Future of Content Creation -...

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Future of Content CreationLatin America Factpack

May 2011

Agenda

• Macro overview

• Media market overview


2WEF LatAm Factpack DRAFTSAO

• Trends in online media

• Case studies

Latin America (LatAm) – Overview

LatAm World

Population (2010, in M) 582 6,852

Urbanization 80% 50%

GDP (2010, US$) 4.7T 61.9T

GDP/ capita (US$) 6.8K 11.8K

Real GDP CAGR 2000-10 3% 4%

Inflation1 (%) 6% 4%

Columbia

Venezuela



(1) GDP Weighted average (2) Ukraine (0.710) is the 69

th; Iran (0.702) is the current 70

thcountry

(3) Similar to countries like Sri Lanka, Gambia and ZimbabweSource: Euromonitor; IFS; CIA World Factbook; IMF, World Economic Outlook Database, October 2010

Latin America:

• 2010 HDI: 0.704 (world rank2: 70)

• 2010 GINI Index: 49.8 (world rank3: 80)

Latin America share of the world:

8%Population

8%GDP

Media market

4%

Internet users

11%

Brazil

Argentine

Chile

LatAm’s macroeconomic fundamentals have improved significantly over past 20 years

... decreasing interest rates...

995

997

999

001

003

005

007

00910

E

Inflationrate

Inflation under control...

Average inflation during 1991-

1994*: 571% p.a.

Average interest during 1991-1994: 1,172% p.a.



1995

1997

1999

2001

2003

2005

2007

200920

10E

… improving government budgets

199

199

199

200

200

200

200

20020

10

... More sustainable GDP growth…

*Data points excluded due to high levels of inflation in the period: 1991 – 215%, 1992 – 393%, 1993 – 783%, 1994 – 850%Source: CEPAL, Euromonitor, IFS, IMF

In LatAm, 7 countries account for ~90% of GDP with huge income disparity across countries

GDP per capita (2010E, US$)

21.9k


5WEF LatAm Factpack DRAFTSAOSource: International Monetary Fund, World Economic Outlook Database, October 2010

0.7k

33x

Forecasts suggest LatAm will continue to have a large working age population

2020F

Men Women



Note: Working age = between 15 and 65 yearsSource: Euromonitor, Bain analysis

65+

15-64

0-14

LatAm income levels are rising; likely to drive higher entertainment and media spend

60

80

100%

LatAm population distribution by annual income



0

20

40

2005 2010 2015F

17 23 30% populationwith >$15kannual income

<$5K

$5K-15K

$15K-50K

$50+

Note: Entertainment and media market numbers include internet access spending; Regional aggregates are based on the top countries in the region; E.g. LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP

Source: Euromonitor, PWC Global Entertainment and Media Outlook 2010-2014, June 2010; Bain analysis

Agenda

• Macro overview





• Case studies

Summary

SubscriptionTV

9% 24% 49%

• Penetration is expected to rise as economy recovers

• Satellite and IPTV to grow

• Argentina and Chile will show fastest growth and adoption

Penetration (%)

Subscription TV

Subscriber Growth

(05-09 CAGR) LatAm World avg.Future Growth Drivers



Internet 20% 40% 45%

• Governments across all key countries have launched national level initiatives for increasing internet penetration

Mobile phones

19% 97% 79%

• Chile, Argentina and Brazil will continue to see good growth

• With growing smartphone and 3G penetration, mobile phones will gain importance as a media consumption platform

Note: Subscription TV and Internet penetration are in terms of Household penetration; Mobile phone penetration is as a percentage of total population

Internet

Mobile phones

Subscription TV penetration far below global average, but great dispersion among countries

Availability of large number of free channels driving down penetration

Penetration is



Note: Regional aggregates are based on the top countries in the region; E.g. LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDPSource: PWC Global Entertainment and Media Outlook 2010-2014

Penetration is expected to rise as economy recovers; satellite and IPTV to grow

Arge

ntina

Chile

Vene

zuela

Mexico

Colombia

Brazil

LatAm internet penetration is near global average and expected to grow rapidly

60

80%

Internet household penetration (%)

Latam avg.(2014)

50

62 6360 59 57



Note: Regional aggregates are based on the top countries in the region; E.g. LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP; Does not include mobile internetSource: PWC Global Entertainment and Media Outlook 2010-2014

0

20

40Latam avg.(2009)

Brazil

Chile

Arge

ntina

Mexico

33

Colombia

25

Vene

zuela

23

4237 37

2009

2014

LatAm mobile penetration is above global average with strong growth expected

150

200%

Mobile connection penetration (%)

Latam avg.

145

166

144

128124 104


12WEF LatAm Factpack DRAFTSAOSource: Wireless Intelligence, 2011

0

50

100 Latam avg.(2010)

avg.(2015)

Arge

ntina

Chile

Brazil

Vene

zuela

103

Colombia

94

106

Mexico

83

100

Other

Latam

82

99108

2010

2015

Smartphones sales and 3G subscribers are expected to grow exponentially



Mobile phones will gain importance as a media consumption platform as more and more people own smart mobile devices connected to high speed networks

Source: IDC; Wireless Intelligence; Bain analysis

TV forms ~50% of ~$40B LatAm media market; relatively uniform across countries

Internet

Out of Home

Music



TV

Film

Print

Video Games

Radio

Out of Home

Note: *LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP ; Internet and mobile access revenue is excluded from the total media and entertainment market; TV exclude online and mobile TV, Print include Newspaper, magazines, B2B publishing, and consumer and educational books (exclude revenues from digital and electronic versions); **Others include Chile, Colombia and VenezuelaSource: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

While traditional media is thriving, ad spend on digital media is growing much more rapidly

Traditional media



Note: LatAm market built on the basis of 6 major geographies, which form ~90% of LatAm GDP ; TV exclude online and mobile TV advertising, Print include Newspaper, magazines, B2B publishing, and consumer and educational books (exclude advertising revenues from digital and electronic versions)Source: PricewaterhouseCoopers LLP, Wilkofsky Gruen Associates

Traditional media

Agenda

• Macro overview





• Case studies

Number of online users has grown rapidly, but consumption per user still materially below U.S.

20

25

30

35

Global

Latam

U.S.

25 25 24 2423

20

Average hours spent online per user/month (2010)

25% short of U.S. bench-mark



0

5

10

15

20

Argentina Peru Brazil Mexico Chile Colombia

Notes: Internet users are people with access to the world-wide network via home, work internet enabled computers, internet cafes or mobile phones; Average hours spend online include only 15+ Internet Audience

Source: Euromonitor; comScore

Online video has high reach among online users but consumption below int’l benchmark

Online Video

60

80

100%

8487 87

8387

Online video reach/web population (2011)



Notes: Include only 15+ Internet AudienceSource: comScore

“Given the region’s appetite for Entertainment, expect to see continued growth in online video consumption as broadband penetration continues to increase”

Comscore, 2011

0

20

40

USA Mexico Brazil Chile Argentina

Users are willing to pay for the content; >60% will consider paying for movies, music & videos



Notes: Based on a survey on 27,000 consumers across 52 countriesSource: Nielson (Feb 2010)

Social networking accounts for a significant amount of time spent online



Notes: Include only 15+ Internet Audience; IM contribution in Brazil calculated by using average of ‘average time spent by an IM user’ in Chile, Argentina and Mexico; *Include data from time period ranging Jun 2010 to Jan 2011; **Include e-mail, Search/navigation, amongst other online categories

Source: comScore; Bain Analysis

Social networking has very high reach among LatAm online users…

Social Networking



Chile

Peru

Arge

ntina

Vene

zuela

Mexico

Colombia

Brazil

Europe

Globa

lAs

iaPa

cific

North

AmericaLatam

Notes: Include only 15+ Internet AudienceSource: comScore

LatAm countries Regions

…with high user engagement

Social Networking



Notes: Include only 15+ Internet Audience; *Include data from time period ranging Jun 2010 to Jan 2011 Source: comScore

Agenda

• Macro overview





• Case studies

Summary

•Maintaining leadership position but slowly adapting to new formats

•One of the fastest growing online business in Latin America –has successfully leveraged the online platform for growth

TV Globo

1

Fnbox

2

3



•As a tool for effective consumer engagement and marketing

•A cutting-edge business model that allows subscribers to watch what they want, anytime, across any device – will benefit content creators, distributors, aggregators and consumers

•Has leveraged Spanish content to cater to growing demand for Hispanic media and expand internationally

Social media

TV Everywhere

Televisa

3

4

5

TV Globo: Traditional media maintaining position but slowly adapting to new formats

Situation Key learning

Results

• Brazilian-based television network that is the largest network in Latin America and third largest in the world

• Offers complementary media outlets including a newspaper and radio station

• Understand how consumer behavior and expectations are changing in terms of content distribution - Television viewing is a crucial aspect of an individual’s daily lifestyle in LatAm, especially Brazil, thus Globo strives to provide a variety of different content to retain its audience

- Popularity of internet has caused Globo to adapt digitally by providing paid access to shows and

1



• Globo in Brazil- Reaches 99.5% of potential viewers, practically the entire Brazilian population

- Possess segmentation capacity due to its network affiliates

- Almost 90% of the network's programming is produced in-house

• Globo in the world- The international channel targets Brazilians and other Portuguese-speakers outside of Brazil

- Globo TV Sports is successful in distributing high quality content regarding Brazilian sports events abroad

- Licensed to over 50 countries, translated to 24 languages and reaches an audience of 100 million viewers worldwide per day

digitally by providing paid access to shows and free access to their newspaper online

- Globo also encourages consumer engagement by allowing viewers to vote and comment on popular reality shows and soap operas online

• Although Globo is adapting to increase its digital offerings, it has not pushed as aggressively as some of its American counterparts to be at the forefront of content innovation- Fewer user-generated content and options

- Fewer acquisition activity to date that points towards embracing new media formats

Source: Globo website

Fnbox has successfully leveraged the online platform to grow in Latin America

SonicoTarjetasTelefónicas

• Social network in LatAm that allows members to organize their accounts

• Enables end user to make cheap international long distance calls from

• Founded in 2002

• Fastest growing online business in Latin America

• Estimated sales of $8M in 2010

Description Products

Recarga.com

• Enables end users to add credits to their prepaid mobile phones in

Leadgen

• Connects advertisers with potential clients by offering relevant

2



their accounts through 3 profiles:

- Private, Public and Professional

• Grown to >50M registered users since it started in 2007

calls from mobile phones and landlines

• Sold >500M minutes and has ~200,000 customers

- Projected to reach $20M by 2011

• Raised $6M for a minority stake from DN Capital and Angel/private investors

• Recognized as the 5th

largest tech startupby BusinessWeek and YouNoodle.com in 2009

Source: Marketwire, Dec 2010; Lit. Search

phones in Latin America and US

• Sold >750M minutes since 2002 and has ~400,000 customers

relevant advertising through demographic and interest-based targeting

• Generates 3.3M qualified leads daily

Companies are using social media as a tool for effective consumer engagement and marketing

Ford FusionHybrid, Brazil

Panini, Brazil

• Created a platform to answer consumer questions

• Created series

• Created a platform where each of the 4 partner blogs, representing the 4 schools of

• 88% of the internet users in Latin America use social networking sites

• ~50% of Latin American

Increasing use of social media

Examples of successful campaigns

Paso de Los toros, Argentina

• Created a platform based on its tagline “Immortal Vengeance” where people

Visa, Mexico

• Invited short videos explaining benefits of credit cards

• Video with Details of campaign

3



• Created series of short films where Ricardo Mauricio answered the best questions

the 4 schools of Hogwarts witchcraft (Harry Potter), posted some challenges online

American companies use social media platforms for consumer engagement

• Companies also leverage social media as an important marketing tool

Source: Synthesio, Jan 2011; Lit. Search

where people could leave bitter messages for their exes

• Video with maximum votes won a trip for 2 to South Africa with tickets to World Cup

• 11,255 Q&A

• 1,000 average views per YouTube video

• 19% increase in card payments in Mexico during the campaign

• 64 video entries

• All copies of the book sold out in <2 weeks

• 1.5M visits to the partner blogs

• >100,000 visitors

• >6000 of the best messages published

Details of campaign

Success

‘TV Everywhere’ is a cutting-edge business model emerging in Latin America

What is ‘TV Everywhere’ or ‘TV 360’

• A solution that allows subscribers to watch what they want, when they want it, across any device

• The solution is available for implementation with any internet-connected device, including PCs, game consoles, tablets, smartphones, connected TV’s etc.

“TV 360 enables producers, content aggregators, pay TV operators, internet portals and ISPs to generate greater income from premium online content.

4


28WEF LatAm Factpack DRAFTSAOSource: Literature searches

Beneficial to content creators, distributors,

aggregators and subscribers alike

Consortium of specialized players to introduce ‘TV 360’

(Pay OTT TV platform)

(Provides content management)

(Supports through hardware architecture)

(Product roll out under Comtelsat TV 360 offering)

portals and ISPs to generate greater income from premium online content. Interested operators & media co’s can quickly launch a pay OTT TV service.”

Vision2mobile.com, 2011

“The offering, combining content, technology and service, is the most comprehensive on the Latin American market. It will satisfy subscriber demand to access premium content through any screen available.”

Rapidtvnews.com, 2011

Televisa entered into alliances and made acquisitions to expand international presence

2010 USA

• Grupo Televisa plans to invest $130M in Univision Communications, in order to expand existing cooperation between the two

• Helps strengthen its foothold in USA, an important market beyond Mexico

2010 USA• JV to produce movies for the fast-growing Hispanic population in the US, who account for 1/4th of the country’s frequent moviegoers

INTERNATIONAL ALLIANCES5

Year Region Partner/ target Description



1/4th of the country’s frequent moviegoers

2008 USA

• Telemundo to air Mexican soccer under agreement with Televisa

• Meets increasing US demand to view Mexican soccer matches

2007 Argentina

• Acquisition of Editorial Atlantida, one of the leading magazine publishers in Argentina

• Annual circulation of 12.8M copies in 2006

2000-2006 Primarily USA

Univision, Venevision, Clear Channel Entertainment,

Hispanic Publishing Group, EMI and others

• Multiple alliances and JV’s to penetrate the growing Hispanic media market in USA

• Segments include TV, publishing and music

Note: List of partnerships is not exhaustiveSource: Datamonitor; Lit search

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