pimpinan Telkom Group

“Trend of Digital Media

and Games in Indonesia”

Gamechanics : Aula Barat ITB, 19 Maret 2013

Joddy HernadySenior General Manager

Innovation & DesignCenterPT Telekomunikasi Indonesia

Key Trends in Games

Key Trends in Media

Huge number of event happens within 60 secs...

3

Source: Shanghai Web Designer, http://www.syncreload.com/2011/09/what-happens-in-1-minute-on-internet.html, 2011

Mobile Traffic Drivers

*Indonesia: ~180M, Smartphone:~30%

Mobile devices:Global: 10B, SmartPhone:

27%APAC: 5B, SmartPhone:

26%*Indonesia: ~180M, Smartphone:~30%By 2017, there will be

1.4 mobile connections

2G: 4%

Mobile Data Traffic (2017)

4G: 45%3G: 51%2G: 4%

4

world’s population

1.4 mobile connections (devices and M2M) for every member of the

world’s population

Mobile File Sharing (5.5%)

Mobile M2M (8.3%)

Mobile Web/Data (22.9%)

Mobile Video (63.3)

Note: * posisi tahun 2012

Average Traffic Per Mobile Device Type will grow significantly in the future …

5

Perubahan Signifikan terjadi juga di Industri Game dunia

Stand AloneStand Alone NetworkNetwork SocialSocial CloudCloud

SmartphoneSmartphone

TabletTablet

Smart XSmart X

ArcadesArcades

PCPC

ConsoleConsole

Mobile ConsoleMobile Console

Mobile PhoneMobile Phone

SmartphoneSmartphone

Trend of Last 1 year : social games and Free Items Games

Mobile Gamers: Players & Payers

www.newzoo.com

Potensi Bisnis Mobile Game

Game Industry Value Chains

Source : The Video Game Industry (Duke University)

Bisnis Baru yg Muncul Dari Industri Game

Potensi Indonesia

� High quality talents (artist & developers)

� Lower development cost

� Large and fast growing market

� Multicultural - rich contents & storylinesMulticultural - rich contents & storylines

− Strong educational support

− Adequate training facilities

− Exposure to global standard & partner

− Need stronger government support

Challengge: Develop “International-Class but

Local-Taste” Indonesian Games

TELKOM Support for Indonesian Game Industry

• Indigo Fellowship Program

• Indigo Venture Program

• Bandung Digital Valley Program, etc.

• Indigo Incubator

Telkom Game Platform & Ecosystem Architecture

GameDeveloper

s

B2C

Social Network

Game Platform

Gamers ( Kids,

Students

Online Mobile Store

Virtual Coin

System

In-Game Chatting

In-App/In-Game Purchase

Game Store/Portal

Settlement System

Subscriber Management

Content ManagementSupplier

Online Web Store

Game Publishers

Voucher Providers

(Tsel,

Telkom)

E-MoneyProviders

(Delima, T-Cash, etc)

B2B2C

B2BOffline

Distribution

Channels

Device Manufactures

Students, young

& product-

ivepeople)

In-Game Purchase

Social Networks

ChattingIn-Game Purchase

System

Report & Statistics

Game Center Game Center User API (Topup,

Consume, Transfer)

Game Center

User SDK

Game Center

Payment API

Management

DirectBilling

(Tsel, Flexi, Speedy)

Service Enabler

PC Client Game, Web

Game, Mobile Game

Key Trends in Games

Key Trends in Media

Digitisation is creating major shifts within the

media value chain ...

Media Value Chain – Convergence Trends around Digit isation

Content Creation

Content Delivery

User Device

Content Packaging

Non-Exhaustive

Content creators and aggregators moving into content

delivery

Content delivery companies launching their ow n devices

16

333366660000

launching their ow n devices

Equipment manufacturers moving into content packaging

and delivery

Content aggregators moving across the entire value chain

Telcos moving into content packaging

Individual creative artists taking on their own packaging and

delivery

Digital Video Ecosystem

17Source : http://www.nytvf.com, 2012

And so the TIME ecosystem continues to undergo substantial change – the boundaries are becoming increasingly blurred

Utilities Automotive

Evolving ecosystem

Telecommunications

18A.T. Kearney Telkom MultiMedia 01-Feb-2012

Banking & Insurance

Health Care

Media & Advertising

Consumer Electronics

Media & Entertainment

Information Technology

Source: A.T. Kearney

Overall, digitisation is facilitating access to new audiences and personalised services, hence growing the pie‘ overall

Before digitization

After digitization

End of catalogue

Archives Hits

First broadcast

Blockbusters

1

Content Grades ‘in Scope’ –Before and After Digitization

19

Existing content that is now economically viable to distribute New content finding an audience thanks to the internet

Value Creation Threshold

Archives

Archives Hits

First Broadcast

Blockbusters

End of catalogue

User-Generated Content

Niche Content

Numerized Archives

catalogue 1

2

1

2

How About The Indonesia Market? Indonesia Media Summary Profile

20

Signs indicate there is a tremendous market opportunity

available, driven by buoyant consumer demand for media

Media Opportunity in Indonesia

xx

Rising Consumer Spend(1)

Increasing Advertising

Spend (1)

Intense Media Usage

Increasing Attractiveness

of Media Sector

6th highest number of Twitter users globally

20.3 hrs of TV/ week (#1 in SEA, 2x Malaysia)

29% growth in online advertising

19% growth in multi-channel TV

advertising

10% growth in

8.3 hrs of radio/ week (#1 in SEA)

6 Telkom_M&E_strategy_kickoff_111122

(1) All Consumer and advertising spend data relates to 2010-2014 annual CAGR Source: Nielsen, PWC Media & Entertainment outlook, A.T. Kearney analysis

SpendTwitter users globally (Jakarta is ranked the 13th tweet-city)

41m Facebook users =

90% of Indonesian online users (#1 in SE Asia)

78% Internet-enabled phone penetration (#2 after Singapore in SEA )

22% growth in pay TV subscriptions

12% growth in digital music sales

6% growth in newspaper sales (with most other markets in decline)

8% growth in DVD sales – despite the

ongoing prevalence of piracy

10% growth in online

gaming spend

#3 country in Global Consumer Confidence Index

10% growth in newspaper advertising

6% growth in magazine

advertising

12% growth in

out-of-home advertising

TV and newspapers dominate the Indonesian Media

landscape

Indonesia Media Market Size (IDR Trillion)

2016 Market Size

Other 6%

Online 1% Music

2% OOH

3% Magazines

5% TV 32%

2011 Market Size

Music 1%

Gaming TV 38%

Online 3%

OOH 2%

Other 4%

Magazines 4%

Rp. 53 tr

Rp. 93 tr

22

Gaming 7%

Newspapers 45%

32% Gaming 5%

Newspapers 42%

38%

Although newspapers still have a large share of rev enues the industry has weak med-long term prospects, the growth will b e on TV and Online

Advertising accounts for ~66% of the total revenues

size in 2011

23

Indonesia’s media market continues to grow at a strong overall rate of 12%, led by TV, Music, and online segments

24

FTA, Pay TV and online segments have the highest

growth together with moderate-high profitability

Media Category Attractiveness Summary

>10

3-4

Indonesia Market Size: Size of bubble denotes

relative 2010 revenues in Rp. tr

High 15x

FTA (13tr)

Physical Games OOH

Online Games

Online Music

Books

Radio

Social Networking Search

ion

TD

A

25

36 Telkom_M&E_strategy_external analysis

Size & Growth: Indonesia; Profitability & Valuation: International Players Sources: A.T. Kearney Analysis

3-4

2-3

<1

1-2

Avg. EBITDA %

0- 10%

10- 20%

20- 30%

30- 40% >40%

Growth 2011-2016 CAGR

Low 2x

Low 2%

High 20%

News- papers

(23tr)

Pay TV

Maga- zines

B2B

Cinema

Online Portals

Val

uati

EV

/EB

IT

TV will remain the most attractive segment

Summary Insights on Size, Growth, Profitability, Va luation

Online and digital Online and digital segments have highest growths of between

TV will continue to dominate media in Indonesia

1 TV will continue to be the medium of choice for advertisers as CAGR continues to grow at ~15%

26

Online and digital segments demonstrate strong growth

2 Online and digital segments have highest growths of between 20%-60%; however, impact by 2016 will still be limited given current small size of online / digital market

Print is declining, yet remains sizable 3

Despite the emergence of the online market cutting into the print share, print still contributes to over 30% of market size in 2016

Valuations are highest in Online and Gaming category

4 Valuations for gaming and online advertising segment is the strongest amongst media segments at 11x-14x

The new Kings of Media ?

Name: R. Murdoch

Age: 80

Net Worth: $7.6 billion

Focus: TV, Movies, Publishing

Background: Philosophy, Politics, Economi cs

Name: M. Zuckerberg

Age: 27

Net Worth: $17.5 billion

Focus: Social media

Background: Engineering

Old Kings New Kings

27A.T. Kearney Telkom MultiMedia 01-Feb-2012 5

Economi cs

Name: T. Turner

Age: 73

Net Worth: $2.1 billion

Focus: TV, Radio

Background: Classics, Economics

Name: A. Lagardère

Age: 50

Net Worth: $2.4 billion

Focus: Publishing

Background: Economics

Name: L. Page/S. Brin

Age: 28

Net Worth: $33.4 billion

Focus: Search, Music, TV

Background: Computer Science

Name: J. Bezos

Age: 47

Net Worth: $19.1 billion

Focus: Music, Video, Devices

Background: Computer Science

The Next hit can come from anywhere !

- Japanese hologram pop star, Hatsune Miku

2812

� Initially 2-D animated spokesmodel for Vocaloid, an audio synthesizer program – now a 3D superstar!

� Has become an international star ‒ Video game (Sega) ‒ Manga series ‒ Social networking site ‒ Likeness was launched into space ‒ 2012 Olympics performance poll ‒ Official Japanese sponsor for

Toyota Corolla

Who is she? Key Lessons

� Think outside the box – creatively and innovatively

� Creativity is not just in terms of content creation, but also in delivery and partnerships

HATSUNE MIKU LIVE CONCERTHATSUNE MIKU LIVE CONCERT

29

…. Plihara Persatuan

Menangkan Persaingan

Jayalah Telkom Indonesia …….

Thank

The Future Trend of TVTV will be an digital device-connected like any other!

Users will choose their programming on TV streams and

watch where they go!

Simple standards that allow content to be published to

TV will evolve

31

Any connected device shall be able to provide TV

experience

Dynamics of Television Industry will change

tremendously!

APPLICATION

Single SubscriberApplication Server

SDP

id-Con:

Covergence

Digital

Innovation

id-Ring:

Toward The King of Digital Society

IDN 2015IDN 2015IDN 2015IDN 2015

2015: 15 M Household1 M AP Wifi

id-Ring:

Nationwide

BB Backbone

id-Access:

True

Broadband

Access

Broadband for

Home

Broadband for

Community

Broadband for

mobilityBroadband for Business

& Government

Digital Society:

InDiSo & InDiCo

32

TELKOM Architecture on Digital Media

33

Launch

OTT

Launch

IPTV

Launch

Single

eEntertainment

Portal

Launch

MLTV

Strategy Implementation of Digital Media 2013

34

Nov 2012

1. Mobile

2. Desktop/

Laptop

3. SMART TV

Feb 2013

1. SD-IPTV

(Low-BitRate)

2. HD-IPTV

(High-BitRate)

Jun 2013

1. Music

2. eBooks

3. Games

4. eStore

5. eRadio Aug 2013