A new breed of media?

Survey by GFK

A new breed of media?

Report on TV myths & truths

Foreword

It has been predicted that the TV industry will change significantly due to the arrival of new devices such as smart TV, connected TV, smartphones and tablets. Indeed, many have predicted that traditional TV will be displaced from its pre-eminent position thanks to the rise of portable devices delivering digital content, as well as the increase in savvy consumers and anytime/anywhere content.

So where does the future lie for the TV industry? Should broadcasters be worried that traditional TV is going to be assigned to the history books? Should advertisers give up promoting products on TV? Will the consumer give up his love affair with the TV in favour other, newer devices?

We have conducted research into these challenging questions. To do this we surveyed consumers in the Netherlands using a questionnaire jointly developed by Deloitte, Paul van Niekerk from GfK and Michel van der Voort from SPOT. We also spoke to advertisers, media buyers, broadcasters and content producers to understand their perspectives as they adapt to the digital revolution and deal with a global economic slowdown. Our research focused on two key areas: • the change of consumer behaviour with respect to their consumption of TV content, and • the response of the players in the TV value chain to these changes.

It’s an exciting time to be part of the ever-evolving media industry. We, as members of the Deloitte TMT team, are pleased to present you with our view on the TV industry’s future.

The results may surprise you.

Daan Witteveen & Marieke van der Donk

2

Content

Introduction to the report

4

Myth 1: TV is no longer relevant

5

Myth 2: New devices will destroy television as we know it today

8

Myth 3: Social media is more influential than TV

17

Myth 4: Advertising on TV will decline

23

Myth 5: Content wants to be free

30

A new breed of media: Deloitte perspective on the future of TV

38

Appendix: Research Description

45

A new breed of media? Report on TV myths & truths

3

Introduction to the report

Today’s consumer lives in the golden age of media consumption. He has an incredible amount of media at his fingertips, which he is able to access with increasing ease through an ever-widening array of technologies and devices. Media consumption for the average European is forecast to continue rising to an astonishing 92 hours a week in 2020. While this does include overlap, the importance of media in the life of today’s consumer cannot be understated.

Many futurists have been quick to write the epitaph of traditional media due to the rise of new media, but the graph below shows the impact on TV so far has been limited.

This report examines the impact of new technologies and new devices on television-related behaviour and the resulting impact on advertising and consumer willingness to pay. It does this by examining and dispelling common myths related to the TV industry, and by taking a fact-based approach to explaining

the impact of these technological shifts on the TV eco-system, including the impact on future business models of TV value chain players.

To produce this report, Deloitte/GfK conducted an online survey of 2,000 consumers in the Netherlands and interviewed key opinion leaders. We also used findings from a similar survey carried out annually in the United Kingdom by Deloitte/ GfK. These results were supplemented with research from industry reports, annual reports, analysts’ reviews and our own experience. For details of our survey methodology, please see the appendix on the research description.

The bottom line of the study is this: despite the explosion in new media forms and the rise of new devices and technologies, TV remains first among equals in the media world. No other media type is able to attract the vast numbers of people that television can.

Figure 1 Number of hours per week spent per media type 1 90

Internet Digital TV Analogue TV Games Wirelesss Outdoor media Digital Radio Analogue Radio Cinema Print

75

60

45

30

15

0 1900

4

1920

1940

1960

1980

2000

2020

Myth 1: TV is no longer relevant

People are watching more TV than ever before Contrary to popular belief, the Dutch are watching more TV than ever before. In fact, the average Dutch person now watches 191 minutes of TV every day, spending 1/5th of every waking hour watching television. This number has actually increased by five minutes in total in the last five years.2 In the UK, this number is even higher. There, people watch TV for 242 minutes per day3, an increase of more than 20 minutes since 2003.4 In the US, the total number of daily minutes spent watching TV is 283.5

It seems that TV is leading rather than following social media, and social network conversations are often fuelled by the latest TV shows. The Facebook page of ‘The Voice’ in the US has above 3 million followers.

More than 15,000 tweets were sent every second when Spain scored a goal during the Euro Cup final in 20129, largely by people watching the live match on TV, we presume. TV is a critical part of the end-of-day relaxation routine for most. Nearly 60% of participants in the Deloitte/GfK study on TV behaviour felt that TV was the best way to relax at home.

TV remains the prime driver and binder of national passion during mega events. For example, sport events continue to attract record viewers. Despite the Netherlands not making it to the finals, over 5 million Dutch people tuned in to watch the final of the European Championship between Spain and Italy in 2012.6 This number was much higher for the World Cup final in 2010 between The Netherlands and Spain, when more than 8.5 million viewers saw the Dutch team lose the final.7

TV also continues to drive content creation in other media sectors. TV listing magazines remain incredibly popular in the Netherlands. Veronica Magazine, for example, has a circulation of 802,599, reaching 2.5 million readers.10 TV talent shows continue to be the birthplace of a large number of new music stars. TV remains critical for brand building, and viewers reveal that TV advertisements have the greatest impact on them, according to the Deloitte/GfK survey.

Meanwhile, the popularity of reality shows in the Netherlands remains at an all-time high. The last season of ‘The Voice of Holland’, a popular TV singing contest, was watched by over 3 million viewers on average. The final of ‘Boer zoekt Vrouw’ (Farmer seeks a Wife) was watched by over 5.3 million viewers.8

Even in today’s age of multiple information sources, TV continues to have a huge ability to frame a society’s opinion. The Deloitte/GfK survey in the Netherlands shows that 62% of respondents feel that “of all the media types, television has the greatest power to change the way people think”.

Figure 2 Number of minutes TV watched the day per age segment (average minutes per day)12 257 222 232 237 225 225 160 166 167 159 162 112 116 116 113 116

112 122 112113118

6-12

13-19

2007

2008

2009

20-34 2010

254

263 266

255

184 191 186 184 191

183 188 180 182

184

35-49

50-64

65+

Average

2011

A new breed of media? Report on TV myths & truths

5

At the same time, people appear willing to spend even more on television. The average monthly TV subscription has gone up from €19.87 in 2007 to €23.87 in 2011, a 20% increase. This number is expected to increase even further to approximately €27 in 2014.11

is likely to increase the uptake of TV consumption, especially among younger, technology-friendly audiences. Easy access means that viewers will be able to watch TV not only in traditional areas like the living room or bedroom but also in other areas inside and outside the house. At the same time, younger audiences no longer have to go to their desktop computers in their bedrooms to surf the net, but can do it in the living room while watching TV.

The expectation that multiple media options will cool the attraction of traditional media like TV to younger audiences has not yet happened in any significant way.

Time spent on TV by children between 6-12 years has been flat over the last four years, whereas there has been a net 3% decline for viewers between 13-19 and 20-34. However, time spent by older audiences (50-64 and 65+) has increased by 5%.

While new devices and other technology developments increase the possibility of multitasking, 66% of people when watching TV only watch TV. This percentage is higher than the single-minded use of other media types.

Over the next few years, the increase in the number of portable connected devices, the proliferation of second screens and the easy access to on-the-go services

Figure 3 Percentage of time of single-tasking during use of media (%)13 TV

66

Gaming (computer)

51

Magazine

43

Paper

34

Call/Text (fixed)

29

Surfing the web

28

E-mail

28

Social Media

18

Call/Text mobile

8

Radio

3 0

6

15

30

45

60

75

Nearly half the country “cannot imagine life without TV” Of the respondents surveyed, 45% agreed with the statement “I cannot imagine life without television”.

This outcome shows how strongly people value watching TV and what a big role it plays in people’s lives. Females agree more strongly than males at 48% and 42% respectively. In the Deloitte/GFK study in the UK, the number was even higher; 55% of the entire sample agreed with this statement14. The UK respondents also feel that watching TV brings the family together much stronger than the NL respondents across all ages. For example, nearly 55% of the people between 35 and 44 agree with this statement in UK while in NL approximately 32% agrees.15 16 In a world where the mobile phone is becoming more and more indispensable, it may be surprising to learn that more than 1 in 3 people would be willing to give up their phone two keep their TV. The survey shows that 35% of respondents would rather keep their television than their mobile.

TV market the new battleground for technology giants The TV market has recently captured a lot of attention from non-traditional players like Apple and Google.

In the Netherlands, Google has recently launched Google TV, and Sony18 is expected to partner Apple in the Netherlands. The entry of left field competition is expected to force TV manufacturers and producers of TV interfaces to focus on usability19, and many analysts expect TV to become the next digital battleground.20

Conclusion: Despite new developments in the media world, television remains a highly relevant and growing market. Consumers are still in love with the TV, which means players in the TV value chain, including content producers, broadcasters, cable companies and device manufacturers, are looking to grab a bigger share of the pie. The entry of global technology giants like Google and Apple into this industry is further testimony to televisions’ long-term attractiveness to consumers.

Figure 4 “I cannot live without television” (category, %)17 Total

32% 32%

23%

45%

Total

Gender

36% 36%

29% 29%

Disagree Indifferent Agree

24% 22%

42%

Male

48%

Female

A new breed of media? Report on TV myths & truths

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Myth 2: New devices will destroy television as we know it today

networks, Internet TV and the Internet itself have had little impact on the amount and manner of television consumption.

The reports of my death have been greatly exaggerated Mark Twain The news media loves to report on new devices and disruptive new technologies. Super set-top boxes, private video recorders (PVRs), connected TVs, 3D TVs, tablets, over-the-top devices – all have been predicted to significantly change TV consumption patterns and, consequently, the business models of players. By 2016, analysts have predicted that there will be 1.8 billion connected TV devices globally.

However, these purported threats have mostly not materialised. Relative to initial expectations, digital TV, the personal video recorder, video-on-demand, social

Consumers still largely rely on TV schedules (66% on TV screens and 56% in newspapers/magazines) and trailers on television (80%) for a majority of their TV viewing, while the growth of torrent sites has not adversely affected the TV market in the same way it has affected the music market.

“The challenge for TV moving forward is to maintain its position as a primary activity�

Dan Ligtvoet, EVP & MD Viacom International Media Networks, Northern Europe

Figure 5 Connected TV devices globally (billion)21 2,0 1,80 0,05

Media-streaming devices

0,25

Hybrid set-top box

0,25

Games console

0,35

Connected Blu-ray player

0,90

Connected TV

1,5 1,25

0,93

1,0 0,74

0,5

0,50 0,36

0,0 2011

8

2012

2013

2014

2015

2016

Figure 6 “How do you find out about new TV programmes which you want to watch” (category, %)22

Browsing the listings on TV screen

23

Browsing the listings in newspapers / magazines

19

Seeing trailers on television within the broadcast schedule

18

Recommendation by a friend

43

2

62

17

63

5

2

41

37

8

Recommendation in a newspaper / magazine

32

27

42

50

2 2 2

Browsing the shows in broadcasters on-demand services

3

23

70

4

Recommendation on a social networking site

3

24

69

4

Seeing adverts in newspapers / magazines

3

Recommendation on a website

2

Seeing trailers on a broadcasters on-demand services

2

Seeing adverts online

1

Seeing posters or billboards

1

54

40 32

62

18

4 69

3

69

26 20 often

3

76 26

0

3

sometimes

40

60 never

4 80

100

don’t know

A new breed of media? Report on TV myths & truths

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More screens mean more TV In June 2012, over 6 million people in the Netherlands owned a smartphone and 2.8 million owned a tablet. The number of smartphones has increased by 600,000 in the last six months, with the number of tablets increasing by over 1 million in the same period.

Worldwide, tablet sales are predicted to grow by nearly 80% a year, to 326 million tablets sold in 2015. By then, nearly 1 in 6 people in the world will have a tablet.

Figure 7 Adoption of tablets in the Netherlands 23 24 Tablet ownership (% of people using tablets in NL) Ownership of tablet/iPad

14%

More screens do not mean less TV. On the contrary, 6 million smartphones, many with large screens, and 3 million tablets will augment the 12.6 million TV sets in the Netherlands and increase the opportunity that people have to watch TV.25 Just as smartphones have revolutionised the mobile phone experience, so can smartphones and tablets transform the TV experience. In all likelihood, new devices will mean that people will be able to watch TV outside the traditional lounge and bedroom which is the so-called ‘TV everywhere experience’.

23%

6%

1% Aug-10

Jun-11

Dec-11

Jun-12 326 26

Number of tablets in the world (m) Other MeeGo Microsoft iOS

WebOS QNX Android

252 20 24 178 14 104

18 15 2010

64 11 47

23

2011

2012

69

54

96 2013

122

2014

2010

10

149

2015 535

482

Tablet PCs Other PCs

95%

116

85

Tablets v/s other PCs, in the world (m)

347

34

434 357

390

18%

27%

41%

82%

73%

59%

2011

2012

2013

52%

61%

48%

39%

2014

2015

TV still the preferred device to watch Live TV Today, Live TV is still being mainly consumed in the traditional way, and a traditional TV is still the dominant device to watch broadcast TV transmitted live, as indicted by 96% of the respondents. Only 4% of respondents watch Live TV through other devices such as laptops, tablets or mobiles.

A likely reason is the quality of services on offer, but that will improve as the number of free and pay-asyou-go offerings for mobile TV increases. However, bandwidth remains an issue in the short term.

Watching Live TV on mobile devices on current 3G networks in the Netherlands is not an option; its limited bandwidth does not yet allow broad streaming. Long Term Evolution services, marketed as 4G LTE, do allow this but they are not expected to be launched earlier than 2013 for the first operator (T-Mobile) and not earlier than 2014 for other operators (KPN, Vodafone).27

“In South Korea prime time is now between 6pm-7pm when many people travel from work to home as people watch TV on new devices. This may happen in the Netherlands in a few years” Ton Schoonderbeek, Regional Leader Benelux & Nordics Mindshare

Figure 8 “What device did you use to watch broadcast TV as transmitted live?”26 A TV with buit-in internet access

A TV with a set-top box

Other* Not specified 4% 2% 8%

22% 66% A regular TV (cable/broadcast)

The limited success of mobile TV offerings in the past has much to do with the limitations of mobile broadcast technology deployed, poor quality handsets and tedious subscription plans.28 These are not the only hurdles to overcome either. One of the major barriers to adopting Live TV on mobile devices, even in advanced markets like the United States, is the rights regime. While cable companies have the rights to retransmit content within a home on other mobile devices, they usually need to renegotiate rights with content owners should they wish to broadcast the content on tablets outside the home. Nevertheless, after considering the future potential the same Dutch operator that quit mobile TV due to technology limitations has recently re-launched its mobile TV offering for smartphones, after launching this offering for tablets and laptops.29

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Catch-up TV becoming popular on mobile devices While Live TV is still being consumed in the traditional manner, new devices like tablets and mobile phones are being increasingly used to watch mainly catch-up TV. At the moment, the traditional TV set is still the dominant device for watching this type of content, yet 41% of the respondents indicated they watch catch-up TV on a PC, laptop, tablet or mobile phone.

The main drivers behind the rise of catch-up TV on a mobile device are the increase in storage capacity of the devices and the easy availability of Wi-Fi access.

This, combined with the fact that the Dutch spend more time getting to work than other nationalities from OECD countries31, means they have more time to pursue such recreational activities while travelling – a significant amount of mobile content is watched by people on the go.

Figure 9 “What device did you use to watch catch-up/on demand service?”30 Not specified 11%

A regular TV (cable/broadcast) 15%

A TV with a 13% set-top box 41% Other

4% A TV with built-in internet access

“Because global brands like Google, Apple, Facebook, Twitter are dominant in our lives, we see global partnerships between these brands and global operating companies like Unilever, Heineken” Ruud de Langen, CEO Mindshare Netherlands

12

Broadcasters dominate the catch-up/on-demand scene Catch-up/on-demand services owned by broadcasters currently loom large in the TV catch-up market in the Netherlands (For example, RTL XL, which includes RTL gemist, has 10 million visits per month32). In the Deloitte/GfK survey, 64% of respondents had used broadcasters’ on-demand services. Unsurprisingly, these services are more popular among younger people with higher education levels. The survey also reveals the leading services; 47% and 22% of respondents indicated they use Uitzending Gemist and RTL Gemist respectively. Females use them significantly more than males.

Figure 10 “Which devices do you use to access broadcasters’ on-demand services and with what frequency?”33 Tablet

8%

7% 12%

28%

7%

8% 15% 4%

5%

6%

12% 7% 33%

4%

28% 39%

37%

30% 57% 46% 30%

13-17 years Often Sometimes

18-34 years Rarely Never

35%

39%

35-49 years

50-64 years

65+ years

Don’t have this device

Mobile phone 6% 14% 3%

4% 12%

7% 7%

5%

4%

14% 71% 73%

71%

7% 13-17 years Often Sometimes

74%

64%

6% 18-34 years Rarely Never

12%

17%

35-49 years

50-64 years

23% 65+ years

Don’t have this device

A new breed of media? Report on TV myths & truths

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What about recorded content?

According to the Dutch Deloitte/GfK survey, two out of three people in the Netherlands have access to a PVR or personal video recorder. Of those who have a PVR, 38% record less than an hour a week, while 20% record between 1-2 hours. The types of content normally recorded are films (56%), drama (26%) and documentaries (25%).

Figure 11 “What device did you use to watch recorded via a hard disk or other recording device?”34 A regular TV (cable/broadcast)

Not specified 14% Other A TV with buit-in internet access

33%

9% 5%

27% A TV with a set-top box

From the perspective of TV revenue models, PVR penetration and associated revenue is of particular interest. For example, in the Netherlands, cable operator UPC offers the PVR option to its premium customers for an additional fee of €4 a month on top of the premium TV package. The penetration of HD, PVR and HD-DVR devices among UPC digital cable subscribers is 62%.35 UPC’s main competitor, Ziggo, offers new customers an interactive HD recorder at a discounted price of €99 euros36, employing a different model.

14

Second screens work in harmony with the TV New devices give us the ability to watch TV, but they also give us a second screen to do other things while watching traditional TV. A recent study by Nielsen noted that 88% of tablet owners and 87% of smartphone owners use these devices at the same time as watching TV.37 Yet analysts report that tablet sales are not going to cannibalise sales of large TVs – 74% of consumers say they will not change their behaviour in buying large TVs even after buying a tablet. Moreover, 57% indicated that their purchasing of small TV’s will not change after they got a tablet.38

“...the quality of the produced video entertainment content in general will improve as the second screen becomes more important” Paul Zonderland, Country Manager The Walt Disney Company Benelux

The Deloitte/GfK survey found that 62% of respondents have, in the month prior to the survey, used a device to access the Internet at the same time as watching TV. Of this group, 74% used a computer or laptop, 42% used a mobile phone and 26% used a tablet computer.

More specifically, 48% of the respondents frequently or occasionally browsed the Internet for general information while watching TV. Some futurist’s prophesised the increase in the use of the Internet would decrease the time we spend watching TV. Indeed, it seems the two can co-exist in harmony.

Respondents of the Dutch Deloitte/GFK study talk on the phone while watching TV about as much as their counterparts from the UK. The Dutch however browse the internet much less. For general information, around 65% of the respondents in the UK frequently of occasionally do so compared to 48% in the Netherlands.

Less than 40% never browses the internet for information about the program they are watching in the UK while more than 50% never does this in the Netherlands.

Second screens appear to be employed only or mostly for private use. Of the respondents surveyed, 72% would not like the content they were viewing on their computer, tablet or smartphone to be displayed on the television screen alongside the programme they are watching.

People see the TV as a social experience and, at times, a personal experience. Many use a second screen to find information related to the show that they are watching. An existing example of solutions following this concept is “Real-time accompany content”, which serves content and advertising related to what is being watched using automated content recognition. An example of this is The Voice app; viewers play a game by acting as coaches during the live shows. A second type of solution is “Transmedia storytelling” in which tablet products are geared toward usage between episodes which is meant to keep followers engaged.

An example from the US is the USA Network and DC Comics production of an interactive graphic novel for the show Burn Notice.40

Figure 12 “How often do you do the following while watching programmes on your television?”39

50

Talk to other people in the room Browse the internet for general information

17

31

13

Talk on the phone Txt/Message with others who are watching the same program

10

15

Communicate with others via the internet about general topics

9

18

Browse the internet for information about the program

5

Communicate with others via the internet about the program

3

Participate in the program

41

31

16

59

52 69

13

81 20

Frequently

15

55

17

0

7

34

27

10

11

18

18

16

1 4

32

Occasionally

40 Rarely

60

80

100

Never

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Web-connected television available but largely unused In the Deloitte/GfK survey, 11.7% of respondents said they have an Internet-connected television (TV set with built-in Internet access). According to GfK, the share of Web TV in the flat-panel TV market was over 60% in 2012; it is expected to reach 84% in 2013. In the US, 16% of households are reported to have a connectable TV. This is expected to grow to 52%, or 66.8 million households, by 2016.41 The same trend is visible in the number of global subscribers for the slightly different IPTV technology.

This is expected to grow at a CAGR (Compound Annual Growth Rate) of 18.1% and more than double the number of subscriptions, from 41 million in 2010 to 93.6 million in 2013 globally.42 However, while it is evident that connected TVs will reach the majority of European households, the disruptive effect of connected TVs on consumer behaviour is expected to be limited. The reasons are twofold. First, there is a difference between having a connectable TV and using it as a connected TV. Factors such as the (non) friendliness of the remote control, lack of time, lack of technical knowledge and even lack of awareness of the possibilities slow the adoption of fully-connected television.43 Second, the nature of TV is not due to change drastically; it will be delivering world-class audio-visual content to consumers for the foreseeable future. Therefore, consumers are likely to purchase more of the same content, but in an easier manner and of better quality, making the most of options like VoD and catch-up. This leads to the increasing importance of distribution mechanisms, like app stores, which were present in around 28% of TVs sold in the Netherlands in December 2011.44 Analysts have noted that, to develop excellent controls and features, companies need both ‘breakthrough thinking on uses of semiconductordriven technologies, along with a well-designed user interface to access the consumer’s content.’45

16

Consumers today want more choice, more control, increased personalisation and enhanced user experience – but, above all, they value simplicity and ease of use. Devices offering a well-designed, user-friendly interface are likely to be appreciated the most. Additionally, two-way interaction is more likely to be employed using second-screen devices alongside the TV, rather than on a large TV screen. Yet, people in the Netherlands are not very interested in new technological products. Two thirds (67%) of the survey’s respondents mentioned that they are unlikely or extremely unlikely to look in showrooms or shops for new technology products when they are shopping.46 With respect to technological adoption, only 5% categorise themselves as innovators or early adapters.4

Conclusion: Technological developments will eventually change the way in which we consume television, as well as the underlying business models.

However, this technological innovation will enhance TV rather than destroy it as all these developments, from the flat-panel TV to 3D production, strengthen the main purpose of TV: delivering world-class audiovisual content.

Companies need to understand consumer behaviour since user experience, packaging and pricing will become the factors that determine success and willingness to pay. Rather than adding new features, the players in the value chain will have to focus on making access to audio-visual content easier and faster, anywhere and anytime. That will result in redefining the roles of value chain participants.

Myth 3: Social media is more influential than TV

The arrival of new types of media is not new. People still read newspapers and listen to the radio even though both media types have ceded ground to the television and the Internet in recent years. Many have argued that the rise of social networks will hurt TV in a similar or worse way.

Yet rarely does one medium fully replace another. Radio added to live concerts; they didn’t kill them. TV and radio remain popular – and time spent watching TV continues to increase despite the rise of the Internet.

The coexistence of different types of leisurely pursuits is more common than the substitution of one for the other.

Having said that, the rise of social media has put TV executives in a predicament. Some TV executives worry about losing viewers to social media sites and in turn losing audience reach and advertising relevance; some fear their programmes are not generating sufficient social buzz; others are striving to emulate social networks’ ability to gather user data.

TV outdoes social media in every meaningful way Today, the total number of hours people in the Netherlands spend watching television is 31 times greater than the time they spend on Facebook, Hyves and Twitter combined. The aggregate number of television hours each month is 1.499 million compared to 48 million on these social mediums combined.

Figure 13 TV use versus social media use48 Aggregate NL consumption of TV and social media TV

1.499

Hyves

30

Facebook

17

Twitter

1 0

50

100

1.500

Hours per month (m) Average consumption per user TV

5.921

Hyves

253

Facebook

144

Twitter

21 0

200

400

6000

Minutes per user per month What’s more, the number of minutes individuals spend watching TV every month is approximately 14 times greater than that of the other three combined. The time individuals spend on social media may be growing faster than that on television, the aggregate number of minutes watching TV is increasing faster than that of social media because it is growing from a much larger base.

In the UK, the aggregate number of hours people watch TV is 35 times the number of hours they spend on Facebook, Twitter and LinkedIn combined.

A new breed of media? Report on TV myths & truths

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Moreover, the average number of minutes spends per user on watching TV is 16 times larger.

Advertising spend much greater on TV than on social networks Today, ad spend on social media is much lower than ad spend on television. Estimated advertising revenue for all social media sites in the Netherlands’ region is less than €50 million.49 In 2011, the amount spent on television was €1.017 billion, which is 20 times larger.50 TV advertising grew by 4.3% between 2010 and 2011.

Zenith Optimedia expects it to grow at a compounded annual rate of around 5% between 2011 and 2014, exceeding the GDP growth forecast by some measure.51 Social media ad spend is also expected to grow quickly, but at a much slower pace than previously expected. According to recent earnings reported by Facebook, its advertising earnings grew 28% year on year between Q2’11 and Q2’12, while this growth was 83% the year before.52 Gartner forecasts that global social media advertising revenue growth will decline from 34.9% in 2012 to 11% in 2016.53 At this pace, social media advertising spend, coming from a much smaller base as it does, is not expected to surpass TV ad spend in the near future.

In addition, the TV market has a much sounder price base compared with social networks. A large number of ads that run on social networks are display ads.

The inventory of such advertising is potentially infinite, since there is no limit to the amount of ads that can be added, whereas the inventory of TV ads is finite, especially within the leading networks. Consequently, the price levels of TV ads are expected to remain strong in the coming years, whereas the ever-increasing inventory of online ads is likely to continue to put pressure of social network prices.

Overall, this means TV is still way ahead of social media in terms of scale, effectiveness and attractiveness to advertisers. As long as there is no medium to replace it, TV will remain unbeaten in reaching and influencing mass audiences.

Little consensus about TV as a social activity TV has often been described as the original social network. However, do people still consider watching TV a social activity? If so, does this mean they want to watch TV together or do they just want to use the activity as a basis for conversation? If the latter is true, do they like to do talk about the programme as it is being broadcast or once it has finished? Lastly, what medium do they use to talk about programmes?

Figure 14 How much do you agree with the following statements about the reasons for watching TV (%)55 56 Watching TV is more enjoyable with others 38 27 17 9

7

Agree strongly

Agree slightly

Neither Disagree agree slightly nor disagree

Disagree strongly

TV is a social activity which brings the family together 36 25

TV much better at encouraging people to buy products Television also dwarfs social media’s ability to persuade consumers to try new products. Only 2% of 18-34 year olds mentioned Facebook as the source for finding their latest planned purchase. This number was substantially higher for television. Approximately one in seven respondents in the Deloitte/GfK survey acknowledged they were persuaded by television to make a non-routine purchase.54

18

23 12 3 Agree strongly

Agree slightly

Neither Disagree agree slightly nor disagree

Disagree strongly

There was no single view on this subject. On one hand, 34% of those taking part in the Deloitte/GfK survey felt that watching TV is more enjoyable with others, and another 28% agreed that TV is a good social activity that brings the family together. On the other hand, 26% report enjoying TV more when on their own, and 37% do not see it as a family-connecting activity.

In contrast to interacting with others during the transmission of a programme, it seems most people prefer discussing TV programmes after watching them, perhaps because they find the content compelling. The results of the survey show that 39% of respondents, more women than men, often talk with others about TV programmes they have watched, 34% occasionally discuss TV programmes after watching, and only 26% rarely discuss them.

Figure 15 People enjoy talking about TV programmes they watch57 58 “How often do you do the following while watching programs on your television?”

“I often talk to others about the programs I’ve watched on TV ” (category, %)

Total 7

Never

11

Rarely

32

Occasionally

26%

34%

50

Frequently

Talk to other people in the room

Gender

29%

23%

Disagree Neither agree nor disagree Agree

33% 35%

39%

36%

Total

Male

43%

Female

A new breed of media? Report on TV myths & truths

19

Communication remains traditional The Deloitte/GfK survey results also show that most people prefer traditional ways of communicating, like talking to people in the same room, phoning or text messaging. A much smaller number of people use the Internet to discuss TV programmes or find information on them, which means that even fewer people use social media for the same purpose.

Television provides the topic of conversation, while social networks, by enabling conversation, amplifies the appeal of television. The emergence of second screen devices has strengthened this ability to converse since it eliminates the need to walk to the desktop computer and it enables people to access social networks while sitting in front of their TV. Another recent survey reports that 41% of people using a second screen when watching TV use it for social media, making it the second most popular activity after surfing on the Internet (51%).59

Today, however, over a quarter (27%) of respondents sometimes use social media to find out about new programmes to watch on TV. Given the short history of social media, these statistics show that social media has become a channel of interaction around TV programmes in a relatively short time. As people share more and more on their social media pages and social networks substitute traditional messaging channels with advanced messaging possibilities, social media is likely to conquer an element of traditional communication, enriching it with additional features.

The complementary nature of TV and social media implies that parties in the value chain should co-operate in developing new models to strengthen that combination. However, this symbiotic relationship has yet to fully take off, at least in the Dutch market.

Nevertheless, if technology and consumer behaviour were aligned, and best practices developed to ensure optimal integration and usability, the mutual effects of TV and social media could be improved significantly.

Combining TV with online advertising has already proved effective since it is reported to have raised the reach of TV campaigns when combined effectively.60

Television and social networks complement each other but collaboration is still minimal Many broadcasters believe that socialisation clearly enhances traditional TV. People who actually visit websites or make comments while watching TV reported that it makes viewing more exciting (72%), makes viewing richer (63%), makes viewing feel more like a communal experience (41%) and encourages them to watch more programmes/of each programme (14%). Only 26% said that it distracts them from watching.

Figure 16 Have you interacted with a TV program other than to vote?61

Send in an answer to win a contest/prize

Social network Other No

10

Tweeted a comment

4

Entered myself in a competition

4

Posted a comment on a social media site

3

Other

1

No I have not interacted

82 0

20

10

20

30

40

50

60

70

80

90

100

Texting still the most popular way to interact with TV shows Just a few years ago, SMS voting was the main way to interact with TV shows. Today, despite the fact that text messaging is becoming increasingly challenged by the rise of a number of free messaging alternatives, text voting remains the primary way of interacting with TV shows. The survey shows that 1 in 5, that is nearly 20% of the respondents, has texted, while only 4% have tweeted a comment and only 3% have ever posted a comment on a social media site. The number of tweets amongst respondents between 13-17 is however much higher at 18%. The low level of tweets can be partly explained by the insufficient integration of social networks with TV shows, but also by the fact that many people simply like to sit back and watch TV and cannot be bothered to share their comments. The integration of social networks can though be a good tool to engage a younger audience.

The Facebook pages of the most popular Dutch TV programmes confirm survey observations that there is limited interactivity with TV programmes compared to their national reach: the page of ‘The Voice of Holland’ has only 170k ‘likes’ compared to an average of 2.8 million viewers per show. Similarly, the page of Dutch soap opera ‘Goede Tijden Slechte Tijden’ has 163k ‘likes’ versus 1.6 million average viewers per show. The same is the case for ‘Boer zoekt vrouw’ and ‘Ik hou van Holland’.

Figure 17 Average viewers and likes for Dutch TV shows62

Show

Average # of viewers per show

Likes on Facebook

The voice of Holland

2.8m

170k

Goede Tijden Slechte Tijden

1.6m

163k

Boer zoekt vrouw

3.9m

51k

Ik hou van Holland

2.6m

32k

A new breed of media? Report on TV myths & truths

21

Figure 18 Number of tweets related to TV channels in week 33, 201263

Other Eurosport

Nederland 1 11%

18%

Comedy Central 2%

8% MTV

Nederland 2

17% 6%

2% 1% Veronica NET 5 SBS 6

Nederland 3

15%

6% 3% RTL 8

5% RTL 7

4%

RTL 4

RTL 5

The average Dutch person may not be tweeting or commenting regularly during shows, but they are paying a lot of attention to certain types programmes.

Typically, live events, sports and youth-oriented content does very well. This explains the fact that channels like MTV and Eurosport feature more prominently on social media measurement tools like Remotely.TV’s monitor of twitter, which notes that ‘Twitter activity around TV programmes is growing by 120% a year’.64

22

Conclusion: Currently, people are spending much more time watching TV than using social media, and advertising spend on TV remains and will remain significantly higher. At the same time, social media complements TV as it does not substitute the experience of watching but enhances it instead, and this trend is expected to grow with the introduction of new devices being used as a second screen.

Content producers will have to co-operate closely with content distribution channels if they want to capitalise on that opportunity. Content owners and broadcasters need to collaborate to provide a seamless and user-friendly experience for the consumer.

For advertisers, TV remains the leading instrument for mass-reach advertising which will not be surpassed by social media. However, it can be complemented by social media to boost the effect of TV campaigns.

New entrants and technology companies will have to focus on providing ultimate usability solutions with seamless interfacing and integration with social networks, utilising their technical excellence for user experience.

Myth 4: Advertising on TV will decline

Advertising is a major source of income for both new and traditional media. Moreover, these media types compete against each other for the same marketing and sales budgets. The rise of online advertising has made a huge impact on the print advertising share; many have argued that it’s only a matter of time before TV suffers a similar fate.

Apart from the rise of Internet advertising, TV is also believed to be facing a threat from new technologies.

For instance, many have argued that the increasing penetration of personal video recorders will hurt the TV advertising market as consumers can skips ads on their recorded content. Likewise, the easy availability of pirated content is damaging since pirated shows are generally available without ads.

One of advertising’s fundamental objectives is to target specific demographic groups or specific customer segments. Yet television is a mostly mass-market medium and, on this basis, TV advertising could be criticised as wasteful and inefficient, particularly when compared to the targeted advertising that the Internet is perceived to deliver.

Figure 19 Relative ad spend development per media type (%) in the Netherlands65 100%

31%

26%

Newspapers

12%

Magazines

46%

75% 61%

66%

14%

Radio Cinema Outdoor

50% 24%

26%

TV

26%

Internet

23%

19% 25% 24% 19%

15%

7%

22%

0% ’80

’85

’90

’95

’00

’05

’10

’14

A new breed of media? Report on TV myths & truths

23

No serious challenge to TV advertising Despite these challenges, the amount spent on TV advertising has stayed strong globally. While other traditional media types like newspapers and magazines have declined, TV is expected to increase its relative share of advertising spend. Over the past decades, there has been a clear shift in ad spend revenue from traditional media types to new ones. The relative amount for TV has however been ever increasing.

Further, the threat from non-linear substitutes may be overstated. Non-linear TV service Hulu, which broadcasts content from the largest TV networks in the US, ended 2011 with revenues of â‚Ź323 million66, which was less than the revenue made by the Today show on NBC.67 In the Netherlands, total ad revenue for online video (excluding YouTube) is less than 2% of TV ad spend.68 Growth rates of online video ads may be impressive, but their small size means that it will be a long, long time before they can be considered a serious challenger to TV advertising.

Figure 20 High impact advertisement types (%)69 70 Type of favorite advert in past year (%) Television

52

Leaflets delivered at door

3

Radio

1

Newspaper

1

Magazine

1

Video on a website

1

Other

2

None

40 0

10 20 30 40 50 60

Advertising type with the most impact (%)

Mass reach is the main reason why linear TV remains so attractive. While non-linear services are gaining popularity, their reach is still very fragmented and it does not allow advertisers to reach targeted audiences on a large scale.

TV advertising good for building brands and launching products Some have claimed that the effectiveness of TV advertising is diminishing because it is too broad-based and isn’t able to target specific groups in the same way as the Internet. However, this purported weakness is actually a strength when it comes to brand building and launching new products, since reaching a wide audience is often the main requirement. There is no substitute for TV which can deliver extensive and powerful campaigns to a wide part of the population in a short period of time.

Television

55

Leaflets delivered at door

38

Newspaper

27

Radio

20

Magazines

15

E-mails from companies

10 8

Direct mail Posters/Billboards

7

Banner/adverts websites

4

Internet search engine

4

Cinema

3

Video adverts websites

2

Banner adverts (mobile)

1

Junk e-mail

0 18

None 0 24

10 20 30 40 50 60

The emotional power of TV is underlined by the fact that 52% of respondents to the Deloitte/GfK survey answered “TV” when asked the question “Where did you see or hear your favourite ad?” The next most powerful type of ad was, perhaps surprisingly, leaflets posted through the letter box, which was the preference of 3% only. In the UK, 84% consumers answering the same question believed that their favourite campaign was TV based and no other medium polled more than 2%.71

Taking a closer look at the results reveals that television has the highest impact across all age segments; except for those older than 65. Younger audiences actually respond better to TV, improving from 39% in the 65+ segment to 70% in the 13-17 years segments. For the elderly, newspapers and leaflets are very important.

The Deloitte/GfK study in the UK showed that these outcomes have been fairly stable since 2009.

“As long as I have been working in media, people have been predicting that the 30 second spot is dying, which off course has been proven wrong”

The inability of non-TV advertising to make an emotional connection with the consumers was such that over 40% of respondents that did not have a favourite type of advertisement, did not have a favourite advertisement, and so did not mention a type of media.

Not only are TV ads able to make the strongest emotional connection, they are able to persuade people to go out and buy a product. Nearly 55% of survey respondents felt that TV ads had the greatest impact on them personally. A similar survey done on consumers in the UK by Deloitte/GfK also had comparable results. In the UK, TV was in first place by a wide margin.

Ruud de Langen, CEO Mindshare Netherlands

Figure 21 Advertising type with the most impact (%)72 Advertising type with the most impact (%) 70 63 58 51 45 44

43

43

39

37 30

28

25 22

21

18

15 12

12

13-17 years

18-34 years

Radio

24

22

Magazines

Newspapers

13

13

35-49 years Leaflets

14

50-64 years

12

65+

Television

A new breed of media? Report on TV myths & truths

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Moreover, despite the power of Internet ads for selling (versus brand building), respondents to the Deloitte/ GfK survey felt that TV ads had the greatest impact on their shopping decisions when compared to ads on any other medium. Ads on TV remain consumer favourites and have the best ability to encourage people to buy the product. The impact of TV is high when it comes to non-routine purchases; 14% of the respondents discovered the product because they saw it on TV. Figure 22 Drivers of discovery that lead to purchase of new products and services (%)73 I just came across it in the store

22

A friend/family member recommended it

16

I saw it within a television program

8

I read about it on a website

8

I saw an advert for it in a newspaperÂ

6

I saw an advert for it in a magazine

6

I saw an advert or sponsorship clip for it on televisio

6

I saw an advert on a website

4

I came across it on Facebook

1

I saw a poster for it

1

I came across it on another social network

0

I came across it on twitter

0

Other TV Online Print

Other, please specify:

9 0

26

5

10

15

20

25

New devices make target advertising on TV a possibility Connected devices like mobiles, tablets and gaming devices will eventually support the TV’s ability to deliver IP-based campaigns – targeting specific user groups. In time, connected TV will enable a change to the advertising model. For example, adverts could be served on a customised basis to each household, with TV ads addressed to each household and delivered via the online connection.

This could eventually lead to video advertising becoming significantly more targeted. To explore the opportunity arising from connected devices, Mindshare entered into a mobile partnership dubbed “Mobile Garage” with Google.74 Another example from the Dutch market is “Ster Extra”.

This app is an interactive second screen service which allows the viewer to interact with the commercials. The viewer can both learn about the commercials through quizzes and making offs, as well as buy or try the products directly.

However, the case for highly targeted TV advertising has not yet been proven. While targeted TV ad campaigns enhanced by technology are certainly attractive in principle, the execution remains the main challenge.

To begin with, the rising cost of producing a television commercial makes it less likely that small businesses with modest marketing budgets (who might want to target ads to just households in their area) will be able to advertise on TV. Secondly, delivering targeted ads via a set-top box requires boxes with uniform specifications and capabilities which place advertisers with significant technical hurdles.

We still like skipping the adverts, but occasionally stop and watch Not surprisingly, most people who watch pre-recorded television often skip the adverts. Over 70% of those who make use of PVRs always or frequently avoid advertising content. In addition, 43% always or frequently do something else during the adverts when watching pre-recorded television via their PVR. Yet the increased uptake of PVR services has not affected the overall advertising market, as evidenced in our findings from the UK. Most people in the UK found that PVRs increased their total TV viewing.76 In the Dutch market, many consumers agreed that, despite watching shows on a PVR, many of them stopped to watch ads or trailers that interested them.

Of the survey respondents, 9.1% noted that they did so frequently or always, another 15.7% admitted to doing so regularly.77

Figure 23 “When you are watching pre-recorded television via your PVR, how often do you...?”(%)75 ...avoid content with adverts

...do something else while the adverts are on?

42

30 26

25 22

17 13

11

10 5 Always Frequently Occasionally

Rarely

Never

Always Frequently Occasionally

Rarely

A new breed of media? Report on TV myths & truths

Never

27

No device has the massive reach of TV There are several reasons why TV ad spend is still alive and kicking and will continue to enjoy a healthy life: companies need to advertise and TV ads are still powerful in building brand awareness and convincing people to buy products. As long as advertisers can maintain the quality of the advertisements and people keep watching television, TV will keep its position as a strong advertising channel.

The advertising revenue for newspapers was disrupted because online classified listings such as craigslist and monster.com are near-perfect substitutes (or superior) to a newspaper’s highly profitable classified listings section.78 In the Netherlands, the growth of websites like marktplaats.nl and vacature.nl has been accompanied by a decline in traditional media (i.e. newspaper) advertising. Fortunately for the TV, there really is no alternative.

Another important reason for the success of TV advertising was its unbeatable reach. In the Netherlands in 2011, TV reached on average 78.8% of the population older than six years every day.79 TV advertising proves extremely effective in bringing an advertising message to the masses - once a commercial is scheduled to be showed on TV, it is guaranteed a part of the population will actually see it.

“...we recognize that TV has played a very important part in the success of our brands in the past; yet TV must continuously reinvent itself to ensure that it remains equally relevant in the future�

Harry Dekker, Media Director, Unilever Benelux

28

For online advertising, the number of websites is practically unlimited and their large inventory creates price erosion and a fragmented communication channel. TV ad inventory is limited, helping maintain strong prices. The unlimited number of internet pages versus the fixed number of TV channels creates a structural challenge for online advertising. Having said that, search keyword rates can still rise because one party (Google) has more control over supply and effectively sets the price.

The mass reach of TV also means that replacing a traditional TV product launch campaign with an online only campaign would require marketers to employ an almost unlimited number of websites to ensure same reach as TV. TV complements online advertising No advertising medium is perfect and each medium has its own strengths. When deeper targeting is needed, advertisers use Internet-based campaigns. However, different media types can exist alongside and even enhance each other. So, rather than television or new media, it can be television and new media.

Online and TV provide different but complementary types of experience. Combining TV and online can result in more reach and effectiveness, as the evidence proves.80 At the same time, television can also help generate traffic and result in direct sales, as evidenced by the consumer response to TV advertising. Television is often a great traffic generator for online campaigns.

Figure 24 Time spent vs. Share of advertising spend (2011)81 = Indicative direction and speed

50

40 Share of Advertising(%)

Newspaper

TV still has room to grow Considering the ratio of time spent and advertising income on different mediums, it becomes apparent that TV clearly receives less than its fair share of advertising revenue. Newspapers and magazines are likely to continue to decline as their share of the time spent on it and ad spend that it receives both continue to decline. Online does quite well and is likely to continue to improve as time spent and ad spend both increase.

Television is also structurally well placed to improve as time spent and ad spend could both increase.

30 Conclusion: Although online is gaining a strong position, TV remains the strongest medium with its mass reach. TV advertisement spending is expected to grow and the medium term outlook remains positive. As long as there is no alternative with the same reach, TV advertising is here to stay.

TV

Internet

20

Magazine

10 Radio 0 0

10

20

30

Time spend (%)

40

50

Moreover, the steady growth of online advertising can be further leveraged to amplify the effectiveness of both TV and online advertising when combined. The different natures of TV (visual) and online (textual and visual) are likely to be further combined to realise the power of a multi-channel approach.

Over time, TV and online (video) will move towards each other. TV will be enabled by connected devices and online video will enter the TV, resulting in a hybrid landscape with the best of both worlds.

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Myth 5: Content wants to be free

Watching TV is actually cheaper than almost any other leisure activity. The average monthly amount paid for TV per household was around €23 in the Netherlands in 2010. Given the number of minutes people watch TV per day and the amount they pay, watching an hour of TV costs approximately 6 cents an hour in the Netherlands. Compare that to a movie ticket, which costs around €10 for two hours, a music concert, which costs €15 for two hours, a restaurant visit, which could set you back €30 a person, or even a visit to the gym.

While many believe the Netherlands has an underdeveloped pay TV market, the amount people in the Netherlands that pay for TV is comparable to other developed countries with similar GDP levels per capita.

Figure 25 shows that the amount paid per hour is a linear function of the subscription revenue per head per year.

Figure 25 TV Subscription revenue per head per year vs revenue per hour (€), 2010, Netherlands82 0,15

USA

Subscription revenue per hour (€)

0,12

iRL

SWE

0,09

AUS FR NED

0,06

UK

CAN

GER

0,03 CHN

ITA BRA

IND

0,00 0

20

Bubble size = avg. # of minutes per day (200)

POL ESP 40

60

80

100

Subscription revenue per head (€)

30

200

220

240

The willingness to pay for TV increases Consumer willingness to pay for traditional (linear) TV has actually increased over time, despite the tremendous increase in bandwidth, the ubiquity of mobile devices and the proliferation of file sharing sites.

There is evidence of this not only in the Netherlands but also in more advanced TV markets like the United States, where TV subscription spend has increased from â‚Ź41 billion in 2005 to â‚Ź104.5 billion in 2010.83 Since 2005, TV subscription spend in the Netherlands has increased at a much faster rate than nominal GDP and advertising spend. The question is: what is driving the willingness to pay and how can different parties in the TV value chain improve this even further?

For content producers and cable companies, the four most relevant tools for increasing the willingness to pay for television are (1) better content, (2) more content, and the (3) technical features and the (4) availability on devices.

Figure 26 Advertising and TV subscription spend compared to GDP (indexed)84 175 164

Advertising Spend Subscription Spend Nominal GDP

150

127 125

119

100

100

75 2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

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Good content is critical First, good content is the primary driver for TV viewing.

Globally, production budgets of TV shows have continued to increase. Take for instance global Pay TV leader HBO, which topped revenues with €3.1 billion in 2011.85 It has continuously increased the budgets of its new shows - the budget for the first season of ‘Game of Thrones’ was estimated between €46-77 million.86 The pilot episode for ‘Boardwalk Empire’, a prohibition era gangster show, topped €14 million.87

By investing in the quality of content, HBO has seen its revenues and number of subscribers increase; HBO expects to end this year with more subscribers than last year and the total number of HBO and Cinemax subscribers to increase by 7 million in 2012.88 Astonishing when you consider that HBO’s hit show ‘Game of Thrones’ is set to become the most pirated show of 2012.89 The Deloitte/GfK survey shows that, currently, people are most likely to pay extra for the latest movies, crime shows and sport.

Figure 27 “For which television products and services would you be willing to pay €10 a month?” 90

11

Latest movies Crime/detective (series, documentaries & movies)

25

9

27

Sport news

4

13

Nature & the outdoors

3

16

Entertainment news

2

Food & lifestyle

2

12

DIY, interior decorating & real estate

2

11

Fitness & health 1 Financial news & investment advice 1

64 63 83 81 84

13

86 88

11

89

7

92

Information about showbizz & 1 4 movie stars

95 20

0 Yes

32

Maybe

40 No

60

80

100

Further evidence that willingness to pay for sports has increased in the past year is demonstrated by the success of the Dutch premier league football channels Eredivisie LIVE, which has acquired nearly six hundred thousand subscribers in the four years since its launch.

The recent investment of over €1 billion by Rupert Murdoch’s Fox International channels into Eredivisie Media and Marketing (EMM) further is a testimony to the belief that willingness to pay for premium TV services is likely to increase.91

More channels mean more money The second major driver for increasing the willingness to pay more in the future is to offer more channels. In the Deloitte/GfK survey, 52.4% mentioned choice of TV channels as the most important aspect of ‘value for money’ of Pay TV subscriptions.

Dutch cable companies have been constantly increasing their number of channels on offer over the last few years. For instance, leading Dutch cable operators Ziggo and UPC offered 60 and 90 channels respectively in 2009; their current premium package includes 120 and 110 digital channels respectively.

Figure 28 Number of channels offered by Ziggo and UPC, 2009-201292 168

174

167

142

132

94 90

90

96

32

30 30

12

4

108

120

110 120

60

60 30

167

30 22

6

28

32 25 22

25 32

22

UPC Ziggo

UPC Ziggo

UPC Ziggo

UPC Ziggo

2009

2011

2011

2012

Digital Analogue HD

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Technology is TV’s friend Quality of picture and sound is perceived as the second most important aspect of ‘Value for Money’ of paid TV subscription by respondents to the Deloitte/GfK survey.

The adoption of HD TVs/3D TVs, devices that offer higher quality of broadcast, has increased over the past few years. According to the Deloitte/GfK survey, 79% of the respondents have access to flat panel/HD-ready television, and sources of TV sales and penetration93 show an even higher penetration: only 11% of the households indicate their television is not HD-ready.

Almost every TV sold in 2013 will offer HD quality.

Partly in response to this trend, leading Dutch cable operator Ziggo in 2011 cut the number of analogue channels from 30 to 25 in order to make room for more HD channels.

Figure 29 Adoption of HD TVs/3D TVs in selected countries94 HDTV penetration in different countries (as a % of households)

39

60 54 45 42 40

39

40

29

28 21

20

14

1413 7 1

1

3

1

1

2007 FRA

7

5 1

2008 USA

JPN

ITA

2009 UK

2010

GER

Flatscreen TV penetration in NL per TV type (as a % of households)

53%

69%

86%

37% 20% 8%

26%

51%

56%

60%

60%

60%

8%

11% 12%

14%

15%

16%

15%

13%

11%

8%

2005

2006

2007

2008

2009

2010

2011

2012

2013

Full HD

34

40%

HD Ready

Non HD Ready

Figure 30 HDTV sales compared to other TV types in NL (k)95 1.768

1.926

1.870

1.749

1.641 1.450 1.159

1.270 16%

9%

1.625 48%

11%

68% 41%

51%

43%

48%

2003

2004

2005 Full HD 3D

17%

2006

2007

HD Ready Only TV

68% 40%

28%

10% 30% 13%

Full HD non 3D

29%

66%

18% 9%

55%

62%

52%

67%

31% 20%

1.581

25%

1.323

26%

35%

8%

8% 2008 No HD Ready TV

21% 8%

5% 2009

2010

Cathod 16:9

2011

2012

2013

Cathod 4:3

Respondents to the Deloitte/GfK survey were most willing to pay for the latest movies and TV series.

Therefore, cable companies have been steadily supplementing their packages of digital and analogue channels with films and VoD programmes. For instance, UPC offers nearly 2,000 VoD films and 3,000 VoD programmes.96 In addition to extensive channel offerings and VoD, cable companies are offering advanced ‘catch-up’ and DVR options and they are planning to create a 3D package in the near future.97 However, only 5% of Deloitte/GfK survey respondents said they have access to 3D-ready television and only 17% of TVs sold in the Netherlands in 2011 were 3D-ready. GFK expects that 3D TV sales will reach 68% of total TV sales in the Netherlands in 2013.98

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New devices drive the willingness to pay for TV Finally, new devices and new ways of distributing content will continue to drive the willingness to pay.

In the Netherlands, 8 million smartphones and nearly 3 million tablets have enabled Dutch consumers with devices that can be used to watch content anywhere and at any time.

Yet for the broadcasters and cable companies offering these services, the unresolved issue of media rights has ensured that offering a seamless service both inside and outside the house remains a significant challenge.

There’s also the question of the best way to monetise such services – directly through an access fee (either bundled or pay per view) or indirectly, by raising an all-inclusive invoice. In the United States, most cable companies offer ‘TV Everywhere’ services to defend market share and reduce churn. So far, they have not been charging directly for providing such access.

While the broader initiative of making TV available on all devices at all times has been hindered by media rights, watch-anywhere-in-the-home apps may gain traction.99 In the Netherlands, the number of fully functional app stores available in the Netherlands is limited, so respondents to the Deloitte/GfK survey showed only limited willingness to buy TV content on an app store-like device.

However, among the youth - the generation with highest adoption rate of new devices - would seriously consider it. For example, of the 42% of 13-17 year olds reported to have a tablet, 5% would definitely buy content via an app store-like interface and 33% would seriously consider buying. Compare these results to those of older generations, who have a lower adoption rate of tablets and are not ready to buy content from app stores – people older than 35 years would not buy content via app stores and less than 18% would consider it, depending on price.

Figure 31 Adoption and WTP for new technology per age group100 101 “Which, if any, of the following devices do you have access to in your household or currently own?”

42% 33% 28%

24%

12%

13-17 years

18-34 years

35-49 years

50-64 years

Tablet computer

“Will the availability of an interface like an app store on TV increase your willingness to pay for on demand video?”

5% 33%

51%

3%

13%

18%

8%

24%

62%

73%

72%

77%

11%

10%

8%

14%

15%

13-17 years

18-34 years

35-49 years

50-64 years

65+

Yes definitely Maybe, but depends on the price No Don’t know

36

65+

These responses are likely to change in the next few years as the adoption of new devices and content distribution mechanisms reaches older generations.

At the same time, usability and convenience will be key factors in the adoption rate – and pricing these products correctly will further enhance the chances of success.

Piracy could inhibit growth in the pay-as-you-go market Before thepiratebay.org was shut down, it had over 1.7 million unique visitors in the Netherlands every month.102 This was more than 13% of the Dutch online audience. Yet the impact of these sites on overall TV advertising has been negligible. The main reason for this is that the Dutch market has been traditionally a FTA (free-to-air) market rather than a Pay TV market, and the FTA model is based on advertising linked to original airing of content. However on the other hand piracy could become a growth inhibitor as the market for pay-as-you-go TV services matures. Content producers and aggregators are likely to lobby regulators for greater IP protection as a consequence.

Conclusion: Compared to other leisure activities, the price of watching TV remains very low, even when customers start paying more for superior broadcast quality, extra channels or other factors.

Therefore, the opportunity to grow subscription spend is significant.

However, the power in today’s value chain is with the distributors. While the price for a basic TV package is unlikely to rise, numerous packaging combinations with various pricing models are possible and distributors need to rethink their packages. Yet, because distributors are often unable to exploit ‘anytime-anywhere’ content due to restricted rights, they will have to work better with content creators and broadcasters to provide consumers a seamless service.

All parties should be able to benefit from the rise of new distribution platforms like app stores since they are likely to stimulate willingnessto-pay, especially among younger consumers, who currently watch the least amount of TV. Again, a ‘co-option’ model (co-operation with the competition) involving technology companies, content producers, distributors, advertisers and new entrants is needed to offer a user-friendly and convenient solution.

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A new breed of media: Deloitte perspective on the future of TV

“Technology companies developing new interfaces for TVs are entering an industry that is worth hundreds of billions of dollars a year in products and services. From TV manufacturers to pay TV service providers, and from manufacturers of STBs to local TV programmers - all are dependent on how consumers search for and find their content on the TV screen.”103

Figure 32 Connected TV strategies105

Few things will have a more profound influence on the prospects of the media and entertainment industry as the pervasiveness of connectivity and the fast increasing number of connected entertainment devices. Nearly a billion smart-connected devices (PCs, tablets and smartphones) were shipped in 2011. This is predicted to double by 2016.104 Advances in technology will drive new revenue opportunities for industry players, who will need to embed their products with new features, create new products and develop new and innovative on their current business models. At the same time, the service expectation of consumers from media and entertainment companies will grow, adding costs and increasing complexity.

Connected TV strategies

Players

Competitive Current strategy • E xperimenting with OTT services, managing direct customer interaction advantage • Selling and reselling online rights to new entrants • Charging traditional distributors a premium for access to new devices

Examples Endemol Talpa Sony pictures

Warner Home Video

Broadcasters

NPO SBS Disney Channel

RTL • Continue to mainly invest in self produced content & non-linear services Nederland • Participating in industry partnerships around OTT Viacom • Better negotiations with distributors, (re)selling rights to new entrants • Trying to develop a direct customer billing relationship

Cable / IPTV operators

Ziggo UPC KPN

Canal digitaal Tele2

Device manufacturers

Sony Philips Samsung

New entrants

Apple TV HULU YouTube

Content producers

• B uilding OTT platforms to enable anytime, anywhere, any device access • Increasingly investing in content and rights • Partnering with content and tech. cos. through new revenue share models • Offer services at limited added cost to increase customer lock-in • Partnering with internet service providers to control user interface • Developing their own platform to offer OTT services

Google TV • Using their reach (internet or retail) to recruit a user base for services Xbox • P artnering with cable companies, device makers and content owners • Buying content broadcast and rebroadcast rights

Weak

Hardware, middleware, web service Nokia Siemens Networks Arris NDS 38

Cisco Intel Nagra Kudelski SeaChange

Browser and platform providers Strong Myriad Metrological Opera software

Wyplay Access

The outlook as we see it for each of the players in the value chain Content providers: Content producers will benefit from the forecasted increase in production budgets in the Netherlands, which will grow to meet consumer demand and expectations for compelling local and international content. At the same time, these companies are likely to try to increase their engagement with the consumer by managing social interactions and by offering traditional texted-based communication – yet they are unlikely to be able to significantly monetise this contact.

The increase in the number of aggregators of TV content creates a new market for content companies, who can benefit from partnerships with international over-the-top (OTT) players like Apple TV, Google TV and YouTube. Content companies have the opportunity to sell (and in some cases resell) content rights to traditional broadcasters and new OTT players as well as broadcast it directly through upcoming TV/set-top box app stores. This will lead to incremental revenue, but local, free TV channels will stay the primary customers for content providers as content budgets of international OTT players will remain limited compared to traditional domestic players.

The increase in new devices also gives content producers a chance to monetise access to their content on new devices (and in some cases outside traditional home environments). However, in the short term is likely that content aggregators (broadcasters and cable companies) rather than consumers will pay for this as access to such devices is sold through packaged deals.

To benefit from these opportunities, content creators will need to display excellent negotiation skills as well as strategic flexibility. They must have the appetite to make decisions and risk failure. And, beyond everything else, content companies need to continue to deliver top quality content.

Yet, while cable companies own the customer contact, broadcasters and content producers have the rights needed to allow and to successfully exploit OTT services. Therefore, broadcasters need to work with cable companies. Broadcasters also need to keep a close eye on the cost of developing direct applications versus the longer term strategic benefit.

Partnering with cable companies or reselling (rebroadcast rights) to international technology players can help broadcasters execute their OTT proposition efficiently and successfully monetise their content across the various platforms at minimal costs. While this doesn’t give them control of the value chain, owning the all-important content will allow them to maintain a position of strength. In the United States, broadcasters like Time Warner and Disney seem to be storming ahead by offering broader distribution rights to cable companies.106

“…the consumer should be able to decide how, when and where he watches video content. For that it’s important to use a right media mix for every format, so we can tell the story perfectly to the audience after considering the strengths and weaknesses of every individual platform” Edwin Valent, creative director SBS Netherlands

Broadcasters: While anytime, anywhere TV services should make paying for TV more attractive, but that will have limited chances for short term success benefits due to the lack of a direct billing relationship with consumers and the small online advertising market (compared with linear TV advertising).

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Cable operators: Currently, many Dutch cable companies are working towards developing a ‘TV Everywhere’ type of proposition, which streams video to IP-enabled devices like mobiles and tablets.

Streaming to mobile devices outside of the boundaries of viewers’ homes requires new streaming rights that content providers and distributors need to negotiate to come to a bilateral agreement.107 In the US, while cable companies have gone far back in their supply chains to the creators of and participants in content to secure the right to sell or give permission for TV Everywhere, in the Netherlands most are still struggling to work through the process.

“For distributors offering a seamless user experience across devices and delivering ‘connected entertainment’ is the route to differentiate us in the market against our competition” Robert Dunn, CEO UPC Nederland

Dutch cable companies are likely in the short term to view anytime, anywhere, any device TV offerings as an opportunity to “pile more value into the bundle” and are likely to offer TV Everywhere services at limited costs or free, at least in the short term. This will enable cable companies to deepen customer lock-in, to reduce churn and will provide them with the opportunity to eventually monetise such services through broader price increases for packages.

At the same time, the increase of TV Everywhere type of propositions will lead to higher demands on Internet providers, which again plays to the advantage of cable companies who are also major ISPs. The authentication requirement for usage of such services is likely to be a strong tool towards customer retention.

Cable companies are likely in the short term to be able to stave off the challenge from specialist OTT players, as these specialists have to first develop a similar ecosystem of live and recorded video content in order to effectively compete with the bundled cable offering.

Further, as cable companies are looking towards offering their own OTT services largely for free, and OTT players all around will face bandwidth constraints due to the increased uptake of on-demand video services. Consequently, as Cable companies double up as ISPs they appear well placed in the short to medium term.

Device makers: For many device makers like Samsung and Sony, connected TV has been a part of their strategy for a while, but the initial version was largely text driven with static windows. Only in recent years has video service become more widely available through strategic partnerships with content players or an open market108.

40

From a strategic perspective, offering video services (through partnerships like YouTube and Pathe) means that device makers need to make the challenging transition from selling products to selling a service; from a one-off transactional relationship to an on-going relationship. While there is obvious value in such ambition, device makers need to outdo cable companies as well as new entrants like Google and Apple in order to succeed. Above all, they need to convince the consumer in the real utility of their service.

Otherwise, there is a strong chance that most of these connected TV services will remain unused.

That being said, device manufacturers have an opportunity to benefit from the steadily growing base of Common Interface(CI) /Common Access Module (CAM) enabled TV sets to attract the consumer into their eco-system of over the top services. This can have a negative impact on the cable companies, unless cable companies manage to defend themselves through superior offerings.

New entrants: In the medium term, it is hard to see new entrants like Apple TV and Google TV disrupting the TV landscape in the Netherlands significantly.

Media rights and IP serve as high barriers to entry.

Consider the announcement by YouTube to spend $100million to original programming109. This numbers is significantly less than a third of the production budget of the top three Dutch broadcasters.110 Further, as just explained new OTT entrants will have to compete by providing a full ecosystem of content and services provided by the cable companies and broadcasters.

While international technology giants like Apple, Google and Amazon are each sitting on billions of dollars of cash, conquering the TV market goes far beyond cash. It goes to core competencies. That’s precisely the reason that Google, Amazon and Apple are successful as technology companies; standardised processes, global products, scalable solutions, decisionmaking algorithms – all these are very different from what is needed to succeed as a content and broadcasting company, where non-standard solutions, local products, often bespoke solutions and gut-based decision making is more common. Most new entrants see themselves as platforms rather than content companies and would rather aggregate and distribute content rather than commission and produce it.

In addition, TV content companies and broadcasters have the example of the music industry, which ceded rights to Apple only to see it take control of the value chain. However, initial evidence in the TV world confirms that broadcasters, content creators and distributors are resisting a larger role for global technology companies in their value chain by mainly withholding content rights.

We believe that breaking up the bundle appears quite unlikely, given that consumer behaviour is notoriously hard to change. Further, media companies have little incentive to change their ways for Apple, Google and Amazon.

In such a situation, technology companies have a few strategic choices - limited partnerships with content owners, expensive content acquisition deals or outright acquisition of content developers. However, in addition they can consider partnering with cable companies and device manufacturers to enable hardware (like set-top boxes) but it remains difficult to see this significantly disrupting the landscape in the Netherlands in the coming one or two years.

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The impact on TV advertising The surge in the adoption of connected devices will serve to only increase aggregate TV consumption.

As the uptake of OTT services grows, so too will the opportunity to advertise on them. The increasing number of connected devices will give traditional broadcasters an opportunity to increase their revenue by following IP-delivered video advertising strategies.111 TV’s position in the advertising world is likely to remain strong, as conventional, linear TV advertising continues to be the preferred media outlet for traditional advertisers. In the future, IP-based advertising can help TV grab a share of the search/transaction-linked advertising revenue, though it will admittedly take time.

Deloitte estimates that, in 2012, targeted TV advertising is likely to represent less than one tenth of a percent of global television advertising revenues, which is less than €162 million out of a total market of €184 billion.112 Despite this, the future of TV advertising appears bright. New devices and second screens will continue to support TV advertising. Research has shown that second screens keep viewers present for ad breaks, encourage more TV viewing, do not majorly affect ad recognition and encourage more family and TV viewing.113 In the future, advertisers will benefit from great partnerships with players in different parts of the value chain, especially if the engagement with technology platform owners and the willingness to experiment with new formats and advertising types increases.

Advertisers will face the temptation to connect directly with the consumer through social media and other channels, yet many have learnt from experience that there are limited substitutes to the power and mass reach of television. The authority of media brands still leads, at least when it comes to consumer communication.

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Overall: The industry is currently in a period of transition, during which time companies need to manage the duality of growth; i.e. optimise their business of today while investing in and creating opportunities for their business of tomorrow. As a result, players will have to adapt their business model to remain profitable. The successful ones are likely to be those who not only understand and embrace the opportunities provided but also assess correctly the revenue potential and get the timing of their investments right.

What this research shows is that, today, demand for connected TV, and consequently the potential to monetise it, in the short term is limited. However, in the future, improved user interfaces, richer content access, faster broadband and enhanced catch-up television services are likely to drive the uptake and monetisation of connected TV services.

The key challenge for companies is getting the timing of their investments right. For media and entertainment companies betting on a connected future, the future can’t come soon enough!

Authors Marieke van der Donk +31 (0)88 288 12 29 +31 (0)6 10 999 277 MvanderDonk@deloitte.nl Marieke van der Donk is a Director Strategy & Operation in Deloitte’s s Technology, media and Telecoms Practice.

Previous to being a consultant, Marieke has been active in management positions in several leading Media companies. Her area of expertise is corporate and market strategy and she leads within consulting the digital transformation initiative. Her clients include many media companies. She has advised on corporate strategy, digital strategy, cost strategy, commercial pricing, and has a vision on how companies can manage the duality of growth as part of their digital transformation. She has written extensively about sustainable digital propositions and other media related topics and is a frequent speaker at national and international media conferences.

Leon Haverkamp +31 (0)88 288 78 47 +31(0)6 83 339 472 LHaverkamp@deloitte.nl Leon is a Business Analyst in Deloitte’s Strategy & Operations practice. His clients include a cable company, television production companies and a large Dutch magazine.

Recent projects in media include service offerings in Europe for a cable company, the investment plan for a TV production company and the digital transformation for a magazine.

Gagandeep Sethi +31 (0)88 288 68 61 +31 (0)6 13 127 167 GaSethi@deloitte.nl Gagandeep is a Manager in Deloitte’s Strategy & Operations practice specializing in corporate strategy in the technology, media and telecoms sector. Before Deloitte, he worked in broadcasting with a leading TV news broadcaster as Head of Content Planning & Strategies and Executive Producer. His clients include television production companies, cable companies, print and online companies, as well as international studios. His areas of specialization include corporate strategy, digital strategy, cost strategy, commercial pricing as well as commercial due diligence. He has written extensively on media in the past including the bi-annual IAB Report on Online Advertising in the Netherlands.

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Consulting

ERS

Maureen Hughes Partner, Media +31 (0)88 288 25 49 +31 (0)6 52 672 502 MaureenHughes@deloitte.nl

Jacques Buith Managing Partner, Enterprise Risk Services +31 (0)88 288 05 30 +31 (0)6 55 853 449 JBuith@deloitte.nl

Michel Vreedeveld Partner, Telecom +31 (0)88 288 25 51 +31 (0)6 53 151 783 MVreedeveld@deloitte.nl

Roel van Rijsewijk Director, Enterprise Risk Services +31 (0)88 288 11 03 +31 (0)6 52 615 087 RvanRijsewijk@deloitte.nl

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Stephen Ward Partner, Telecom +31 (0)88 288 28 52 +31 (0)6 12 580 118 StephenWard@deloitte.nl Audit Anton Sandler Partner, Audit +31 (0)88 288 00 60 +31 (0)6 55 853 427 ASandler@deloitte.nl Ingrid Buitendijk Partner, Audit +31 (0)88 288 18 67 +31 (0)6 12 581 567 IBuitendijk@deloitte.nl

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Daan Witteveen Managing Partner, Technology, Media & Telecommunications +31 (0)88 288 02 36 +31 (0)6 55 853 436 DWitteveen@deloitte.nl Bart Paalman Director, Financial Advisory Services +31 (0)88 288 01 30 +31 (0)6 52 048 204 BPaalman@deloitte.nl Tax Stephen Brunner Partner, Tax +31 (0)88 288 67 40 +31 (0)6 50 656 275 SBrunner@deloitte.nl

Appendix: Research Description

Brief comment of Intomart GfK Television is one of the fastest developing media of these times. To keep track with these developments advertisers, agencies and TV providers need to know all details about the experiences of the consumers as well as details about the size and composition of the audience (audience measurement). GfK is active in both fields. Along with the development of new media technologies, new measurement techniques are continuously developed to make these insights available.

Questionnaire The English questionnaire was created by SPOT/ Deloitte/GfK. In the end it has been translated into Dutch.

As described in this report, the basic form of watching TV remains dominant. In line with this the well established measurement of watching TV via panels and meters is an appropriate technique for measuring TV audiences. Specific audience details about gender, age and education etc. are available, but also information about the audience’s interests and activities is delivered by these TV panels.

Sample The sample was drawn from the Intomart GfK Online panel (n=100.000). In total n=3240 respondents were invited of which n=2000 respondents completed the questionnaire. The net response was 62%. The sample was weighted to represent the Dutch population (13+) on the characteristics gender, age, education, household size and region. The population figures are based on the Gouden Standaard (Golden Standard) by CBS (Centraal bureau voor de Statistiek).

However, TV is becoming a Smart TV. The TV set is developing from a one dimensional device into a hub with many functions in the households. Advertisers and TV channels are more and more interested in the function of this new TV behavior, also in relationship with the use of other new media and devices like VOD, 2nd screens and the use of apps: the ‘customers journey’. The big challenge is to bring all this information together.

Methodology The research was conducted online with CAWI (computer assisted web interviewing). Respondents received an invitation by e-mail with a hyperlink to the questionnaire. The average questionnaire time turned out to be 20 minutes.

Fieldwork The fieldwork for this study was executed from May 16th until June 5th 2012.

A new breed of media? Report on TV myths & truths

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Carat insight media survey, European Technographics

1

OECD, http://www.oecd.org/social/socialpoliciesanddata/

31

Benchmark Survey, Deloitte Analysis

SKO, Jaarrapporten 2007-2011

2

BARB/InfosysTV

3

oecdfamilydatabase.htm 32

STIR, May 2012

33

Deloitte/GfK, V48_4/3: Tablet / Mobile phone (Which devices

Ofcom Market Report 2011

do you use to access broadcasters’ on-demand services (

Ofcom Market Report 2011

e.g. Uitzending Gemist, RTL Gemist, Veamer, KPN, UPC, SBS,

SKO, http://www.kijkonderzoek.nl/kijkcijfers/

SKO, http://www.kijkonderzoek.nl/kijkcijfers/

SKO, http://www.kijkonderzoek.nl/kijkcijfers/

4 5 6 7 8

Pathe, Videoland) and with what frequency)?) (N=1301) Deloitte/GfK, V10_2: Recorded via a hard disk recorder or

34

other recording device. What device(s) did you use to do this?

(N=408) (Total can exceed 100% since multiple answers were

http://mashable.com/2012/07/02/euro-2012-tweet-record/

9

allowed)

HOI, http://www.adverterenbijsbs.nl/print/veronica-magazine/

10

doelgroep

UPC Annual Report 2011; HD, DVR and HD-DVR devices also

35

include non-DVR devices, therefore only a part of the 62% of

PWC E&M outlook for NL 2010

11

the digital subscribers will be paying the additional fee

SKO Jaarrapporten 2007-2011 , Nielsen, Deloitte analysis

12

13

SPOT Tijdbestedingsonderzoek 2012

36

Deloitte/GfK UK: I cannot imagine life without television (How

37

much do you agree or disagree with the following statements

38

about the reasons for watching TV?) (N=4006)

39

14

15

Company websites

Nielsen Mobile Connected Device Report Forrester - The Tablet-TV Connection, 2012

Deloitte/GfK, V54c 1-8: How often do you do the following whilst watching programs on your television set (includes

Deloitte/GfK, V7_2: TV is a good social activity that brings

broadcast, PVR and on-demand)? (N=2000)

the family together (How much do you agree or disagree with

16

the following statements about the reasons for watching TV?)

40

(N=1999)

41

Forrester - The Tablet-TV Connection, 2012

Forrester - The Fight To Control The TV Becomes A Platform War

Deloitte/GfK UK: TV is a good social activity that brings the family together (How much do you agree or disagree with the

Gartner - Forecast: IPTV Subscriptions and Revenue,

42

following statements about the reasons for watching TV?) (N=4006)

Worldwide, 2008-2015, 2011 43

GfK: Ketenoverleg Digitale Televisie - Monitor Digitale TV in Nederland vierde kwartaal 2011

Deloitte/GfK, V7_4: I cannot imagine life without television

17

(How much do you agree or disagree with the following

44

statements about the reasons for watching TV?) (N=1999) Sony Twitter stream https://twitter.com/SonyNederland/

18

Nederland vierde kwartaal 2011 45

Gartner - Market Trends: Apple TV Rumors Point to

status/231397776569806848 19

Gartner - Apple TV Rumors Point to Next-Generation TV

Next-Generation TV Functions, Worldwide, 2012 Deloitte/GfK, V36b_1: Latest movies (For which of the

46

Functions, 2012 20

following television products and services would you be willing to pay 10 euro’s a month?) (N=2000)

Forrester - The Fight To Control The TV Becomes A Platform War

Informa Telecoms and Media 2012 (Connected-TV and pay-TV

21

47

Deloitte/GfK, V36a: Tech adoption

48

operator partnerships) 22

Deloitte/GfK, V12_1-12: How do you find out about new TV programmes which you want to watch? Please tell us how

50

often you find out about new programmes in the following

51

ways? (N=2000)

52

GfK persbericht 25/06/2012 “Trends in Digital Media”

Deloitte estimates based on expert interviews SPOT Tijdsbestedingsonderzoek 2012

Zentih Optimedia 2011 Facebook Earnings Release Q2 2012

53

Gartner, Forecast: Social Media Revenue, Worldwide, 2011-2016

Gartner, IDC

24

SPOT, CBS

25

SKO Jaarrapporten 2007-2011, CBS, Comscore March 2011, Deloitte analysis

49

23

GfK: Ketenoverleg Digitale Televisie - Monitor Digitale TV in

54

Deloitte/GfK, V28: Please think about the last product or

Deloitte/GfK, V10_1: Broadcast TV as transmitted live. What

service you bought that was not a routine purchase. Which, if

device(s) did you use to do this? (N=1573) (Total can exceed

any, of the following best describe how you found out about

26

this product or service? (N=2000)

100% since multiple answers were allowed) 27

http://www.gsmhelpdesk.nl/read.php?id=7336

28

family together (N=1999)

http://webwereld.nl/nieuws/106196/kpn-staakt-mobieltv-viadvb-h.html

29

Deloitte/GfK, V7_2: TV is a good social activity that brings the

55

56

Deloitte/GfK, V7_5: Watching TV with others is much more enjoyable than when on my own (N=1999)

http://forum.kpn.com/t5/News-stream/Nieuw-Overal-in-huislive-Interactieve-TV-kijken-op-je/ba-p/44280

57

Deloitte/GfK, V54c 1-8: How often do you do the following whilst watching programs on your television set (includes

Deloitte/GfK, V10_3: Catch-up/on demand service. What

30

broadcast, PVR and on-demand)? (N=2000)

device(s) did you use to do this? (N=265) (Total can exceed 100% since multiple answers were allowed)

Deloitte/GfK, V7_10: I often talk to others about the programs

58

I’ve watched on TV (N=1999) 46

59

Stroom Mediacommunicatie, First of second screen? Een

http://www.vanityfair.com/hollywood/2012/05/aaron-sorkin-

85

onderzoek naar de invloed van second screen op tv kijkgedrag 2012

newsroom-sneak-peek accessed 11 Aug 2012 86

http://online.wsj.com/article/SB100014240527487038063045 76244951109037560.html accessed 11 Aug 2012

Nielsen IMS & UKOM, November 2010, BARB 2010

60

Deloitte/GfK, V68: Have you ever interacted with a program

61

http://www.variety.com/article/VR1118022673?refCatId=14

87

other than to vote? (N=2000) 62

SKO average # of viewers between 01-01-2012 and 30-06-

accessed 11 Aug 2012 88

http://www.theverge.com/2012/8/1/3213079/hbo-earnings-

2012, Facebook pages of TV programmes, snapshot of 20-082012

cord-cutters-subscribers accessed 11 Aug 2012 89

https://torrentfreak.com/game-of-thrones-most-pirated-tvshow-of-the-season-120608/ accessed 11 Aug 2012

Remotely.tv; week 12.08.2012 - 18.08.2012

63

64

http://www.immovator.nl/files/images/Persbericht%20

Deloitte/GfK, V36 b1-10: For which of the following television

90

MPJC%202012%20Remotely.pdf

products and services would you be willing to pay 10 euro’s a month? (N=2000)

Zenith Optimedia 2011, Deloitte Analysis

65

http://articles.businessinsider.com/2012-01-12/

66

http://www.screendigest.com/news/2012_08_fox_buys_into_

91

tech/30618896_1_hulu-ceo-jason-kilar-content-providers-bignumbers Accessed 15 Aug 2012

dutch_football_venture/view.html accessed 20 Aug 2012 Ziggo and UPC Annual Reports 2009-2012, Ziggo and UPC

92

websites accessed 08-2012

http://www.businessinsider.com/the-today-show-made-485-

67

million-of-revenue-last-year-2012-6 Accessed 15 Aug 2012 Deloitte analysis based on Deloitte/IAB report; SPOT TV annual

68

93

GFK Kwaartaalmonitor Digitale TV Q4 2011

94

Ofcom Market Report 2011, GFK Kwaartaalmonitor Digitale TV

report 69

Deloitte/GfK, V24: Which of the following types of advertising

GFK Kwaartaalmonitor Digitale TV Q4 2011

do you think have the greatest impact on YOU PERSONALLY?

96

(N=2000)

97

Deloitte/GfK, V26: Where did you see or hear this advert?

70

(N=2000) 71

Q4 2011 95

Ziggo and UPC websites accessed 08-2012

LGI Annual Report 2011 GFK Kwaartaalmonitor Digitale TV Q4 2011

98

http://paidcontent.org/2012/08/07/cablevision-rolls-out-

99

optimum-app-for-kindle-fire/ accessed 12 Aug 2012

Deloitte/GfK UK, T109: “All those with a favourite advertising campaign” (N = 1103)

Deloitte/GfK, V6: Which, if any, of the following devices

100

do you have access to in your household or currently own?

Deloitte/GfK, V24: Which of the following types of advertising

72

(N=2000)

do you think have the greatest impact on YOU PERSONALLY? (N=2000) 73

101

Deloitte/GfK, V23: Will the availability of an interface like an app store on TV increase your willingness to pay for on

Deloitte/GfK, V28: Please think about the last product or

demand video? (N=1787)

service you bought that was not a routine purchase. Which, if any, of the following best describe how you found out about

102

this product or service? (N=2000)

103

Comscore, March 2011 Gartner - Market Trends: Apple TV Rumors Point to Next-Generation TV Functions, Worldwide, 2012

http://www.mindshareworld.com/who-we-are/news/@

74

Mindshare_and_Google_launch_Ground_Breaking_Mobile_

104

Initiative-Mobile_Garage Deloitte/GfK, V44_4 / V44_5: Do something else while the

75

adverts are on / Avoid content with adverts (N=2000) 76

jsp?containerId=prUS23398412 accessed 27 Jun 2012 105

Deloitte analysis

106

Anything, Anytime, Anywhere... For You; Your Guide to the Latest in TV Everywhere – JP Morgan

Deloitte/GfK UK Study, June 2011. Sample: All those who have acquired a PVR in the last year (N=337)

107

Anything, Anytime, Anywhere... For You; Your Guide to the Latest in TV Everywhere – JP Morgan

Deloitte/GfK, V44_6: Stop fast forwarding if I see an advert /

77

trailer that interests me (When you are watching pre-recorded

http://www.vodprofessional.com/features/samsung’s-smart-tv-

108

television via your PVR, how often do you do the following things?) (N=1301) 78

strategy/ accessed 22 Aug 2012 109

SKO Jaarrapport 2011

110

Nielsen IMS & UKOM November 2010, BARB 2010

111

80

Deloitte estimated based on expert interviews

IHS Screen Digest Broadband Media and Advertising Intelligence Services

SPOT Tijdsbesteding 2010, Zenith Optimedia 2011, SPOT

81

Jaarrapport 2011, Radio Advies Bureau, Deloitte Analysis 82

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