GLGi: Cable TV and Broadband Video Will Richmond.

GLGi: Cable TV and Broadband Video

Will Richmond

Council Member Biography

Will Richmond is President and Founder of Broadband Directions LLC, a leading market intelligence and consulting firm which specializes in broadband-delivered video. Many of the world’s largest media and technology companies subscribe to Broadband Video Focus, the firm’s market intelligence service. Mr. Richmond has worked in the broadband, cable TV, content, network infrastructure and software industries for over 15 years. During the mid-1990s he was the VP of Business Development at Continental Cablevision, then the 3rd largest cable TV operator in the U.S., where he was a co-founder of Continental’s pioneering high-speed Internet service. Since 2003, Mr. Richmond has worked with many early-stage and established companies in the broadband video industry. He is an acknowledged thought-leader in this area and is frequently called on by industry executives, investors, journalists and others to provide his insights. Mr. Richmond is a graduate of Cornell University and Harvard Business School.

Topics

► How is broadband video changing the traditional video distribution value chain?

► What are the key players in various media segments currently doing with broadband video?

► What are the major trends and technologies impacting the market?

► Which business models are working and what are their challenges and opportunities?

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© Copyright 2007. Broadband Directions LLC. All rights reserved. Page 7

Profiting from Broadband Video’s Disruptive Impact

GLG PresentationNew York, N.Y.October 24, 2007

Will RichmondPresidentBroadband Directions LLC

© Copyright 2007. Broadband Directions LLC. All rights reserved.


Legal Disclaimer

All information contained in this document is proprietary to and copyrighted by Broadband Directions LLC, except as described below. You may not alter or remove any trademark, copyright or other notice from any copy of this document.

Broadband Directions and the Broadband Directions logo are trademarks of Broadband Directions LLC. All other trademarks used in the document, including the logos of cable networks reproduced herein, are the property of their respective owners. All web site images and content of companies excerpted in this document are the copyrighted material of their respective owners.

Neither Broadband Directions LLC nor any other party is responsible for any deficiencies in the accuracy, completeness or timeliness of any information contained in this document, or for any decision made using such information. In particular, information contained in this document was gathered over a specified period of time, and it is possible that such information has changed since it was collected and is out of date as of the publication of this document. The opinions contained in this document reflect the judgment of the author at the time of publication and are subject to change.

This document is designed to provide general information on the subject matter covered. It is not intended to provide personalized advice or guidance. You are responsible for properly analyzing and verifying any information you intend to rely on.


Definitions

• Broadband-delivered video is:– Delivered through broadband IP connections (cable modem, DSL)

– Served remotely from anywhere on the Internet to a user’s computer

– Sometimes downloadable to portable devices (e.g. iPod, Zune)

– Also called “Internet TV”, “online video”, “broadband TV”

• Broadband-delivered video is not:– “IPTV”, which uses set-top boxes and a “walled-garden” approach

– “Mobile TV” or “Wireless Video” (e.g. VCast, MobiTV, others)

– VOD served by a cable/satellite/telco set-top box

– TiVo or DVR video


Key Questions To Address

What changes are happening in the video distribution value chain?

What are media companies doing with broadband video?

What’s ahead?


$

$$

$/other

Traditional Video Distribution Value Chain

ConsumersAdvertisers

$$

$

Source: Broadband Directions LLC

Producersand

Rights Holders

Cable TVNetworks Retail

Distributors (cable TV or

satellite) Broadcast TV

Networks & Stations


“Broadband-delivered video is the

single most disruptive influence

on the traditional video distribution value chain.”

WHY?


Broadband is an Open Video Delivery Platform

Internet

Cable modemor DSL

Computer

Television

?

Broadband

Network

Portable Video Player(e.g iPod, Zune)

?


Video Servers(e.g. Yahoo, CNET, MLB)

Video Servers(e.g. YouTube, NYTimes, Budweiser)


3 Disruptions of Broadband Video

1. Established video providers can go “direct-to-consumer”– “Cable bypass” – 1st time to get video directly to audience– New economics based on retail, not wholesale model

2. New broadband video distributors can establish value– Define new services that are aligned with consumer behaviors– Change “basis of competition” among market participants

3. New video-focused market entrants can emerge– Numerous types of companies enter video market– New broadband/online-centric economics


Broadband video’s disruption is

REAL

not theoretical


1. Broadband Enables Direct-to-Consumer Models


ConsumersAdvertisers

$$$

$ Broadband access only

$

$

Cable TVNetworks

RetailDistributors (cable TV or

satellite)

Producers and

Rights Holders Broadcast TVNetworks & Stations


Examples of Direct-to-Consumer Models

• NBC/News Corp Hulu• Discovery Beyond• E “The Vine”• Lifetime Video Lounge• CBS Innertube• HGTV KitchenDesign• TNT Dramavision• Starz Vongo• CourtTV Extra


2. Broadband Enables New Video Distributors

$

$


Broadband Video Distributors

$$

ConsumersAdvertisersAdvertisers

Broadband access only

$


satellite)

Producers and

Rights Holders

Cable TVNetworks

Broadcast TVNetworks & Stations


Examples of New Video Distributors

Portals/Search• AOL• Yahoo• MSN• Google• Apple iTunes

Aggregators/Syndicators• Joost• Comcast• Amazon• Wal-Mart• Brightcove

UGC/Video sharing• YouTube• MySpace• Revver• Metacafe• Veoh


3. Broadband Enables New Video Providers


New Video Providers

(startups, incumbent non-video media or

marketers)

Broadband access only

$

ConsumersAdvertisersAdvertisers

$

$ $

$



satellite)

Producers and

Rights Holders

Cable TVNetworks

Broadcast TVNetworks & Stations


Examples of New Video Providers

Niche providers• JibJab• Next New Networks• Cycling.tv• The Nine• Barrio305• WGSN

Print publishers• WSJ• NY Times• Businessweek• Better.tv

Online publishers• About.com• iVillage• CNET• NASCAR

Brand marketers• Dove• Smirnoff• MGM• Neiman Marcus• Frito-Lay


$

$$

$/other

SubscribersAdvertisers

$$

$

Producersand

Rights Holders

Cable TVNetworks Retail

Distributors (cable TV or

satellite) Broadcast TV

Networks & Stations

Current Video Distribution Value Chain


Future Video Distribution Value Chain?


All Video Providers

AdvertisersAdvertisers

$

$$

$


Consumers

$




What’s ahead?


Top 75 Cable TV Networks and Broadband Video


Top 75 Cable TV Networks Embrace Broadband Video

Broadband-Delivered Video Available at Top 75 Cable TV Networks' Web Sites

Yes99%

No1%


Broadband-Delivered Video Available at Top 75 Cable TV Networks' Web Sites

Yes99%

No1%


Year to Year Comparision of Top 75 Cable TV Networks Offering Broadband Video

71

68 74

-

20

40

60

80

Yes No

# o

f N

etw

ork

s

2005

2006


Year to Year Comparision of Top 75 Cable TV Networks Offering Broadband Video

71

68 74

-

20

40

60

80

Yes No

# o

f N

etw

ork

s

2005

2006



Advertising Model Dominates for Top 75

Business Models Used for Broadband Video by Top 75 Cable TV Networks

Advertising & paid downloads

2%

Subscriptions only2%Commerce only

6%

Advertising & subscriptions

4%

Advertising only86%


Business Models Used for Broadband Video by Top 75 Cable TV Networks

Advertising & paid downloads

2%

Subscriptions only2%Commerce only

6%

Advertising & subscriptions

4%

Advertising only86%



Broadband Becoming More TV-Like

Is a Video Window Embedded on the Network's Home Page?

No62%

Yes38%


Is a Video Window Embedded on the Network's Home Page?

No62%

Yes38%



Top 40 U.S. Newspapers and Broadband Video


Top 40 Newspapers Embrace Broadband Video

Broadband Video Available at Web Sites of Top 40 Newspapers

No3%

Yes97%

Broadband Video Available at Web Sites of Top 40 Newspapers

No3%

Yes97%



Sources of Newspapers’ Video

Source of Video for Top 40 U.S. Newspapers

Original video only5%

Both46%

Third party video only

49%

Source of Video for Top 40 U.S. Newspapers

Original video only5%

Both46%

Third party video only

49%



But Ads Not Yet Widely Implemented

For Top 40 U.S. Newspapers, Is Original Video Ad-Supported?

No70%

Yes30%

For Top 40 U.S. Newspapers, Is Original Video Ad-Supported?

No70%

Yes30%



Top 40 U.S. Magazines and Broadband Video


Top 40 U.S. Magazines

Yes, 28, 70%

No,12, 30%

Top 40 Magazines Offering Video at Their Web Sites


Top 40 U.S. Magazines

Own video, 20, 72%

3rd party video,4, 14%

Own & 3rd party video,

4, 14%

How the 28 Magazines Offering Video Source It


Top Broadcasters and Broadband Video


Broadband Video and the Broadcast TV Industry

1. Broadcast networks fully embrace broadband– Full streaming of episodes– Paid download models remain– Hybrids emerging (e.g. NBC Direct)– Syndication (Hulu, CBS IAN, ABC/AOL)

2. Local affiliates move video online– Streaming news clips and shows mainly– Viewers get on demand, online access

3. New aggregators and syndicators break down geographic boundaries– Companies emerging to syndicate local video– Voxant, Clip Syndicate (Syndicaster), TitanCast, etc.– Ad-based models


Local Stations Offering Broadband Video

Yes92%

No8%

Broadband-Delivered Video Available at 50 Select Local Stations' Web Sites



Ad Support is Prevalent

Ad-support85%

Ad-free15%

For the 46 Local Stations Offering Broadband Video:Ad-support or Ad-free





What’s ahead?


Other Key Broadband Trends To Watch

• “Convergence” devices rolling out– Bridge PC/broadband and TV worlds– AppleTV, Microsoft Media Extenders, Xbox, Sansa TakeTV, etc.

• Improved ad targeting– Technologies to do video, audio, meta-data recognition– “AdWords” style business models

• Independently-produced video– Proliferation of independently-produced video, mainly ad-supported– Continued audience fragmentation

• Advertisers/Marketers embrace broadband– Lots of new “direct” campaigns using video– Reduce costs, increased tracking

• Peer-to-Peer (P2P)– Potentially alleviates bandwidth congestion– Lots of funding (Joost, Veoh, BitTorrent, etc.)


Conclusions

• Broadband most significant disruptive influence on video distribution value chain

• All players are re-thinking their business approaches

• Market is very dynamic – agility is key to success

• Broadcasters need to move forward aggressively


For ongoing commentary, visit:www.videonuze.com

Broadband video news and analysis….


Thank You

Will RichmondPresidentBroadband Directions LLC

wrichmond@broadbanddirections.com617-699-4459www.broadbanddirections.com


GLGi: Cable TV and Broadband Video Will Richmond.

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