The Real “House of Cards”

IAB MIXX ConferenceMarch 21, 2013a presentation by Dan Hill

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How emerging mainstream behaviours such as Binge Watching, Second Screen and Cord Cutting are apt to change the TV video business and how this could impact media spending patterns. 2

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Canadian Broadcast TV IndustryRevenues in $ Millions 2011 3

Source: CRTC Communications Monitoring Report 2012

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Canadian Broadcast TV IndustryRevenues in $ Millions 2011 3

Advertising$3,553

Source: CRTC Communications Monitoring Report 2012

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Canadian Broadcast TV IndustryRevenues in $ Millions 2011 3

Other$429

Advertising$3,553

Source: CRTC Communications Monitoring Report 2012

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Canadian Broadcast TV IndustryRevenues in $ Millions 2011 3

Television Services$10,991

Other$429

Advertising$3,553

Source: CRTC Communications Monitoring Report 2012

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Canadian Broadcast TV IndustryRevenues in $ Millions 2011 4

Subscriber Revenues$2,403

Cable, Satellite & IPTV$8,588

Other$429

Advertising$3,553

Source: CRTC Communications Monitoring Report 2012

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TV Services & Residential InternetRevenues in $ Millions 2011 5

$0

$2,500

$5,000

$7,500

$10,000

$12,500

TV Services Residential InternetSource: CRTC Communications Monitoring Report 2012

$10,991

$4,900

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6

Tel-e-vi-sion noun

1. a system for transmitting visual images and sound that are reproduced on screens, chiefly used to broadcast programs for entertainment, information, and education.

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7

We love TV

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We’re different TV viewers at different times

8

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The sofa and laziness rules

9

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Netflix subscribers watch it a lot - and most of their time is spent on the TVShare of Netflix Viewing by Screen*Anglophone Netflix Viewers** 18+ 10

Smartphone4%

Tablet4%

Computer27%

TV65%

Source: Media Technology Report *Hours of watching Netflix on specific devices was only asked to the Landline sample ** Past month

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11Long tail value by Genre

No TailValue is

Immediate

Long TailValue is

spread over time

Sports Political Humour

News Reality

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12Long tail value by Genre

No TailValue is

Immediate

Long TailValue is

spread over time

Documentary Drama

Sitcom

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Binge Watching

13

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Time Spent* by Activity: Watching Regular TV, Internet TV and NetflixAnglophones 18+Hours Per Week 14

0

5

10

15

20

25

No Netflix Netflix

Regular TV** Internet TV Netflix

Source: Media Technology Report ** Cable, satellite, IPTV or off-air TV * Survey respondents tend to underestimate time spent with traditional media (e.g. TV) and overestimate use of new technology (e.g. Internet) NOTE: Some overlap may exist between Netflix hours and Internet TV hours.

1

15

6

4

11

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Serialized and Episodic Programs 15

Serialized ProgrammingDefining Characteristics:• Stories resolve within episode• Emphasis on formula (e.g.

procedural) over character • Typically programs do well as

Repeats • Weaker online

Episodic ProgrammingDefining Characteristics:• Long story arcs• Emphasis on character

development and complex relationships

• Obsessive fan base• Strong online following

Game of ThronesDownton Abbey

Breaking Bad

The Good WifeElementaryNew Girl

NCISModern Family

CSI

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Appointment TV and Binge TV 16

Appointment TV

Can’t be missed, we set our schedules around it

We like to be part of the shared experience

Time between episodes to reflect and imagine

Binge TV

A great thing to do, especially when we have a block of time

Great to experience with someone close

Seeing it all at once allows us to see things on a deeper level

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HBO and “Game of Thrones”

17

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HBO & Netflix Business Models 18

Subscribers

Monthly Subscriber Rate

Share to TV Service Providers

30 Million 33.3 Million

$15 $8

50% 0

Gross Monthly Revenues $22.5 Million $26.6 Million

Source: The Atlantic Wire, “The Economics of Netflix's $100 Million New Show” February 1, 2013

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Conventional vs. Specialty Networks? 19

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The Role for Advertising?

20

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21Connected TV Variants

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21Connected TV Variants

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21Connected TV Variants

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Access the Internet on a TV Set*Anglophones,18+

22

0%

5%

10%

15%

20%

25%

Fall 2010 Spring 2011 Fall 2011 Spring 2012 Fall 2012

21%

16%

11%8%7%

Source: Media Technology Report * Past month

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Cord Cutting

23

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Internet the “most essential medium” for Americans 24

0%

10%

20%

30%

40%

50%

60%

70%

2002 2007 2012

46%

33%

20%

12+ 12-34 35+68%

33%

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Most to Gain

25

Production CompaniesDistributorsTalent including Directors, Writers and Actors

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Most to LoseTelevision Service ProvidersSpecialty Channels that focus on scripted drama and comedy

26

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The Second Screen 27

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Americans watching TV and using a device at the same time 28

Tablets• Skew older 25-34 and

55-64 are heaviest users

Favourite Activities• Seeking information

about the programs they’re watching

• Surfing and eMailing• Checking Sports

Scores

Smart Phones• Skew younger 18-24

year olds are the heaviest users

Favourite Activities• Social Media• eMail• Shopping

Source: Nielsen Cross Platform Report, Q2, 2012

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29NFL Mobile

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30Republic of Doyle “Ride Along”

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The future

31

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The Changing Experience 32

Appointment TV Binge TV

Single Screen Multi Screen

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Specialist and Generalist

33

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Thank Youdan@terraformmedia.ca 34

terraformmedia.ca

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