DIGITAL MEDIA CONSUMPTION IS GROWING, EVERYTHING ELSE IS SHRINKING

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Evangeline Golden
6 years ago
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1 DIGITAL MEDIA CONSUMPTION IS GROWING, EVERYTHING ELSE IS SHRINKING US Consumer Media Consumption Share % 40.9% 35.2% Mobile 30.0% Desktop/laptop 14.0% 12.0% 6.6% 5.8% 2.9% 3.3% TV Radio Print Other Digital Source: emarketer

2 And averages do not tell the whole story

3 THE SHIFT IS GENERATIONAL Top 5 Media Mentions Among All Adults, 2013 Aged 75+ Aged Aged Aged Aged Aged Aged Total Watch TV Read newspapers/ magazines Listen to the radio Go online on a computer/ laptop/netbook/tablet Use a smartphone Source: Ofcom

4 GENERATIONS HAVE A PREDICTABLE LIFE CYCLE Source: Goldman Sachs

5 MILLENNIALS AND GEN Z First digital native generation(s) Already 45% of population and largest share of earners Profoundly different media habits

6 18-24 TV VIEWING DOWN ~30% IN 4 YEARS Traditional TV* Viewing Trends Among Year-Olds Weekly time spent in hours, based on total population Hours spent Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q *Traditional TV refers to all live + DVR/time-shifted TV viewing during the quarter. Source: Nielsen

7 Meanwhile

8 DIGITAL MEDIA CONSUMPTION GROWING EVERY YEAR, ESPECIALLY MOBILE Growth In US Digital Media Time Spent Desktop Mobile App Mobile Browser Total minutes (MM) 118,299 97,440 77, , , , , , ,522 MOBILE TIME SPENT Jan-13 Jan-14 Jan-15 Source: comscore Media Metrix Multi-Platform & Mobile Metrix; US, Total Audience

9 MILLENNIALS CHECK THEIR PHONES EVERY 10 MINUTES Source: Kana Software

10 My smartphone never leaves my side, night or day 87.0% THEY KEEP THEM IN REACH 24 HOURS A DAY 12.0% 2.0% Agree Disagree Not sure Source: Zogby Analytics, cited by KPCB (Mary Meeker LinkedIn slideshare)

11 When I wake up, the first thing I do is reach for my smartphone 80.0% THEY CHECK THEM FIRST THING IN THE MORNING 18.0% 2.0% Agree Disagree Not sure Source: Zogby Analytics, cited by KPCB (Mary Meeker LinkedIn slideshare)

12 So here s a glimpse at the past, present, and future of media

13 THE PAST (~2000): 3% DIGITAL 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom

14 THE PRESENT (~2015): 40% DIGITAL 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom

15 THE FUTURE (~2030): 80%+ DIGITAL 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom

16 TRADITIONAL TV HAS PASSED ITS PEAK Households With Pay TV Vs. Subscription OTT, U.S., E, Millions Pay TV Households Digital SubscripZon (OTT) Households E Leichman Research Group, US Census Bureau, Activate analysis

17 PAY TV SUBSCRIBERS ARE SHRINKING Cable TV Subscribers (US) Millions Q1 14 Q2 14 Q3 14 Q4 15 Q1 15 Q2 15 Source: Leichtman Research Group

18 Primetime Household TV Ratings VIEWERSHIP IS FALLING Nielsen Household RaZng (% Of Households With TV Sets Watching) Big 4 US TV Networks Average Source: Nielsen

19 Meanwhile

20 NETFLIX ~70 MILLION AND GROWING Q Netflix Subscribers Estimates in millions, Global Q Q Q Q Q InternaZonal DomesZc Q Q Q Q Q Q Q Millions Source: Netflix

21 HULU ~10 MILLION AND GROWING Hulu Subscribers Estimates in millions, Global E Millions Source: Hulu, BI Intelligence estimates

22 AMAZON PRIME ~45 MILLION AND GROWING Amazon Prime Members Estimates in millions, Global E Millions Source: Deutsche Bank, Company reports

APPLE TV 35 MILLION+ AND GROWING Apple TV Installed Base 40 35 Global US 30 25 20 15 10 5-2007

23 APPLE TV 35 MILLION+ AND GROWING Apple TV Installed Base Global US Millions Source: BI Intelligence estimates

24 FACEBOOK REACHES MORE THAN FREE TV Facebook vs. TV Daily Reach US Four TV Networks 73% 68% 63% 58% Facebook 83% 63% 89% 42% Percent Reach Age Age Age Age 55+ Source: Nielsen

25 NETFLIX IS WATCHED MORE HOURS PER MONTH THAN ALMOST EVERY OTHER NETWORK Total Hours Of Viewing, Per Month Per Network Liam Boluk, MEDIA REDEF

26 NETFLIX HOUSEHOLDS WATCH 60 HOURS OF NETFLIX PER MONTH, 2X ANY NETWORK GROUP Source: Liam Boluk, MEDIA REDEF

27 YES, TV STILL DOMINATES VIEWING TIME US Consumer Time Spent On Video Per Month, 2015E, Hours Ad-Supported 9% Paid Downloads 5% Total: 177 hours SubscripZon TV 14% TradiZonal TV 72% Source: Digitalsmiths, emarketer, GfK, Sandvine, Nielsen, TDG, Activate analysis

28 BUT DIGITAL VIEWING UP ~100% IN 3 YEARS Monthly Consumer Time Spent On Video, U.S., E, Hours Paid Downloads Ad Supported SubscripZon E Source: Digitalsmiths, emarketer, GfK, Sandvine, Nielsen, TDG, Activate analysis

29 And the TV audience is increasingly a specific demographic

30 MEDIAN VIEWER AGE MSNBC and CNN: 60 Broadcast Networks: FOX News: 68

31 WHY IS DIGITAL TV GROWING? Convenience.

32 WHY IS DIGITAL GROWING? We can watch what we want to watch when we want to watch it on any screen.

33 1. Digital TV networks will continue to thrive

34 ITUNES AND NETFLIX ALREADY DWARF AVERAGE CABLE NETWORKS Cable Network vs. Digital Content Revenue (Millions) $20,000 $18,000 $16,000 $14,000 $12,000 $10,000 $8,000 $6,000 $4,000 $2,000 $0 itunes Neilix AMC Source: News Reports, Company Filings

35 $12,000 YOUTUBE REVENUE CLOSING IN ON BROADCAST NETWORKS YouTube Ad Revenue Vs. CBS Ad Revenue And AMC Networks Revenue (Millions) $10,000 $8,000 $6,000 $4,000 $2,000 $- CBS Ad Revenue CBS Ad YouTube Ad Revenue AMC Networks Revenue Source: News Reports, Company Filings, BI Intelligence estimates, BofA Merrill Lynch Global Research

36 2. Access providers will continue to thrive unless (until?) real price competition

37 CABLE S FUTURE IS BROADBAND Cable Subscribers Millions By Service (US) TV Broadband Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Note: Select major cable providers Source: Leichtman Research Group

38 WIRELESS S FUTURE IS BROADBAND Wireless data service spending in the US (Billions, USD) Source: TIA

39 3. Traditional TV networks will go through ~decades of pain

40 Why?

41 Money follows eyeballs.

$30,000 $20,000 $10,000 $- 2003 2004 2005 2006 2007 2008 2009 2010

42 WHEN EYEBALLS LEFT PRINT THIS HAPPENED Newspaper Ad Revenue (Print vs. Online) $60,000 $50,000 $40,000 Print Online In Millions $30,000 $20,000 $10,000 $ * Source: Newspaper Association Of America, *Estimate

43 THERE ARE TOO MANY NETWORKS Channels Receivable And Watched Per TV Household US Average TV Channels Received Average TV Channels Watched Source: Nielsen

44 THERE ARE TOO MANY (MEDIOCRE) SHOWS Average original TV series each year vs. survival rate Source: Liam Boluk, MEDIA REDEF

45 So get ready for years of consolidation and pain.

46 DIGITAL MEDIA IS THE NEW BIG MEDIA 2014 Revenue Select Media Companies (Billions) 10.3% YoY $ % YoY $ % YoY $ % YoY -3.7% YoY 58.4% YoY $13.8 $13.3 $ % YoY -1.3% YoY -4.6% YoY 8.7% YoY 0.8% YoY $5.5 $4.6 $3.2 $2.5 $1.6 Google Disney Time Warner CBS Viacom Facebook Neilix Yahoo Ganneb AOL New York Times Source: Company Filings, BI Intelligence estimates

47 And big media companies are now distinctly medium-sized.

48 THIS IS THE NEW BIG 2014 Revenue Select Media Companies 27.9% YoY $233.7 Billions 2.9% YoY 5.4% YoY $132.4 $ % YoY 10.3% YoY $68.8 $66.0 Apple AT&T Verizon Comcast Google Source: Company Filings, BI Intelligence estimates

Left To Your Own Devices

V I D E O A D V E R T I S I N G B U R E A U - R E P O R T 2 0 1 8... Left To Your Own Devices Understanding Consumption In Today s Connected World Q1 2018 Contents Summary 3 The Impact of Connected Devices