Networked Media

1. Networked Media Personal media experiences any time, anywhere Aurelio Severino Marketing&Strategy, Ericsson Italy

2. Networked mediaOne common market for media and telecom industries Networked media Mobile 3G networks Digital content Telecom Media Fixed broadband networks Video Games Print Music TV Radio Personalization “Everything’s networked. You want to talk to somebody or talk to another machine, you want to see music and video games and content and data and services” - Howard Stringer, CEO Sony

3. An evolved user experience

4. Networked media opportunityA rapidly maturing area A million downloads a month of SeeMe TV (3UK, launched in Oct05) 57% of US teenagers create own content for the net (Pew research reported by Guardian) >210 million homes have BB connection >2 billion mobile users More than 50M 3G enabled users 1 million videos sold in 20 days (I-Tunes, Apple, Nov05) >335 legal music download stores, up from 50 two years ago (IFPI:06 Digital Music Report) 1.82 billion paid-for WAP page impressions (during Mar-05 in UK, MDA) 1 million video streams in 10 days (Dec-05, BSkyB and Vfe UK) “There is a demand out there. How big? It's too soon to say. But it's for real, and it's going to be with us for a long time” - Bob Wright, chairman of NBC Universal

5. Example: TV / SMS voting Example: ”inNw?” campaign Networked media benefits (QoS) Personal Interactivity Payments Niche interests Viral distribution Networked media Feedback loop 24/7 “Certain costs borne in the physical world such as manufacturing, returns and pick-pack-ship are not relevant for digital products. For physical products, these costs are in the range of 15% to 18% of sales”(EMI, annual report 2005)

6. High interest for new media servicesMusic download is the #1 service for the YEA group Music download service Video telephony Multimedia/picture messaging Browsing the internet Positioning service (like gps) Photo editing Share a picture while talking E-mail Music videos/movie trailers Walkie talkie anywhere TV in your mobile phone Game download service Share a video clip while talking Personal homepage Information updates YEA (Young Early Adopters) Instant product info Total 0% 10% 20% 30% 40% 50% 60% Source: Ericsson Consumer Lab Global 10 Survey 2005 (>13.000 respondents in ten countries)

7. Recent networked media study • UK-based analyst group Analysys supported us to evaluate the revenue potential of the networked media market • Global summary • 2005 – 2011 scope • Bottom-up and top-down forecasting as well as interviews

8. 120 100 80 billions) 60 Networked media market revenues (EUR 40 20 0 2005 2006 2007 2008 2009 2010 2011 Western Europe North America Developed Asia Rest of World Networked media opportunityOver EUR100 billion by 2011 Figure 3: Networked Media market revenues by region, forecast 2005 - 2011 [Source: Analysys, 2006] “In 2005, the networked media market was valued at just under EUR20 billion, but by 2011, overall market size will grow to EUR107 billion” “Included in these figures are connectivity, substitution, volume increase and additional revenues – related to home and mobile screens”

9. “By 2011, total networked media revenues will account for 11% of total media market revenues” “We would also expect this share to continue increasing after 2011 based on current growth rates.” “Note that the networked media market grows at a much faster rate than traditional media (35% versus 3.5%) during the 5-year period” 1,000 900 800 700 600 Total market revenues (EUR billions) 500 400 300 200 100 0 2011 Traditional media Networked media 11% of all media revenues by 2011 Figure 4: Traditional v Networked Media market revenues, forecast 2005 - 2011 [Source: Analysys, 2006] Average annual growth rate of 35% Average annual growth rate of 3,5% *Networked media includes IPTV, mobile TV, mobile music, online music, mobile ringtones, mobile gaming, online gaming, online video, mobile radio, online radio, mobile published information, online published information

10. “Today, established markets of networked music, gaming and publishing account for the majority of networked media revenues” “By 2011, networked television and gaming will be the largest revenue sources” “The rapid IPTV and mobile-TV growth give networked television the highest growth rate (62% CAGR) of the six networked areas” 120 100 80 60 Total market revenues (EUR billions) 40 20 0 2005 2006 2007 2008 2009 2010 2011 Networked Television Networked Music Networked Gaming Networked Video Networked Radio Networked Print Multiple content types Figure 7: Networked media market growth by type, forecast 2006 - 2011 [Source: Analysys, 2006]

11. “There are a number of services where the term ‘media’ doesn’t directly apply, but which could be considered as part of the networked media market depending on the definition” Potential for more networked media services Imaging/photo Etc. Gambling Non-entertainment

12. “Increased consumption of networked media will be the main component of growth (around 60% of networked revenues by 2011)” “This is due to the fact many networked services will be innovative in nature” “Additional services, such as advertising, unified messaging, short-format video and PVRs will contribute increasingly to overall networked media revenues” 120 100 80 billions) 60 Networked media market revenues (EUR 40 20 0 2005 2006 2007 2008 2009 2010 2011 Connectivity revenues Substitution Volume increase Additional Main growth from increased usage Figure 8: Networked Media market revenues by source, forecast 2005 - 2011 [Source: Analysys, 2006]

13. “They have no CRM or other structures set up and tested that would be relevant to our customers. The content owners/producers would do better to leave this space to the operators” Scepticism amongst both media and telecoms organisations Media companies on telcos Telcos on media companies “(Well known MNO) see themselves as similar to a shopping mall. However it is not easy to see how operators can really carve themselves a niche in this market as they are not retailers and have little or no experience or understanding of retailing” “The operator has a personal relationship with the end-user. A broadcaster, etc., generally does not. They may feel they have one, as the content owner, but they have little or usually no direct experience with consumers” “Content providers view operators as pipe owners" “Operators control the relationship with the end-user but we are always very involved, especially the brand police & the marketing department” Source: Networked media project interviews, Analysys Research, 2006

14. Networked media challenges • Creating successful business models • that provide maximum benefits for both media and telecom industries • Understanding and satisfying (especially young) users • with intense and interactive media sessions • Fulfilling the promise of one experience • where all devices with TV, PC and mobile seamlessly interwork Value chains Pricing models Managing digital rights Maximising involvement Segmentation Maximising uptake Solution convergence Multi-service handling Multi-format handling

15. Device / client strategy Content aggregation Strategy? Solution? Consumer & Enterprise Lab Reach? Complete solutions Hosting Consulting Content management? Rights clearing? Established relations Mobility World Segmentation? Billing? An industry in its makingEricsson takes an active role Mobile 3G networks Networked media Digital content Telecom Media Fixed broadband networks