June 2014 China Digital TV Holding
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June 2014
China Digital TV Holding
11
Company Overview Leading Provider of CA Systems to China’s Digital TV Market
2
CA DRM NBP
DVB OTT
CA
Company Overview
Exchange New York Stock Exchange
Ticker STV
Market Cap US$200M
Headquarters Beijing, China
Employee 700+ (including approx. 400 R&D staff)
11
Conditional Access Systems (CAS) & Digital Rights Management (DRM)
3
Core technology for Pay TV market.
Protects the security of signal transmission through signal
encryption in the head end and signal decryption in the terminal
end.
Transmission Channels: Cable, satellite and terrestrial TV.
CAS
Terminal End System Smart Card Head End System
Using the leading security technologies in content encryption,
access control , key replacement, two-way authentication, fingerprint
watermark, clone detection and chromosome tracking to protect
contents.
Can be used in cable TV, IPTV, Internet TV and any other Pay TV
platforms to protect content.
DRM
CA DRM NBP
DVB OTT
11
Best after-sales services
Outstanding technical
support team
Tailored services
Quick response for
maintenance
Meeting different needs of
different operators
Supports multiple forms of
digital TV transmission,
including satellite TV,
terrestrial TV, and Cable TV
Open system: simulcrypt
can be shared with other CA
systems
Mature industry chain
Flexible integration with
head-end system and STB,
decreasing the cost of
digitalization
Competitive Advantages of the Company
Stabilized Systems
High security
Cracking prevention
Intellectual property
System that can support
millions of cable users
Over 50% market share
High Quality Mature Industry Chain Full Service
CA DRM NBP
DVB OTT
4
11
China Market Large and Diversified Customer Base
5
China Market
Domestic market
18.2
15.0 15.6
2011 2012 2013
Smart Card Shipment Volume - Domestic Market
(Million)
CA DRM NBP
DVB OTT
*Data Source: Zhongguang Luoda Report and company data
29 provincial operators use STV’s CA systems More than 100million smart cards accumulatively shipped in China market as of Mar 31, 2014 52% market share in year of 2013
CA DRM
11 0.8
1.4
1.6
2011 2012 2013
Smart Card Shipment Volume - Overseas market
6
North America: Costa Rica Antigua
Overseas markets
South America: Venezuela Bolivia
Africa: Namibia Ghana Tanzania Malawi
Europe: Belarus
Asia: Thailand Myanmar Malaysia
India Indonesia Nepal
Georgia Afghanistan Tajikistan
Mongolia Russia
Overseas Market Expanding in Overseas Markets
CA DRM NBP
DVB OTT
(Million)
STV has shipped smart cards to 20 countries all over the world. The Company expects 50% annual growth in smart card shipment in the future. More than 4.2million smart cards accumulatively shipped in overseas market as of Mar 31, 2014
CA DRM
11
13.3 10.0 8.5 7.5 6.4
2.2 4.4 7.5 10.5 12.5
2.6 3.9 5.8
8.7 13.1
2.1
4.1
5.2
2014E 2015E 2016E 2017E 2018E
STV Smart Card Shipments
18.4 19.3
24.2
31.2
37.6 (Million)
Future Growth Catalysts for Smart Card Shipments
7
7.1 7.4 8.0 9.0 11.5
2014E 2015E 2016E 2017E 2018E
China’s Terrestrial TV & Direct TV shipment outlook
(Million)
CA DRM NBP
DVB OTT
Future Catalysts
Overseas markets
Terrestrial TV & Direct TV
Organic growth in
Cable users
STB replacement: ①Two way STB ②HD STB ③Replacement ④Secondary STB
Network
Broadcasting Platform
26.5 20.0 17.0 15.0 12.7
4.3 8.7 15.0 21.0 25.0
2014E 2015E 2016E 2017E 2018E
China’s Cable STB Organic Increase STB Replacement
30.8 28.7
32.0 36.0 37.7 (Million)
2.6 3.9
5.8
8.7
13.1
2014E 2015E 2016E 2017E 2018E
STV Overseas Smart Card Shipment Volume
(Million)
* Data Source: Company forecasts * The Company expects a growth of 50% on smart card shipment in overseas market
* Data Source: Company forecasts & Luoda Reports * From 2014 to 2018, the Company expects that the penetration rate of terrestrial and Direct TV using CA cards will be 49%, with an 8% STV’s market share
* Data Source: Company forecasts & Luoda Reports * From 2014 to 2018, the Company expects that the organic growth in Cable users will be 5% * Suppose that Cable operators begin to replace STB from 2014
* Data Source: Company forecasts * Suppose that STV will maintain a 50% market share in the next five years
11
Network Broadcasting Platform (NBP) Helping Operators Expand Their Businesses
8
TV Users
Home
User base Operators can expand their user base from 210 million TV cable households to 630 million mobile and air sharing users Location base Operators can expand their location base from home only to a variety of public places, such as airports, railway stations and schools
Time base Operators can expand their time base from evening primetime only to 24/7
Traditional user base and coverage area
Larger user base and coverage area after business expansion
CA DRM NBP
DVB OTT
TV Users
Tablet Users
Mobile Users
Computer Users
Home
Home Airport
Railway Station
Bus Stop
11
NBP Business Expansion Model
9
STB Cable Operators
TV
Cable Operators
TV PC Pad Mobile Phone
Airports Railway stations
Coaches Schools
NBP APP
download NBP Head-end System
NBP Gateway
Traditional business
Traditional business extension
Reduces deployment costs and enhance user coverage Provides various operation modes via mobile app
Enhances individual coverage
1
2
3
NBP- Core Advantages
CA DRM NBP
DVB OTT
11
NBP Development goals
10
Live shows
VOD
Watch Back
OTT
Local Video
NBP
Integrate different content
resources and provide users with a variety of watching experiences
TV Content NBP Services Smart Terminals
TV Everywhere
TV
Tablet
PC
Smart phone
Airport Railway station
Bus stop Bank
Hospital Restaurant
Home Dormitory
Multi screen
CA DRM NBP
DVB OTT
11
0.1 0.7
2.1
4.1
5.2
-
1
2
3
4
5
6
2014E 2015E 2016E 2017E 2018E
NBP - Shipment Volume NBP shipment volume
3.9
7.8
9.7 11.0
11.8
17%
41%
65%
77%
86%
-50%
0%
50%
100%
-1
1
3
5
7
9
11
13
15
2014E 2015E 2016E 2017E 2018E
NBP - User Coverage Cumulative user coverage Market penetration
NBP Market Forecast
11
(Million) (Million)
CA DRM NBP
DVB OTT
* The Company expects that it will cover 10% of public hotspots * The Company expects that it will maintain a 50% market share in NBP * Data Source: Company forecast
11
Cyber Cloud – Video Cloud Computing Covering a Wider Range of Customers
12
Cable TV
4G Mobile Users
IPTV
云游戏 Cloud Games
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Value Proposition – Mobile Game Distribution Platform
13
Cloud Streaming
Platform
AD
Game
Ad
Education
Games Market Share
TV users
AD
Mobile Users
Inte
rnet
G
amin
g
TV
Mob
ile Term
inal
Operators
Cloud computing solutions can be deployed on the cable TV platform. The cloud platform can now also be deployed on IPTV platforms operated by telecom operators, to provide the same cloud services for IPTV users In the 4G age, cloud computing solutions can also be deployed on the mobile platform, pushing more web games and more client-based games to users.
Clients
games,
65%
Web
games,
15%
Mobile
games, 14%
Others, 6%
CA DRM NBP
DVB OTT
11
Game joint operation
Interactive external devices
App promotion
Streaming platform
Cyber Cloud – Video Cloud Computing Business Model
14
IPQAM
VOD
Motion-sensing camera
Motion-sensing controller
Spinning
Interactive TV market
Product sales Joint operation
Boxing Penalty
Fruit Ninja Angry birds
English Channel
Online Graffiti
Education Wukong Literacy
Streaming management platform (operators)
App operation platform (concurrent sell)
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Product Lines
15
Cloud fitness
Cloud games
Cloud motion sensing Cloud education World-leading motion-sensing games
Fitness at home
Core players, old players
Pre-school, early childhood parent-child interaction
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Core Valuation – Integration of upstream and downstream industry chains
Chip partners
Terminal-end systems partners
Game joint operation partners
Chips Cloud platform Terminals
Games
16
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Cyber Cloud vs. Others Solutions
17
Smart Terminal
Cyber Cloud
Investment costs
Upgrading and maintenance
User experience
Controllable management
20RMB
Fast
Good
Good
200RMB
Slow
Average
Average
Providing services and app distribution platform based on Cyber Cloud computing to broadband operators
Excellent compatibility, simple to transplant, and fast to deploy
Concentrated Investment in cloud platform and lower per-household cost
HD Two-way
300RMB
Average
Good
Average
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Market Coverage
18
Cable market Gehua Signed
Nanjing Signed
Jiangsu Signed
Dalian Signed
Shijiazhuang Signed
Jishi Signed
Shanxi Signed
Xinjiang Signed
Qingdao Signed
Hunan Signed
Chongqing Signed
Kunshan Signed
Changshu Signed
Anshan Signed
Ningbo Signed
Telecom market Beijing Unicom Signed
Shanghai Telecom Signed
Hebei Unicom Signed
Guangdong telecom Signed
Fujian Telecom Signed
Shandong Unicom
Signed
4G market
China Telecom Signed
Users coverage: Cable: 60 Million; IPTV: 8 Million
CA DRM NBP
DVB OTT
11
Cyber Cloud – Video Cloud Computing Market Coverage
19
CA DRM NBP
DVB OTT
99
139 177
222
274
2014E 2015E 2016E 2017E 2018E
China's total interactive TV subscribers
2 9
19
40
74
2014E 2015E 2016E 2017E 2018E
Cyber Cloud penetration subscribers
(Million)
(Million)
* The Company expects a cloud streaming platform penetration rate of above 50% * The Company expects Cyber Cloud to maintain a 50% market share of the cloud streaming platform market * Data Source: Company forecast
11
JOYsee DVB+OTT Solutions Core Product of Post-STB Age – Product Introduction
20
Directly connected to the TV
Traditional Business
STB Cable Operators
电视 “Live”
Cable Operators
Traditional Business Extension
Dongle + APK
Mini HD STB
“Live”
OTT
1
2
3
Core advantage
Reduces STB investment costs, while retaining traditional users Improves the user experience Enhances Internet access via smart TV; smart terminal manufacturers can provide more forms of TV Internet services.
CA DRM NBP
DVB OTT
11
21
JOYsee DVB+OTT Solutions Core Product of Post-STB Age – Business Model
21
Gehua Cable network
Jiangsu Cable network
Hunan Broadcasting
- - - - - -
Xiaomi
LeTV
Lenovo
- - - - - -
Skyworth
Customers
CA DRM NBP
DVB OTT
Basic Service VAS Service CA Licensing
APP software
Products package
To provide: DVB & VAS service
Mini HD STB & APPs
Smart TV
$$$ Revenues from: Sales of Mini HD STB & SARFT and OTT VAS revenue-sharing
$$$ Revenues from: Basic viewing fee & SARFT VAS revenue-sharing
$$$ Revenues from: Sales of Smart TV
$$$ $$$ $$$
Video, Gaming, Payment,
Education etc Apps
11
0.06 0.55 1.10
2.08
3.65
2014E 2015E 2016E 2017E 2018E
Mini HD STB
JOYsee DVB+OTT Solutions Core Product in Post-STB Age – Future Market
22
(Million)
Partnerships with Cable Operators
Partnerships with Television Manufacturers
CA DRM NBP
DVB OTT
* The Company expects that Mini HD STB will account for 15% of overall smart TV shipment volumes * The Company expects that JOYsee will maintain a 50% market share of the Mini HD STB market * Data Source: Company forecast
11
23
Future Development Direction of the Company
About“iKan”: The company will build a signal platform through increased penetration of NBP. The user can leverage the platform to film what is happening and share it via webcast in real time.
About“Two-way network transformation”: The company will develop the core technologies of the “two-way network transformation” through investment and cooperation.
About“Overseas operations”: Leveraging its strengths in overseas markets, the Company will help operators (e.g. Beijing Gehua) to develop digital TV businesses overseas.
Thank you!
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