VOD s Advantage: Viewers Watch TV Longer & Spend More Time With Commercials

VOD s Advantage: Viewers Watch TV Longer & Spend More Time With Commercials

VOD (Video on Demand) allows users to view/catch up on shows or movies through a single platform from cable, telco or satellite providers without the need for extra hardware.

Video On Demand Summary VOD is now available in 60% of homes; up 43% in five years VOD content has grown exponentially Number of titles have quadrupled Recent episodes and high profile programs have been added to VOD libraries As a result, consumer usage is growing steadily 70% use VOD; 59% watch TV content Time spent with VOD is up; close to 9 hours/months VOD viewers watch longer; spend more time with commercials Who are they? Higher income, A18-34 who are likely to have kids & own more devices Asians tend to watch more VOD content Nielsen measures and reports VOD Viewing VOD viewing is now being measured and therefore monetized within the C3 window. More advertisers are exploring VOD opportunities day 4 and beyond

Video On Demand Is Now Available In 60% Of Homes; Up 43% In Five Years VOD Availability in TV HHs 42% 46% 53% 57% 60% 60% '09 '10 '11 '12 '13 '14 47,660 UE(OOO) 53,278 61,095 65,300 67,946 69,481 Source: Nielsen; June of each year.

VOD s Growth Is Driven By Increased Ease Of Use and Large Number of Titles Available Average U.S. MSO VOD Titles Per Month 28,180 # of Titles Has Quadrupled In Past 5 years 15,667 20,081 5,950 8,100 10,403 2008 2009 2010 2011 2012 2013 Source: SNL Kagan Multichannel market trends; Count represents avg monthy selection, reflecting turnover and refreshed content and are not comparable to average titles available simultaneously.

And Libraries Continue To Be Populated With Recent Episodes of Popular Shows Sample Programs on VOD (Availability Varies by Cable Provider)

Two Out Of Three Consumers Use Video On Demand; Mostly Tuning To TV Programming 70% of Digital Consumers Use VOD check 59% of All TV s That Watch On Demand Watch Content From Major Cable & Broadcast Networks Comcast reported; 70% use VOD of those who use, 59% view tv pgm = Rentrak 2013 report

One Third Of All TV Entertainment Transactions Occur Within The First Three Days % of Transactions Occurring By Day Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 23% of all FOD transactions occur within days 1-3 31% of all TV entertainment transactions occur with days 1-3 Source: Rentrak 2013 report

So There Exists An Opportunity For Advertisers To Reach More Viewers Outside The First Three Day Window % of Transactions Occurring By Day Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7, ETC 69% of all TV entertainment viewing occurs outside the C3 window Source: Rentrak 2013 report

Usage Levels

Viewers Spend Almost 9 Hours a Month Watching VOD Time Spent (Hrs Per Month) +9% v. 2011 8.7 8.5 8.0 2011 2012 2013 Source: Rentrak state of VOD report 2013

And Usage Will Continue To Grow: 1 in 4 A18-49 Cite an Increase in VOD Usage in Past 6 Months In The Past 6 Months, How Has Your Video On Demand Usage Changed? CAB/Magid Video Nation Study 2013; BASE: Have VOD 1208 In the past 6 months, has your Video On Demand usage.?

On-Demand Viewers Tend To Watch More Of The Commercials Since Fast-Forward Feature Is Most Likely Disabled Average Minutes Watched Per Viewers For a 30-min Program LIVE 20 min DVR 23 min VOD 28 min Source: Nielsen custom Npower Statiistic: avg number of total pgm min viewed per viewer on each mediumm for recent pgm (P2+), oct, 2013

In Fact, VOD Viewers Watch More Television Overall Daily Time Spent With Time-Shifted Viewing In Primetime Recently Telecast VOD Viewers Non-Recently Telecast VOD Viewers Total 0:09 0:14 Hispanic 0:05 0:11 Daily Time Spent With Live Viewing In Primetime Black 0:05 0:10 Recently Telecast VOD Viewers Non-Recently Telecast VOD Viewers Asian 0:05 0:15 Total 0:54 1:05 Hispanic 0:48 1:00 Black 1:07 1:16 Asian 0:32 0:44 Source: Nielsen Cross Platform 1Q14; Recently Telecast VOD (pgm that is delivered on VOD within 7 day of original telecast

VOD Viewing By Age/Race

On Average, VOD Contributes 4-5% In The Coveted 18-49 demo, While Individual Shows Experience a 15-20% Increase in Viewership From VOD % of Viewing LIVE VIEWING TIME-SHIFTED VIEWING VOD VIEWING ALL 67% 29% 3% P2-11 64% 30% 6% P12-17 64% 29% 7% P18-34 59% 35% 5% P35-49 60% 36% 4% P50-64 68% 29% 3% P65 75% 23% 2% Source: Nielsen Cross Platform 1Q14; Recently Telecast VOD (pgm that is delivered on VOD within 7 day of original telecast

VOD Platform Appeals To The Younger Demos % of Viewing LIVE VIEWING TIME-SHIFTED VIEWING VOD VIEWING 6% 7% 5% 4% 3% 2% 30% 29% 35% 36% 29% 23% 64% 64% 59% 60% 68% 75% P2-11 P12-17 P18-34 P35-49 P50-64 P65 Source: Nielsen Cross Platform 1Q14; Recently Telecast VOD (pgm that is delivered on VOD within 7 day of original telecast

And Asian Americans Tend To Watch More VOD, Whose Contribution Through VOD is 8% % of Viewing LIVE VIEWING TIME-SHIFTED VIEWING VOD VIEWING 3% 5% 5% 8% 32% 19% 32% 40% 76% 65% 63% 52% White Black Hispanic Asian Source: Nielsen Cross Platform 1Q14; Recently Telecast VOD (pgm that is delivered on VOD within 7 day of original telecast

Although Movies are Still the Most Popular Genre, 65% of VOD Users Have Watched a TV Show in the Past Month A18-49 Viewed In Past Month (Base: VOD users) Watched Movies On VOD 81% Watched TV Shows On VOD 65% Source: MRI Doublebase 2013 A18-49; Base= watch VOD in past month

Due to their Serialized Nature, Dramas are the Most Popular TV Program Type to Use VOD to Catch Up With Distribution Of Top Program Genres 52% 29% 7% 6% 2% Feature Film Drama Documentary Participation Variety Comedy Source: Nielsen Primetime internal VOD & total TV usage data; NPower internal VOD data includes only Programming encoded for measurement

What is driving consumers to VOD?

Catching Up Is A Big Driver For VOD Content; Half Citing They Use It To Get Up To Date With New Season I ll Watch Past Episodes of TV Programs on VOD to Get Up to Date With The New Season (Top 2 Box) +19% v. YAG +23% v. YAG 53% 51% +12% v. YAG 47% A18-24 A25-34 A18-49 1055 Please indicate the extent to which you agree with the following statement In order to be up to date with the new season, I ll watch past episodes of TV programs on Video on Demand. (Top 2 box strongly agree, agree) Source: Nielsen; August of each year.

Who is the typical VOD user?

VOD Users Are More Likely To Be Younger Share of Audience VOD TV 48% 31% 12% 9% 11% 5% 17% 23% 23% 20% K2-11 T12-17 A18-34 A35-49 A50-99 Source: Nielsen; Sept 13

They Tend To Be Higher Educated, Earn More and Own More Video Devices VOD Audience Comp Delivery Status Income/ Family/Education 84% 52% 45% 43% 36% 40% 30% 20% 33% 15% 1% 11% Satellite Wired Cable Telco Recently Telecast VOD Non Recently Telecast VOD Earn $100K Have Kids 4+ Yrs College Recently Telecast VOD Non RecentlyTelecast VOD Ethnicity Device Ownership 71% 65% 85% 77% 57% 52% 51% 42% 84% 83% 63% 56% 15% 13% 17% 9% 4% 5% White Black Hispanic Asian Recently Telecast VOD Non Recently Telecast VOD Smartphone Owner Source: Nielsen Cross Platform 1Q14; Recently Telecast VOD (pgm that is delivered on VOD within 7 day of original telecast DVR HH Tablet Owner DVD Owner Video Game Console Owner Recently Telecast VOD Non Recently Telecast VOD

Is VOD measured and therefore able to be monetized?

Nielsen Now Measures and Reports VOD, Allowing the Industry to Monetize Recently Telecast VOD Day 1 Day 2 Day 3 Day 4 Day 5 Day 6 Day 7 Day 8+ If content has SAME commercial load does it contribute to linear telecast rating? If content has DIFFERENT commercial load does it contributes to linear telecast rating? Yes Yes Yes Yes Yes Yes Yes No No No No No No No No No What Happens After The 7 th Day? Content is captured but does not contribute to the linear telecast ratings. Is VOD incorporated in the C3 rating? Yes, if content has same commercial load.

VOD s Dynamic Ad Insertion Allows For Monetization

VOD Dynamic Ad Insertion What is It? Allows network operators to provide target ads that can be swapped in and out of VOD television programs Footprint? 30+M HHs DAI Universe Who? 10 of the Top 10 DMAs, 26 of the Top 30 Top broadcast and cable programming for example NBCU, Scripps, Fox, & FearNet Source: Canoe 2013 STB Data

VOD DAI Current Usage Average of 68 VOD DAI campaigns per week 17 networks utilizing the platform Campaign orders come from linear & digital Brand categories executing DAI campaigns include: Retail Health & Beauty Travel Movie Studio Food Pet Automotive Source: Canoe 2013 STB Data; 8/13

Benefits of DAI Leverage the Existing Linear TV Plan Potential to target like linear TV, by: Time, Series Genre Rating Use the same ad asset as linear TV Compliment the TV plan's reach as VOD DAI reporting does not disrupt VOD inclusion in the Nielsen rating

Benefits of DAI Get Timely & Reliable Reporting Pay only on actual viewed ad impressions verified by Canoe (MRC Certification in process) Stable, accurate, single source ad impression reporting delivered on a daily basis by Canoe All ad impressions are "above the fold Fuse Canoe HH ad impression with Nielsen VPVHs (apply Linear or C3 VOD VPVHs) Compliment Rentrak data on Program Views

What is the future of VOD?

Video On Demand Revenue Is Poised To Grow PPV/VOD Ad Revenue (in millions) 2016 2015 2014 2013 2012 2011 2010 2009 2,471 2,342 2,215 2,071 1,931 1,877 1,851 1,788 Source: SNL Kagan; revenue for cable, dbs,telco ; grey bars are estimates

Appendix

Cable VOD Advantages DVR Streaming Web Sites VOD Pro: Has fast-forward, rewind and pause capability Con: Extra cost to HH Pro: Has fast-forward, rewind and pause capability Con: Extra cost for some content Have to create an account to access info Fast-forward may be disabled for some content Pro: Already hooked up to the television. No additional user name, password or additional monthly bills are necessary Virtual library Can watch content anywhere anytime on various platforms with services such as XFinity Con: Fast-forward may be disabled for some content