1 2012 Cisco and/or its affiliates. All rights reserved.
February, 2012
Slide 2
2012 Cisco and/or its affiliates. All rights reserved. 2
Service Provider Multi-screen offering becoming table stakes
Partnerships & Vertical Integration Rising churn and Subscriber
acquisition cost Broadcasters and Media New distribution platform
& interactive content Sky Sport TV on iPad / RTL on iPhone
& iPad Hybrid Broadcast Broadband TV: HbbTV New business models
Hulu 2009 revenue: $100M 1 st half 2010 revenue: $100M Consumer
Behavior Netflix = 20% of US downstream internet traffic in peak
times Online Video Snacking 11.4 Hour /month Video = 91% of
consumer IP traffic by 2014 20%
Slide 3
2012 Cisco and/or its affiliates. All rights reserved. 3 3 3
Consumer Experience Content Fragmentation Broadcast, Premium, UGC
Device &Device & Screen Fragmentation TV, PC, Mobile,
Gaming,TV, PC, Mobile, Gaming, PDA Interactivity Fragmentation Lean
back, Lean forward, Social Business Models Subscription
Fragmentation Broadband, TV, Mobile, Movie rentals, OTT Free vs.
Paid Ad Dollars Fragmentation Transition from linear TV to online
2012 Cisco Systems, Inc. All rights reserved.
Slide 4
2012 Cisco and/or its affiliates. All rights reserved. 4 4 Age
2+ Age 12-17 Age 18-34 Age 35-54 Age 55-64 Age 65+ 30.2% 39.5%
32.7% 30.8% 33.8% 24.8% Source : Nielsen Convergence Summit
Slide 5
2012 Cisco and/or its affiliates. All rights reserved. 5 5 20
Total18-34 Age 35-54 Age55+ Age Missed episodes of shows I watch on
TV Episodes of TV shows I do NOT watch on TV Episodes of TV shows I
have ALREADY watched on TV Episodes ofEpisodes of past shows that
are not on TV now None of these Source : CBS Entertainment Panel
Survey, July 2009 88% 27% 16% 39% 4% 89% 36% 21% 44% 2% 88% 26% 16%
40% 4% 86% 20% 11% 31% 7%
Slide 6
2012 Cisco and/or its affiliates. All rights reserved. 6
Reasons for Watching Computer Video When at Home Base: Watch Video
on the Computer at Home Consumers Watch Video on Their Computers To
Time-Shift and Multi-Task 75% of respondents watch video on
computers Each week, they watch about 1 hour, 45 minutes of video
on computer They watch at home 63% of time 93% of 18- to
24-year-olds watch video on a computer, averaging 2 hours, 45
minutes per session 40% of respondents watch video using portable
devices Each week, they watch about 54 minutes of video on portable
devices 39% of this time, they are at home Source: Cisco IBSG
Connected Life Market Watch, 2012 Device Shifting
Slide 7
2012 Cisco and/or its affiliates. All rights reserved. 7
Multi-screen TV experience Online Content on TV /STB Intuitive
Unified Navigation for All Content Web 2.0 Experiences on
TV/STB
Slide 8
2012 Cisco and/or its affiliates. All rights reserved. 8 About
half of the Netflix users watch it on a console (XBOX 360, Wii or
Playstation 3) 89% of the HULU users watch it directly from their
PCs (compared to 42% of the Netflix users) About 20% of the Netflix
users watch it on SmartTV 37% of the iPhone users watch video on
their phone (6x as likely as the typical subscriber) Vital
question: is your content and distribution network ready to be
delivered to all these devices consoles, PC, mobile devices,
SmartTVs? Source: GamePolitics.com, Market Watch, Nielsen.com
Slide 9
2012 Cisco and/or its affiliates. All rights reserved. 9 More
Visual More Social John
Slide 10
2012 Cisco and/or its affiliates. All rights reserved. 10 More
Visual More Mobile
Slide 11
2012 Cisco and/or its affiliates. All rights reserved. 11 On
the content quality and quantity more and better On the delivery
network: delivery on managed and unmanaged networks On the consumer
device: delivery to any device 1 1 2 2 3 3 The weakest (technology)
point will ruin the experience
Slide 12
2012 Cisco and/or its affiliates. All rights reserved. 12 2012
Cisco and/or its affiliates. All rights reserved. 12 ARPU per Bit
(Revenue) Data Traffic (Cost) ComingProfitabilityGap Increase
Revenue Multiple options for monetizing services enabled by
Videoscape Enable partnerships Ad revenue Partnered content Cloud
Client Network Reduce Costs Manage over the top video traffic
CapEx: Make better use of resources OpEx: Manage video bandwidth
during peak usage Improve Experience Three-screen experience and
session shifting Quality of video experience
Slide 13
2012 Cisco and/or its affiliates. All rights reserved. 13 Model
1 Subscription / Transaction Monthly fee or per transaction
purchases (Download to own, Rental) Could also be a combination of
both. More appropriate for data SPs who want to expand service
offering into video space. (Good first step) Model 2 Bundle Uplift
/ Reduce Churn TV Everywhere offered to higher end service tiers at
no additional fee Revenue is indirect through encouraging greater
stickiness in higher service tiers. Further revenue lifts via pull
through business. Youd like video you might want to move up to the
higher data service tier Model 3 Advertising Based This is
typically an OTT solution, which dont have to be affiliated with
Consumer SPs Revenue is via advertising, typically as price per
mili, price per click, and inserted ads in programming
Slide 14
2012 Cisco and/or its affiliates. All rights reserved. 14 2012
Cisco and/or its affiliates. All rights reserved. 14 $ Time Network
Termination B2C Business to Consumer Peering Points $ Service
Providers $ Rising Costs: Increased SAC and Churn Increased
bandwidth usage Bigger bundle of products Flattening Revenues:
Saturated markets few new subscribers Increased use of flat-rate
tariffs Regulatory & Competitive price pressure Today
Broadcasters
Slide 15
2012 Cisco and/or its affiliates. All rights reserved. 15 2012
Cisco and/or its affiliates. All rights reserved. 15 B2B2C Business
to Business to Consumer $ $ $ $ Service Providers $ $ $$$ $ $ $ SP
Platform Leverage Network and Data Assets Tomorrow Broadcasters
Government Advertisers OTT/Content Aggregator Application Developer
Utilities
Slide 16
2012 Cisco and/or its affiliates. All rights reserved. 16
Streaming was limited to the customers of Verizon only, for PC and
mobile platforms, based on Silverlight Time lag was between 15 sec
and 45 sec. 2.1m users watched the game online (from total 111.3m),
average 39 min/view. Source: Streamingmedia.com, nfl.com Vital
question: is your distribution network ready to take a load of 2%
of your viewers, going on-line? Would you compromise the quality of
your top content because of lack of preparation?