Bruxelles, July the 15th

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Bruxelles, July the 15th

• New Screens
• New Medias
• Video and Broadband

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Agenda

• Prospects for video related to Internet
  developments as well as cinematographic and
  audiovisual production.
• What are real business opportunities that
  broadband offers the distribution of
  cinematographic and audio-visual products?
• Internet, Broadband Internet, ADSL, Wi-fi,
  interactive TV.

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1- End Of The Internet Bubble (1999/2001)
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The Current Audiovisual Value Chain
What was to change
Producer Distributor
Editor Channel
Aggregator Bouquet
Diffusion
Portal
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Mergers of Big Companies Remember!

• AOL/Time Warner.
• Bertelsmann-Napster.
• Vivendi Universal.

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Painful Disillusions when the Bubble Bursts
(2000)

• Withdrawing of the financial markets with respect
  to the NTIC.
• Implosion of the fully Integrated Groups
• Internet Content market remain flat

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Where are we just now?

• Didnt one throw the baby out with the bathwater?
  

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2 - The New Deal (2002)
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Two Major Impulses Since 2002

• DVD
•  
• Broadband

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New Value Chain
Production
Syndication
Software
ISP
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Key Questions

• Is there really a business model for video
  products on-line?
• Which are the cultural stakes related to the Web
  (World Wide Web).

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Explosion of Broadband

• The number of ADSL lines worldwide 46 million
  at the end of 2002 (30 million at the end of
  2001).
• Quadrupling of medium-heavy traffic
• PC always connected
• Unlimited consumption

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The Broadband Market derived from free downloading

• Electronic mail constituted the "killer ap'" of
  the Internet first generation.
• Free down loading is the driver of Broadband
  value for consumers.
• Games, softwares, and videos are at the heart of
  the promise.
• Currently, only the game on line represents a
  paying market.

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Threats!
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To Summarise

• The spontaneous culture of Net surfers is exempt
  from payment for content, and related to the free
  sharing of contents. 
• Free down loading is the driver of Broadband.
• Video is a large part of the promise.

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Consequences

• The fight against industrial hacking becomes a
  central stake for the movie industry,
• But Internet is not the the only responsible for
  hacking.
• The rights owners are relatively lonely in this
  battle.

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3- The Divine Surprise
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The DVD Leads To New Consumer Behavior

• 60 of consumers buy on average a DVD per month
  (28 for VHS).
• 60 of the purchases (or hiring) are due to the
  willingness to see a film missed in the cinema,
  against 40 for VHS.
• DVD now draws the TV set market (home theater,
  flat screens etc).

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4- In Search of Graal
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Shall We Believe in TV by ADSL ?

• New technology allows to broadcast TV by ADSL
  without additional installation.
• Possibility of "triple play" for telecom
  operators telephoneInternetTV.
• But low potential if the offer is reduced to a
  few thematic channels.
• The interest lies within new VoD style offerings.
  

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New Consumer Tendencies related to DVD

• The small screen competes with large screens
  (cinema)
• Strong qualitative request from consumers
• New consumers gradually break free from TV
  schedules
• Choosing time gains ground in comparison to
  imposed time

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5- Towards a New Way Of Video Consumption
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VODWhich technology?

• Cable is well positioned in the countries where
  it is fully deployed (USA, Nederland, Belgium,
  etc.)
• In all other countries, satellite allows already
  restricted VoD
• Telcos will develop their offer later, after the
  ADSL network has matured.

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First Steps

• PVR in the USA, (Tivo and Sony) a slow but
  regular progression
• STB France Pilotime (Canal) and Platinium (TPS)

Tivo Série 2
Sony digital recorder
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VoD Take-up around 2007
2007
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Principal Conclusions (1)

• Broadband will strongly stimulate video on
  Internet
• Development of Broadband will probably enhance
  the advertising business model, but on a modest
  scale.
• Free audiovisual offerings, legal or illegal,
  will continue to grow on the Internet.
• Hacking constitutes the principal threat for the
  audiovisual industry and more specifically for
  the cinema.

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Principal Conclusions (2)

• The electronic distribution of audio-visual
  productions (DVD or VoD) is the principal stake
  of the video business for the five next years.
• Television will become more and more interactive.
  
• Paying TV by ADSL constitutes a real, but
  limited market.
• VoD could be a strong opportunity for the
  audiovisual production.  

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Europe 3 Directions to Remain in the Race.
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1-Launch an ISP/Producer negotiation in
order to stimulate the dialogue between the
technical operators, ISPs and producers, in
particular on the question of hacking
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2- Quickly inform the case for VoD from a
commercial, technical and legal point of view.
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3- The Culture Issue Launch a reflexion
about the linguistic and cultural presence of
European Cultures on the Internet
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Thank You for your Attention