LUMA partners The State of DIGITAL VIDEO Terence Kawaja
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LUMA partners
The State of DIGITAL VIDEO
Terence Kawaja
The Rise of Digital Video
Hours
29%
Source: eMarketer, comScore
U.S. Digital Video Proper6es Ranked by Unique Video Viewers
Average Time Spent per Day with Digital Video by Device in U.S.
YouTube Has Dominated the Rise of Digital Video
0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8
2011 2012 2013 2014 2015
Tablet Smartphone Desktop Other
But Now It’s Not the Only Game in Town
Facebook Auto-Play Videos are Ubiquitous
75% From Mobile
4 Billion Daily Views
Mobile Apps Bring Live Content to Your Fingertips
Snapchat Has Built Mobile-First Advertising
Publishers Are Making Video Too
There Just Isn’t Enough Supply!
Display Ad CPM $1.90
Video Ad CPM $24.60
Source: ZenithOptimedia, Note: Average CPM
$2.9%
$4.2%
$6.0%
$7.8%
$9.5%
$0.0%
$1.0%
$2.0%
$3.0%
$4.0%
$5.0%
$6.0%
$7.0%
$8.0%
$9.0%
$10.0%
2012% 2013% 2014% 2015% 2016%
CAGR:&34%
&
CAGR:&172%
&
Source: eMarketer
$ billions
ProgrammaAc Video Digital Video
Digital Video Spend Continues to Rise
Source: eMarketer
$ billions
ProgrammaAc Video Digital Video TV
$0.0$
$10.0$
$20.0$
$30.0$
$40.0$
$50.0$
$60.0$
$70.0$
$80.0$
2012$ 2013$ 2014$ 2015$ 2016$
$64.5 $66.4 $68.5 $70.6 $73.8
But is Still Only a Fraction of the TV Market
Traditional Digital vs.
Traditional Digital vs.
100 : 1
19 Buckets 36 ~ 100 Companies ~ 400
$150 billion Total Spend $6 billion $1.5 Billion $ / Company $15 Million
Traditional TV vs. Digital Video Players
100 : 1
Market Cap: $2 Trillion Cash: $530 Billion
5x Cash
New Entrants Have Plenty of Money to Build or Buy
Screens
Delivery
Content
2008 Was So Simple: Traditional & Digital Silos
Delivery
Screens
Content
Second Screen Chromecast / Airplay
Partnerships “Netflix + Disney”
Convergence Begins with Device Proliferation
OTT/CTV
Delivery
Screens
Content Partnerships “Netflix + Disney”
Facebook Drones?
TV Economics
Content Channels Media MVPDs Device / UI
9,000+ Channels
CONSUMER
CTV
Devices
OTT
UI
Traditional TV Content Model
Content Channels Media MVPDs Device / UI
CONSUMER
Programs Networks Channel Bundles
“Must Carry” & Broadcast Content
Traditional TV Content Model
Content Channels Media MVPDs Device / UI
Tier 1 Cable and Broadcast Content
M A R K E T E R
CPG Upfronts $30BB
$40BB Spot and Scatter TV ads
$6.3BB Comcast bundles in sports content
C O N S UM E R Affiliate Fees
$40BB
Retrans Fees
$80BB Subscriptions
Traditional TV Content Model
Bundling Enables Pre-Funding of Content
10% Support 100%
Bundling Enables Pre-Funding of Content
Final Late Night Episode
Evolution of Top Rated Show
Most Viewed Episode
1993
1990
1992
80MM
52MM
38MM
Traditional TV Content Model
Final Late Night Episode
Evolution of Top Rated Show
Most Viewed Episode
1993
2007
1990
2013
1992
2009
80MM
30MM
52MM
8MM
4MM
38MM
Cross channel devices killed the television star!
Media Channels MVPDs Content Device / UI
CONSUMER
“Just broadband only, thanks!”
Subscription content on license
Discrete content
“Made for web” content
“I forget what channel it’s on I just stream it”
“Artist to Consumer”
Digital Opens Different Distribution & Content Strategies
Big $$$ A18-49 Reach
Incremental Budget
A25-54 Reach
Paying 30-50% more for .5-1% more reach?!
TRP
Source: Needham & Co. , Nielsen
Incremental Cost Per Reach Point
Incremental is Increasingly Expensive on TV!
eMarketer Digital Video Spend Projection
$0 $0
Source: eMarketer
eMarketer TV Spend Projection
Yet TV Dollars aren’t Slowing…
TV is Definitely Not Hurting Yet
Leslie Moonves, CEO
3 Year Compensation:
$186 Million
2014 Revenue >
Cracks In The Wall
Slack in Demand for Upfront Buys
OTT Options are Growing
$50-‐$70
$8
$9
$20
$99/year
$15
$6
Average Basic Cable Packages ~$120
Source: NPD Group
$15 Stream
Programmatic Platforms Targeting Technology Attribution / Analytics Low-Cost Production
Integrated Workflow
Premium Content Brand Relationships
Convergence of Two Worlds
Selling Points Reverse in 2015
Upfronts NewFronts
Selling Premium Content Selling Data-‐Driven Approach
Selling Points Reverse in 2015
Selling Data-‐Driven Approach Selling Premium Content
Upfronts NewFronts
Now TV is Being Aggressive with Data
Credit Card Data
Subscriber Data Target Audience
Yogurt Buyers
Frozen Snack Buyers
Wireless Data Users
Inspired by WSJ
Digital is Increasing Investment in Original Content
Everyone is geVng in on the game
?
New Tier 1 Shows Backed with Tier 1 Talent
$0 $0
(1) Assumes 7.5% of TV Spend Shifts to Digital Source: eMarketer
eMarketer Digital Video Spend Projection eMarketer TV Spend Projection
Digital Dollars Could Double
Perception vs. Reality in Addressable TV
Linear TV Programma6c TV
Percep6on
Reality
Linear TV Addressable Linear TV
Video On Demand (VOD)
Over The Top (OTT)
Digital Video
Programma6c TV
WARNING: LUMA Decks Usually Call for More M&A
Convergent TV via M&A
CONTENT
DISTRIBUTION
MONETIZATION
Media
31 Video Deals in the Last 2 Years
Digital Video Has a Very Bright Future
1. Preferred Consumer Media 2. Continued Device 3. New Content Formats 4. Ad Inventory Shortage 5. TV Demand Shift 6. Strategic Exit Opportunities
New York | San Francisco | Palo Alto
Access. Insights. Execution.
LUMA partners
Thank you! @tkawaja
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