TV 2020: The web migration

1. Television 2020
The Web Migration
Presentation
June 2009
IDATE Contacts
Florence Le Borgne
Mob: 06 74 59 36 31 - f.leborgne@idate.fr
Gilles Fontaine
Mob: 06 70 70 85 92 - g.fontaine@idate.fr

2. A third phase in the evolution of the TV industry
Analog TV Digital TV Internet TV
Any time & Anywhere
All Live Theme channels introduce
Personal TV
Usage Collective educated viewers to off-live
Shared in my network
On the TV set On multiple TV sets
On any terminal
Terminal = TV Digital managed networks Network gatekeepers
Network as technical provider Multichannels providers as bypassed by Internet
Access The TV channel is the gatekeepers between services and challenged
gatekeeper TV channels and viewers by device managers
Catch-up & VOD
Services Broadcast television Multichannel television Enriched TV
Video social networking
TV Channels Public funding TV channel subscription Program advertising
Funding TV channels advertising TV package subscription Program purchase
Rightholders
Rightsholders Rightholders Device manufacturers
Key players Broadcast TV channels Packagers/Network operators Search engine
Social networks
Source: IDATE © "Television 2020: The Web Migration"
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3. TV 2020
Key trends
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4. Usage: More video time, less live TV,
increased "off-TV" viewing time
1. Free and pirated content is widely available on the Web
2. Social networks contribute to circulating content
3. Online video quality of service is improving
4. Catch-up TV offerings are becoming widespread
5. New screens make nomadic use easier
Breakdown of time spent watching video online, France, 2008-2020
(for people with Internet connections, in minutes per day)
350 5 hours of video
300 per day in 2020,
250
1/3 of which is
Off-TV
200
150
100
50
0
2008 2020
catch-up TV fixed live TV channels - fixed networks
live TV channels - nomad & mobile on-demand video - fixed networks
on-demand video - nomad & mobile
Source: IDATE © "Television 2020: The Web Migration"
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5. Access: The connected TV set
disconnects households from traditional networks
1. The TV set connected to the Web and new peripherals remains
central to the digital household
2. Services are increasingly managed at the household level instead of
the network level
3. New portals are competing with traditional operators
Percentage of "Internet only" households
16%
14%
12% Approximately 10%
10%
of households are
"Internet only"
8%
6%
4%
2%
0%
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
-2%
USA UK Germany Italy France Spain
Source: IDATE © "Television 2020: The Web Migration"
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6. Services: Catch-up TV, a key service
1. TV channels reap long-term benefits from on-demand consumption
via catch-up TV
2. Combines the best aspects of the Web and broadcast TV
3. 3D emerges, driven first by movies and games
Breakdown of on-demand video advertising sales figures in 2020
Live TV channels- fixed networks Catch-up TV
Live TV channels - nomad & mobile On-demand Video - fixed networks
On-demand video - nomad & mobile
Source: IDATE © "Television 2020: The Web Migration"
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7. Advertising: Erosion then monetization of on-demand content
1. Multichannel TV has an impact on rates, Internet further boosts its
advertising offering
2. Only premium content generates significant advertising revenue
3. Catch-up TV can combine personalization with the strength of media
brands
Comparative profitability of video ads by service, UK, 2008-2020
(base 100 = live TV, 2008)
120 Catch-up TV:
Premium content
100
and
80 personalization
are key
60
40
20
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Live TV Catch-up TV On demand
Source: IDATE © "Television 2020: The Web Migration"
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8. Pay-TV: Still more growth potential for ARPU
1. Premium offerings in a better position than basic offerings, which
are threatened by catch-up TV and VOD
2. Bundle ARPU may augment in the short/medium term through
digitization, PVRs, VOD and HDTV
Pay-TV ARPU by country, 2008-2020
(EUR per month)
80 ARPU increases
then meets
70
competition from
60 free online
50 offerings
40
30
20
10
0
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
USA UK Germany Italy France Spain
Source: IDATE © "Television 2020: The Web Migration"
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9. TV 2020
3 scenarios
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10. Scenario 2 "My Video Web"
Our vision of the TV industry in 2020
Context New services Operators
• The crisis accelerates the transformation • Mobile TV is widespread • End of the exclusive model for
of the Internet, the nervous system of • All content is accessible on-demand most programs
social life online and for streaming from fixed or
• Widespread nomadism and online mobile networks • Channels cut out the middle
storage • 3D (and immersion) enter the mass man and producers become
• Free, universal Internet connections, market phase more powerful
predominance of social networks
• Users comfortable with ICT, constant • Several large global
personal identification channels/franchises, some free,
some paid
• Public service broadcasting
Video consumption Networks marginalized
• "Internet only" households • Integration of advertising /
• Drop in broadcast TV audience and direct marketing / e-commerce,
widespread development of on-demand • Considering a second switch-off of producers are paid based on
video broadcast TV product sales
• "Broadcast your life "& more robust UGC
• Piracy disappears with the end of the • Telcos serve as enhanced
anonymous Internet connectivity platforms
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11. Alternate scenario #1: "Broadcast as Usual"
The broadcast model adapts
Context New services Operators
• The economic crisis continues • The connected TV and the marriage of •Consolidation of private
Web and TV fail to take off channels
• Limited roll-out of fixed and mobile ultra • 3D remains limited to movie theaters
high-speed connectivity • Mobile TV remains a niche market •Reduced footprint of public
• Web video services do not have access broadcasting
• Internet has not become an to premium content
entertainment tool •Predominance of live TV,
events, heightened competition
in sports, fewer TV dramas
•Crisis of theme channels
Video consumption Networks
•Vertical integration of telcos
and TV channels
• TV audience increases, since TV is the • Managed networks remain dominant
least expensive form of entertainment • Fiber networks in urban centers
• Terrestrial and satellite broadcasting
• TV remains predominantly live, with some increasingly focus on nomadism
catch-up TV
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12. Alternate scenario #2: "Community TV"
Fragmentation
Context New services Operators
• Social instability and governmental •Multiplication of local Web-TV channels • Decrease in premium
control over networks •Mobile TV for the upper classes content production
• Citizens are concerned about health risks •Community-based encrypted social networks
and privacy •3D and the connected TV fail to take off • Pay channels for upper
• Society increasingly clustering into classes
communities
• Powerful public channels,
serving to maintain social
Networks ties
• Terrestrial broadcasting under tight control
of the state • Advertising shifts towards
Video consumption • Most private broadcasters have abandoned location-based direct
terrestrial broadcasting marketing
• Audience fragmented into communities • Fiber networks reserved for major
• Collective nomadism metropolitan areas • Explosion of the "Internet
• Community, local, non-profit UGC • Poor workers connect on nomad hubs titans"; eBay is the dominant
• Significant piracy issues • Fiber networks in urban centers player
• Terrestrial and satellite broadcasting
increasingly focus on nomadism • Regulation is on the local
level
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13. TV 2020
Impact on the market
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14. Impact on the market
TV and video advertising market in Europe’s five main markets,
2008-2020 (millions of EUR)
Pay-TV Growth revived by Rise of VOD Free online
faring best digitization and new content impedes
services growth
60 000
50 000
+3% a
year for
40 000 the
period
30 000
20 000
Zero
10 000 growth
for the
0 period
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Advertising Pay
Source: IDATE © "Television 2020: The Web Migration"
Recession Slight Pressure on Monetization of
rebound prices from the catch-up TV and
Web Internet video
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15. The central scenario, "My Video Web,"
is not the most favorable to the TV market
1. "Broadcast as usual" is more favorable – less
value destroyed by the Internet
2. "Community TV" is less favorable – the market is
fragmented and not terribly solvent
Total TV and video market according to the three scenarios,
2008-2020 (100=2008)
150
140
130
120
110
100
90
80
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Reference Scenario 2: Web TV
Scenario 1: Adaptation of the broadcast model
Scenario 3: Fragmentation
Source: IDATE © "Television 2020: The Web Migration"
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16. TV 2020
Conclusion
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17. Some key points
All the conditions for a migration to the Unlike the music and print media
Internet are now in place industries, the video industry is investing
• Consumption patterns have changed
in the Internet. But in the short term, the
migration will destroy value
• Terminals are connected
• Drop in advertising rates
• Content available online
• Broader circulation of content without compensation
• Online video quality of service is improving
• Controlling costs will therefore be one of the dominant
• Confluence of strategies among players features of the decade from 2010 to 2020
The migration will have a deep-seated
impact on the TV industry
• Video consumption up strongly
• Content is largely commoditized
The European industry is particularly
• The end of the exclusive operating model threatened
• Households are no longer locked in by managed • North American producers will serve consumers directly
networks
• Regulation of Web content and on-demand services will
• Producers bypass channels and distributors be difficult
• Only integrated pan-European conglomerates will
In the mid-term, monetizing new withstand the challenge
consumption patterns will revive growth • Regulations will have to change
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18. Thank you!
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