How to Win from OTT Disruption Content Aggregation for Operators December 10 th , 2019
About Tara Tara Neal is the Executive Editor and Telecom Strategist at The Fast Mode. She has more than 20 years of experience in research, analysis and strategy planning. She has written extensively on various topics relating to networking, SDN/NFV, 5G, OSS/BSS, digital services innovations, operator strategies, market trends and growth and development of various emerging sectors. Tara holds a First Class Honours in BSc Accounting and Finance from The London School of Economics, UK and is a CFA charterholder from the CFA Institute, United States. Tara Neal Executive Editor, The Fast Mode 2 2
Agenda • Market overview: PayTV in APAC and South East Asia • OTT disruption: Technology, UX/CX, Content • The new goal for Operators and the strategies to reach it • Let’s get practical • Summary 3
About Marco Head of Operator Products for Vewd, leading the development of all pay TV operator products and defining new product areas for the pay TV industry. 18+ years in the TV industry: Zenterio, ADB, Pirelli Broadband, Telsey. Marco Frattolin Senior Product Manager, Vewd 4 4
Vewd is a Global Technology Company The Leading Provider of OTT and Hybrid TV Solutions 230+ 300 EMPLOYEES WORLDWIDE MILLION 9 COUNTRIES WITH DEVICES DEPLOYED VEWD OFFICES WORLDWIDE 60+ United States New York & San Francisco Norway Oslo Sweden Gothenburg & Linkoping Poland Warsaw & Wroclaw GLOBAL China Beijing South Korea Seoul CUSTOMERS Japan Tokyo Taiwan Taipei Brazil São Paulo 5
Why Vewd for Pay TV Operators ▪ Powering 10+ leading Pay TV Operators around the world Pioneering TV and OTT for the past 17 years ▪ Working with 4 of the top 5 STB manufacturers Ships on ~40M devices per year, over 300M in total ▪ Integrated on all major silicon platforms Most deployed HTML5 and hybrid TV SDK in the industry ▪ Available on all STBs: Linux, AOSP, Android TV and RDK Compatible with all major premium OTT TV Apps OPERATORS TV PLATFORMS STB VENDORS OS’s 6
The Big Picture in APAC The impact of IP 450 400 350 Subs (Millions) 300 250 200 150 100 50 0 2014 2015 2016 2017 2018 Cable IPTV Satellite OTT Source: IHS Markit 7
Indonesia Pay TV Trends Subscriber growth and penetration rate development Revenue growth 8 000 16% 14,0% 13,5% 659 7 000 14% 6 942 6 000 12% Subscribers (Thousands) 543 5 944 9,6% Penetration Rate 5 000 10% USD Millions 4 000 8% 366 3 694 3 000 6% 2 000 4% 1 000 2% - 0% 2014 2019 2024 2014 2019 2024 Source: Media Partners Asia “Asia Pacific Pay-TV Distribution 2020” 8
India Pay TV Trends Subscriber growth and penetration rate development Revenue growth 16 000 180 82% 81,2% 160 81% 14 000 14 881 153,12 140 80% 12 000 Subscribers (Millions) 137,04 120 79% 11 122 Penetration Rate USD Millions 10 000 118,64 77,4% 100 78% 8 000 80 77% 75,8% 6 000 6 813 60 76% 4 000 40 75% 2 000 20 74% 0 73% - 2014 2019 2024 2014 2019 2024 Source: Media Partners Asia “Asia Pacific Pay-TV Distribution 2020” 9
Philippines Pay TV Trends Subscriber growth and penetration rate development Revenue growth 7 000 30% 500 25,6% 450 6 470 23,7% 6 000 25% 432 400 Subscribers (Thousands) 400 5 000 350 5 096 Penetration Rate 20% USD Millions 14,1% 300 320 4 000 15% 250 3 000 200 10% 2 652 150 2 000 100 5% 1 000 50 - 0% - 2014 2019 2024 2014 2019 2024 Source: Media Partners Asia “Asia Pacific Pay-TV Distribution 2020” 10
Vietnam Pay TV Trends Subscriber growth and penetration rate development Revenue growth 16 000 70% 1 200 59,0% 14 000 60% 54,4% 1 000 1 054 13 429 Subscribers (Thousands) 12 000 50% 11 653 Penetration Rate 866 800 10 000 USD Millions 34,8% 40% 8 000 600 30% 6 940 6 000 488 400 20% 4 000 200 10% 2 000 - 0% - 2014 2019 2024 2014 2019 2024 Source: Media Partners Asia “Asia Pacific Pay-TV Distribution 2020” 11
OTT Disruption Continues Key aspects Technology Content UX and CX All trademarks are property of their respective owners. 12
OTT Transforms Operator Services Industry moving away from traditional broadcast technology MORE & BETTER SERVICES OTT TECHNOLOGY • VoD, PVR • IP architectures • Personalization / vs. traditional broadcast transmission addressable • Adaptive bitrate protocols and DRM • Linear and Live vs. broadcast, multicast and CA WHAT DRIVES ADOPTION • Impacts on ways of working Broadband availability, fixed or mobile • Cloud-based shared workflows • • OTT technology is now sufficiently mature Agile and DevOps vs. siloed and on-prem vs. waterfall • Cloud capacity is proven • Open networks, public clouds, CDNs • vs. closed managed networks Makes economic sense in more cases 13 13
OTT Traffic Outpaces Managed IP Asia Pacific video traffic set for exponential growth, but not through traditional TV connections 120 17,13 100 97 80 Exabytes 60 15,26 40 47 10,8 20 22 0 2018 2020 2022 CDN traffic (mostly video streaming) TV services on managed network Sources: Cisco 14 14
OTT Impacts UI and UX Engaging interfaces inspired by the web OPTIMIZED TO DRIVE USAGE AND ENGAGEMENT • Content-centric • Context-sensitive • Always evolving • Data-driven and personalized • Based on intuitive spatial navigation • Voice control All trademarks are property of their respective owners. 15
OTT Impacts Consumer Experience Net Promoter Score face-off (low, mean, high) TV and Internet Service Providers (-16, 0, 19) Streaming Media (24, 39, 49) Source: Qualtrics XM Institute (US-only) 16
OTT Impacts Content Choice More services compete for share-of-wallet DAZN Disney+ Youku Tudou Hotstar HOOQ NHL.TV HBO Max Eros iFlix Viu Fandango AppleTV+ Now Now Line TV Showtime CBS Sports Peacock MLB.TV OTT HQ Iqiyi NBC WWE Sports OONA AMZN B/R Live YouTube Network HBO Now tonton Gold Freedrive Viki Tencent Philo Pluto TV Sony PS WatchTV Crunchy- Hulu Plus Video VRV WarnerMedia Roll Vue Netflix Paramount CBS All- Fox Nation HBO Go Google Catchplay DirecTV + CMCSA Amazon Vudu Play Access Sling TV Now Prime NBC Watch- Fox Sports YouTube DISCA CBSN fubo TV WatchBack Video Crackle Hulu ESPN Twitch Go Apple TV TV Pre-2007 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019+ Source: Barclays, Vewd internal 17
Content, Not Price, Drives Subscriptions Percent who cite content versus price when purchasing multiple OTT subscriptions 36% Vietnam 64% Thailand 34% 66% 31% Singapore 69% 28% Philippines 72% 36% Malaysia 64% Indonesia 30% 70% 29% India 71% 0% 10% 20% 30% 40% 50% 60% 70% 80% Source: Brightcove Price Content 18
New Operator Strategies 19
The Goal: An Integrated Operator Experience Overcoming platform and content fragmentation Explore The problem is not only how to deliver Consumer content, but also how to improve the whole consumer journey and process of finding, Consume Pay consuming and paying for content. OPERATOR EXPERIENCE 20
“The maximum upside is likely to accrue to distributors who can create product bundles rather than price bundles.” 21 21
Operator Strategies 22
1 st Screen is Important Modern TV UX Time spent watching TV in Asia Pac by country Hours per week 0 5 10 15 20 25 30 35 Indonesia Taiwan Vietnam New Zealand Australia India Thailand South Korea Singapore China Source: Statista Hong Kong 23
Modern TV UX Modern TV UX From technology-centric to content-centric PREVIOUS TV UX DESIGN MODERN TV UX DESIGN • Driven by technology • Content takes prime position with video, pictures, metadata • Based on how the content is packaged and delivered • Context and relevance drive discovery • Based on when the content is available • Personalization algorithmic + editorial • Complex remote control • Technology used seamlessly to access any content anytime • Intuitive navigation with minimal remote control All trademarks are property of their respective owners. 24
Multiple Device Options Required TV Client Device Need a portfolio approach to reach customers strategy Home hub STB Dongle Audio Operator TV BYOD Retail form factors Media player Smart TV Multimedia Hybrid Small box, Soundbar Co-branded, co- Pay TV app on Pay TV app on gateway, smart HDMI stick, Smart speaker marketed smart device app store Smart TV home IP-only TV Provided by Operator Partially subsidized Purchased by End User Higher Capex Lower Capex Customized features Standard features OTT technology More control, walled garden Less control, open to competition Bundling opportunities Commoditization New Operator formats Broader demographic target Expand reach off-network 25
The Search for the Perfect Mix The perfect content mix • Exclusive content Premium content • Partner / own production The anchor of the bundle • Early-to-market OTT apps • Complete line-up of linear TV channels Global and local content • Must-have global OTT apps Complete the offer • Focus on local content • Relevant longtail content New categories, longtail, niche • Personalization Enrich and differentiate • New categories: gaming, short form, niche 26
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