Time-shifting, Place-shifting, Attitude-Shifting: How Digital Media is Changing the Way We Watch TV

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1 Time-shifting, Place-shifting, Attitude-Shifting: How Digital Media is Changing the Way We Watch TV Presenters: Andrea Downing, PBS Distribution Eric Wolf, PBS Technology and Operations

2 Digital Landscape

3 TV is still King TV in the Home 285M 151:03 (+3.6%) Time-shifted TV 73M 7:11 (+33%) Using the Internet 161M 27:04 (+3.6%) Video on Internet 123M 2:53 Video On Mobile 11M 3:42 Nielsen A2/M2 Three Screen Report Q4 2008

4 But consumers embracing digital platforms at exponential rate 15 billion video views online in Jan % of high speed users watch online video monthly 2 1 out of 6 internet users watch full TV episodes online million video sold on itunes 3 3 billion VOD views in comscore; 2 - Horowitz Assoc.; 3 - Apple, Inc.; 4 - Rentrak, Inc.;

5 Media consumption will be seamless across platforms My media available anywhere Home Mobile Anywhere Best Screen Available

6 Growth will come from new platforms US Home Video Revenue

7 Today s digital distribution strategy is largely focused on broad distribution Whether it s over the air or on the Internet, it s about content, and online it s our strategy to reach people wherever they are and bring our content to them. - Leslie Moonves CBS Corporation President and CEO You have two options follow your consumer online or not. Just ask the music business and now the newspaper business what happens when you don t. - Kaan Yigit, Solutions Research Group Disney/ABC is an exception focusing on their big brands abc.go.com, espn.com and disney.com

8 Experience to date shows that online viewing supports broadcast Nielsen findings: online videos helped increase the overall TV-viewing audience ABC: content that TV networks put online drives viewers back to television CBS: 35% of its online video audience is more likely to watch CBS programming on TV because they connected with shows online

9 Competitors centralized streaming experiences NBC.com ABC.com CBS.com MTV.com

10 but also widespread distribution of their content NBC on Hulu ABC on AOL CBS on Veoh MTV on Joost

11 PBS Activity

12 PBS digital distribution objectives directly support our corporate priorities Increase Resources: Maximize monetization opportunities to support public television growth. Grow Audience: Ensure PBS content is available wherever consumers are accessing content.

13 PBS has built partnerships with a range of online video providers in the last 2½ years

14 including partners like Hulu, which syndicate to various 3 rd -party sites

15 Demonstration

16 Overall Insights: Digital Market Although ad-supported syndication is believed to have much more upside than download-to-own, it is becoming clear that this is a long-term view. Volume is the key to revenue growth: a toe-in-the-water approach does not yield much results. Syndication leaders and laggards are beginning to emerge.

17 Insights: Download-to-own itunes is the clear market leader Netflix s results are also encouraging The fat head drives revenues Fresh content is key to growth Market is price-inelastic No impact on DVD sales Content preferences are emerging

18 Insights: Ad-supported Viewing can be very low Frequent releases required Releases tied to broadcast do much better Users seem to tolerate ads around public television content Length of view is longer than expected Daypart viewing mimics TV Users want the whole story

19 Trends From Here

20 Technical fundamentals are still fundamental EVERYTHING is IP connected Bandwidth costs declining (for both consumers and businesses) Storage costs declining Encoding is getting better Everything is moving to the cloud

21 Business fundamentals are still fundamental Better to be an incumbent Convenience is king But consumers also want things cheap and free is the best kind of cheap

22 Some Interesting Products To the TV set Roku Netflix Yahoo! ConnectedTV XBOX Integrated Experience Apple To the PC Hulu Joost Watch Out For Boxee Google

23 Technical Battles Non-broadcast video coalescing around H.264 Battles moving to new places Customer relationships Interactivity Application layers Social network / social media layers

24 Demonstration

25

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31

32 Looking Ahead

33 Distribution will fragment, but incumbents will be the major players Traditional TV folks: cable, dbs New TV: telcos Device folks: Apple, Microsoft Content distributors: Netflix, Amazon Content owner aggregation: Hulu Content owner direct : MLB, CBS

34 Online video continues to change rapidly, and we plan data-driven experiments to guide our future digital plans Does public television benefit from broad digital distribution, or are we best served by focusing online viewing on several key platforms? What is the optimal balance between video content on pbs.org and station.org sites versus 3rd-party sites? Is the ad-supported model viable for PBS? How can PBS best serve stations in distributing content online?

35 Q & A

36 Thanks for coming. Don t forget to fill out the comment cards.

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