Download - Kontrol Media Presentation Global Carriers Making Online Profitable

Making Online Profitable: The Case for Strategic Collaboration between Global Carriers and the Media Industry

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Presented May 5, 2010 at Digital Hollywood

Hollywood & Telecom Executive Brainstorm

Santa Monica, California

2Global Carriers Making Online Profitable

The Team

Thomas Rambold

◦ CEO, DESS Consulting - C-Level consulting with global carriers

◦ Former CTO , Siemens Information Networks

◦ Former General Manager, Siemens Broadband and Data/IP business unit

Mark Kapczynski

◦ CEO, Kontrol Media – media industry incubator

◦ VP, Advertising Solutions, Atigeo – pattern recognition software

◦ Former CEO, MESoft, Inc. – tapeless workflow software for film and TV

◦ Former Microsoft, Director of Worldwide Media & Entertainment Solutions

Seth Walworth

◦ VP Industry Marketing, Kontrol Media

◦ Former Director of Marketing, MESoft, Inc.

◦ 30 years, telecommunications marketing and product management experience

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Our Sources

20+ interviews with media industry executives

50+ conversations with thought leaders at media industry conferences

◦ ad:tech

◦ Media Summit New York

◦ IAB 2010 Leadership Meeting

Secondary research from various online articles and publications

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Our Objectives

Review online threats to carrier and media cash cow revenue streams

Highlight the opportunity gap in online commerce

Identity key issues impeding online commerce

Highlight intrinsic carrier capabilities that can solve these issues

Propose a value-add Carrier E-Commerce and Media Services platform

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Why Work Together – Main Themes

Lucrative revenue sources face long term threats

◦ Carriers – Will mobile voice and data transport be commoditized?

◦ Studios – DVD sales are falling and the TV ad market is stagnant

◦ Newspapers & Music – The sky has already fallen

E-commerce is a key market

◦ Carriers – How do you participate in $155B* of e-commerce transactions?

◦ Media – How do you make e-commerce work for content?

Both industries need each other to figure it out

◦ Carriers have unique assets they could deploy

◦ Media firms – and their advertisers – can provide critical input

Source: Forrester Research, "Forecast: U.S. Online Retail Sales, 2009 - 2014"


Carriers - Clouds on the Horizon

Mobile is the cash cow but ………

◦ 87% U.S. market penetration*

◦ Price wars starting

◦ Massive 4G network investments

Huge growth in mobile data traffic – but who gains?

◦ Mobile will be dominant Internet access method by 2014

◦ More search ads for Google

◦ More Facebook, YouTube, and Twitter traffic

◦ Lots of free Wi-Fi – why buy expensive carrier data plan?

◦ Nightmare precedents - LD, Local, enterprise data – transport becomes a commodity

Carriers are reacting

◦ Wholesale Applications Community initiative

◦ Branded hardware

◦ Complaints about Google getting a free ride

…… Add value to Internet activity, not just access and transport

6Source: Plunkett Research, "Wireless, Cellular & RFID Industry Trends"


Media – Clouds Overhead

Studios still healthy

◦ $62B TV ad revenues, $34B cable programming fees , $17B DVD sales/rentals*

But consumers are drifting online

◦ 800,000 households dropped cable in last two years*

◦ 17 percent of weekly viewing audience watch one or two TV episodes online

◦ In a networked home – who cares where the show originates from?

How do you make online pay?

◦ Internet has 34% of eyeballs – but only 12% of marketing spend*

◦ Consumers accustomed to free content

◦ Piracy remains a problem

◦ Nightmare precedent – newspaper and record label implosion

Media industry is reacting

◦ DECE – content portability

◦ CIMM – cross-platform ad measurement

◦ TV Everywhere – Cable walled garden

◦ Destination Portals – Hulu, newspaper paywalls

Still searching for answers …..

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Source: Adams Media research: From Wall Street Journal, January 4, 2010. “Cinema surpassed DVD sales in 2009”

Source: Convergence Consulting Group, "The Battle for the American Couch Potato“ (TV ad, cable fee, # of subscribers leaving)

Source: Forrester Research, “U.S. Interactive Marketing Forecast, 2009 – 2014”


Little Strategic Collaboration So Far

For studios

◦ DVDs and TV still rule

◦ Cable MSOs are the strategic partners

◦ Carriers are considered

Pipe providers

An emerging TV programming outlet

A source of advertising and sponsorship $$

For carriers

◦ Been riding the mobile wave

◦ Other vertical markets – financial, healthcare, retail – are considered bigger

◦ Focus on cloud-based enterprise services across industries

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Strategic Collaboration is Needed

For Studios

◦ Carriers – not cable MSOs – are the dominant providers of online and mobile infrastructure

◦ The center of gravity for content distribution is moving online

◦ You can’t solve strategic online issues without involving the carriers

For Carriers

◦ Wireless data usage is expected to grow 4000% by 2014*

◦ You must add value to this – or you will be a commodity transport provider

◦ Media firms – and their advertisers – will tell you what value is needed and how to charge for it

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Source: Local Techwire, March 24, 2010: "As Sprint prepares for video calls, wireless execs seek more bandwidth"


Online Commerce – Latent Opportunity

E-Retail: $155B in 2009 - 6% of retail sales* (U.S.)

E-Marketing: $26B in 2009 - 12% of ad spend* (U.S.

◦ Consumers spent 34% of their media time online in 2009

◦ Mobile advertising was $400M

Paid online TV/movie sales and rentals - $361M* - 2% of total (U.S)*

Lots of room for growth – particularly with a better platform

How much of this revenue can carriers address?

◦ Transaction fees, Advertising services, Content distribution services, ???

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Source: Forrester Research, "Forecast: U.S. Online Retail Sales, 2009 - 2014“

Source: Forrester Research: “U.S. Interactive Marketing Forecast, 2009 – 2014”

Source: Adams Media Research: From Wall Street Journal, January 4, 2010, “Cinema surpassed DVD sales in 2009”Source: Convergence Consulting Group, “The Battle for the American Couch Potato”


Key Online Challenges - What You Told Us

Advertising ROI

Get consumers to pay for content

Curb piracy - without irritating legitimate users

Enhance the user experience

Anywhere, anytime, any screen distribution

Content discovery

“One-Click” Transactions

Solve these, turn “digital dimes” into “digital dollars”

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Carriers can Change the Game Massive Subscriber Reach – mobile, online, TV

Customer Information – Single, integrated profile

Start-to-Finish Session Management

◦ Know WHO you are, WHERE you go, WHAT you do, Start to Finish

◦ Track and log activities to augment profile

◦ Profile can travel with subscriber throughout session

◦ In-session content or ads are optimized to profile

Scalable Bandwidth and Infrastructure

Transaction, Multi-Screen, and Security Expertise

Clout to set standards

Native strengths, barely tapped for e-content and e-commerce

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Real-Time Profiles – A Big Step Forward

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Real-Time User Profile- OPT-IN (Value Exchange)- Preferences- Online History- No Direct Identifiers- Inference and Learning Engine

- Web Interface Engine

Social Media

ONLINE SESSION

WebsitesContentAdvertising

Financial Transaction Services

Search Engines

Opt-in, secure, intelligent agent that saves time & improves relevance


Telco Next-gen Platform

Publishers3rd Party

VARsAd Agencies

Brands

Reporting

Carrier Shared

Services

Advertising

EngineContent

Engine

Targeting

EngineUser Profiles

Consumer

Device Platform

•internet•apps•SMS•email•video

•mobile•pc•TV•“other”

eTailers

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Better ROI for Your Advertisers

Reach – Micro-target LARGE audiences

◦ Massive carrier databases

◦ Comprehensive profiles

◦ Profiles tagged that meet advertiser criteria

◦ Profiles interact with websites and search engines as users surf web

◦ Ads served only to the targeted audience

Relevance – Ads more likely to be viewed

Engagement – Intelligent profiles enhance user interactions with ads

Measurement – Profiles capture all activity for campaign review

Value – Efficient and effective use of ad $$

◦ Target easily and precisely AT SCALE

◦ Reach efficiently across channels and screens

◦ Engage and track through the purchase funnel

◦ Follow up for awareness, favorability, intent, and brand-building.

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More Paying Customers for your Content

Identify LARGE audiences of your best prospects

Reach them efficiently across channels and screens

Make it very easy for them to buy

Deliver a premium and differentiated experience

◦ Value-added bundles

◦ Exclusive and personalized interaction

◦ Higher-quality video and/or audio

Protect this premium content from piracy

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Curb Pirates – Not Legitimate Users

Direct-download cyberlockers are the go-to piracy source

Carriers have the most potential control over these cyberlockers

But carriers have no reason to enter the minefield

◦ A lot of cyberlocker traffic is legitimate

◦ Some falls into gray areas

◦ Carriers risk losing subscribers if they curb legitimate traffic

◦ At worst, they risk lawsuits

Publishers argue that online piracy costs them a lot of money

Then find a way for carriers to profit from solving the piracy problem

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An Enhanced Consumer Experience

Key elements remain convenience, relevance, engagement, and quality.

◦ Don’t bombard me with messages I don’t care about.

◦ Let me engage or dig deeper in different ways

◦ Make it easy to buy.

◦ Enhance with bundles, features, interactivity, and audio/video quality

Means knowing as much as possible about that person, right now.

Requires real-time profile that interacts with search engines and web sites

Requires the ability to deliver a better experience

◦ “One-click” transactions

◦ Quality-of-service guarantees,

◦ Content delivered 7x24 to the desired device

◦ Video-roaming “rescreening”

◦ Support in-session service requests

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Improved Content Discovery

The immense amount of information on the Internet ….

◦ Makes it hard for consumers to discover content they would like to buy,

◦ But have forgotten about,

◦ Or don’t even know exists

Hard for publishers to get full value from their long-tail inventory

Serendipitous search will help

◦ Real-time user profiles will improve results from content search tools

◦ Site-specific such as Amazon.com

◦ Or general search such as Google or Bing

Even better – target and drive likely buyers to your destination portal

◦ Real-time profiles will interact with your content search tool

◦ Make superior suggestions from superior information

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Simplified Distribution Across Screens

Multiple Dimensions requiring carrier expertise and scale

◦ Ability to deliver across fixed line and wireless environments

◦ Authenticate user for entire viewing session and multiple screens.

◦ Digital Rights Management to authorize usage

◦ Video/audio formats matched to device and available bandwidth

◦ Ads inserted as necessary

◦ Support “re-screening” to other user devices in-session

◦ Support video roaming hand-offs as necessary

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“One-Click” Transactions

Multiple dimensions requiring carrier expertise and scale

◦ Real-time profiles that interact with transaction engines to save users time

◦ Purchase, pay-per-x, subscription, ad-inserted, and micro-payment options

◦ Scalable bandwidth and processing to handle surges in customer demand

◦ Immunity from denial-of-service attacks

◦ Secure, PCI-compliant transactions

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Contact Information

Mark Kapczynski

Kontrol Media

[email protected]

310-594-3547

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mailto:[email protected]

Download - Kontrol Media Presentation Global Carriers Making Online Profitable

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