Get Real The Economics of Convergence For Oxford

Get Real The Economics of Convergence For Oxford Media Convention January 18th 2007 Tess Alps CEO Thinkbox I cant believe what you say, cos I see what you do Aretha Franklin Predicting the future Its important - but using what supporting data? Research relying on claimed behaviour is dangerous Better by far to examine real behaviours eg London Business School/ACB research into PVR usage Be sceptical: who, how and why The resilience of broadcast TV 30 HW CH indivs 25 ABC1s Total number of hours per week

20 16-24s 15 10 5 0 1998 Source: BARB/Infosys 1999 2000 2001 2002 2003 2004 2005 2006 Year

And commercial broadcasts share will continue to grow 90 80 inds 70 16-24s 60 abc1s 50 40 30 20 10 0 2001 2002 2003 2004 2005 2006 Source: BARB/Infosys 2012 TV ad viewing : historic highs in 2006 but revenue still weak

900 800 2003 Impacts (Millions) 700 2004 600 2005 500 2006 400 300 200 100 0 Indivs Source: BARB/DDS ABC1s 16-24s Pricing the long-tail: targeted TV still discounted 20

18 Premium Commercial Share % 16 Discounted 14 12 10 8 6 4 2 0 35% 47% Remaining 53% Channels Source: BARB/Infosys 0000-0030 0030-0100 0100-0130 0130-0200 0200-0230 0230-0300

0300-0330 0330-0400 0400-0430 0430-0500 0500-0530 0530-0600 0600-0630 0630-0700 0700-0730 0730-0800 0800-0830 0830-0900 0900-0930 0930-1000 1000-1030 1030-1100 1100-1130 1130-1200 1200-1230 1230-1300 1300-1330 1330-1400 1400-1430 1430-1500 1500-1530 1530-1600 1600-1630 1630-1700 1700-1730 1730-1800 1800-1830 1830-1900

1900-1930 1930-2000 2000-2030 2030-2100 1200-2130 2130-2200 2200-2230 2230-2300 2300-2330 2330-2400 Population (millions) Broadcast still dominates the media day 50,000 45,000 40,000 35,000 30,000 25,000 20,000 15,000 10,000

5,000 0 Time TV Source: IPA Touchpoints Hub Survey Radio Newspaper Internet 00:00-00:30 00:30-01:00 01:00-01:30 01:30-02:00 02:00-02:30 02:30-03:00 03:00-03:30 03:30-04:00 04:00-04:30 04:30-05:00 05:00-05:30 05:30-06:00 06:00-06:30 06:30-07:00 07:00-07:30 07:30-08:00 08:00-08:30 08:30-09:00

09:00-09:30 09:30-10:00 10:00-10:30 10:30-11:00 11:00-11:30 11:30-12:00 12:00-12:30 12:30-13:00 13:00-13:30 13:30-13:00 14:00-14:30 14:30-15:00 15:00-15:30 15:30-16:00 16:00-16:30 16:30-17:00 17:00-17:30 17:30-18:00 18:00-18:30 18:30-19:00 19:00-19:30 19:30-20:00 20:00-20:30 20:30-21:00 21:00-21:30 21:30-22:00 22:00-22:30 22:30-23:00 23:00-23:30 23:30-00:00 Population (millions)

Internet :a technology not a medium 7,000 New TV distribution technologies are mostly incremental to broadcast TV and displacing other activities 6,000 5,000 4,000 3,000 2,000 1,000 0 Time Banking online Buying Groceries Buying products/services Seeking info on products/services Seeking info on News/Sports Music/Film/Entertainment

Using Email Using the Internet for work Source: IPA Touchpoints Hub Survey Human beings havent changed Needs States Entertain Me Play/Buy Me-TV Linear Broadcasting IPTV PVR Recorded Streamed Mobile TV Interactive TV Retail and Rental DVDs Streamed Broadband TV TV Gaming VOD & NVOD Downloads

85%+ of fixed viewing time? Finite consumer spend? Different economic cultures Internet content rarely paid for Greater expectations of paying for mobile phone services. Vodaphone state TV services make more than ring-tones now. The power of free/cheap eg C4 Celebrity Big Brother mobile downloads 10 fold increase now free. Cinema model may emerge viz shop window of premium broadcast made at a loss because it promotes secondary pay windows Payment by response possible from brands (IPTV, iTV, etc) at a premium but requires a return path Bigger economic threats Short-termism in marketing Retail pressures on brands Loss of confidence in broadcast TV the industry can help itself Over-regulation Inescapable fact : public-service, high-end content will need subsidy/support