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The Future of TV Connected DevicesColin Dixon

Senior Partner, AdvisoryIn Front of the Curve™

In Front of the Curve.™In Front of the Curve.™

Primetime in 1960

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In Front of the Curve.™In Front of the Curve.™

Primetime in 2010

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In Front of the Curve.™4

Internet

PC

STB/PVR

nDTV

CableSatelliteTelcoTV

Tru2Way

MCEGame

Console

Hybrid STB

[TiVo]

Competitors

Incumbents

iSTB[NeuLion]

Blu-ray Player

What’s happening beneath the TV?

©2009 TDG

In Front of the Curve.™In Front of the Curve.™

Worldwide Over-the-Top Households

• Today, only 39 million households worldwide have connected their BBE TV to the Internet

• By 2014, 167 million will be OTT households

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©2009 TDG

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50

100

150

200

250

300

350

400

2009 2010 2011 2012 2013 2014

BBETV HH

OTT TV HH

Broadband Enabled TV Households versus OTT TV

Households Worldwide

In Front of the Curve.™In Front of the Curve.™

Over-the-Top TV Devices - 2009

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Early Market again dominated bythe Game Console

• 78% OTT TV Households haveone

Hybrid STB a distant secondplace 7% OTT TV HH

The rest have a minor share Hybrid STBs, 7% iSTBs, 6% Blu-ray and nDTV, 4% each MCEs, 1%

nDTV4%

Game Consoles

78%

iSTB6%

MCEs1% Hybrid

STB7%

BluRay4%

Mix of OTT Active Devices in the Home in 2009

©2009 TDG

In Front of the Curve.™In Front of the Curve.™

Over-the-Top TV Devices - 2014

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By 2014, Market still led by GameConsole

• 35% OTT TV Households haveone

Blu-ray and Hybrid STB in jointsecond place 16% each

The rest nDTV, 13% iSTBs, 11% MCEs, 9%

But remember, the entiremarket has tripled in size Every category has grown

considerably Game console OTT TV HHs

‘09, 31M ‘14, 84M

nDTV13%

Game Consoles

35%

iSTB11%

MCEs9%

Hybrid STB16%

BluRay16%

Mix of OTT Active Devices in the Home in 2014

©2009 TDG

In Front of the Curve.™

TV Platform Trends

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•Everyone wants to be a portal

•CE Manufacturers believe they can be a content aggregator

•Samsung wants to share ad revenue and get subscription payments

•Portals are almost all walled-garden

•Content provider must have agreement with manufacturer

•Device owner can only see that content

•Starting to borrow moves from PayTV Playbook

•Xbox Live Gold raised prices specifically for ESPN3

•Everyone pays whether they want ESPN3 or not!

•Advertising picture is a mess

•No standard avails

•No standard business rules

•Almost impossible to count and pay

•So many platforms

•No single device a market maker

In Front of the Curve.™

New Approaches to Open

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•Intel/Yahoo! Widgets

•Small web applications on TV

•TV Needs to support widget engine

•Requires decent processor like Intel CE3100/4100

•76% think widgets valuable on TV

•Seems to be loosing steam

•Miniweb

•CE Device needs to support ETSI standard WTVML browser

•TV commerce built in

•Built for TV, leverages the web

•TV aware

•Boxee

•Open APIs allow anyone to play

•Inclusion in “channel list” requires partnership

•Roku

•600K footprint

•Free, Open SDK

•Anyone can get on box

•Want to be guide to Internet video on TV

•Rovi Ad Service

•Opening up interactive ad network originally launched for its Guide

•In discussion with multiple CE vendors

•Includes full ad backend management services

In Front of the Curve.™

What About Google TV?

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•A blend of the web and TV

•“Bringing everything that you love about the web to your television”

•Type in what you’re looking for

•Works with voice input too

•Searches all your channels, recorded shows and the web

•Full web browser

•TV Aware – sometimes!

•The Platform

•Software

•Android, Chrome, Flash, webm(?)

•Intel CE4100 SoC

•3D Graphics, video processing, native h.264 support

•Logitech “Companion Box”

•Can use Android devices as remote

•Google TV Ads

•“Our advertising is targeted. We can do even more relevant television advertising, which should be worth a lot of money.” Eric Schmidt, CEO Google

•The Timeline

•October release – imminent!

•Early 2011 for Android Market, SDKs

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Q & A

In Front of the Curve.™

Colin DixonSenior Partner, Principal Analyst