Broadcasting & Convergence

1. Broadcasting & Convergence Business, Technology, Market, and Regulatory Policies Emeka Mba, DG, NBC November 13, 2015

2. Outline of Presentation • Understanding terms • Global trends • Nigerian media & entertainment market • Review current trends • Understanding Market structures • Regulators Dilemma • Q & A

3. Nigeria Facts • Population: over 170m+. • Another 20+ million Nigerians live abroad, one of the world’s largest diasporas • Largest Economy in Africa; GDP - $514.7Billion; • Highest number of TV/VCR penetration in Africa of 26 million TVH • Most active media/broadcast sector with over 400 TV Radio stations • The 3rd largest movie producing nation after India and Hollywood. • 90 million plus mobile phones; 67 million Internet users • With 55 per cent of Nigeria’s 130 million population being accounted by youths it requires no extra effort to see that the entertainment industry stands a great future.

4. A step back …Evolution of TV • Connected TV • VOD • Apps • Content discovery • Enhanced TV • PVRs • Interactive services • Digital TV • Satellite • Cable • DTT / Freeview • Analogue TV • Limited TV channels • No TV • Undeveloped markets • 9 • Source: Inview Ltd.

5. Changing dynamics of the global broadcast industry

6. The Nigerian television industry is in the middle of a dramatic transformation The pieces scattered all over the place, are starting to come together. Significant pieces of the new broadcasting ecology include: Impact of Digital on definition of TV content, creation and distribution Restructuring the advertising market, through credible audience measurement Reviewing current anti- competitive practivces in relation to content and wholesale of premium local & foreign tv content The role of Public broadcasting: Restructure NTA, attached concrete public programming mandate. Impact of Digital on Broadcast Industry • 8

7. Disruptive, and Evolutionary: Digital technology is an insurgent dimension to the business of media New broadcasting value chain segmented into two: broadcaster and signal distributor and multiplexer New services, and new business models • New Digital Broadcast ecology • 4

8. Emerging Opportunities Nigeria has an estimated 26 million TV households (TVHH), and less than 20% have access to digital TV via DSTV, Mytv, ACTV, Consat, NTA Startimes, GoTV, etc. Impact of Digital transition would have significant impact on the broadcasting business value chain: TV content creation: more channels and content Aggregation Platforms: Multichannel video network operators Distribution: Platform & Set top boxes Advertising market, through credible audience measurement Connected TV: Increasing internet access via digital TV Set top Box, hard bundled with Wi-Fi

9. What is happening now: Current Status STB Strategy: What we are doing The Commission has introduced a National Common Set Top Box System based on the Inview middleware and Nagra CA technologies which will  provide a platform for the introduction of Conditional Access, Electronic Programme Guide (EPG) and many new value added services, such as; interactive services, interactive advertising, and e-Government services. Additional STB peripherals such as Personal Video Recording (PVR) and Wi-Fi enabling devices will also be governed under these national standards. Channel Strategy The Commission recognises that, a successful digital switchover (DSO), and the rapid free view digital TV (FTV) uptake across Nigeria, is dependent on consumer willingness to acquire a set-top-box (STB). The Commission will consider proposals on a fair, reasonable & non-discriminatory selection process measured against: high quality domestic and international content; great choice of FTV content; channel appeal across a range of demographics; and mix of new/original programming and library content

10. New Digital Broadcasting Value Chain • Network Service Operator/Broadcast Signal Distributor • A licensed entity that builds, owns and operates networks and transmitter for the distribution of digital broadcast signals associated with the multiplex • FreeView NG: Multiplex Operator • Customer Facing: A licensed entity that aggregates/packages, operates and markets a content offering on a digital multiplex and that decides on a Conditional Access & SMS • Local TV channels/other services • Content Provider: Broadcaster • A licensed service entity provisioned on a digital broadcast multiplex that has editorial responsibility for content ( audio, video, and or data) offering in that multiplex • 8

11. Broadcast Signal Distributors: x2 • ( Based on geographical exclusivity vs. Fixed Mux assignment • Universal CA/EPG/ Middleware • New Digital Terrestrial TV Ecosystem • New DTT Spectrum • 470 – 694 Mhz ( UHF Channels 21 – 48) • # Available 8Mhz mux = 28 • Universal Broadcast Ecosystem: CA/EPG/ Middleware • Rule#1: Must pay & carry for Local originated Channels • Rule#2: Carry ratio of 50% NG Subscription Channels • Multi-channel Video Network Providers (Multi Tenants Operators)VOD etc. • *Subscription TV channels: City/Regional & National • CCNL (ACON) Freeview Nigeria • * Local TV Channels: Max12 per city • *” Regional” Channels: x 6 per region • *National Network Channels: x 20 • DTT Pay TV Self Carry: • NTA StarTimes • Details GoTV • 7

12. Digital TV License Categories • Subscription Pay Television Broadcasting License • National • Regional • State/City • Free View Terrestrial Television License • National • Regional • State/City • Signal Distribution License • National • Pay Television Content Services • Niche Thematic Subscription TV License • Nationwide Subscription TV License • Temporary Subscription TV License • 9

13. NBC’S VISION FOR TELEVISION IN NIGERIA • Wide offering of diverse channels • Regional / local coverage • Segmented / thematic offering • FTA / Pay • Digital Nigeria • Efficiency in use of spectrum • SFN • Digital Dividend Spectrum • Interactive services • T-Government • T-Banking • T-Voting • T-Gaming • Increased Revenue • Digital Access Fee Collection • Advertising Measurement • Set top Box Manufacturers • Income from DD auction • Cross platform connectivity (PC, Mobile, PDA) • Improved image and sound quality • 10

14. Benefits of DSO More local content (news, sport, etc) : increasing social inclusion More jobs: More involved in TV production: est 10,000 new jobs to be created from this area , STB Manufacturing: 5000 new jobs STB Middle ware App development: 1000 new jobs. Greater advertising market, stimulating growth in local businesses Better overall viewing experience

15. Media & ICT Important to distinguish between the medium and the delivery mechanism, ie delivery technologies: Technology especially digital will continue to impact on the delivery mechanisms. They will come, become obsolete and be replaced. The content: music, films etc will always remain.

16. Understanding Convergence • Convergence: delivery of similar services – video, telephony, data, over same transmission platform. • Types: • Technological: due to digitization of broadcasting, telephony, and IT networks • Industry: mainly due to corporate or structural alliances across different sectors. • Market: introduction of value added multimedia services

17. Existence of Several Bottlenecks likely to hinder development of new services • Regulation of Spectrum • Regulation of Content Digital vs. Analogue: New Markets and Competition:

18. Broadcasters • Consumers • FTA • Content • Infinite • CHOICE • Schedule Free • Interactive • Pay Per View • Pay per Channel • Limited • PULL • Push Impact of Convergence • Control

19. Convergence: impact on regulations in Pay television • Regulatory Dilemma: balancing the need to employ regulations to achieve a fully competitive multiplatform market, and consumer protection, against the need to protect and promote investment and competiveness in the sector • Regulation of Content: Protect Consumers and stakeholders in new converged environment. • Regulation of Market Bottlenecks: encourage development of new multiplatform and multichannel services. • Regulations of Media Diversity: ensure media diversity and access by consumers to such wide range of services.

20. Market Dynamics • The market for audio-visual contents in the pay television provides two keys sides: • Demand side: where platforms (Dstv, Hitv, Mytv) need to offer the widest range of bouquets that include the following: • All major FTA channels, • Thematic and specialist channels, and • Premium channels • Offer Side: Broadcasters have a need to extend to as many distribution channels, ie platforms as possible to maximise • Subscription revenues • Advertising revenues

21. Content Aggregator/editor • Editorial Responsibility: Acquisition and aggregation of Content: E.g. TV programmes/schedules • Customer facing: responsible for managing the consumer offerings/sales package, and relationships with customers/viewers • Platform Operator • Network Operator Content Regulation in a digital environment • Responsible for Network capacity sales and management: Deals with scarcity and service quality • Understanding and defining the new value chain structure • Analyse the relationship between the players at different levels of the value chain

22. Market Bottlenecks • Access to Content: acquisition of programming content and certain premium events is vital to ensuring market entry and operation of platforms. • Access to Platform: access to EPG and CAS is crucial for content providers to reach the consumers, and ensure service and market success. • Access to Network: access to network facilities is vital when dealing with scarce resources, such as spectrum.

23. Regulating Content Bottlenecks • Access to content • Restriction to content, including premium rights and events hinders the emergence of new services, and platforms, and their ability to compete effectively.

24. Market Features • Exclusivity long term deals are currently the norm for premium content, especially sports • Long term output deals with studios and other content producers, and • Minimum guaranteed rates • Legacy experience with cumulative advantage benefiting existing broadcasters with long history in the market

25. Sasa Vucinic: 2005 Ted Presentation: Investing in a free press.

26. Implications for Regulation • Do not impede convergence if there is no undesirable concentration of market power • Avoid different treatment of competitors • Reduce regulation if competition increases • Reconsider need for regulation when new services emerge • Consider how to treat new substitutes for regulated services

27. Challenges & Conclusion • Industry in transition: These are interesting times for the NBC • Technology will continue to drive change • Over arching government policy on convergence cloudy • Social relevance of broadcasting will increase, and therefore need to apply clever regulations • The market for pay television services will grow as digital spreads. • Regulation alone does not solve problems or build institutions: what is required is creative thought leadership