future of digital: the next big thing
TRANSCRIPT
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Providing in-depth insight, data, and analysis of everything digital.BI Intelligence
The next big thing
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DIGITAL IS INHERITING THE EARTH
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DIGITAL MEDIA CONSUMPTION IS GROWING, EVERYTHING ELSE IS SHRINKING
US Consumer Media Consumption Share
Source: eMarketer
43.2%
40.9%
14.0%
6.6% 5.8%
35.2%
12.0%
2.9% 3.3%
TV Radio Print Other
2011 2012 2013 2014 2015
Desktop/laptop
Digital
30.0%Mobile
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IT’S A GENERATIONAL SHIFT
Top 5 Media Mentions Among All Adults, 2016
Source: Ofcom
0 20 40 60 80 100
Alladults
Aged16-24
Aged25-34
Aged35-44
Aged45-54
Aged55-64
Aged65-74
Aged75+ Useasmartphone
Goonlineonacomputer/laptop/netbook/tabletWatchTV
Readnewspapers/magazines
Listentotheradio
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$0
$20
$40
$60
$80
$100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
DIGITAL ADS GROWING, ALL ELSE FLAT
US Advertising Revenue
Source: ZenithOptimedia, BI Intelligence Estimates
Billions($)
Digital
TV
RadioPrintOutdoor
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YahooAOL Twitter
$0
$5
$10
$15
$20
$25
$30
$35
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Millions($)
IT’S GOOGLE, FACEBOOK, AND “OTHER”
Global Digital Ad Revenue
Source: Company Filings, BI Intelligence Estimates
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IN 1H 2016, GOOGLE AND FACEBOOK GREW, EVERYONE ELSE SHRANK
US Digital Ad Revenue, Billions ($)
$27.5
$14.2
$3.4$9.9
$32.8
$17.4
$5.7$9.7
USDigitalAdRevenue Google Facebook EveryoneElse
1H2015 1H2016
+19%
+23%
+68%-2%
Source: IAB, Facebook, Google, Digital Content Next
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THE BELL TOLLS FOR LEGACY TV
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For the last 20 years, digital has disrupted print. For the next 20, it
will disrupt TV.
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TRADITIONAL TV HAS PASSED ITS PEAK
Households With Pay TV Vs. Subscription OTT, % Of US Homes
Source: Nielsen, Leichtman Research Group
86%82%
41%
53%
Q414 Q115 Q215 Q315 Q415 Q116 Q216
Pay-TV SubscriptionOTT
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TRADITIONAL TV VIEWERSHIP IS FALLING
Average Time Spent Per Day Watching Traditional TV, HH:MM
Source: Nielsen
4:43
4:19
4:114:09
Q22013 Q22014 Q22015 Q22016
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YOUNGER TV VIEWERSHIP IS COLLAPSING
Source: Matthew Ball, REDEF, Nielsen
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Meanwhile…
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MODERN TV NETWORKS ARE EXPLODING
0
50
100
Q32012 Q32013 Q32014 Q32015 Q32016
Domestic International
Amazon Prime Subscribers
0
20
40
60
80
2012 2013 2014 2015 2016 2017E
0
5
10
15
2011 2012 2013 2014 2015 2016
Netflix Subscribers
Apple TV Installed Base Hulu Subscribers
0
50
2012 2013 2014 2015 2016 2017
Millions
Global US
Millions
Millions
Millions
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ITUNES, NETFLIX DWARF CABLE NETWORKS
Source: News Reports, Company Filings
$20
$7
$3 $-
$5
$10
$15
$20
$25
2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion
s($)
iTunes
AMC
Netflix
Cable Network Vs. Digital Content Revenue
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YOUTUBE NOW BIGGER THAN CBS
Modern Digital Ad Revenue Vs. Traditional TV Revenue
Source: Company Reports, UBS
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Millions($)
CBSAdRevenue
YouTubeAdRevenue
AMCNetworks
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NETFLIX SAW MORE HOURS PER MONTH THAN ANY OTHER TV NETWORK
Total Hours Of Viewing, Per Month, Per Network
Matthew Ball, MEDIA REDEF
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We can watch what we want to, when we want to —
anywhere, on any screen.
MODERN TV NETWORKS ARE JUST BETTER
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So what’s going to happen?
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First, TV won’t “die.”
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Old media don’t die. They get niche-ified. (See radio and print.)
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There are three parts of “TV” — and two are thriving.
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1. Modern digital TV networks will continue to thrive.
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2. Access providers will continue to thrive.
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3. Traditional TV networks will go through ~decades of consolidation and pain.
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THERE ARE TOO MANY LEGACY NETWORKS
Channels Receivable And Watched, Per US TV Household
Source: Nielsen
151.4168.5
179.1 189.1 197.4208 205.9
17.8 17.5 17.8 17.5 20.9 19.9 19.8
2010 2011 2012 2013 2014 2015 2016
Avg.TVChannelsReceived Avg.TVChannelsWatched
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THERE AREN’T ENOUGH (GREAT) SHOWSAverage Original TV Series Each Year Vs. Survival Rate
Source: Matthew Ball, MEDIA REDEF
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EVEN TRADITIONAL STRONGHOLDS LIKE SPORTS ARE STARTING TO SEE DECLINES
Households With ESPN, Millions
Source: Nielsen, WSJ
NFL Football RatingsThrough first 4 weeks, 2015 vs. 2016
96.17
94.4
92.94
90.99
89.01 88.78
Jul'14 Feb'15 Jul'15 Feb'16 Jul'16 Aug'16
Lost7.4Mhouseholds in2
years
NBCSundayNightFootball: -13%
FoxSunday:-3%
CBSSunday:-3%
CBSThursdayNight:-15%
ESPNMondayNight:-17%
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FORTUNATELY, TV IS AWASH IN MONEY
US Revenue, Billions ($)
Source: Media Partners Asia, 2016
PayTVSubscriptions,
145.6
TVAdvertising,72.32017E 217.9B
Total
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So TV networks will suffer in style.
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THE NEXT BIG THING
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NOT SMARTWATCHES OR GLASSES — THESE AREN’T MEDIA CONSUMPTION DEVICES
Why Apple Watch Owners Wouldn’t Buy Another Apple Watch
Source: Fluent
34%
31%
16%
12%
4%
3%
Tooexpensive
Notuseful
Ugly
Waitingforabetterversion
Featuresduplicatedbysmartphone
Requiressmartphone
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VR/AR HAS POTENTIAL, BUT IT’S STILLTOO EARLY…
Global VR Headset Shipments Forecast, Millions
Source: BI Intelligence Estimates
0.78.2
12.017.3
24.4
33.0
42.6
55.1
2015 2016 2017 2018 2019 2020 2021 2022
Wearehere
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THE NEXT BIG THING: SOCIAL VIDEO
45
6
8
10
Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
4
6
8
10
12
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
6.0 6.3 6.5 7.08.0
Q2'14 Q3'14 Q4'14 Q2'15 Q4'15
Daily Video Views, By Platform, Billions
+200%
+150%+33%
Source: Facebook, Snapchat, KPCB, Bloomberg, Activate, BI Intelligence Estimates
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THIS IS A NEW KIND OF STORY
• “Thumb stopper”
• Sound optional
• Intimate and conversational
• (Often) square or vertical
• Shareable
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SOCIAL VIDEOS TRAVEL ACROSS PLATFORMS
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THE OPPORTUNITY IS MASSIVE
0
500
1000
1500
2000
2500
3000
Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16
Business Insider Monthly Video Streams, Millions
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Social videos can be evocative, entertaining, and effective.
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INSERT“BUCKETOFWARMCHOCOLATE
CHIP COOKES”
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Social videos can change behavior and compel action.
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THE RAINBOW BAGEL
“We got slammed like you couldn’t believe. I haven’t slept in weeks. It’s been crazy since Christmas, but Business Insider really put us over the top.”
-Francine LaBarbara, Marketing Coordinator, The Bagel Shop
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TUBING IN THE HAWAIIAN WILDERNESS
• 30+ million views
• “I don’t know how it happened but WOW”
• Phone’s ringing off the hook and reservations booked
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THE SPIDER CATCHER
• 110+ million views
• Sales skyrocketed 500% on Amazon
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INSERT Thequeenofbadrobots