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Second episode of the Operator's Survival Guide, entitled "Show Me the Money". Presented by Viaccess-Orca's Deputy CEO, Haggai Barel, at the OTT TV Summit 2013. Watch his presentation here: http://www.youtube.com/watch?v=LloorkPAFbk
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Operators Survival Guide, Episode two: Show Me the Money
Haggai Barel @haggaibb
Deputy CEO @ViaccessOrca
The Marketplace
OTT Service Providers
Broadcasters
Content Creators
Pay TV Providers
Retention / Competition
Maximize Exposure
Expansion Security / Max. Revenue
Traditional
Social Networks
Technology Enablers CE Makers
Retailers
CE Sales / Margins Technology Advances
Maximize Reach Ongoing Sales
Non - Traditional
Users’ Behavior and Expectations
Users’ Behavior and Expectations
Users’ Behavior and Expectations
• Subscriber churn / retention
• Service adoption
• Premium services
• Content costs / licensing
• Business models
• Changing competitive environment
Operator Challenges in Today’s Market
Tour Guide
Engagement Model
Business Rules CAS / DRM Anti-Piracy Services
Engagement Model
EPG, PVR VOD / Catchup Self Service
Business Rules CAS / DRM Anti-Piracy Services
Engagement Model
Business Rules CAS / DRM Anti-Piracy Services
EPG, PVR VOD / Catchup Self Service
Social Profiles
Engagement Model
Business Rules CAS / DRM Anti-Piracy Services
EPG, PVR VOD / Catchup Self Service
Social Profiles
Cognitive Exploration Next Gen. Metadata Full Engagement
Engagement Model
User’s perspective
Business perspective
Engagement and Revenues
Monetization Strategies
While in the US majority of spending is on SVOD services, ad-supported services dominate OTT revenue in Europe
19% 13% 11%
29% 27% 24% 21% 20% 17% 18% 14% 12%
17% 22% 21%
11%
8% 7%
12% 11%
10% 23% 25%
22% 16%
13% 11%
13%
19% 18%
19% 41% 43%
14% 19% 22%
12% 15%
15% 21%
17% 16% 0.36%
1% 2%
50%
38% 38%
42% 40% 41% 37% 33% 39% 41%
52% 55%
64%
55% 56%
0.31% 0.24% 0.24%
3% 3% 4% 6% 7% 7% 4% 4% 5% 5% 3% 3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013 2011 2012 2013
US UK Germany France Italy
Public Broadcast
Advertising Revenue
SVOD Revenue
TVOD Revenue
EST Revenue
Source: Strategy Analytics' Digital Media Strategies -OTT Video Forecast
OTT Forecast: Share of OTT spending by Business Model- 2011-2013
Change in Penetration of TV Everywhere
81%
40%
12%
3% 2%
86%
53%
16%
7% 5%
90%
66%
21%
9%
18%
92%
72%
25%
10%
21%
0%
20%
40%
60%
80%
100%
North America Western Europe Eastern Europe Asia / Pacific ROW
% o
f P
ay
TV
Su
bsc
rib
ers
wit
h A
cce
ss t
o T
V E
ve
ryw
he
re o
r
Mu
ltis
cre
en S
erv
ice
s th
rou
gh t
he
ir P
ay T
V O
pe
rato
r
Availability of Multiscreen / TV Everywhere Services
July 2011
January 2012
July 2012
January 2013 (Est)
© 2013 Parks Associates
17% 18%
26%
0%
5%
10%
15%
20%
25%
30%
December 2010 November 2011 November 2012
% A
war
e o
f a T
V E
very
wh
ere
Serv
ice
fro
m t
hei
r P
ay T
V P
rovi
der
Awareness of TV Everywhere Service(Among BB HHs With Pay-TV Service)
Parks Associates Consumer Analytics© 2013 Parks Associates
Changes in Awareness
Western Europe OTT video spending is still a small fraction compared to US OTT video market
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
$8,000
US UK DEU FRA ITA
2011 2012 2013
Source: Strategy Analytics' Digital Media Strategies -OTT Video Forecast
OTT Forecast: Total OTT Video Spending- 2011-2013
$M
A Look at TV Everywhere Users
• Higher overall ARPU (for triple-play bundles)
• Likelihood to cancel service is not notably higher than for overall subscribers
• More likely to have reduced part of their pay TV subscription
• Higher overall spending on:
• DVD rentals and purchases (1.7x)
• Blu-ray rentals and purchases (1.7x)
• Video rental downloads (4x)
• Video purchase downloads (4x)
• Theater tickets (1.5x)
• OTT subscriptions (2x)
TV Everywhere User vs. Average Subscriber: Video Spending
20
TV Everywhere Users Average Pay TV Subscribers
Average age 38.5 44.7
Primary generations Gen X (42%)
Mil. / Gen Y (33%) Boomers (36%)
Gen X (35%)
Children at home 56% 36%
TV Everywhere User vs. Average Subscriber: Demographics
Similar in:
• Gender
• Income
• Education
• Marital status
• Home ownership
• Number of adults per HH
• Number of kids per HH (among HH with kids)
0% 30% 60% 90%
Premium sports package
Premium movie channels
DVR
HD Channels
% Subscribing to Service
TV Everywhere User Avg. Pay-TV Subscriber
Premium TV Subscriptions"Which of the following do you have with your TV service?"
(Among BB HHs With Pay-TV Service)
Parks Associates Consumer Analytics© 2013 Parks Associates
TV Everywhere User vs. Average Subscriber: Subscriptions to Premium Features
• Compared to average subscribers, TV Everywhere users spend fewer hours watching:
• Broadcast TV
• DVR recordings
• OTT services are second to broadcast TV as most often used source of content (followed by DVR recordings)
• TV Everywhere users spend more hours watching:
• DVDs
• Video-on-demand on TV
• Pay-per-view
• Video from online sources
TV Everywhere User vs. Average Subscriber: Viewing Quantity
• Average 2.6 more Internet-connected devices per household
• More likely to use a portable device for e-mail
• Twice as likely to update Facebook with a tablet
• 50% more likely to catch up on news and blogs via smartphone
• Over 85% use a device other than a TV to watch full length movies
TV Everywhere User vs. Average Subscriber: CE Environment
• Availability / cost of content
• Personalization of the experience
• Content discovery
• Second screen experiences
Trends Impacting Monetization
Monetization Opportunities
Bundling with existing packages
Monetization Opportunities
• New landscape / new options
• Most lucrative customers
• Spill-over into paid video
• Shift to more personal experiences
• Tight link between personalized offering and increased revenues
• Be prepared for some trial and error
• Step up and start experimenting
Conclusions
Thank you
Haggai Barel @haggaibb
Deputy CEO @ViaccessOrca