How Physical Media Distributors Can Make the Successful Transition

Making the Successful Transition to

Electronic Media Distribution

Christopher Schouten, Senior Marketing Director – Online

Media-Tech Hamburg

22 May 2012

2010 © IRDETO | This document contains information that is privileged or confidential

Contents

Changes in Video Distribution & Piracy

About Irdeto

The Future of Physical Media

The Digital Media Revolution

Physical to Digital Transition Strategies

Emerging Standards: UltraViolet

Irdeto Solutions

Page 2 2012 © IRDETO | This document contains information that is privileged or confidential

Changes in Video Distribution & Piracy

What’s Happened In Just 5 Years?


Video Distribution 2007…


Video Content Distribution 2012…

…from a

single

company


https://www.netflix.com/

Piracy 2007


Piracy 2012


About Irdeto

Your Trusted Partner in Secure Media

Distribution


Prevent piracy with dynamic security

Actively manage piracy where it occurs

Offer consumers a great alternative to piracy and

effectively monetize it

Managing The Piracy Continuum™


Irdeto’s Areas of Expertise

Dynamic Security for Broadcast &

Broadband Media

Broadband TV Services

Piracy Management

Services

Blu-ray Content

Protection (BD+)


The Future of Physical Media


Global & Regional Blu-ray Shipments Per Year

0

200

400

600

800

1,000

1,200

1,400

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Blu-ray disk shipments (millions)

North America

Latin America

Western Europe

Eastern Europe

Middle East / Africa

Asia Pacific

Source: Irdeto forecast based on

combined data from Screen Digest,

SNL Kagan and other sources


The Digital Media Revolution

The Rise of “Over The Top” (OTT)


Consumer Drivers for OTT Growth

Device reach

Content Availability

Ease of Discovery

Portability

Range of Business Models

Availability Windows

$ $ $

$

Source: Parks Associates


Growth of OTT Services

North America

Dominated by a few players:

Transactional: Apple

iTunes

Subscription: Netflix,

Hulu

OTT represents an increasing

amount of network traffic

Emerging Markets

Multiple OTT services are

entering emerging markets

Several inhibitors slow

adoption:

Low incomes

Low broadband

penetration

Content piracy

Asia

Relatively low adoption of

VOD services

No single dominant OTT

service provider across

nations

Overseas OTT providers

entering Asia/Pacific markets

(Netflix and Hulu)

Western Europe

Broadcasters lead online

viewing

Multinational OTT providers

emerging and gaining users



What Content Consumers Want

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TV

Computer

Mobile Phone

Recent broadcast 1+ mo / current season Past season reruns Not available by broadcast

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

TV

Computer

Mobile Phone

Movie

s

Scrip

ted

TV

Pro

gra

mm

ing


The newest content is the most desired on all

platforms, which presents higher security

requirements when licensing.

HD is also an increasing consumer

requirement, but the studios are deeply

concerned with the security issues around it.


Perceived Value of OTT Services by Pay TV

Subscribers

With an increase in awareness and

interest has come an increase in the

number willing to pay for multi-

screen video services.

The higher perceived value/willingness to pay for

TV Everywhere can be leveraged to launch new

premium services.

0% 5% 10% 15% 20% 25% 30% 35%

Canada

Germany

France

US

Italy

Spain

UK

% Willing to Pay $/€ 4.99 or More for a TV Everywhere Service

Pay TV Subscriber Willingness

to Pay for TV Everywhere

Source: Parks Associates Consumer Analytics© 2012 Parks Associates


How to Buy A Movie:

The Consumer’s Perspective

OTT Services

Piracy

Physical Media


+ Known & trusted

+ Often earliest release

+ Good for collection

+ Easy to use

+ HD quality

- Limited Portability

- Requires physical

purchase

+ Often multi-device

+ Flexible bus. models

+ Increasing quality

- Often later release

- Few collection

options

+ Multi-device

+ Free

+ Good for collection

- Mixed quality

- Requires tech ability

- Illegal

Do Good OTT Services Have An Impact On

Piracy?


0%

10%

20%

30%

40%

50%

Canada France Spain Italy US Germany UK

% S

tati

ng

As

a P

rim

ary

Vid

eo

So

urc

eWebsites offering free, online video

Video downloaded from P2P sites

Pay TV feature with Internet video

Primary Sources of Video for Cord Shavers

Source: Parks Associates Consumer Analytics© 2012 Parks Associates

The widespread

use of online

video content

from legitimate

sources (BBC

iPlayer and Sky’s

multiscreen

service) have

make the UK one

of the few markets

where TV

Everywhere

offerings are

prioritized above

illegitimate

sources by cord

shavers.

Physical to Digital Transition Strategies

Getting Into The Digital Game


Historical Disc-To-Digital Solutions 1

Studio-Specific Digital Copy

Pros:

Easy to redeem after physical purchase

Works across multiple devices IF the right DRM is supported

No additional cost to consumer

Cons

Not a single scheme – options different per disc

Limitation in number of devices supported

(often just one)

Limitation in types of devices supported

(device, OS, etc. depending on DRM)

Limited availability of content


Historical Disc-To-Digital Solutions 2

iTunes Digital Copy

Pros:

Easy to redeem after physical purchase

Works across Apple ecosystem (Mac/PC iTunes, iPad, iPhone)

No additional cost to consumer

iCloud support recently added

Cons

Only works within Apple ecosystem

Limited availability of content


Digital distribution not working well for highest-

value (sell-through) movie & TV show offers


Promise

Capabilities

Future

REALIZED VALUE – SO FAR Shortcomings

for consumers

and for industry

UltraViolet:

The Next Generation Digital Media Solution


Key UltraViolet Features:

The Consumer Perspective

Household (up to 6 Members) Rights Locker

Online Streaming Access (up to 3 simultaneous)

Physical Copy Option

Up to 12 Registered

Apps/Devices for Downloads (offline

viewing or progressive

download)


http://images.google.com/imgres?imgurl=http://gizmodo.com/images/2006/04/bluedotbdp1200.jpg&imgrefurl=http://gizmodo.com/gadgets/portable-media/bluedots-bdp+1200-12+inch-portable-dvd-player-168036.php&h=320&w=390&sz=28&hl=en&start=3&tbnid=EfjGsSarFg_k7M:&tbnh=101&tbnw=123&prev=/images?q=portable+dvd+player&gbv=2&svnum=10&hl=en&safe=off

UltraViolet Benefits, Numbers & Timeline

By the numbers in the U.S.:

5000+ UltraViolet movie titles

currently available

2 Million accounts registered

Compatible with 300+ Internet-

connected consumer devices

Timelines

U.K. launch in June

Germany following soon


Source: UltraViolet consumer survey in Oct, 2010 (1,025 consumers)

UltraViolet addresses many of reasons for

dissatisfaction/non-trial of today’s electronic sell-

through solutions

Consumers indicate they will change behavior for

UltraViolet – i.e., change choice of Retailer and

App/Device…and also buy more often

Benefits enabled by an alliance are most powerful:

choice where to shop, whose apps/devices to

buy…not being “locked in” or “having to start over”

Standardized technology specification provides

interoperability and ease of use for consumers

UltraViolet Market Research

Especially high-affinity segments

Homes with teenagers and

children

18-34 year olds

Blu-ray buyers and renters.

Consumers indicate they will

change behaviour for UltraViolet

Will buy from one content retailer

instead of another

Will buy content a higher

proportion of time

Will pay a little more ($1-2+)

Source: UltraViolet consumer survey in Oct, 2010 (1,025 consumers)


UltraViolet Ecosystem Roles:

Which roles will you play?

UltraViolet Account System (operated by DECE)

Client

Implementers

(downloads)

Retailers

Streaming Providers

Download

Svc. Providers Content

Providers

Tools, Services & Component Providers

License Content

for sale with

UltraViolet rights

1

Provide streaming access to consumers’

UltraViolet collections

5

B2B role: prepare,

store and distribute

content/licenses

Sell content with

UltraViolet rights

2 3

Creates Apps &

Devices for

downloads

4

Multiple roles possible for physical disc manufacturers:

Download Service Provider for your content owner customers and others

Streaming Provider to your content owner customers and others

Retail storefront (branded or white label)


UltraViolet’s Shot in the Arm: Walmart

Helps consumers make the transition from legacy physical to digital

with 5000 available titles.

Kicks off electronic collecting at a lower price threshold than new

purchase.

Sets the stage for future electronic purchase or continued hybrid

physical/electronic collecting.

Has received some consumer backlash but good reviews.


Irdeto’s Electronic Distribution Solutions


Powering The Broadband Revolution

Pay-TV

Operators OTT

Increase Revenue, Increase Loyalty,

Increase Brand Equity

Publish Control

Monetize Secure


http://en.wikipedia.org/wiki/File:Viasat.jpg

The most open, flexible and proven

end-to-end solution for monetizing your

content across multiple screens and

platforms

Irdeto TV Everywhere Solution


Irdeto wishes you a secure future in

Electronic Media Distribution!

Please let us know how we can help you.

Christopher Schouten

[email protected]

www.irdeto.com

Page 33 2010 © IRDETO | This document contains

information that is privileged or confidential

mailto:[email protected]

http://www.irdeto.com/

Documents

How Physical Media Distributors Can Make the Successful Transition