When supply met_demand

The Changing Shape of Online Video in Europe

When Supply Met Demand

Marc Gosschalk, November 2011Senior Analyst, Video Metrix 2.0 Product Management

2© comScore, Inc. Proprietary and Confidential.

Agenda

The Story So Far

The Demand for Online Video

When Supply Meets Demand – The Consumption of Online Video in Europe– A Quality Viewing Experience– A Wide Range of Engaging Content– Convenient and Accessible– A Price Worth Paying

Case Study: YouTube

Conclusions

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The Story So Far

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Online Video is a Huge Market Across Europe

*EU-7 includes UK, France, Germany, Spain, Italy, Russia and Turkey

Source: comScore Video Metrix, September 2011

226m people watched an average of

20 hours each of Online Video in

September in EU-7*

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Rapid growth of Unique Viewers and Video Views Stopped in Q1 2010 for EU-3*

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140

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Feb-2008

Aug-2008

Feb-2009

Aug-2009

Feb-2010

Aug-2010

Feb-2011

Aug-2011

Videos (Billions) Unique Viewers (Millions)Source: comScore Video Metrix, Media Trend *EU-3 includes UK, France and Germany

Videos (Billions) Unique Viewers (Millions)

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Online Video Appeared to Have Peaked in Terms of Adoption and Market Share

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Feb-2008

Aug-2008

Feb-2009

Aug-2009

Feb-2010

Aug-2010

Feb-2011

Aug-2011

Videos (Billions) Unique Viewers (Millions)

Videos (Billions) Unique Viewers (Millions)

Rogers’ Diffusion of Innovation

S-curve

Source: comScore Video Metrix, Media Trend

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A Closer Look Tells a Story of a Shift from Quantity to Quality

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Feb-2008

Aug-2008

Feb-2009

Aug-2009

Feb-2010

Aug-2010

Feb-2011

Aug-2011

Videos (Billions) Unique Viewers (Millions)

Videos (Billions) Unique Viewers (Millions)

Sept 2010 March 2011

Minutes per Video 5.4 6.0

Total Minutes (bn) 111.4 117.9

Source: comScore Video Metrix, Media Trend and Key Measures

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The Last Six Months have seen a Renaissance of Online Video

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Feb-2008

Aug-2008

Feb-2009

Aug-2009

Feb-2010

Aug-2010

Feb-2011

Aug-2011

Videos (Billions) Unique Viewers (Millions)

Videos (Billions) Unique Viewers (Millions)

March 2011 Sept 2011

Minutes per Video 6.0 6.2

Total Minutes (bn) 117.9 156.9

Source: comScore Video Metrix, Media Trend and Key Measures

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Composition of Young Males Indicates Market Maturity

05

101520253035404550

Germany France UK Spain Italy Russia Turkey

OtherMales 15-34

17.3% 19.3% 19.6% 21.5% 22.2% 30.4% 44.9%

42.7

36.6

30.5

18.8 20.3

43.1

21.6

Total UVs 15+

Source: comScore Video Metrix, Demographic Profile, September 2011

Unique Viewers (Millions)

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Growth in Video Views Supports Latency in Spain, Italy, Russia and Turkey

Videos (bn) –March 2011

Videos (bn) –Sept 2011

6 Month Growth

Spain 3.0 3.2 9%

Italy 2.3 2.7 22%

Russia 3.1 4.7 51%

Turkey 3.4 5.0 48%

Source: comScore Video Metrix, Key Measures

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But Engaged Viewers Watching Lengthy Videos Suggests they may Make Ground Rapidly

Minutes perVideo

Minutes per Viewer

Spain 6.9 1,096

Italy 6.7 914

Russia 7.2 792

Turkey 7.1 1,660

Source: comScore Video Metrix, Key Measures

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The Demand for Video – What do we Want?

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What do we Want?

1. A Quality Viewing Experience

2. A Wide Range of Engaging Content

3. Convenient and Accessible

4. A Price Worth Paying

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When Supply Meets Demand – The Consumption of Online Video in Europe

1. A Quality Viewing Experience 2. A Wide Range of Engaging Content3. Convenient and Accessible4. A Price Worth Paying

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A Quality Viewing Experience: Increased Broadband Penetration and Serving Infrastructure Drives Streaming Quality

Improved infrastructure for delivery of content

Advances in video quality

Higher, flexible definition

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816

460

324

875813

382

0100200300400500600700800900

1000

BBC France TelevisionsInteractive

ProSiebenSat1 Sites

Total Minutes (MM) for Broadcasters in Respective Countries

Sep-10 Sep-11

A Wide Range of Quality Content: TV Broadcasters Have Stronger Online Presence in More Mature Video Markets

Source: comScore Video Metrix, Key Measures

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Russia

Italy

A Wide Range of Quality Content: Presence of Local Specialists Varies by Country

Rank Property Unique Viewers Reach

5 COMINGSOON.IT 2,693 13.37 Telecom Italia 2,681 13.2

10 METEO.IT 2,036 10.0

Rank Property Unique Viewers

(000)Reach

2 Mail.ru Group 18,247 42.33 Gazprom Media 14,161 32.94 Yandex Sites 5,648 13.1

Source: comScore Video Metrix, Key Measures, September 2011

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17,799

19,891

30,811

56,164

Yahoo! Sites

Microsoft Sites

Viacom Digital

FACEBOOK.COM

Unique Viewers (000) in EU-7

A Wide Range of Quality Content: US Superpowers Engage Large European Audiences that have their Own Individual Characteristics

Source: comScore Video Metrix, Key Measures and Cross Viewing (taken from UK data), September 2011

Have Affinities to Video Viewing from Sites in…

Games Category

Social NetworkingCategory

Computer HardwareCategory

Technology NewsCategory

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478

302231

16494 56

798

570 571 560

216

72

0100200300400500600700800900

UK France Spain Italy Turkey Russia

Total Minutes (MM) for

Mar-11 Sep-11

A Wide Range of Quality Content: Online Video Suits a Variety of Content Types

Source: comScore Video Metrix, Key Measures

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A Wide Range of Quality Content: Low Barriers to Entry Permit New Market Players, Including the User

68 80 73111

8866

17

150

7255

1213

26

39

0

50

100

150

200

250

Spain UK France Turkey Russia Germany Italy

Ustream

Vimeo

Source: comScore Video Metrix, Key Measures, September 2011

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A Wide Range of Quality Content: User Generated Video Content is being Supplemented by High Quality Partner Content

• 16.5m Viewers in France

• 42.9m Viewers in EU-7

• 12.1m Viewers in Turkey on IZLESENE.COM

• 6.3m Viewers in Turkey on Izlesene Facebook

• 13.2m UVs in Russia on RUTUBE.RU

• 20.1m UVs in EU-7 on RUTUBE.RU,

up 38% since March ‘11

Source: comScore Video Metrix, Key Measures, September 2011

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2,924

2,1552,047

1,610

989472

Unique Viewers (000) for Perform Sports

UKTurkeyFranceItalySpainGermany

Convenient and Accessible: Syndicated Nature of Online Video Further Facilitates Expansive Reach in Relevant Contexts

Source: comScore Video Metrix, Key Measures, September 2011

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Convenient and Accessible: Broadcasters Leverage Analytics to Build Engaged and Loyal Audiences

3.7m 2.8m

6.9m

0.6m

Audience Overlaps – Unique Viewers

1.9m 1.7m

3.9m

0.4m

Source: comScore Video Metrix, Audience Duplication, September 2011, France / Spain

Searchable, huge inventories aren’t burdened by schedules

Tailored browsing and viewing driven by data

24© comScore, Inc. Proprietary and Confidential. Source: comScore Social Essentials, September 2011

% Visiting Topgear.com

Total Internet 1.6%Fans Exposed to Brand Messages on Facebook 9.5%

‘Friends of Fans’ Exposed to Brand Messages on Facebook 5.0%

Convenient and Accessible: Online Video can Leverage the Power of Social Media

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A Price Worth Paying: Room for Growth in Online Video Ad Penetration Compared with TV

0.4% 1.4%20~ 20%*

Percentage of Total Viewing Time Spent Watching Ads

Online Video - UK Online Video - US TV - UK

*Estimate

Source: comScore Video Metrix, Key Measures, September 2011

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A Price Worth Paying: Online Video Advertising Creatives can be Tested for more Predictable Outcomes

Avg. Views Engagement Score

Top 10 Highest Scoring Video Ads 325,000 62%

Lowest 10 Scoring Video Ads 17,000 21%

Source: comScore and ARS Viral Scoring Database, US

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020406080

100120140160180200

TED.COM (UK) Joost Media (France)

Composition Index of Audience with Household Income over £35k*

A Price Worth Paying: Online Video Offers Attractive Audiences in a Retail Environment that can be Easily Planned Against

173131

*€36k in France

Source: comScore Video Metrix, Demographic Profile, UK/France, September 2011

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A Price Worth Paying: Campaign Delivery and Impact can be Understood

The emergence of View-Through as a valuable metric

Digital traces and flexibility allow for tailored– Duration– Placements– Formats– Creatives and Messaging

Dynamic decision making

Source: comScore Campaign Essentials and Ad Effx – Example data

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A Price Worth Paying: Online Only and Cross Platform Audiences are Growing Into TV Space

Base sizes:Total=2833

TV Only=1921Online Only=189

Both TV/Online=723‘How do you typically watch [original series TV]?’

Base: Persons who watched original series TV Research study conducted by comScore in US, May 2011

Cross-Platform

Viewers 26%

TV Only Viewers 67%

Online Only Viewers 7%

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Case Study: YouTube

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YouTube is a Huge Market Across Europe

Over 190m people watched an average of over

4½ hours each of

Online Video on YouTubein September in EU-7

Source: comScore Video Metrix, September 2011 data

32© comScore, Inc. Proprietary and Confidential.

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Jul-2010 Oct-2010 Jan-2011 Apr-2011 Jul-2011

Videos (Billions) Unique Viewers (Millions)

Evolution of YouTube Viewing has Matched Market Trends in EU-3

Source: comScore Video Metrix, Media Trend, UK, France and Germany

Videos (Billions) Unique Viewers (Millions)

33© comScore, Inc. Proprietary and Confidential.

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Jul-2010 Oct-2010 Jan-2011 Apr-2011 Jul-2011

Total Minutes Minutes per Video

YouTube’s Transition has been Driven by Matching Demand for Longer, more Premium Content

Total Minutes (Billions)

Minutes perVideo

Source: comScore Video Metrix, Media Trend, UK, France and Germany

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A Quality Viewing Experience

Vast infrastructure for delivery of content

Advances in content quality

Higher, flexible definition

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A Wide Range of Engaging Content

Source: comScore Video Metrix, September 2011 data

152,000 UVs in the UK

3,765

2,5701,682

1,457

1,346

1,030793

Unique Viewers (000) for Machinima @ YouTube

UKGermanyFranceRussiaSpainItalyTurkey

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Convenient and Accessible

Sources: comScore Media Metrix, Video Metrix and qSearch, September 2011

8.0

46.5

Searches in Europe (billions)

Rest of the Web

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100

150

200

UniqueVisitorsEU-7

UniqueViewers

EU-7

Millions

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A Price Worth Paying

Free Content

Unobtrusive Ads– Encourage the User to remain in control– Offer transparency to facilitate relevant placement

Source: comScore Video Metrix, September 2011 data

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Conclusions

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Conclusions

A New Age for online video is emerging around quality, not quantity

The internet provides perfect foundations for viewers to watch what they want, how they want, when they want

Online video advertising can be more powerful without being intrusive

An increasingly complex and competitive market makes informed decision making critical

“Every time we think about making a decision, we think about doing

experiments and proving that the results make sense… Companies

should be saying ‘What information can I gather, how can I understand my

users better?’… and doing the analytics over that to make decisions”

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Thank You! Questions?mgosschalk@comscore.com +44 207 099 1779