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Changing TV Landscape

TV distribution and consumption are evolving globally, with new devices and platforms reshaping the industry. Both the U.S. and international markets are experiencing shifts in programming consumption and audience preferences. The rise of connected devices like tablets, smartphones, consoles, and smart TVs is enabling widespread access to content, with increasing demand for diverse programming. Online viewing is on the rise, leading to the emergence of new players in the industry and a greater emphasis on content creation. This transformation is reflected in the revenue mix, production strategies, and global expansion of TV networks. Stay informed about the latest trends shaping the television landscape.

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Changing TV Landscape

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  1. Changing TV Landscape June 2013

  2. Changing Television Landscape • TV distribution and consumption are changing all over the world • In the U.S. and other developed markets, new devices and platforms are leading increased programming consumption • In other territories, more traditional pay television services continue to grow, adding new channels and viewers • Hit shows and formats created in the U.S. are finding a more global audience; at the same time, the market for local programming is thriving The result is an increased demand for new and library content, and programmed channel experiences

  3. SPT Distribution

  4. Connected Devices such as Tablets, Smartphones, Consoles, & Smart TV’s are Enabling Ubiquitous Consumer Access to Content Over the next 4 years, device ownership is expected to grow at a 13% CAGR (1) (2) (3) (4) • Source: SNL Kagan. Number of devices in millions. • Applies to Internet-connected video game consoles used to access professionally produced content. Excludes multiple video game consoles per HH. • Stand-alone set-top boxes including, but not limited to, Apple TV, Roku, Boxee and TiVo. Excludes set-tops integrated with multichannel service • Internet capable TVs and blu-ray units that are connected and used for OTT video. Excludes overlap of devices. • Applies to households using a PC or media server to transfer OTT delivered content to the TV. Excludes households viewing content directly on PC screen.

  5. Connectivity and Devices are Driving Online Viewing U.S. TV and Online Viewing Households (MM) (1) Does not represent cord cutters but applies to households regularly viewing television shows or movies using Internet or over-the-top (OTT) delivery, most online/OTT video HHs in the above graph also subscribe to multichannel services. Source: SNL Kagan, September 2012.

  6. The Emergence of Online Viewing has Created New Players as Consumers Seek Flexibility OTT TV Everywhere New digital networks have emerged taking advantage of the ability to go directly to the viewer without an MSO middleman Traditional MSOs (i.e., cable & satellite) and networks are adapting their services to accommodate online viewing

  7. By Adding Digital Networks to the Traditional “Linear” Channels, There is Greater Demand for Content • Digital networks also create demand for programming that is discontinued on traditional linear networks Broadcast Basic/Premium Cable Internet Services

  8. Global Growth in Television Consumption is Increasing Worldwide Demand for US Content Chart to be updated

  9. Both Traditional Networks and Digital Networks are Spending More on Programming Traditional Linear Networks New Digital Networks Est. Annual Content Spend $2Bn+ $500MM – $1Bn $500MM

  10. SPT Distribution: Growing Buyer Pool International distribution continues to grow given new buyers and opportunities with SVOD and a strong global Pay TV market. The team has continued to build relationships with content buyers both domestically and internationally which is directly reflected in the growing number of SPT customers we sell to International Domestic Source: SPT analysis. Note: Domestic count does not include local affiliates of national networks already included.

  11. SPT Distribution: Shift in our Revenue Mix SPT has capitalized on the shift in consumer consumptions patterns. This is directly reflected in our shifting sources of distribution revenue as well as our new deal structures and partners (ex. Community on Netflix) International Revenue Mix U.S. Revenue Mix Source: SPT and SPHE finance.

  12. SPT Production

  13. Networks are Under Greater Pressure to Distinguish Themselves and Attract Viewers • Original programming has become a critical tool Potential for emphasis to shift

  14. SPT: U.S. Production • SPT has had the most successful production slate in a decade with SPT receiving orders for seven new scripted series. SPT’s increased production slate reflects our success creating original television content to satisfy a greater demand for our product New Series Returning Series Note: Excludes Wheel of Fortune, Jeopardy!, The Young and the Restless, and Days of Our Lives.

  15. SPT: International ProductionBuilding a Worldwide Presence Companies in 13 countries around the world covering multiple regions; Programs aired in 88 countries, 73 languages and counting… Amsterdam Beijing London Cologne Moscow ASIA Paris Rome Culver City Beirut Cairo Hong Kong Miami (Latin America/USH) Dubai Bogota AMERICAS EMEA (Europe, Middle East, Africa) Tuvalu Sao Paolo

  16. SPT Networks

  17. Continued Growth of International Pay TV Universe • Tremendous growth opportunities internationally where Pay TV penetration is expected to grow to 61% by 2016 International Pay TV Subscribers & Penetration CAGR TBD, remove US line Note: Subscribers in millions. Source: Morgan Stanley research as of January 2013. SPT Networks FY16 sourced from FY 2013 MRP.

  18. SPT Networks: Global Expansion SPT is capturing the subscriber growth trend by continuing to expand our channel presence internationally through new channel launches and targeted acquisitions in key growth areas 159 COUNTRIES 804 MILLION HOMES 124 FEEDS 22 LANGUAGES EUROPE & RUSSIA KOREA NORTH AMERICA JAPAN ASIA AFRICA LATIN AMERICA AUSTRALIA

  19. SPT Networks: Adapt or Die • SPT’s broader network strategy also recognizes new distribution platforms and consumer behavior • SPE already owns a premium content OTT digital network with Crackle • Top ad-supported premium content service that is available across all platforms; broader audience reach than several top paid services, including Hulu+ and Amazon • Top ad-supported channel on key platforms (Top 5 channel on Bravia, Blu-ray, and Roku) • Crackle expanding device and territory footprint to capitalize on growth in alternative consumption models • Expanding Reach of Linear Networks • Evaluating direct-to-consumer apps (e.g., AXN Go in LATAM) with cable/sat partners • Participating in existing local TV Everywhere offerings of cable/sat partners (e.g., Singapore)

  20. Conclusion

  21. Sony Pictures Television: Highlights SPT is well positioned to take advantage of the changing TV landscape Global Pay TV Growth • Networks projected to have an EBIT CAGR of 23% across the plan, coming from all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins • International distribution continues to grow given new buyers and opportunities with SVOD and a strong global Pay TV market • Increasing buyers for content as new SVOD (i.e., Netflix) and AVOD (Crackle) services continue to proliferate • Crackle breaking new ground with original production and continue distribution across platforms and global expansion New Distribution Opportunities Increased Demand for Content • Most successful production slate in a decade with SPT receiving orders for seven new scripted series • Currently producing 32 programs for 17 US networks

  22. SPT Embraces Changes An industry leader constantly shaping and adapting to new trends, SPT has experienced significant growth and has become the largest contributor of profitability to SPE Total TV = 60% Total TV = 37%

  23. Q&A

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