boe new media ecoystem 2011 apr 15

THE NEW MEDIA ECOSYSTEM: Making Sense of Technology and EconomicsRobert R Yamashita Cogentic AdvisorsGlen W Anderson Cogentic Advisors


Agenda

• INTRODUCTION

• CHANGING LANDSCAPE OF NEW MEDIA

• DRIVERS OF CHANGE : Technology, Economic

• OPPORTUNITIES / CHALLENGES

• KEY SUCCESS FACTORS: Technology, Business

• CONCLUSIONS


The SpeakersRobert Yamashita (Managing Director, Cogentic Advisors) – Prior to co-founding Cogentic, Mr. Yamashita held executive roles in the converged New Media ecosystem for over 15 years (Sony, THX, C-Cube Microsystems) and has ten years of management consulting in corporate and technology strategy, including experience as a Principal Consultant in digital media strategy at PricewaterhouseCoopers. His recent projects have included digital asset technology and strategy for major Hollywood studios, CE companies and various technology startups. While with Sony Electronics, Mr. Yamashita was a co-founder and director of the Pro-MPEG Forum. Mr. Yamashita has extensive industry experience in strategic planning, alliance management, business development and marketing at consumer electronics, semiconductor and communications companies (Sony, C-Cube Microsystems, Rockwell, TRW LSI Products) and holds a B.S. with Honors from the California Institute of Technology.

Glen Anderson (Managing Director, Cogentic Advisors) - Glen was most recently in investment banking with Oppenheimer & Co. in New York and prior with Jefferies & Co. in San Francisco, focused on telecom, networking and media. Prior to his career in investment banking, Glen worked in the commodity trading business in New York, the venture capital industry in Europe and the hedge fund industry in Chicago. Glen has been close to technology his entire career beginning as an engineer in Motorola's mobile devices business, supporting the design of revolutionary products such as the Motorola StarTAC and the Multiple Application Phone - the world's first "smart-phone". He has been a technology consultant to Lehman Brothers, the New York Stock Exchange and Midway Games, and consultant to Sprint Wireless and Comcast, among others in technology and organizational strategy. Glen holds a B.S. Magna Cum Laude in Engineering, and an MBA with Honors from The University of Chicago. Glen holds series 7, 24, 63, 79, 86 and 87 securities licenses.


Cogentic AdvisorsBusiness Performance Business Performance

Acceleration Acceleration ™


Terminology and Scope• Traditional Media

– Theatrical Release Movies; DVDs; Blu-ray– Broadcast (Cable, Satellite, Terrestrial) of linear titles

• New Media Content– Internet Content: Websites, Blogs, Interactive Titles, Social Media– Games and Media-Based Applications– Mobile Content and Apps: Mobile A/V; User Generated Content; Paid/Free

Apps

• New Media Ecosystem– Additional participants and platforms that support the creation,

management, distribution, and consumption of new media

• Scope of Presentation– While the new media ecosystem is described, sections on Opportunities

and Challenges, and the Key Success Factors focus mostly on the Motion Picture and Post Production industry


Agenda

• INTRODUCTION





• CONCLUSIONS


New Media: A Changing Landscape

• Changes in How We Consume Media– Hours of digital media consumption on the rise– Users want to consume content on all devices they own

• Mobile Video Users– Content and applications optimized for mobile devices– New and different consumption and business models

• Social Media Integrates with Traditional Media– Highly interactive communities– Proliferation of User Generated Content (UGC)– Real-time community aggregation around content


Increased Consumption

• 10hr/wk 1920• 20hr/wk 1940• 40hr/wk 1970• 80hr/wk 2010

20 yrs

30 yrs

40 yrs


Our Media Consumption is Evolving

Mobile Video Users

Source: eMarketer

Global Mobile Video Users (2008-2014)


Social Media / Content-Based Communities

Rapid market penetration and evolution

ATTRIBUTION: http://www.simplyzesty.com/social-media/decade-social-media/


Agenda

• INTRODUCTION





• CONCLUSIONS


Change Drivers: Technology

• Broadband Penetration and Utility• Mobile Devices: Smartphones and

Tablets• Connected Home to Connected TV• Interactive Content• Social Media Integration• Standards-Based Converged Experience


Broadband Penetration Rates

2011• 55% households

at least 6Mbps (one HDTV stream)

• 20% have over 24Mbps (multiple HD streams)

2015• 85% of homes will

have broadband, with 65% over 24Mbps


Broadband Utility: Speed vs. Price

Leaders• Japan, South Korea• High Speed; Low Price

Average• Europe, North America• Medium Speed, Low Price

Emerging• Eastern Europe, Mexico• Low Speed; High Price

LEADERS

EMERGING

AVERAGE


Mobile Devices: Smartphones

• Smartphone shipments overtake PC by 2012

• Units shipped in 2010 about 250M

• Forecast nearly 500M units to ship in 2012


Mobile Paradigm Shift: Tablets

• iPad release in 2010 created a seachange

• More users will watch video on tablet devices than other mobile products

• Linux devices include Google Android; PalmOS

• Linux-based devices will represent 61% of market in 2015


Connected Home > Connected TV

The Evolution of Television

Source: Parks Associates, IPTV and the Digital Home


Interactive Content (examples)

Interactive eBook: YUDU Pro

Metabeam Interactive App


Interactive Content (examples)


Mobile Image Recognition;2D Tags; QR Codes

Split-Screen Live Video Debate

Source: Augme Technologies Source: Viafoura, Inc.

Standards-Based Interoperability

DECE / Ultraviolet• Over 60 member

companies

• CE, Studios, Retailers

• Rights in the Cloud

• Buy Once, Consume Anywhere


Change Drivers: Economic

• Changing Consumption Patterns• Emerging Market Pay TV Growth• Growth and Monetization of IP Video• Mobile Video Consumption and Revenue• Social Media Growth• M&A: Consolidating nascent, fragmented

markets


Experiential Continuum …


Time

Quality

Variety Place

Mobile DevicesDVR’s and IP Video

IPTV, HDTV, Social Media Content in the Cloud

Changing Consumptions Patterns …

Increased Consumption

• 10hr/wk 1920• 20hr/wk 1940• 40hr/wk 1970• 80hr/wk 2010

20 yrs

30 yrs

40 yrs


Emerging Markets and IPTV are Creating Growth in Traditional Consumption

Channels…

Source: ABIresearch

• Increased consumer interest in personalized video viewing experience, interactive and premium content and 3D digital video

• Increased demand from service providers for sophisticated and versatile digital video processing systems required to deliver video to subscribers on a number of different devices in a number of different formats

• As the IPTV market matures, many innovations are emerging, including Over-the-Top Video applications to supplement video-on-demand offerings; technical upgrades for DVRs, High-definition programming, MPEG-4/H.264, first class system integration and adaptive streaming


IP Video is Growing Rapidly… In 2010, 66.7% of U.S.

Internet users, or 147.5 million people, will watch some form of online video content at least once per month.

By 2014, the number of U.S. online video viewers will represent 77 percent of Internet users, or 193.1 million people. U.S. online video ad spending will jump 48.1 percent in 2010, reaching $1.5 billion.

By 2014, U.S. spending on video advertising is expected to reach $5.5 billion.

U.S. online video ad spending will jump 48.1 percent in 2010, reaching $1.5 billion.

By 2014, U.S. spending on video advertising is expected to reach $5.5 billion.


With Monetization On Par With Traditional TV…

Near Parity is expected 2011


Mobile Video Consumption is Soaring…

The population of mobile video viewers in the US will reach 56.7 million in 2014

Mobile video revenues will roughly triple between 2009 and 2014, rising from $436 million to $1.34 billion

U.S. Mobile Video Revenue

Source: eMarketer


Creating Huge New Markets…

Global Mobile Video Revenue U.S. Mobile Video Revenue

Source: eMarketer


With Social Media a Potentially Disruptive Force…


Generating Interactive Marketing Spending


M&A, While Down…

World U.S.

Few recent deals HuffingtonPost.com by AOL ($315 million) DivX by Sonic Solutions ($325 million), then Sonic Solutions by Rovi ($763

million) Marvel Entertainment, Inc. by The Walt Disney Company ($4.2 billion) Busch Entertainment by Blackstone Capital Partners ($2.7 billion) Kit Digital – ioko ($78M); KickApps ($45M); Polymedia ($34M); Kewego ($27M);

Kyte ($6M)


Continues to Transform Digital Media…

Despite fewer high-dollar deals in 2010, the total number of deals has been rising steadily since 2009

Industry consolidation is being driven by the industry/sector boundaries and the migration of other industries to “smart” digital media products

Consistent with prior years, the most active Media and Entertainment sectors were Internet Software & Services (B2B and B2C): 247 total deals, or 35% of total M&E volumeSource: Ernst & Young Global Technology M&A Update


Recent Major Transactions


Source: Covington | Associates

Agenda

• INTRODUCTION





• CONCLUSIONS


Opportunities :: Challenges (2010-2014)

OPPORTUNITIES CHALLENGES

Proliferation of Consumption Options

Accelerated Timeline• Shortened Production Cycles• Compressed Release Windows

New Business Models Complex Interactions• Ecosystem Interactions• Transactions and Personalization

New Monetization Opportunities

Maintaining Interoperability• Content• Commerce• Community


Proliferation of Viewing Options

“Too Many Choices”

OTTVideo

InternetEnabled TV

Games

TabletAnd

Mobile

Images from Fast Company - 2010-Oct-21


Accelerated Timelines

Shortened Production Cycles• Integration of UGC into news, live TV, online, IPTV• Response to compressed release windows• Response to faster adoption of new technologies

Compressed Release Windows• Steadily shrinking due to proliferation of online

options• Need to monetize “long-tail” content to achieve

ROI© The Business of Entertainment LLC

Shortened Production Cycles

Many sources of content• Live feeds• User Contributed / UGC• Archive

Competition for eyeballs• UGC on internet• Hyper-syndication• Multiple output formats


Compressed Release Windows

Even though box office revenue rises, release windows shrink

Source: MPAA Website


New Business Models … an example

From watching movies with Facebook credits (virtual currency) …to $30 PPV to watch movies at home 60 days after theatrical release


Leading to Complex Interactions

Example: Interactions in

the Online Video Advertising Ecosystem


Personal Info –vs- Targeting


• The more personal the device, the less willing consumers are to give personal data

• For TV ads, 1 in 5 is willing to provide personal data for better targeting

• Consumers do not want mobile ads

• Adults over 55 are twice as likely to object to providing personal data as 18-34 yr olds

• Only 1 in 3 young adults (18-34) truly object to providing personal data for relevance

• 1 in 4 aged 18-34 proactively desire relevance

Source: Parks Associates

Agenda

• INTRODUCTION





• CONCLUSIONS


Technology Success Factors

CHALLENGE TECHNOLOGY REQUIREMENT


Reconfigurable SOA and Processes• Advanced Parallel Workflow Systems• Integrated Back-End Commerce Systems

Complex Interactions• Ecosystem Interactions• Transactions

Flexible and Robust System Interfaces• Secure, Configurable Media Delivery Systems• Integrate Commerce Metadata with Content


Middleware to Bridge Systems• Flexible Auto-Transcoding; New Authoring Tools• Rights Management and Payment Processing• Social Media Integration; Scalable Enterprise IT


Business Success FactorsCHALLENGE BUSINESS REQUIREMENT


Capital Efficiency• Multi-Source Distributed Business Models• Increase Enterprise IT and Workflow Management

Complex Interactions• Ecosystem Interactions• Transactions

New Workflow and Revenue Tracking• Intelligent Taxonomies for B2B Supply Chain• Integrate e-Commerce and Analytics for B2C


Standards-Based Experience• Leverage the work of DECE• Prepare for more focus on back-end integration• Focus on new ways to engage communities


Service Oriented Architecture (example)


Sony Media Backbone Conductor• SOA facilitates integration• A/V files shared on Media Bus• Reconfigurable services on demand• Functional workflow management

Source: Sony Electronics

Post Production Market: 2010-2014

Market ConcentrationLarge Post Houses account for 70% of total revenueMedium Size account for 23% of total revenueSmall Post Houses represent about 7% of total revenueVery small number of large companies dominate

Number of CompaniesLarge Post Houses: 1.6% in 2010; 1.5% in 2014Medium Sized Companies: 15.4% in 2010; 28.5% by 2014Small Post Houses: 83% in 2010; 70% in 2014Consolidation: Med-sized acquire smaller post houses

Sources: IBIS World, Morgan-Stanley, PwC, Annual Reports

Market StructureDriven by Studio Release Windows80% of revenue derived from Film & TV Production15% of revenue derived from AdvertisingMix shifts toward Online and Mobile Advertising

NUMBER OF POST PRODUCTION COMPANIES (by company size)


Agenda

• INTRODUCTION





• CONCLUSIONS


Conclusions• Rate of Change is Accelerating in the

Ecosystem– Drivers Multi-format/multi-device; Mobile; Social Network– Implication Content Discovery and Search increasingly

important

• Economic Landscape in Flux– Drivers Increasing competitive forces; economic downturn– Implication Capital efficiency and leveraging workflow systems

• With Transition Comes Opportunity– Drivers Content is no longer “king,” consumers demand flexibility– Implication Quality and flexibility of experience determines

who wins


THE NEW MEDIA ECOSYSTEM: Making Sense of Technology and EconomicsRobert R Yamashita Cogentic AdvisorsGlen W Anderson Cogentic Advisors


boe new media ecoystem 2011 apr 15

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