Pace plc Technology Briefing. OTT : Over-the-top. Dr. Paul Entwistle Head of Investor Relations & Chief Technologist Wednesday, 9 th June 2010

Transcription

1 Pace plc Technology Briefing OTT : Over-the-top Dr. Paul Entwistle Head of Investor Relations & Chief Technologist Wednesday, 9 th June 2010

2 Over-the-Top Agenda I will explain : What OTT is That TV is part of a spectrum of video content services : OnDemand, DVD, Cinema, Subscription, Free... Emphasize that our customers offer Subscription TV and that it is a managed service That Subscription TV has a strong business underpinning it That the consumer benefits from the robust, easy to use and upgradeable managed services And conclude : That far from a being a threat OTT allows our customers (the Subscription TV providers) to offer even more services such as Video-on-Demand, Catch-up TV, Interactive applications... That the continuous (relentless) evolution of these services drives demand for ever more capable STBs And that the STB remains the efficient, dedicated, managed device to ensure the delivery of those services! 2

3 Basics What is a Set-top-box? STB: Technically standardised, commoditized, retailed STB: Service provider managed, bespoke, edge of proprietary network 98%* 3 * 98% of Pace s 2009 revenue was for service provider managed STBs

4 Definitions What is OTT? OTT (Over-the-top) (syn. Internet TV) The delivery of a service often video using the open internet It can be delivered straight from the provider who could be the creator to the viewer Without the need for intervening carriage negotiations, or infrastructure investments (It is independent of the viewer s internet service provider) However, it is unmanaged and quality of delivery can not be guaranteed IS NOT THE SAME AS IPTV (Internet Protocol TV) A managed TV service delivered using internet protocols* Closed, proprietary network, accessed via a specific internet service provider Services are optimised and customised to suit the network and end-device capability Providing control over quality of delivery and end device serviceability * internet protocols a basic suite of standardised techniques for moving data packets across a network; used on and off the internet 4

5 Over-the-Top Landscape... User Generated Content Content retailers (rent / sell) Broad range of content (inc. premium) (Movies, TV shows, Education...) High Quality Material HD, 3D, Surround Sound Robust high quality delivery Managed Service State-of-the-art Device PVR, HD, Hybrid, VoD, WholeHome Traditional broadcasters Internet broadcasters Multichannel Subscription TV Distributing content owner 5

6 Subscription TV Paying for Content Theatrical DVD Rental (Launch price, library price) DVD Sale (Full price, discounted price) Pay.Per.View On-Demand Library On-Demand Pace s customers Pay Movie Channels (inc. subscription bundles) Free TV (Advertising funded) < 3 months 6 12 months months 2 3 years This [Canvas] is likely to shift value from the DVD Rental market to the PPV / VoD market 4 Subscription TV, Video Rental and Purchase Are different products with different consumer behaviours 6 Source: 4 BBC Trust : Report on the Impact of Canvas on Pay-VoD Services

7 Subscription TV Paying for Content US Video Revenues (2008) Total 42B USD Opportunity for traditional TV distributors to offer On-Demand Multichannel Subscription TV Traditional TV distributors have very strong consumer brand DTO Consumers get easy to use, seamless, integrated managed service Investing in sport : DirecTV BSkyB $4B NFL Sunday ticket 1B Premier league DTR On their TV, via an STB Available on today s Hybrid STBs : DirecTV, Canal+, Viasat... DVD Rental migration to Download-to-rent [DTR] (eg. Netflix, Seesaw ) DVD Sales migration to Download-to-own [DTO] (eg. Amazon, Apple ) 7 Source: 5 Entertainment Merchants Association,

8 Subscription TV How Big is the PayTV Industry? Global PayTV subscription revenue (2009) : ~180 B (USD) 2 Global PayTV STB shipments (2009) : +120 M 2 Global PayTV TV households (2009) : 57% 3 US PayTV households (2009) : 94% (108 M) US top 10 TV distributors subscribers (2009) : 89.3 M 1 US top 10* TV distributors aggregate market cap. : 351 B (USD) US Cable s revenue from residential video (2009) : 53 B (USD) 1 * Based on 8 of the top 10 (excludes Cox Communications & Bright House Networks) 8 Source: 1 NCTA, 2 ScreenDigest, 3 IMS research

9 Subscription TV Paying for Content (example US : 2008) US Video (2008) Revenue (42B USD) 5 CREATORS home video - bought home video - rental Theatrical Premium cable Basic Cable & Broadcast On Demand AGGREGATORS 8.2 Cable Networks Broadcast Networks 21B USD 1 Discovery ABC ADVERTISERS ESPN CBS 32B USD 6 TNT FOX Affiliate fees 42B USD Pace 0.67B USD (US only 2009) MSO TV DISTRIBUTORS TELCO B CST DBS 51B USD 1 Comcast TWC Verizon AT&T Affiliated Stations DirecTV Dish 29B USD 7 VIEWERS 9 Source: 6 Bill Gurley, abovethecrowd.com, 7 DirecTV & Dish SEC filings

10 Subscription TV Putting OTT into perspective On-demand content: Apple : 200 TV shows, 400 movies DirecTV 8 : ~6000 titles Satellite broadcaster - No IP infrastructure Uses OTT to complement and enhance broadcast offering Delivered to the TV via the STB Netflix : titles Primarily impacts the 22.7 B USD DVD rental and sales market Wallmart acquires VUDU (STB and OTT delivery platform) Hulu : 190 Content Providers Remember 32 B USD of Affiliate fees at stake!! 9.95 USD pcm to be introduced on some content Owners: News Corp/Fox, Disney/ABC, NBC (Comcast tbc) The television industry fundamentally has a subsidized business model that gives everyone a set-top box, and that pretty much undermines innovation in the sector. Ask TiVo, ask Roku, ask Google in a few months. The only way this is going to change is if you start from scratch, tear up the box, redesign and get it to the consumer in a way that they want to buy it. But right now, there s no way to do that. The TV is going to lose until there s a viable go-to-market strategy. That s the fundamental problem with the industry. It s not a problem with the technology, it s a problem with the go-to-market strategy. I m sure smarter people than us will figure this out, but that s why we say Apple TV is a hobby. Steve Jobs 10 Source: 8 DirecTV SEC filing

11 Any time, place,... device Giving viewers what they want (as long as they subscribe) TV Everywhere TWC & Comcast initiative to allow their subscribers to access content on-line Free access to subscribers Giving subscribers greater choice of device (and therefore time and place) Federated approach allows Content Owner portals No single gatekeeper Supports important brand identity of creators / aggregators BSkyB Sky Player For subscribers: Access live streaming and On-demand Through XBox360 and PC IP is the common communication language of Connected Devices whether Games Console, Phone, PC or STB... 11

12 Over-the-Top Summary so far Successfully being used by Subscription PayTV to complement and enhance their broadcast offerings with on-demand Free OTT TV is highly unlikely to replace subscription PayTV (business model dependence on distribution fees) Most likely to impact traditional video rental Initiatives to meet consumers multi-device demands are underway (any time, any place) 12

13 Technology Technology Technology 13

14 Interactivity OTT is an interactive app. 14

15 Connected TV Standards & Specifications (Software) components of an OTT enabled device: IP delivery : Signalling and broadcast service integration : Presentation and navigation : Security / DRM : Metadata : Audience measurement : Application run-time and management : Many pieces no common solution Technical Standards DVB, ETSI, IEC, IETF Solutions for specific technical tasks Platform Specifications DTG Profile and selection of TSs for a specific service Device & Platform Specifications Canvas, Bespoke Further includes detailed specification of user experience (interaction, presentation, quality) 15

16 Connected TV Technology : choices, choices HbbTV Hybrid Broadcast Broadband TV European broadcaster supported initiative Blended not alternate experience TV optimized browser (HTML / JS / remote control) Minimal specification to ease implementation Middleware and device friendly Completed Nov2009 sent to ETSI for Standardisation DTG DBook 6.2 Connected TV feature : MHEG xplayer Published Mar2010 DTG DBook 7 Working with Canvas and other stakeholders BBC + Arquiva, BT, C4, Five, ITV, TalkTalk Detailed and open specification of an internet TV device & platform Technical details currently confidential / and not yet all available A solution available without [a content] subscription (that also allows a pay/subscription business model) Keeps control over user-interface / navigation and presentation Seeks to avoid a defacto proprietary solution emerging Started Dec 2008 products due Spring 2011 Technical homogenisation can not provide the Subscription TV industry with competitive differentiation 16

17 Connected TV TV s with web CE Industry (Walled garden aggregations) Sony Bravia Internet Video Panasonic Viera Cast Samsung Internet@TV Philips NetTV Custom integrations Is there a long-term commitment to maintaining portfolio of content / device software? 17

18 Connected TV Through a Managed Service Platform Pace - Innovation Partner Remember STB is a bespoke managed service platform software updates... Pace is currently demonstrating Flash Lite apps running on our US HD Cable STBs Network Services: In-band Docsis OTT Flash Lite Internet applications : Social networking Video streaming Information Pace s Engineware TM... Subscription TV managed STBs offering video rich, OTT applications 18

19 Over-the-Top Summary Pace s customers (Subscription TV Providers) OTT expands their service offerings Being used today : DirecTV, Viasat, Canal+,... Robust, secure, upgradeable Managed service Pace : Trusted Partner, Innovator and Leader Delivering : Hybrid (OTT), Whole-Home,... Demonstrating : Advanced interactivity (OTT) Increasing need for higher performance and connected STBs Convergence : expanding Subscription TV with Over-the-Top 19

20 Great products to our customers every time.