2011. 4. 29

IPTV Business of SK Broadband

We will review…

Overview of IPTV Business

IPTV Business Strategy

Future of IPTV Business

3

1. Overview of IPTV Business

High-speed Internet Telephone Corporate Service New Business

High-speed internet- Fiber Lan(100M)xDSL(ADSL / VDSL) - cable modem(HFC) Value added servicesIPTV service

local calllong distance callInt’l call(005,00766)VoIP(internet call)universal access numbercollect call /lifelong number

Mobile OfficeZone ServiceFMC ServiceManaged ServiceSolutionMPLS VPN QoS

Introduction of SK broadbandA.

SK broadband is the first in the world to commercialize ADSL, high-speed internet, on which Korea’s IT prowess has been built.

Domestic/Int’l Leased LineInternet DirectMetro Ethernet Leased LineData VPNCorporate phoneIPTIDC

Business Portfolio

4

1. Overview of IPTV Business

TV

Hub

PC

Phone

STBVideo On Demand

VAS

Contents H/E Platforms Network Terminal

Real time Broadcast

Real timePremium

IP Network

【 User’s Location 】【 IPTV Head End 】

IPTV supplies high-definition, real-time broadcasting service to the customers and IPTV

STB(Set Top Box) is easily installable on High-speed internet regardless of the locations

File server

SCS

LGS

VoDSystem

CDN

Access NWBackbone

AR

IP-QAM

ONUOTR

L3

L2

L2

HFC

FTTx

B/B Encoder CAS

IPTV Service ConfigurationB.

☞ Head end is comprised of VOD, VAS and Linear channel service by the high-definition images with high quality

sounds.

5

SK IPTV Subscribers (’10. 4Q)

SK broadband launched the world’s first VoD Service through IP N/W in 2006, and has been kept innovating IPTV service as the IPTV Pioneer of Korea.

(unit ‘000)

☞ Bundle marketing policy with the Internet product

History of IPTV serviceC.

1. Overview of IPTV Business

IPTV Subscribers in Korea

☞ The World Shortest Record of New Media Industry

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

SKB KT LGU+

• Hit 1 Million Subs in 9 months from launching• Hit 2 Million Subs in 16 months (April 2010)• Hit 3 Million Subs in 24 months (Dec 2010)

•947,650 subscribers including VOD only Subs

0

200

400

600

800

1000

06 07

1H

07

2H

08

1H

08

2H

09

1H

09

2H

10

1H

10

2H

Total Pre-IPTV IPTV

1. Overview of IPTV Business

Service StructureD.

Basic Subscription

Premium 92 Channels

Light 77 Channels

Economy 29 Channels

Additional Charged Service

TVOD Current Movie

Premium SVOD

Terrestrial TV PackPremium Movie Pack

Game From kids to Adult Home Karaoke

Info Stock, Art

Btv, IPTV of SK Broadband supplies the diverse contents to customer and received the best NCSI(National Customer Satisfaction Index) 2011

•Subscription is available by the 3 different

Products by the Pricing differentiation

FeaturesProduct

• A full range of contents from latest dramas and

movies to major TV programs

• popular cable channels, adult contents, sports and

education/life-style contents

• Linear Channel Catch-up Service enables to replay

the major linear channels by VOD function

• SVOD is available for the basic subscribers

• A la carte Channel subscription is available with the

Light, Economy subscribers

• Current movies and library movies are available

• Additional interactive services are available

7

2. IPTV Business Strategy

Industry StructureA.

Telecommunication Corporations’ expansion toward the media business is essential approach for the vision of Convergence of Media and Communication.

Competitors’

Potential

approach to

media biz

Potential

competitors’

High-speed

internet service

Growing

Bargaining Power

of customer

Potential

competitors’ TV

service

No special

Bargaining Power

of Supplies

8

2. IPTV Business Strategy

Consumer StructureB.

30s old, efficient consumer is the profile of the core customer of Btv, but Kids and teenagers audiences are also considered as the active users.

Age Distribution Graph Age-specific Use Graph

17%

34%

31%

18%14%

24%

40%

20%

14%

24%

40%

20%

14%

28%

44%

14%

15%

32%

39%

14%

50s and over

40s

30s

Under 30

B internet Household

Btv Household

Hit Ratio TVOD RatioBtv Household

9

2. IPTV Business Strategy

VOD – Power to attract CustomerC.

IPTV Subscribers get more satisfaction with VOD Programming in addition to the Linear Channel service.

Power of SVOD Theme menu Programming

• Essential service for the basic subscribers• Programming with On Air Promotion makes

effective attraction

☞ The data shows the update for the theme

programming works effectively for a week.

※ Source : SKB(Btv) AGB Nielson Korea (Cable TV), May 2008

• Essential service for the IPTV basic subscribers• SVOD maintain more stable frequent use than

Linear Channel Service

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23

Btv

Cable TVKids Programs

TV Drama series

TV Drama Series

0

20

40

60

80

100

120

140

0

100

200

300

400

500

1/28 1/30 2/1 2/3 2/5 2/7

Total 3D Special Lunar Year

10

2. IPTV Business Strategy

VOD - Additional RevenueC.

Transactional VoD Programming

• Setting the early window by the collaboration with the Contents Providers

• Premier service which runs the title simultaneously with the theater

• Packaging the contents Premium Subscription VoD Product

☞ Balance of SVOD, TVOD, and Premium SVOD window will maximize the revenue, preventing the latent complain of subscribers

VoD Programming of IPTV makes more revenue than the other media for Particular Transactional VOD and Premium Subscription VOD base.

Event Title: Perfect Guide to Spiderman3

Event Promotion Period: 2007. 4. 25 ~ 2007. 5. 09

Prize

1st Prize(5 persons): Spider-man3 Props

2nd Prize(20 persons): Spider-man3 Souvenirs

3rd Prize(200 persons): 2 Spider-man3 Movie Tickets

Electric Ticket will be provided. Only Spider-man3 movie can be reserved

Spider-man1

Spider-man 2

Spider-man 3 Trailer, TV Spot, Making Film, Interview, etc.

Spider-man Animation, Episode 1~13 (30m/each) / Animation Trailer

2. IPTV Business Strategy

VOD – Revenue ContributionC.

Video on Demand service is the most competitive function for IPTV platform at its early stage comparing to the other TV media including Cable TV, Satellite TV.

<Revenue Structure>

Subscription Fee

STB Rental Fee

Interactive Contents

Ads.

VoD

Shopping

53%

21%

12%

1%

3%8%

etc 3%

☞ VOD takes the highest portion in the revenue structure except the subscription fee.

<BCG Matrix>

☞ VOD makes the revenue easily and steadily at

least for the first few years more than any other

services of IPTV do.

?VoD

Growth rate

Revenue Portion

Basic Subscription

Interactive Contents

12

2. IPTV Business Strategy

Interactive Service D.

26 different types of Interactive service regarding info, game and various entertainment through strengthening the Link service.

Participation Event

• Multi-Broadcasting of World Cup, Commentator selection service and Score Quiz event etc

☞ Linear channel - VOD - Commerce etc

Interactive linked Service

Interactive Games

• Customer regards Game as the Value added Service on TV Platform

• Game Developers participate proactively considering IPTV as the additional market

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2. IPTV Business Strategy

AdvertisementE.

“Personalized” TV service

Advertisement is evolved into interactive pattern from the conventional download method.

Selective Target Ad Interactive Commercial

• Planning Event Customer Participation

• Link advertisement with mobile

☞ From Unilateral contents category targeting

To the recommended advertisement

Ad-Agency Geographic

Population Time

Household Age

Channel

Broadcasting companies

Target Analysis

Potential Target

Ad-Server

14

2. IPTV Business Strategy

CUG Service – MeritF.

CUG service helps the followings.

○ Spending too much time on employee education?

○ Need a place for your own subscribers or group?

○ Need a place for promotion or advertisement?

○ Want to sell the product to your own group?

○ Need a communication tool between subsidiaries?

15

2. IPTV Business Strategy

CUG Service – What to ServiceF.

Created to share the menu for the Closed User-Group(companies and closed communities), providing their own programming management through IPTV

CUG Advantage

Independent Linear channel + VOD operation with competitive price

Creating new Biz Models (Commerce, Advertise, Education etc)

B TV server

STBTV

CUG + Btv service

CUG only service

STBTV

Information

Notice

Promotion

Contents

Linear Ch

16

2. IPTV Business Strategy

The contents provision time was shortened by the atomization of system and the

automatic distribution is available through the opening of the CMS system to contents

providers and more contents are provided.

[CMS]

[Encoding Server] [Inspection Server] [H/E]

[File-Distribution System]

MPEG2

H.264

[Material]

[Encoding Automation System]

[CDN]

IDC

Upload

File

synchronization

XPG

distributionContract

META

InfoProgramming Acquisition ingest Encode DRM

Inspection/

Backup

Operation

InfoAs Is

To Be Linking

[Open Contents Operation Process]

☞ Contents providers are able to register their own contents through CMS and Encoding tools

CUG Service - Contents Operation SystemF.

17

2. IPTV Business Strategy

Education IPTV service brings the entertaining education opportunities to the Public

school and Home. IPTV service with mobile and web service enables the seamless

learning.

EducationG.

Parents

Public School Private Institute

Students

Homework

Monitor for the study/ location

Teaching Material

Leisure time useGroup Study

Long-distance lecture

Mobile Education

18

3. Future of IPTV Business

How to cope with the cost of Content, Set Top Box, and SAC affects to swift expansion of IPTV business as the best TV media.

<Cost Structure>

What to innovateA.

STB

Flat Fee

Excessive MG

Contents SAC

1 exclusive Provider

M/W dependen

cy

Memory Capacity Burden

No User contents

Hurdle for New

comer

Saturated Internet market

Hurdle for Nscreen

☞ N-screen service spreads SAC to the

diverse business and decrease the

dependency to the STB

Open Ecosystem

N-Screen Platform

☞ Open Ecosystem enhances the

distribution of the users, which increases

the customers’ satisfaction and decrease

the dependency to the Major contents

owner

19

3. Future of IPTV Business

Open EcosystemB.

TV Service by the Consumers’ ParticipationPladucer

Person

Social Club

Mall, Company

Establish Integrating Platform

Storage

Payment

System

Auto

Transcoding

Contents Management

System

Distribution

Live SystemCommunication

Tool(Bulletin Board)

1) Renting Platform 2) Contents Market

With the strategy to increase the user’s proactive participation, IPTV will get more active contents transaction

3) Programming Strategy for Genre/Community

Concept

▶ IPTV provides new space for direct trading of contents

20

SK broadband is expanding IPTV service from TV to N-screen service as the smart media platform with the collaboration of SK affiliates.

Cyworld (on Service)Melon (on Service)

• Btv supplies “Cyworld” the famous

community web-service to Btv

subscribers on TV base

• Btv supplies “Melon” the famous

Mobile music market of SKT to Btv

subscribers on TV base.

N-Screen StrategyC.

3. Future of IPTV Business

TV+STB/ Built in STB

21

Open Ecosystem

PC

GameConsole

MobilePhone

To Be ModelD.

3. Future of IPTV Business

To expand the business, IPTV shall be considered a part of “Smart media” more familiar to the consumers, and will take the open ecosystem the consumers will participate proactively

Contents Provider User

Pad

N-Screen Platform

IPTV as Smart media

Platform

22

IPTV is evolving as

The Eldest Brother

of Smart Media

Thank you