The Future of TV:

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Madrid Spain, October 5 2007
The Future of TV Curators, Aggregators and
Niche Channels
Presented at FORO501 Innovation in Television
Content, platforms and formats Sponsored by
RTVE, UIMP, Abertis Telecom.
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• The Future of TV
• The influences behind the view
• Revolution?
• Evolution?
• The impact of change on content

3
Background
Forrester (UK) Media and Retail sector analyst,
During the dotcom boom then bust.
BBC (UK) Strategy, Factual and Learning The
360 era e.g. Rome on all platforms.
Nordicity (Toronto and London) Consultant
Film, TV, New Media Strategy development for
broadcasters and production industry, in the old
world and the new world
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• The Future of TV
• The influences behind the view
• Revolution?
• Evolution?
• The impact of change on content

5
Jim the new TV viewer?
Jim goes to university
No room or money for a tv doesnt buy cable
package buys broadband for school
Watches tv favourites online CSI, Sopranos, and
Discovery Channel on Joost

• Jim rarely engages with a Canadian broadcaster .
  online for the Corner Gas and goes to the pub for
  hockey

Graduates from university with student debt not
sure why he should buy a tv subscription package
for 50/month when he gets his favourites for
free . Replaces laptop with big iMac screen and
Apple TV
Jim never watches Traditional TV
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New technologies drive the Jim possibility

• Jim could be the norm, as new technologies could
  reduce the bandwidth costs of viewing online

• With peer-to-peer networks, the greater the
  number of users, the greater the power of the
  network
• Hence the lower the costs of bandwidth to the
  content distributor for distributing video

Source Jason Roks, PXP
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Advertising will follow Jim.. possibly away from
TV

• Internet advertising in Canada is growing by
  18.8 Compound Annual Growth Rate compared to TV
  at 3.8.
• As more Jims shift to viewing TV online, ad
  dollars also shift to the Web so is the
  traditional television business model under
  threat?

Current and Forecasted Ad Revenue in Canada
(U.S., 2005)
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• The Future of TV
• The influences behind the view
• Revolution?
• Evolution?
• The impact of change on content

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In actual fact, Jim is a Minority (for now)

• 90 of Canadians watch tv with a BDU subscription
  and pay 50

• 10 watch TV free via terrestrial analogue tv

• 29 between ages 9 and 29 view tv content online

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In Canada, there is evidence that traditional TV
is still the Main Screen
CBC audiences typically hover around 500-700,000
viewers (4 share) Little Mosque in 2007 hit 2m
HD TV Uptake is Steadily Increasing
of households
Nordicity Estimates for HDTV Set Uptake in Canada

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In the UK, terrestrial TV still reigns supreme
TV Viewing in the UK by type of platform
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• The Future of TV
• The influences behind the view
• Revolution?
• Evolution?
• The impact of change on content

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• The impact of evolutionary change on content
• New players aggregators, curators and niche
  channels-- will emerge, but only a few will see
  success
• Producers and Broadcasters will pursue hybrid
  models of revenue generation
• New and hybrid models will not change forms of
  content over night, but over time development
  will be impacted

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• The impact of evolutionary change on content
• New players aggregators, curators and niche
  channels-- will emerge, but only a few will see
  success
• Producers and Broadcasters will pursue hybrid
  models of revenue generation
• New and hybrid models will not change forms of
  content over night, but over time development
  will be impacted

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New Players Aggregators
Aggregating available content into one portal or
player
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New Players Curators
Curating or collecting the best content, both
video and interactive content, around a certain
subject or audience.
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New Players Niche Channels
A site dedicated to a specific program or a
specific stream of programming

• PRODUCER DRIVEN Têtes à Claques
• Tetes-a-claques, Quebecois site
• Animated clips posted daily

• BROADCASTER DRIVEN - CurlTV
• Niche broadcaster online only
• Curling games for die-hard fans
• Subscription fees charged

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But the Economics are a challenge with these new
models

• The dirty truth of the long tail only the
  aggregators make real money from aggregation
• Revenue shares based on a cut of advertising will
  be slim for each content provider
• Curating is a tough business, as audiences have
  to be generated before they can be monetized
• Heavy.com the cost of generating an audience
  via marketing the revenues generated by
  monetizing the audience
• To succeed, niche channels will struggle to
  command the perfect combination of
• High CPMs (ad rates) and/or subscription fees
• High user numbers
• Low production and distribution costs
• Low marketing costs

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• The impact of evolutionary change on content
• New players aggregators, curators and niche
  channels-- will emerge, but only a few will see
  success
• Producers and Broadcasters will pursue hybrid
  models of revenue generation
• While new and hybrid models will not change forms
  of content over night, over time development will
  be impacted

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Realistically most Producers and Broadcasters
will Pursue Hybrid Models

• Because of the difficult economics of the new
  players, broadcasters and producers will pursue
  both traditional and new sources of revenue

13 x 30 eps can be sold to broadcasters,
domestically and internationally
Interactive content and games can provide
alternative revenue streams, e.g. via sponsorship
Media player video content can provide
alternative revenue streams, via sponsorship
which is more heavily regulated in linear world
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Meaning that the number and complexity of
revenue sources will increase
Current and Projected Sources of Production
Funding - Canada
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• The impact of evolutionary change on providers of
  and forms of content
• New players aggregators, curators and niche
  channels-- will emerge, but only a few will see
  success
• Producers and Broadcasters will pursue hybrid
  models of revenue generation
• New and hybrid models will not change forms of
  content over night, but over time development
  will be impacted

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Implications on Content Production

• The development process will increasingly
  incorporate consideration of the following
  questions
• Does the content invite opportunities for
  sponsorship, and/or product placement?
• Can the content travel internationally to
  maximise value?
• Is interactive content versionable e.g. be sold
  as components, including for games?
• Able to produce spin-off products e.g., books,
  and other products

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Implications on Content Production

• A complex matrix algorithm will be needed to
  determine the maximum value of each different
  type of rights
• Who gets to distribute the program online and for
  how long and in which territory? First window
  broadcaster? Second window? How will it be
  geo-blocked?
• When are rights values exhausted by
  broadcasters before a producer dares distribute
  solo or direct to aggregators, such as Joost?
• Which aggregator, curator, or broadcaster will
  promise the highest revenue share?

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Implications on Content Production

• Content must be found and viewed to make money,
  with both the new and the hybrid business models
• So, what does content need to include to ensure
  this
• Metagged with popular key words to be found on an
  aggregator?
• Shock-factor encouraging viral marketing?
• Heavy marketing budgets?
• Attention grabbing titling?

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Conclusions

• The future of TV is a brave new world where the
  opportunities are high
• Viewers can be reached in any number of ways
• Potential buyers and distributors are numerous
• Costs of production and distribution decrease
• But the challenges are equally high
• The fight for viewers attention becomes harder
• Despite low distribution and production costs,
  generating enough revenue from each buyer and
  distributor is still difficult.
• The survivors will be innovators of content as
  well as of business models

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Thank-you

• For more information about Nordicity
• www.nordicity.com
• Contact
• Terri Wills
• twills_at_nordicity.com