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Conclusions: broadcasters can play an important role in Convergence 3.0

Conclusions: broadcasters can play an important role in Convergence 3.0 . Supplying high quality content which users can easily access Help network operators secure investment in new broadband networks Contributing to standards and protection for children and other vulnerable groups.

JasminFlorian
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Conclusions: broadcasters can play an important role in Convergence 3.0

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  1. Conclusions: broadcasters can play an important role in Convergence 3.0 • Supplying high quality content which users can easily access • Help network operators secure investment in new broadband networks • Contributing to standards and protection for children and other vulnerable groups

  2. Broadcasters’ approach to the internet: three phases Stage Broadcasters’ use of the internet Phase 1: Incremental A minor supplement to the things they were already doing Phase 2: Strategic Creating initiatives to exploit the internet as a new medium in its own right Phase 3: Transformative Recognition of the new opportunities provided by high capacity broadband We are now in the early stages of the ‘transformative’ phase

  3. So far, broadcasters have had a positive effect on internet development, although the scale is hard to quantify • Promotion • Providing rich content and shared resources • Raising awareness and encouraging digital literacy

  4. 1 2 3 8 12 18 YouTube channel rank 2059 3747 191 26 820 286 No. of videos uploaded 117 87 60 45 31 24 CBS Universal NBC RCA Warner NBA Music Records Quality content still hugely important • Consumers clearly value professionally produced quality content No. of views up to June 2007 (millions)‏ Source: YouTube

  5. Securing trust and confidence online: traditional broadcasters are well placed to help Question asked: “Please indicate the top three media sources you depend on for information on these topics” TV Newspapers Magazines Internet Rank of the internet News 91% 63% 10% 16% 3 Business News 40% 36% 8% 13% 3 Sports News 62% 42% 6% 11% 3 Source: Forrester, Q2 2006

  6. High-speed broadband infrastructure will require significant investment Proposed broadband infrastructure investment by country 2007 2006 2007 2008 2010 2008 2010 Target year 95% 80% 75% 62% 50% 46% 28% BelgacomBelgium DTGermany SBCUSA VerizonUSA KT Korea HKBNHong Kong NTTJapan Target homes (millions)‏ 11 2 16 20 12 1.8 47 Investment planned €3bn €300m €3.4bn €6.7bn-€8bn n/a €100m €37bn Technology FTTN FTTN FTTN FTTH FTTH FTTH FTTH Source: Capgemini

  7. Promoting consumer and citizen welfare • Three broad suggestions in developing policies • Encourage competitive markets (lowering entry barriers and ensuring that consumers are sufficiently well-informed to make effective choices)‏ • Define and safeguard the public interest in the new convergent world (self-and co-regulation)‏ • Encourage broadcasters, other content owners and network operators to find ways sharing risks and rewards

  8. Aims of the report • This an independent study which examines: • The role that broadcasters have so far played in the development of the internet; • The challenges and opportunities ahead, as convergence progresses; • How broadcasters and the internet can work more closely in future; and • The key policy issues for debate. • This presentation contains the provisional findings

  9. The traditional broadcasting model differs considerably from the online world Broadcasting Online One-to-many Many-to-many Linear Non-linear Built narrative content Interactive and participative Geographically constrained Global Regulated in public interest Broadly unregulated Zero marginal cost per user and an established distribution infrastructure Zero marginal cost per user but likely to require significant investment in infrastructure However, these differences are reducing as we move towards a more converged communications world

  10. But the internet has already offered significant scope for an extension of broadcaster activity • Scale and freedom from geographical limitations • Digitising (and monetising) the content archive • New opportunities to deliver more specialist content in a commercially viable manner • Increasing the richness and depth of broadcast content • Building a stronger, more participative and more loyal audience • Reducing costs

  11. Broadcasters’ use of the internet can be described in three phases Stage Broadcasters’ use of the internet Phase 1: Incremental A minor supplement to the things they were already doing Phase 2: Strategic Creating initiatives to exploit the internet as a new medium in its own right Phase 3: Transformative Recognition of the new opportunities provided by high capacity broadband We are now in the early stages of the ‘transformative’ phase – many broadcasters are now using third party platforms, such as YouTube, to distribute their audiovisual content

  12. So far, broadcasters have had a positive effect on internet development, although the scale is hard to quantify • Promotion • Television is still, by far, the most dominant medium – time spent consuming television is 8 times higher than time spent online • Providing rich content and shared resources • Funding, talent, production resources, etc. • Raising awareness and encouraging digital literacy • Particularly true for some specific demographic groups The importance of information and entertainment in driving internet take-up suggests broadcaster influence has not been trivial

  13. In many countries broadcasters are already leveraging their brands to build significant online presences The most popular European broadcaster internet sites ordered by country ranking Internet property Country Ranking among top 100 web properties % Reach (Jun '06)‏ % Reach (Jun '07)‏ Increase of reach (%)‏ BBC Sites UK 5 55.3 59.6 4.3 DR.DK Denmark 7 36.8 33.2 -3.6 Publieke Omroep Netherlands 7 33.0 33.4 0.4 MTV3.FI Finland 7 45.5 35.3 -10.2 YLE.FI Finland 8 30.9 30.9 0.0 TV2 Danmark Denmark 8 32.0 31.4 0.6 V2 Sites Norway 9 n/a 33.6 n/a ORF.AT Austria 10 22.2 22.0 -0.2 VRT Sites Belgium 11 18.9 19.4 0.5 NRK.No Norway 13 27.0 28.4 1.4 Groupe TF1 France 16 19.4 23.8 4.4 SRG SSR idée Suisse Switzerland 19 15.9 17.3 1.4 Sveriges Television Sweden 19 20.2 18.6 -1.6 Source: EBU

  14. And in many countries, broadcasters are developing increasingly sophisticated online offerings Country Broadcaster Video streaming On demand video downloads Podcasts Mobiles RSS Communities & forums User-generated content Business Model UK BBC Yes throughout IPlayer – BBC programming only, 7 days after airing Yes, large radio section Yes through-out Yes throughout Yes for most sections Yes Free, licence fee supported ITV Yes throughout – although clips only On demand for 30 days after airing Yes, minimal Yes Yes Yes Yes on ITV Local Advertising Channel 4 Yes throughout – although clips only 4OD – variable availability Yes, radio section & T4 Yes Yes Yes for most sections Yes Advertising US NBC Yes, including full-length episodes Yes, from MSNBC Yes Yes, from MSNBC Yes Yes, through video uploads Advertising ABC Yes Yes Yes Yes Yes Yes Advertising CBS Yes, including full-length episodes Yes Yes Yes Yes Yes Advertising Italy RAI Yes Yes Yes Yes, news and other ‘web channels’ Yes Advertising Netherlands NED 1(part of NPO)‏ Yes Yes Yes Yes Yes Free, licence fee supported Sweden SVT Yes, including full length episodes Yes Yes Yes Yes Free, licence fee supported Brazil Rede Globo Yes Yes Yes Yes Yes Yes Yes Advertising Japan NHK Yes Yes Yes Yes Advertising Source: Broadcaster sites and Human Capital analysis

  15. 46% Information 43% 28% Communication 20% 22% Keep up with technology 26% 20% For the Children 20% Owners 16% Entertainment Intend to get 13% 12% Shopping/ banking/ booking 12% Recommended by friends or family 11% 18% Information and communication are the key drivers or internet take-up The drivers for internet take-up Source: Ofcom, 2006

  16. Looking ahead, we are entering a new “transformative” phase • High capacity broadband makes possible the delivery of high quality long-form audiovisual content • Web 2.0 • Changing user/content relationships • Increasing democratisation • The increasing importance of search and content navigation • New business models • Content provision • Paying for the infrastructure

  17. The broadcasting value chain is being transformed The internet Ideas Talent & Talent & Talent & Talent & Producer Producer Producer Producer Producer Bundler Bundler Bundler Bundler Bundler Distributor Distributor Distributor Distributor Distributor Devices Devices Devices Devices Gateway Gateway Gateway Navigation Navigation Navigation Audience Audience Audience Audience Resources Resources Resources Resources • The content value chain, previously controlled by a small number of broadcasters, has been opened up to anyone with an internet connection and an idea • In an online world, equipped with powerful search tools and user recommendations, bundling is arguably much less important • Distribution, navigation and consumption are all made possible through the internet

  18. New online services have emerged, with richer content and greater functionality Site Functionalities User-created blogs, including text, pictures and hyperlinks User-created ‘encyclopaedia’ Photo sharing Social networking, allowing uploaded music, text and pictures Video sharing Live and pre-recorded video broadcasting allowing captioning and insertion of pre-recorded video packages Live and pre-recorded video broadcasting Live and pre-recorded video broadcasting

  19. And whilst television remains hugely popular and important, there has been clear migration online Time spent using communications services 2006 -3.6% -2.0% 158.0% -8.0% 58.0% change2002-2006 250 216 200 170 150 minutes per day per person 100 50 36 6.9 3.7 0 television radio internet fixed mobile Source: Ofcom

  20. Millions of subscribers Hostnames 100% 137.5 70 Annual growth (Q1 2006 to 2007)‏ 125.0 60 112.5 80% 100.0 50 87.5 60% 40 75.0 62.5 Active 30 40% 50.0 20 37.5 20% 25.0 10 12.5 0 0% 0 UK Italy 1995 1997 2005 2007 1999 2001 2003 USA India Spain Brazil South China Japan Russia Turkey Poland Mexico France Canada Sweden Belgium Australia Germany Netherlands Both internet ‘reach’ and provision of content online continues to grow at considerable rates Broadband subscriptions and growth amongst top countries Growth in the volume of hostnames and active websites Source: Point Topic Source: Netcraft.com

  21. In this third phase, broadcasters could, if they meet the challenge, have a greater role to play • Broadcasters can help drive further internet development by: • Supplying high quality content which users can easily access • Creating clear expectations for users about the nature and reliability of available content; • Providing the vital roles of aggregator and navigator; • Helping later adopters to make sense of the internet. • Helping the internet to adjust to a world in which it will have to pay more attention to citizens’ concerns about standards and protection for children and other vulnerable groups. • Help network operators secure investment in new broadband networks

  22. 1 2 3 8 12 18 YouTube channel rank 2059 3747 191 26 820 286 No. of videos uploaded 117 87 60 45 31 24 CBS Universal NBC RCA Warner NBA Music Records Quality content is still hugely important, both for consumers and in setting standards • Consumers clearly value professionally produced quality content No. of views up to June 2007 (millions)‏ • The economics of programme production still suggest that a high production value programme needs mass audience exposure on a broadcast channel to ensure a return on its upfront investment • Although it is possible to create content specifically for the internet, the promotional and marketing costs will be prohibitive in most cases Source: YouTube

  23. Securing trust and confidence online is also crucial, and traditional broadcasters are well placed to help • A GlobeScan survey revealed that the most trusted global news brands tested include the BBC (with 48% across the 10 countries saying they have a lot or some trust) and CNN (44%)‏ • Consumers, particularly for news and factual content, clearly place most reliance on traditional broadcaster sources Question asked: “Please indicate the top three media sources you depend on for information on these topics” TV Newspapers Magazines Internet Rank of the internet News 91% 63% 10% 16% 3 Business News 40% 36% 8% 13% 3 Sports News 62% 42% 6% 11% 3 Source: Forrester, Q2 2006

  24. High-speed broadband infrastructure will require significant investment Proposed broadband infrastructure investment by country 2007 2006 2007 2008 2010 2008 2010 Target year 95% 80% 75% 62% 50% 46% 28% BelgacomBelgium DTGermany SBCUSA VerizonUSA KT Korea HKBNHong Kong NTTJapan Target homes (millions)‏ 11 2 16 20 12 1.8 47 Investment planned €3bn €300m €3.4bn €6.7bn-€8bn n/a €100m €37bn Technology FTTN FTTN FTTN FTTH FTTH FTTH FTTH Source: Capgemini

  25. Broadcasters may work with network operators to help secure this major infrastructure investment • Enders Analysis estimate that the total cost of deploying fibre to the home (FTTH) to 90% of UK households would be €14bn • Network operators may have to shoulder the burden of investment, but are not certain of the returns • Broadcasters may be able to help by agreeing innovative deals with networks, to share risk and rewards

  26. There will also be important roles for policymakers in promoting consumer and citizen welfare • Over regulation will stifle growth and innovation; under regulation risks a wild-west-style ‘free for all’ • We assert three broad suggestions in developing policies • Encourage competitive markets by lowering entry barriers and ensuring that consumers are sufficiently well-informed to make effective choices • Define and safeguard the public interest in the new convergent world drawing on aspects of self-and co-regulation, rather than transferring old style broadcasting regulation to the broadband world • Encourage broadcasters, other content owners and network operators to find ways sharing risks and rewards

  27. As a result, we argue that there clear consumer and citizen benefits from a symbiotic broadcaster/internet relationship • There have already been some impressive success stories as broadcasters begin to recognise the opportunities of the internet • As we move into a more converged media and communications world, the future development of broadcasting and the internet will be increasingly closely linked • Broadcasters and leading internet players depend on, and will benefit from, working closely with each other

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