NEXT#1 The Three-Screen Challenge Digital Distribution: The Key to a Multi-Platform Strategy

1. NEXT#1The Three-Screen ChallengeDigital Distribution:The Key to a Multi-Platform Strategy Thursday 20th September 2007 Contact IDATE Florence LE BORGNE - BACHSCHMIDT Head of TV & New Media Practice +33 (0)4 67 14 44 43 f.leborgne@idate.fr

2. …From the consumer side

3. A few questions…

4. What are the main concerns of a broadcaster? • Addressing its consumers’ needs • To increase their loyalty • To maintain or even to increase its turnover

5. What are the consumers’ needs? • To access a TV offer… • … more individualised… • … more personalised… • … more interactive • To free themselvesfrom the programming grid

6. 1930 - 1980 1980 - 1995 1995 - 2005 2005 - ... 2010 - ... 1930 - 1980 1980 - 1995 1995 - 2005 2005 - ... 2010 - ... Age of... Commercial Public analogue TV Multichannel Personal TV Egocasting analogue TV digital TV Inform , Help viewers (re) find Maintain audience Channel operator’s Maximise viewing Cultivate , Optimise coverage " their " programmes strategic goal... audience Entertain Production Programming Key activities Assembly Programm access guide Creation / Talent Challenges Controlling Programme supply Appeal and marketing Media brand Cost control and frequencies (control over service offerings name clout ( ability evolution of existing broadcasting rights ) to generate demand ) business model Towards personal TV? Different phases of Europe’s TV industry Source : IDATE, according to Simon Walker BBC Corporate Strategy

7. What are the screens available?

8. A multiplicity of screens… • … inside the households • Example of the French market: on average, 4.4 screens per household Average number of screens per HH Source : IDATE, Use-IT survey 2006

9. Teenagers are well-equipped • Beyond individual equipment, toward the development of a personal equipment • Half of the teenagers have a TV set in their bedroom Personal equipment of Teenagers Base : Teenagers Source : IDATE, Use-IT survey 2006

10. But TV is still the leading screen… • TV still has the lion’s shareAn average French viewer spent : • Around 3h30 a day on a TV set • But only 52 mn a day on Internet Average weekly screen-time (in hours) Source : IDATE, Use-IT survey 2006

11. 35 30 25 Temps Console de jeux 20 Temps PC domicile Temps TV différé 15 Temps TV direct 10 5 0 15-24 25-34 35-44 45-54 55-64 65 and + ans ans ans ans ans et + … even if Internet/PC replaces TV gradually • … but not in the short term! • A generational trend introduced by the youngest • The 15-24 spend less time on TV but more on internet than the elderly • Teens are more inclined to consume recorded and on demand programs Average weekly screen-time by age(in hours) Gaming time PC time – Home TV time - Recorded TV time - Live Source : IDATE, Use-IT survey 2006

12. … and even if mobile screen will complement or compete with the TV set • … but not in the short term! • Interest for mobile TV depends on the knowledge : • Between 2/3 and 3/4 people who have tested the service intend to subscribe • But only 15% to 20% of people who have not tested the service intend to subscribe Interest in the concept of mobile TV Equipment rate in mobile phone by age Source: CNES-IDATE Source : IDATE, Use-IT survey 2006

13. What do consumers expect to find on each platform?

14. On the TV screen • A large free TV offer… • 37% of French pay-TV subscribers would unsubscribe for a large free TV offer • … complemented with VOD and SVOD services … • 44% of French TV viewers would be interested in VOD services • And 2/3 of them would accept to pay around 3 EUR/film • 57% of French TV viewers would be interested in a SVOD service • … and with PVR functionalities … • 1/4 French TV viewers would be interested in such functionalities • Among HH with PVR devices, recorded programs represents from 30% to 40% of the total TV time • … and programs in HD quality Interest in HDTVaccording to the existing equipment Source : IDATE, Use-IT survey 2006

15. On the PC What do people store on their PC? • PC becomes a new device for content storage and management • More than a third of PC HH listen to music on their PC • 26% watch films or TV series on their PC • But entertainment practices are still marginal on Internet in comparison to communication (e-mails, IM, etc.) and practical uses (banking, e-commerce, etc.) • E-mails: 80% • Banking: 48% • Live TV: 6% • An obvious development of UGC • 24% of French net surfers share their photos on line and 4% their personal videos • but are people really interested in UGC? What do people do on Internet? Source : IDATE, Use-IT survey 2006

16. On the mobile screen • What are consumers looking for? • Two main wishes : • To find on the mobile screen the same content than on the TV set • To access contents matching their personal interests • A large offer is preferable … • … but is not essential • The most wanted contents: • News • Sport • Entertainment • Music • Documentaries • Extra functionalities : • VOD • PVR-like functionalities • Interactive services • Digital radio The most wanted programs Source: CNES-IDATE

17. Conclusions: how to adapt to this evolving environment?

18. How to adapt? • TV is still the leading screen, but… • TV viewers want a large free TV offer • And will favour time-shifting • To create new forms of advertising • To develop live events • Consumers need references • They want to find their favourite channels, their traditional brands • To be present on mobile TV and on Internet • But maybe with different formats(shorter programs, close-shots) • New developments will generate extra-costs, but… • Will the consumers accept to pay? • Can the advertising market support alone the development of a multi-platform strategy? • And will consumers accept ads on their personal devices?

19. Thank you !