Trends in the content industries

Trends in Digital Content

NEM Summit – 30 September 2014

Gilles Fontaine

Deputy CEO

[email protected]

Copyright © IDATE 2014

37% of the content market is dematerialized

2

31%

43%

13%

67%

Book Movies Music Video

game

Share of dematerialized sales

Source: IDATE

Copyright © IDATE 2014

On-demand multiscreen video…

3

Dexter S1 2006

Live: 69%

Homeland S3 2013

Live: 32%

TV-screen Desktop Smartphone Tablet Laptop

Video viewing time: 2013 VS 2012

Source: Ericsson ConsumerLab TV and Media, 2013

Copyright © IDATE 2014

…on a subscription model

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SVOD

67 million subs

Music streaming

21 million subs

Online libraries

2 million subs

Source: IDATE

Copyright © IDATE 2014

Markets under pressure:

volume does not offset decrease in prices…

5

Book

11.4 EUR

e-Book

6.8 EUR

Average price, in Europe, in 2013

DVD

10.6 EUR

VOD

9.7 EUR

Source: IDATE

Copyright © IDATE 2014

…and piracy

6

0

2

4

6

8

10

12

14

16

2010 2011 2012 2013 2014 2015 2016 2017 2018

Physical Video revenues

On demand video revenues

Total video revenues

Tendancial increase of spending in audiovisual services and products

The piracy gap:

dematerialization does not compensate for decrease in physical sales

Gap between long term trend in consumer spendings in video and actual spendings

Source: IDATE

Copyright © IDATE 2014

Distribution challenged: bundling at stake

7

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

2007 2008 2009 2010 2011 2012

Total company margin Video Margin

Source: Comcast

Higher margins for broadband than for video

US Cable has more broadband

subscribers than video subscribers

US households watch 17

out of 189 available channels

Compared global and video margins of Comcast

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Distribution challenged: self distribution

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Source : IDATE, Future TV 2025, juillet 2014

The self-distribution scheme

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Delivery networks: IP convergence, Cloud

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IP Convergence

Contribution

Broadcast to IP

Hybrid networks

Cloud-based delivery

How Tivo migrated to the cloud

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Content is king (again):

Cord cutting…not for TV services

While Netflix reached

30 million subs in the US…

10

Penetration rate

March 2012 and Sept 2013

29% 28%

21% 23%

20% 22%

11% 14%

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Average retail price

Content is king (again):

Self-distribution means more investments in programming

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15 US$

39%

Share of consumer

spendings invested

in content

9 US$

67%

Source: IDATE estimates

Copyright © IDATE 2014

Content is king (again):

Dematerialization means a higher share for content

12

41%

Physical Vs Dematerialized

58%

46% 49%

39% 59%

21% 54%

Source: IDATE

Rightholders/producers share of the final market

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Consolidation: winner takes all?

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ITunes market share of the US music download market: 63%

US Market share of the top 4 rental VOD services: 90%

Netflix market share of the World SVOD market: 66%

World market share of the top 3 streaming services: 80%

Source: IDATE

Copyright © IDATE 2014

A fragmented Europe

14

145

98

62

42 27

39 52 53

83 77

47 38

10 7

46

106

Catch-up TV VoD films/series

Source: European Audiovisual Observatory

VOD

3 key US players in Europe

VOD

500+ national players in Europe

American OTT video providers’ footprint in

Europe as of October 2014

Source: IDATE, State of TV & Video Services worldwide, July 2014

Number of on-demand services

Copyright © IDATE 2014

To sum-up: productivity gains needed all along the chain

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Production

Big data

Post-production in the cloud

International distribution and

formats

Marketing

Big data

Yield management

Advertising

Real Time Bidding

Integration of mass advertising

and one-to-one marketing

Delivery

Cloud

Networks cooperation

Copyright © IDATE 2014

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