Convergence A global media companys perspective

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Convergence A global media companys
perspective
Kevin Obi Senior Vice President Digital
Assets NBC Universal International
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• Introduction to NBC Universal
• Media convergence trends in mature markets
• Response from a global media company

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The Power of GE and NBC Universal

• A division of one of the most respected global
  companies
• Revenue 173Bn
• Net Income 22Bn
• Market Cap. 317Bn
• 300,000 employees

• One of the worlds leading media and
  entertainment companies in the development,
  production and marketing of entertainment, news
  and information to a global audience (Circa 10
  of GEs revenues)

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NBC International Universal brands
TV Production Distribution
Film
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Views on Convergence

• Industry view
• Fixed mobile convergence
• Device convergence
• Multi-services convergence (bundling)
• Network convergence
• Media/telecoms/technology
• industry convergence

Are we putting the customer first?
Technology
Churn reduction
Cost savings Cash-in
Customer Benefits?
Media
Telecoms
Revenue enhancement
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• Introduction to NBC Universal
• Media convergence trends in mature markets
• Response from a global media company

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Huge changes in media technology in recent years.
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.. accompanied by changes in the media consumer
Now
1950s
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..have resulted in current media trends

• Choice proliferation and fragmentation of
  audiences
• More time shifting of TV content through PVRs
• Bigger TV screens, higher definition, PC monitors
  becoming TVs and vice versa
• Experimentation with windowing of theatrical
  releases
• Rise of content on the internet UGC, video,
  illegal TV and Films (mostly for free)
• Advertising money shifting from TV to the
  internet and advertiser move to greater
  targetability
• 6. Consumers are more technology savvy

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Convergence of video content and the Internet is
the most pressing near term trend

• Internet and media convergence was a major
• theme CES Las Vegas in January 2008
• IPTV services being launched across the world
• France is IPTV market leader
• Japan and Hong Kong are Asian market leaders,
  followed by places like South Korea
• Early days of IPTV services in India
• Mobile internet and video on mobile is still
• relatively immature, except in Japan and Korea
  

• Examples from Europe USA
• UK Internet traffic to online video websites
  increased
• by 178 between February 2007 and 2008.
• BBC iPlayer (catch-up TV) increased its market
  share
• of UK Internet visits by 423 between Feb
  Dec 07
• MSN announced in April 08 that video streaming
  in
• Europe is growing at over 60 every month
• SRG's study "Prime Time is Anytime" surveyed
  Americans aged 12 and over
• Internet TV viewers nearly doubled from 25 to
  43 between 2006 and 2007
• 20 of the American online population watches TV
  on the internet every week

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Possible future scenarios
1 - Status Quo
Audience inertia and existing barriers prevent
mass shift to new media platforms except for
short form content
2 On demand TV
Internet enabled long form content on-demand
gains traction and a significant proportion of
the linear TV audience, but sits alongside and
complements linear TV
3 -True Anywhere / Anytime TV
The norm becomes for consumers go around
traditional broadcasters and search for content
on the internet, obtain this directly from
content owners (or illegally) rather than watch
linear TV
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but barriers exist to true anytime/anywhere TV
Internet
Home Broadband Connection Port
2. Connection from BB port to TV or
the last 10 feet
1. Pipe thickness needs to be 6 Mbps
TV
Others barriers include licensing, windowing,
business models
3. Viewer inertia low desire to watch
TV on PC
PC
Only 6 of US viewers have ever connected a
computer to a TV to watch internet video Harris
Interactive Entertainment, 2007 US survey
Diagram LEK Consulting
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Can we see the future in younger audiences?
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New competitors have also emerged UK example
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• Introduction to NBC Universal
• Media convergence trends in mature markets
• Response from a global media company

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The major challenge for media companies
How do we make the transition from our
businesses of today to the future businesses of
tomorrow, without destroying the businesses of
today?
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Response from a traditional media company
Content is king - continue to make great
content Compete against increasing power of
Internet distributors - control distribution,
branding and the user experience Build
stand-alone value in online destination sites
Take a few bets on the digital media stars
of tomorrow
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Internet TV - hulu

• Joint Venture by NBC Universal and News Corp
  created to aggregate premium video content for
  the U.S. Market
• Founded in March 2007 with a 100 million
  investment from private equity firm Providence
  Equity Partners.
• Consumers Aggregate Digital Content, With Great
  User Experience
• Build the best consumer video experience online
• Premium video content TV, film (both short and
  long-form), Internet originals
• Highest levels of content protection
• Scale Distribute to give scale while monetizing
  content and branding Hulu
• Distribution partners in US include AOL,
  Comcast, MSN, MySpace and Yahoo
• Monetization Attractive Business Model for
  Content Owners
• Primarily ad supported with commitments from
  major brand advertisers
• Advertisers Premium video content
• Largest video advertising network ever assembled
  on the web
• International Expansion

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Convergence on mobile
NBC Universal has made content available on
mobile platforms, including long-form and
short-form content, WAP sites, text-based
applications services

• Financial news and info on WAP, "live" channel
  streaming and on the Nokia catalogue in Europe
  Asia
• Licensing content applications (games,
  personalisation) based on our Film and TV IP D2C
  platforms pre-loaded films onto micro-SD
• Made for mobile content production stand-up
  comedy clips, animation, wallpapers,
  screensavers, voice tones
• Simulcast of 3G Mobile TV services in Germany
  Austria, seeking to do more across Europe
• NBC2Go mobile TV channel on media flow 2,200
  hours of live, wireless coverage of the 2008
  Olympics the biggest wireless event to date in
  the US.

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Taking bets - NBCU/GE Peacock Equity Fund

• 250MM Fund launched 1Q07
• JV between GEs Media, Communications
  Entertainment Group NBC Universal
• Investment Round Series B or later
• Sector Focuses Digital Advertising, Digital
  Content, New Platforms, Mobile, Interactive
  Entertainment, Media Technologies

Seeking to make further investments in India
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Conclusion

• Convergence is now a reality
• Presents both a great opportunity and a major
  threat to media organisations
• Smart media companies will follow the audiences
• NBC Universal is well ahead of the curve!

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• Thank you!