Agenda

3. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

4. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

5. “Content” versus distribution News Objective journalist News organization Information Broadcaster/ publisher Empowered consumer consumer Entertainment Production companies TV channels Broadcaster Scripts/ ideas Source Filter Aggregator Distributor

6. Empowered consumers • Seek out what they need • Create and connect to communities of like-minded individuals • Get frustrated by seemingly arbitrary boundaries (geography, payment mechanisms, laws, etc.)

7. Empowerment cascades down the four C’s Creators Critics Collectors Couch potatoes

16. Media is an extreme example, but there are others • Medicine • Pharmaceuticals: Knowledge of generic alternatives • Doctors’ diagnoses • Hypochondriacs’ diagnoses! • Commerce • Comparison shopping • Travel • Trip advice, planning and booking

17. But . . . how widespread is this behavior? • The good news: • It’s only advanced users so far – only 4% of the population are creators and less than 9% are critics • Most consumers aren’t as driven about their entertainment (i.e., they have lives!) • The bad news: • As technology becomes as easy as turning on the TV, more consumers will engage – watch IPTV’s progress carefully • Many vested interests WANT this – Google, telcos, device manufacturers Plus, you need to factor in a new generation of consumers

18. Millennials (born 1980 to 2000) fuel social media

19. European consumers: behavior Hours per week: Regular online activities: Base: European consumers (1st graphic), online consumer (2nd graphic) Source: Forrester’s European Consumer Technology Adoption Study Q2 2006 Survey

20. European consumers: device ownership Base: European consumers Source: Forrester’s European Consumer Technology Adoption Study Q2 2006 Survey

21. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

22. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

23. “Content” versus distribution News Objective journalist News organization Information Broadcaster / publisher empowered consumer consumer Entertainment Production companies TV channels Broadcaster Scripts/ ideas Source Filter Aggregator Distributor

24. Making the home PC sexy to use again Before social media: After social media: • Productivity • Banking/eCommerce • Games • Education • Communication • Global communities • Creative engagement • Instant access to entertainment

25. And the PC is starting to evolve

26. Making the home PC sexy to use again Before social media: After social media: • Productivity • Banking/eCommerce • Games • Education • Communication • Global communities • Creative engagement • Instant access to entertainment BUT, it is still a PC and still in a spare room or a home office

27. Social, connected devices Sony Mylo Microsoft Zune Nintendo DS Sony PSP

28. Sophisticated TV devices driving consumer empowerment

29. Rich interaction: next-generation game consoles Wii PlayStation 3 Xbox 360 Around 8-9million were online around the globe at the end of 2006

30. The telco rush to video: BT / AT&T / Glowria

31. Realistically, there are still hurdles to overcome • Blanket coverage for infrastructure • Broadband • Wi-Fi • Ability of non-PC devices to break out of niches • Lack of standards and manufacturer cooperation • Business models are still unclear

32. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

33. Agenda • When empowered consumers attack! • The future media device: The PC or not the PC? • How are media companies dealing with this?

34. Not well in general…

35. BSkyB + myspace

36. Warners, Universal etc

37. Fighting back with HD services • New TVs and new physical media allow delivery of better experiences • Increased production in HD (now that the costs have dropped and the tools have improved) • Still not possible (easily!) via IPTV or other streaming mechanisms • Creates demand for more back catalogue releases

38. Asset Management • Digitisation of catalogues • Trancoding for different devices and channels • Allows global production workflow

39. The endgame: The video delivery long tail TV Advertising Subscriptions TV, DVD Buy, rent Advertising DVD, IP Rent Advertising IP Advertising Niche programming, Deep catalog, Extended material Movies & VOD Broadcast & Cable Personal programming Views Titles

40. What should media companies do? • Don’t get trapped in a pure ‘broadcaster’ role • Could easily be displaced by IPTV, Google or other new delivery technology • Talk to key technology rain-makers: Apple, Intel, Cisco, HP, Microsoft, Google • Don’t assume advertising revenue or government subsidy will remain unchanged • Investigate multiple, merged revenue models • Focus on IP and building direct consumer relationships

41. Summary • Social media creation is taking off: the first wave of empowered consumers is already among us • The PC may be the primary device today, but other devices will play a key role in the future • Media companies must embrace these new technologies and consumer needs to survive in the long term

42. Thank you Paul Jackson +31 20 305 4882 pjackson@forrester.com www.forrester.com