TV Brands Are Well-Positioned To Keep Themselves At The Center Of The Ever-Evolving, Video Streaming Ecosystem

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2 Contents Synopsis... 3 Key Takeaways... 4 Current Television Truths In A Streaming Environment TV Time Spent Comparison...6 Live TV Viewing...7 Social TV Engagements Evolution Of Video Consumption Video Consumption Trend TV / Video Device Reach...12 TV / Video Device Average Audience...13 The Lifeblood Of The Video Streaming Pipeline Content Investment Comparison...15 Ad-Supported TV Brands Content Investment Trend...16 Ad-Supported TV Brands Online Platforms Time Spent The Effects Of Video Streaming On Ad-Supported TV Video Streamers TV Consumption TV vs. SVOD Services Reach Comparison...21 Multiscreen TV Vs. SVOD Services Average Audience...22 TV Ratings Trend...23 TV Ratings Reallocation To TV Streaming & Other Media Streaming Effects On TV Ratings MVPDs & Their On Demand Edge Subscription Trend Streaming Satisfaction Comparison Churn Velocity VOD Availability...31 VOD vs. SVOD Penetration Comparison...32 VOD Titles...33 MVPD VOD vs. SVOD Comparison Contact Us... 35

3 SYNOPSIS The Relationship Between TV Brands & Video Streaming: Synopsis The final chapter in a three-part series on video streaming, Requiem For A Stream: The Relationship Between TV Brands & Video Streaming, looks at the current TV environment and evolution of video consumption along with the effects that video streaming and ad-supported TV have on each other In summary: Ad-supported TV brands and video streaming whether it s TV Everywhere applications or frenemy VOD services have a symbiotic relationship that complements each other by driving increased viewership of content across screens and growing overall video consumption The $50 billion invested annually in programming by ad-supported TV brands fuels the video streaming pipeline while, in turn, MVPD On Demand solutions and SVOD services bring in new audiences to networks programming as viewers look to discover new shows Driven by content-thirsty super consumers who love to watch TV and stream long-form videos, TV-branded online platforms are exploding as people seek out what they want, when they want directly from content providers Whether it s because of overall media consumption habits, continued build-out of multi-screen / on-demand platforms and offerings or increased content investment: TV Brands Are Well-Positioned To Keep Themselves At The Center Of The Ever-Evolving, Video Streaming Ecosystem REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 3

4 KEY TAKEAWAYS Six Key Takeaways About The Relationship Between The Ad-Supported TV Environment & Video Streaming Ecosystem Time spent viewing TV far exceeds the time spent with streaming-capable platforms and mobile devices Even with the prevalence of streaming, live viewing continues to be the most popular way to consume TV programming Live viewing enables people to engage with their favorite programs, and fellow fans, in real time on social media platforms Ad-Supported TV Brand s content investment is the lifeblood of the video streaming pipeline which helps fuel the continual replenishment of on demand libraries While linear TV has seen a single-digit decrease in time spent over the last two years, it s important to note that people aren t leaving TV content, they re just sometimes choosing to view it through alternative streaming options Conversely, catch up and discovery streaming, either through TV Everywhere apps or VOD services, can help drive linear TV ratings for returning shows A key reason for steady MVPD retention is their distinct on demand advantage which features a much larger offering of exclusive current titles relative to SVOD services REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 4

5 Current Television Truths In A Streaming Environment: Committed Viewers & Engaging Content

6 TV TIME SPENT COMPARISON Time Spent With Television Reigns Within A World Of Multiple Streaming Platforms & Mobile Devices 35:26 Weekly Time Spent (hrs:mins) 1Q 16 23:26 16:18 1:38 1:33 0:58 1: :17 1: : :20 2:36 1:07 2: A18+ A18-24 A25-34 Live+DVR/Time-shifted TV Game Console Multimedia Device DVD/Blu-Ray Device Video on a PC Video on a Smartphone Devices With Streaming Capabilities* Source: Nielsen Total Audience Report, 1Q 16. * Time spent for devices with streaming capabilities reflects all activity, not just video streaming (ex. game console includes time spent playing non-connected video games). Multimedia devices include Apple TV, Roku, Google Chromecast, Smartphone, Computer/Laptop, etc connected to the TV. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 6

7 LIVE TV VIEWING Live Continues To Be The Most Popular Way To View TV, A Ratio Nearly Unchanged Over The Last Three Years Even though there s so much content available at any time, people still want to watch most programming in the moment 10% 11% 11% 9% 10% 9% 13% 14% 13% 90% 89% 89% 91% 90% 91% 87% 86% 87% Q Q Q Q Q Q Q Q Q A18+ A18-24 A25-34 Live TV DVR/Time Shifted Source: Nielsen Total Audience Report, 1Q 16 REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 7

8 SOCIAL ENGAGEMENTS People Enjoy Live TV Because They Love Engaging With Others About It In Real Time On Social Media Look no further than Twitter to see the strength of Live TV where the top trending topics were filled with TV-related conversations during a recent summer month 31 Top Twitter Trending TV Topics In 31 days #CokeZero400 Rank: #5 #FRAISL Rank: #4 #MacysFireworks Rank: #3 #WWENXT Rank: #5 #Smackdown Rank: #3 #RHONJ Rank: #1 #Euro2016Final Rank: #2 #HipHopHonors Rank: #1 #TheBachelorette Rank: #2 #AllstarGame Rank: #1 2-Jul 3-Jul 4-Jul 6-Jul 7-Jul 10-Jul 11-Jul 12-Jul #MLBFortBragg Rank: #5 #FuturesGame Rank: #3 #SKCvNYC Rank: #5 #HRDerby Rank: #3 #PrettyLittleLiars Rank: #5 #ESPYS Rank: #1 #POTUStownhall Rank: #1 #60Minutes Rank: #2 #RNCinCLE Rank: #1 #WWEDraft Rank: #1 #60Minutes Rank: #2 #DemsInPhilly Rank: #1 #SDLive Rank: #2 #Sharknado4 Rank: #1 13-Jul 14-Jul 17-Jul 18-Jul 19-Jul 24-Jul 25-Jul 26-Jul 31-Jul #DocAndDarryl Rank: #3 #RHONJ Rank: #4 #TheBachelorette Rank: #2 #Smackdown Rank: #4 #RHONJ Rank: #4 #TheBachelorette Rank: #2 #PGAChampionship Rank: #3 Based on the top #5 Twitter trending topics at 9pm each night, excludes athletes who were trending due to playing in a televised game or event and individual speakers at the RNC & DNC conventions. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 8

9 SOCIAL ENGAGEMENTS Speaking Of Engagement, Ad-Supported TV Programs Have Many More Fans On Social Media Than SVOD Original Series On average, the top TV programs have 11x the Facebook Likes and 7x the Twitter Followers than top original SVOD series Facebook Likes (000) by Program 10 Top TV Shows Vs. 10 Top SVOD Original Series Twitter Followers (000) by Program 10 Top TV Shows Vs. 10 Top SVOD Original Series The Walking Dead 34,750 The Walking Dead 4,548 Big Bang Theory 32,422 The Voice 4,348 Vampire Diaries 23,552 Big Bang Theory 3,856 Grey's Anatomy 22,086 Pretty Little Liars 3,649 NCIS 17,400 Jimmy Fallon 3,610 Criminal Minds 15,222 Grey's Anatomy 2,411 The Voice 14,755 Vampire Diaries 2,148 Pretty Little Liars 14,367 Orange Is The New Black 1,548 American Horror Story 11,485 American Horror Story 1,420 Jimmy Fallon 10,090 Criminal Minds 1,368 Orange Is The New Black 6,737 NCIS 1,008 House of Cards 2,685 House of Cards 907 Narcos 2,467 Daredevil 514 Daredevil 2,327 Jessica Jones 264 Stranger Things 1,242 Making A Murderer 137 Jessica Jones 981 Stranger Things 136 Bojack Horseman 456 Bojack Horseman 132 Making A Murderer 444 Unbreakable Kimmy Schmidt 100 Unbreakable Kimmy Schmidt 408 Narcos 77 Transparent 249 Transparent 43 *as of August 9th, Based on current shows, top 10 streaming shows based on and average of Facebook likes and Twitter followers REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 9

10 Evolution Of Video Consumption: TV Stability In The Face Of Connected Device Growth

11 VIDEO CONSUMPTION TREND Total Video Consumption Has Increased Slightly Over The Past Year Total Video Consumption: Weekly Average (hrs:mins) includes TV-connected device activity 41:24 42:06 0:07 1:32 0:14 3:41 0:09 0:23 1:49 4:09 +2% 30:47 31:08 0:12 0:26 0:28 0:41 1:55 2:33 6:26 7:02 +1% 35:50 35:26 21:48 20:24 Q Q Q Q A18+ A18-34 TV (Live + Time-shifted) TV-Connected Devices PC Video Smartphone Video Tablet Video Source: Nielsen Comparable Metrics Report Q1 2016: Data based on average week between December 29, 2014 March 29, 2015 & December 28, 2015 March 27, TV reflects Live+DVR / Time-shifted TV; TV-Connected Devices include DVD, Game Console, Multimedia Device (Apple TV, Roku, Google Chromecast, Smartphone, Computer/Laptop, etc connected to the TV), VCR. TV-connected devices figures reflect any usage on the TV, not just accessing media content (ex., playing video games). REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 11

12 TV / VIDEO DEVICE REACH TV Reach Is Stable Even As Mobile Devices, Which Allow Ease Of Streaming, Continue Their Double-Digit Growth TV reach stabilized in 1Q 2016 after a marginal decline in 2015 while TV-connected devices saw only mid-single-digit growth YOY Average Weekly Reach (000) 210, ,517 +2% A18+ A Q , ,413 +5% 86,308 77,706 85, , % 1Q % 46,986 31, % 56,869 55,549 +2% 36,375 37,975 +4% 22,730 20,496-10% 43,828 36, % 16,708 11, % TV (Live + Timeshifted) TV-Connected Devices PC Video Smartphone Video Tablet Video TV (Live + Timeshifted) TV-Connected Devices PC Video Smartphone Video Tablet Video Source: Nielsen Comparable Metrics Report Q1 2016; Data based on average week between December 29, 2014 March 29, 2015 & December 28, 2015 March 27, TV reflects Live+DVR / Time-shifted TV; TV-Connected Devices include DVD, Game Console, Multimedia Device (Apple TV, Roku, Google Chromecast, Smartphone, Computer/Laptop, etc connected to the TV), VCR. TV-connected devices figures reflect any usage on the TV, not just accessing media content (ex., playing video games). REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 12

13 TV / VIDEO DEVICE AVERAGE AUDIENCE TV s Audience During Any Given Minute Dwarfs Video Viewing On Any Other Connected Or Mobile Device Even with Millennials, the average live + time-shifted TV audience is more than double the video viewing on any other device Average Audience Per Minute (000) 51,236 51,267 A18+ A % 1Q Q % 9,373 8,849 5,992 5, % +20% 2,193 2, % +273% % 2,767 3, % +34% +58% +234% 822 1, TV (Live + Timeshifted) TV-Connected Devices PC Video Smartphone Video Tablet Video TV (Live + Timeshifted) TV-Connected Devices PC Video Smartphone Video Tablet Video Source: Nielsen Comparable Metrics Report Q1 2016; Data based on average week between December 29, 2014 March 29, 2015 & December 28, 2015 March 27, TV reflects Live+DVR / Time-shifted TV; TV-Connected Devices include DVD, Game Console, Multimedia Device (Apple TV, Roku, Google Chromecast, Smartphone, Computer/Laptop, etc connected to the TV), VCR. TV-connected devices figures reflect any usage on the TV, not just accessing media content (ex., playing video games). REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 13

14 The Lifeblood Of The Video Streaming Pipeline: Ad-Supported TV Brands Content Investment

15 CONTENT INVESTMENT COMPARISON Ad-Supported TV Brands Programming Investments Help Continually Replenish Video Streaming Content Many of the dollars committed by major OTT services are also spent buying proven TV content, thus further showing how ad-supported TV fuels the video streaming ecosystem Estimated 2016 U.S. Share Of Content Investment (Original & Acquired) OTT side notes*: 67% of Hulu viewers and 44% of Netflix viewers enjoy watching Network TV shows the most Netflix s 2014 estimated content split was 91% acquisitions vs. 9% originals Only 6% of TV titles on Netflix are original series; 1% for Amazon SVOD services pay over $1MM per episode to acquire top TV programs Hulu $1.2B YouTube $1.0B Netflix 2.6B Amazon $1.6B Total Ad-Supported TV Brands $48.3 Billion Total Ad-Supported TV Brands include Cable & Broadcast *check out Requiem For A Stream: The Video Streaming Ecosystem on for more information Sources: TV Brands: SNL Kagan 2016, all other services based on VAB analysis of existing projections and estimated for U.S content rights only. Amazon: Various analyst reports & SNL Kagan; Netflix: SNL Kagan & Netflix financial reports; YouTube: based on Google financial statements and projected out based on VAB analysis of YouTube s global audience split; Hulu: estimated based on investment projections announced through Hulu. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 15

16 AD-SUPPORTED TV BRANDS CONTENT INVESTMENT TREND Based on The Typical Multi-Year Production Cycle, There s Actually $200B+ Working In The TV Marketplace Considering that creative development is a multiyear process, there s approximately over $200 billion in programming investments actively working for the TV brands TV Networks Programming Expenses Cable + Broadcast (in billions) Investment is projected to increase each year, which means there will be even more content available on networks TV Everywhere and direct-to-consumer platforms in addition to more programming that can be licensed to OTT services in the secondary market Sources: SNL Kagan 2016 projections REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 16

17 AD-SUPPORTED TV BRANDS ONLINE PLATFORMS TIME SPENT With So Much On-Going Investment, People Can Stream A Multitude Of Content Directly From TV Brands At Any time There s been a healthy increase in the amount of time consumers spend with TV brands across platforms - including TV-branded websites, mobile browsers and apps Total Minutes Spent With TV-Brand Platforms Online (in millions) 71,817 87, % Mar-15 Mar-16 29,227 36, % P13-64 P18-34 Source: comscore MediaMetrix Audience Duplication: March 2015 vs. March VAB analysis of customized TV-brand online group which includes websites & mobile app usage for cable networks, broadcast networks and MVPDs. Does not include time spent viewing TV programs on OTT services like Netflix and Amazon. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 17

18 The Effects Of Video Streaming On Ad-Supported TV: A Symbiotic Relationship

19 VIDEO STREAMERS TV CONSUMPTION The Heaviest Video Streamers Watch Nearly As Much Television As All Other Streamers These super video consumers that identify as the heaviest streamers only watch 6% less TV than the lightest streamers and actually watch 11% more TV than the non-streamers within internet homes Television Consumption Among Video Streamers Quintile Analysis 4:16 4:30 4:24 4:38 4:33 3:51 Quintile 1 (Heaviest) Quintile 2 Quintile 3 Quintile 4 Quintile 5 (Lowest) Hrs:Min ( Avg Day) Non-Streamers (Internet Homes) Source: VAB analysis of Nielsen Total Audience Report, Q1 16; based on cross-platform homes ranked by in-home streaming behavior. 1/1/16-3/31/16 via Nielsen NPOWER/Cross-Platform Homes Panel for P2+. Streaming based on home PC only. Chart based on average daily minutes REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 19

20 VIDEO STREAMERS TV CONSUMPTION Comparatively Speaking, Television Continues To Dominate Even The Heaviest Streamers Video Consumption Time Heavy streamers spend 11x more with TV than video streaming on a daily basis which shows just how complementary streaming is to the consumers overall video consumption behaviors Heaviest Video Streamers Daily Streaming vs TV Viewing 4:16 Streaming TV Viewing 0:22 Heaviest streamers = Quintile 1 Hrs:Min Source: VAB analysis of Nielsen Total Audience Report, Q1 16; based on cross-platform homes ranked by in-home streaming behavior. 1/1/16-3/31/16 via Nielsen NPOWER/Cross-Platform Homes Panel for P2+. Streaming based on home PC only. Chart based on average daily minutes REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 20

21 TV VS. SVOD SERVICES REACH COMPARISON Ad-Supported TV Reach Is Virtually Unchanged Even As Major SVOD Services Have Seen Double-Digit Growth Monthly TV Cume Reach vs. Streaming Services Used At Least Once A Month To View TV Programs / Movies (among P13-64 general population) 92% 91% % 33% 7% 13% 10% 12% 13% 13% Ad-Supported TV NETFLIX Amazon Instant Video HULU TV Everywhere Source: VAB Analysis of Nielsen R&F Time Period Report, Live+7, Total Day, March 1-31, 2014 & 2016, P13-64 (reach based on P13-64 total pop) for ad-supported TV. GfK Comparing Streaming Services 2014 & 2016, GfK US Basis: April ,002 and March ,007 US consumers, users of streaming video, aged 13-64, interviewed online. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 21

22 MULTISCREEN TV VS. SVOD SERVICES AVERAGE AUDIENCE Multi-Screen Ad-Supported TV Brands Continue To Command The Majority Of Viewing During Any Given Minute At any moment, there are four times as many people watching multi-screen TV content, either on their television or through TV Everywhere apps, than the major SVOD services combined Average Audience (000) During Any Given Minute Ad-Supported Multi-Screen TV Brands Vs. SVOD Services P13-64 Hulu 1,464.0 (4%) Amazon 1,018.2 (3%) Netflix 6,213.0 (15%) Multiscreen TV 31,348.9 (78%) Multi-screen TV Netflix Amazon Hulu (linear + TV Everywhere ) Source: VAB analysis of P13-64 SVOD & TV Everywhere activity based on monthly estimations of time spent and streaming services usage from GfK Comparing Streaming Services study, US 2016, data. Basis: March ,007 US consumers, users of streaming video, aged 13-64, interviewed online. TV viewership based on Nielsen NPower R&F Time Period Report, Live+7, Total Day, March 1-31, 2016, P18-34 & P13-64 REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 22

23 TV RATINGS TREND Time Spent Watching Ad-Supported Linear TV Has Seen A Single-Digit Decrease Over The Last Two Years Monthly Average Time Spent Watching Linear Ad-Supported TV (hrs:mins) 120:04 112:34-6% Mar-14 Mar-16 P13-64 Source: Nielsen NPower R&F Time Period Report, Live+7, Total Day, P13-64, March 1-31, 2015 & March 1-21, REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 23

24 TV RATINGS REALLOCATION TO TV STREAMING & OTHER MEDIA But People Aren t Leaving TV Content, They Just Sometimes View It Through Alternative Streaming Options An estimated 74% of the overall two year decrease in total time spent with television can be found through increases in TV-network content viewership on other sources such as TV Everywhere apps and major SVOD services Estimated Balance of TV Time Spent Decrease Vs. Streaming Increases TV-Network Content Only (Between March 14 & March 16) P13-64 TV Everywhere 13% Balance vs. TV Decrease 26% An estimated 74% of the TV time spent decrease went to viewing of TV content outside of linear TV Netflix: 43% Hulu: 12% Amazon: 6% -6% Top SVOD Services (TV networkcontent only) 61% Source: VAB analysis based on a mix of several sources including SVOD services periodic announcements of time spent estimates when available, comscore mediametrix trend data, monthly time spent and streaming services usages statistics from GfK Comparing Streaming Services study US 2014 & 2016, and data from SNL Kagan Fall 2015 Consumer Insights U.S. survey which aided in the calculation of TV-network content time split estimates for each SVOD service. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 24

25 TV RATINGS REALLOCATION TO TV STREAMING & OTHER MEDIA The 26% Balance, Which Equates To Only Four Minutes Per Day, Is Fragmented Across A Host Of Other Media Platforms The 26% balance reflects the difference between the monthly linear TV time spent shift & the increased time spent with TV content through streaming (March 14 vs. March 16) In lieu of watching linear TV or streaming TV content for those 4 minutes per day, where else are people spending their time? Consuming Non-Authenticated TV Content Streaming Movies / Original TV Series Estimated Balance of TV Time Spent Decrease Vs. Streaming Increases TV-Network Content Only (Between March 14 & March 16) P13-64 TV Everywhere 13% Watching Other Videos Or Gaming On Social Media Listening To Music Gathering News & Information Balance vs. TV Decrease 26% Top SVOD Services (TV networkcontent only) 61% An estimated 74% of the TV time spent decrease went to viewing of TV content outside of linear TV -6% Source: VAB analysis based on a mix of several sources including SVOD services periodic announcements of time spent estimates when available, comscore mediametrix trend data, monthly time spent and streaming services usages statistics from GfK Comparing Streaming Services study US 2014 & 2016, and data from SNL Kagan Fall 2015 Consumer Insights U.S. survey which aided in the calculation of TV-network content time split estimates for each SVOD service. Website list based on sites that have increased total minutes in comscore March 2014 vs. March 2016 data. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 25

26 STREAMING EFFECTS ON TV RATINGS The Ability To Stream TV Programming On Demand Does Help Drive Linear Ratings Video streaming allows people not only to play catch up with their favorite shows but also discover new ones. The below analysis shows the ratings bump that 10 streaming-friendly TV programs received on average for their first episode last season compared to their last episode in the prior season. Average P2+ Audience Comparison (000) Last Episode of Prior Season vs. First Episode Of Latest Season 1990 s 5, , % Last Episode of Prior Season First Episode Of Latest Season Source: VAB analysis of Nielsen NPower, Program Report, Live+7, P2+ data covering appropriate episode premiere dates between Average P2+ audience is based on the 10 program average for their respective episodes. Only premieres were included in average. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 26

27 MVPDs & Their On Demand Edge: The Largest Provider In The Video Ecosystem

28 SUBSCRIPTION TREND Overall MVPD Subscription Shifts Have Been Negligible Even With The Influx Of Many New Streaming Services Over the next year, MVPD subscription households are projected to decline marginally by only 1% MVPD HHs Projections MVPD Subscribers *note: for more information on video streaming, please refer to the other VAB reports - Requiem For A Stream: The Video Streaming Ecosystem & Requiem For A Stream: Video Streaming Behaviors Source: SNL Kagan projections based on June 2016 for MVPD subscriber data. MVPD HHs estimates include residential and commercial customers for cable, DBS, telco and other multichannel platforms. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 28

29 STREAMING SATISFACTION COMPARISON MVPD Subscribers Are Most Satisfied With Paid Streaming Video Services, Showing Just How Much These Services Complement Pay-TV When it comes to specific satisfaction measures, the gap between cord stackers and cord cutters / nevers is largest for content selection (40 points) Overall Satisfaction With Paid Video Streaming Service By Segment Overall Index (Based on 1,000 Point Scale) Cord Stackers (Pay-TV subscriber + paid video streamer) Cord Nevers (Have never subscribed to Pay TV; paid video streamer) Cord Cutters (Recently canceled Pay-TV sub; paid video streamer) % of Streamers* 60% 4% 13% Source: J.D. Power 2016 Streaming Video Satisfaction Study. Based on responses from 3,928 customers who have used a subscription or transaction-based streaming video service within the past six months, fielded in June-July Streaming services include Netflix, Hulu, Amazon, VUDU and Apple itunes. Satisfaction based on six key measures in order of importance: performance and reliability, content, cost of service, ease of use, communications and customer service. *Based on study respondents. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 29

30 CHURN VELOCITY There Is Very Little MVPD Churn Attributable To Customers Leaving For OTT Alternatives And That Velocity Is Slowing Multichannel substitute households, defined as HHs that rely on Internet or OTT delivery to view TV shows or movies in lieu of a traditional multichannel subscription, is expected to see slowed growth over the next few years Projected Residential MVPD % Churn As A Result Of MVPD Substitute HHs 1.5% 1.4% 1.1% 0.8% Source: VAB analysis based on projected multichannel substitutes HH estimates from SNL Kagan November 2015 data and residential MVPD HH projected estimates from SNL Kagan June 2016 data which excludes DBS overlap by HHs taking multiple multichannel subscriptions. REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 30

31 VOD AVAILABILITY A Key Reason For MVPD Retention Is VOD Accessibility Which Continues To Grow Among Households VOD was the original on-demand service, existing in people s home through their MVPD provider dating back to the early 2000 s, several years before the rise of streaming VOD Availability in TV HHs Up 52% since % 46.4% 52.7% 56.9% 59.5% 60.0% 61.9% 63.2% Source: VOD availability based on Nielsen (June of each year) REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 31

32 VOD VS. SVOD PENETRATION COMPARISON In Fact, VOD Penetration Remains Much Higher Than DVR Or SVOD DVR / SVOD / VOD: TV HH penetration 61% 61% 62% 62% 63% 63% DVR 49% 49% 50% 49% 50% 48% 50% 50% SVOD VOD 45% 46% 41% 42% 4Q '14 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 Source: DVR & SVOD penetration from Nielsen Total Audience Report, 1Q 16; VOD from Nielsen data based on the last month of each quarter REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 32

33 VOD TITLES MVPD VOD Catalogs Offer A Wide Range Of Content And Are Continuing To Grow At A Double-Digit Pace The breadth of MVPD catalog titles quadrupled since 2009 Average U.S. MVPD VOD Titles Per Month Up 411% since 09 41,375 27,930 33,875 8,100 9,803 15,667 20, Source: SNL Kagan January 2016, reflects cable and telco MVPDs, excludes satellite MVPDs REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 33

34 MVPD VOD VS. SVOD COMPARISON In Fact, MVPD VOD Libraries Dwarf Those Of The Most Popular SVOD Services With something available on-demand for anyone and everyone, MVPD s content variety truly is unmatched and continues to grow SVOD vs. Average U.S. MVPD Comparison # of Titles Per Month Netflix Hulu Amazon Average MVPD 27,930 33,875 41,375 17,241 17,218 19,762 9,635 7,160 8,803 8,945 7,092 9, Jan 15-Jan 16-Jan Source: VAB analysis of SNL Kagan January 2016 data (MVPD catalogs reflect cable and telco MVPDs, excludes satellite MVPDs) REQUIEM FOR A STREAM: THE RELATIONSHIP BETWEEN TV BRANDS & VIDEO STREAMING 34

35 CONTACT US For More Information Visit Us Online TheVAB.com Follow Like us: facebook.com/videoadvertisingbureau Sean Cunningham President & CEO Danielle DeLauro SVP Strategic Sales Insights Jason Wiese VP Strategic Insights Evelyn Skurkovich VP Strategic Research & Insights