OTTVideo…FriendorFoe

PresentedbyScottMeyerMarketingDirectorInnovativeSystems

LocatedinMitchellSDVideoServices• IPTVMiddleware• InnoStream VODServerPlatform• 150SystemsinNorthAmerica

APMAX™VoiceServices• EnhancedHostedVoiceSolutions• SIPPhoneProvisioningandManagementSoftware• CallCenterRoutingandRecordingSoftware• 820APMAXSystemsDeployedinNorthAmerica

eLation™OSS• Billing• Financials• Staking&Mapping• ACSTR-069

OTTVideoWhatIsIt?

Theabilityforconsumerstowatchcontentwhentheywanttowatchit.Methods• ConsumerInitiatedRecording– STBcDVR• RestartTV• PauseLiveTV• VideoonDemand

- Transactional- SubscriptionVOD- CatchUp/JustMissedTV-- LocalEventVOD

WeBlewItWithVOD!L

• Developedin1992• FirstCommercialDeploymentin1993

• EarlyEquipmentandBandwidthCostswereProhibitive

• MoreContentandLowerCostsby2003

• VideoRentalMailorderbusinessinCalifornia– 1998

• 30Employeesand925DVDs• BeganVODoverInternetin2007• 2015SurveyofNetflixviewersrevealedover80%subscribetoitbecausetheypickwhattheywanttowatchwhentheywanttowatchit!

LegacyVideoProviders Netflix

RuralNorthAmericanSurveyConducted2016&2017

• ProveOutNetflixModel

• MeasureTimeShiftedViewingImpact

• GaugeConsumerKnowledgeinTimeShiftedTechnology

• DetermineConsumerInterestinTimeShiftedViewingOptions

Whywasthisneeded?

KeySurveyPoints• IndependentlyConducted

• OnlyRuralTelecomConsumers

• NorthAmericanSampling

• StrictlyaPhoneSurvey

• SurveyConductedandCompiledinJanuary2016andagaininJanuary2017

BoxScoring

• 1to10Scale• 1=Uninterested• 10=VeryInterested

BottomBox MiddleBox TopBox

1 2 3 4 5 6 7 8 9 10

ExecutiveSummary

•82%ofRuralHomeshaveSubscriptionVideoService•Only4%ofRuralHomesrelyExclusivelyonOver-The-TopContent

•DVRisin52%ofRuralHomes•20%WouldViewC3/CatchUPVODTodayifAvailable•16%WouldSubscribetoCloudDVR(cDVR)TodayifAvailable

•42%ofHomeshaveFIVEormoredevicesconnectedtotheInternet

0 10 20 30 40 50

NoTV

Antenna

OTTOnly

Cable

Satellite

Telco/PhoneCo.

THEIRVIDEOPROVIDERS

1%

7%

41%28%

13%

4%1%

4%

46%35%

6%

Surveyrespondentsdon’trecognizethattheirCableProviderisalsotheTelco

0

20

40

60

80

100

BottomBox

MiddleBox

TopBox

LOCALBROADCASTCHANNELSAREABIGDEAL!

85%

9%6%

87%

8%5%

RuralDVRSubscribers2016

DVR=Yes DVR=No

56%44%

RuralDVRSubscribers2017

DVR=Yes DVR=No

52%48%

0 5 10 15 20 250%

1-9% 10-19% 20-29% 30-39% 40-49% 50-59% 60-79%

80-100% Don'tKnow

TOTALTVDVRVIEWINGTIME RuralConsumersspendnearlytwiceasmuchtimeviewingtheirDVRsComparedtotheNielsonAverage!

13%12%

5% 11%9%4%

5%

9%2%

13%14%

21%17%

15%9%

7%

3%5%

020406080100

BottomBox

MiddleBox

TopBox

DVRADDONOPPORTUNITIES

72%

12%16% 13%7%

80%

010203040506070

BottomBox MiddleBox TopBox

CloudDVRisDesired!

16%

64%

20%

CaseStudy– Cloud/NetworkDVRValleyTel- Herried,SouthDakota• Cloud/NetworkDVROnly

• ExistingHomeDVR’shaveRecordFeatureDisabled

• TieredPricingBasedonStorageandRecordStreams

StantonTelecom–Stanton,Nebraska• Cloud/NetworkDVROnly– 1st RuralProviderinUStodothis

• StandardSTBsOnly• TieredPricingBasedonStorageandRecordStreams

Forbothproviderssavingsincapexandopex aswellasprotectionofconsumersrecordedcontentwerethedriversingoingtoanall-Cloud/NetworkDVRModel.

010203040506070

BottomBox MiddleBox TopBox

InterestinOn-DemandCatch-UpTV(C3VOD)

61%

20%19%

CaseStudy– VideoonDemand

MarquetteAdamsTelco– OxfordWI- InVODSince2010- 2500VideoSubs- FreeVODforAllSubscribers- TransactionalVOD- Vubiquity- C3– CatchUpVOD- LocalVOD

SubscriberslovetheirVOD!

- Averaging3000VODtransactionspermonth

- LocalVODContentTopDraw- MonthlyVODCostPerSub=

.45CentsUS

“WepayalotmoreforotherprogrammingandgetalotlessbangforourbuckthanwedowithourVOD” JerrySchneider- GM

TVsConnectedtotheInternet2016

DoesNotStreamVideotoTVStreamsVideototheirTV

23%

77%

• RokuTV• AppleTV• SonyPlayStations• TVswithIntegratedWebAccess

TVsConnectedtotheInternet2017

DoesNotStreamVideotoTVStreamsVideototheirTV

RokuTVAppleTVSonyPlayStations

66%

34%

0 5 10 15 20 25 30

1Hour

2Hours

3- 5Hours6 - 9Hours 10-14Hours

15-25Hours

26- 50Hours

Don'tKnow

HoursPerWeekRuralVideoConsumersUseaStreamingService

13%8%

22%

18%

7%28%

5%25%

6%

6%

5%4%

16%

21%

13%

5%

0 5 10 15 20 25 30

1to3

4

5to6

7to8

10to13

14to25

Don'tKnow

NumberofConnectedDevicesinHome

12%19%

13%

7%

24%

9%

4%6%

3%

7%9%

12%

1%

NotIntoVideo? • AmustforResidentialCLECOpps

• IncreasedVulnerabilitytoChurn

• SharedResources–Headend/Middleware

• VideoQualityisEssential

• MoreSpeedWILLbeRequiredinthenextFiveYears!

Summary

• RuralDVRConsumptionHigherthanNationalAverage

• ForRuralConsumersOTTStreamingisaComplementtoTraditionalPayTVnotaReplacement

• ConsumersAreReadyforCloudDVR

YourTimeShiftedVideoOptionsgiveCustomersa“Netflix”likeexperience!

• CustomersWantFreeCatch-UpTV(C3VOD)

• VODContentWillKeepThemonYourLinearVideoNetworkLonger

• TimeShiftedViewingReducesDemandonOTTWhichReducesTrafficonYourInternetConnections

UseTimeShiftedViewingOptionstoReduceChurn!

SummaryContinued

42,000NewVideoSubsQ12017!

ComcastisinvestinginthehardwareandsoftwarerequiredtobringIPtothelegacyTVexperienceandforthisreasontheyaregainingvideosubswhenothersarereportinglosses.

There’sOnly24HoursinaDay!

PleaseleaveyourBusinessCardorsendJenniferanemail

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InnovativeSystemsVoiceandVideoSalesDirectorforTexasJenniferPavlicekjenniferp@innovsys.com