Future of Digital: The Next Big Thing
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Transcript of Future of Digital: The Next Big Thing
Providing in-depth insight, data, and analysis of everything digital.BI Intelligence
The next big thing
DIGITAL IS INHERITING THE EARTH
DIGITAL MEDIA CONSUMPTION IS GROWING, EVERYTHING ELSE IS SHRINKING
US Consumer Media Consumption Share
Source: eMarketer
43.2%
40.9%
14.0%
6.6% 5.8%
35.2%
12.0%
2.9% 3.3%
TV Radio Print Other
2011 2012 2013 2014 2015
Desktop/laptop
Digital
30.0%Mobile
IT’S A GENERATIONAL SHIFT
Top 5 Media Mentions Among All Adults, 2016
Source: Ofcom
0 20 40 60 80 100
Alladults
Aged16-24
Aged25-34
Aged35-44
Aged45-54
Aged55-64
Aged65-74
Aged75+ Useasmartphone
Goonlineonacomputer/laptop/netbook/tabletWatchTV
Readnewspapers/magazines
Listentotheradio
$0
$20
$40
$60
$80
$100
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
DIGITAL ADS GROWING, ALL ELSE FLAT
US Advertising Revenue
Source: ZenithOptimedia, BI Intelligence Estimates
Billions($)
Digital
TV
RadioPrintOutdoor
YahooAOL Twitter
$0
$5
$10
$15
$20
$25
$30
$35
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12
2Q12
3Q12
4Q12
1Q13
2Q13
3Q13
4Q13
1Q14
2Q14
3Q14
4Q14
1Q15
2Q15
3Q15
4Q15
1Q16
2Q16
3Q16
Millions($)
IT’S GOOGLE, FACEBOOK, AND “OTHER”
Global Digital Ad Revenue
Source: Company Filings, BI Intelligence Estimates
IN 1H 2016, GOOGLE AND FACEBOOK GREW, EVERYONE ELSE SHRANK
US Digital Ad Revenue, Billions ($)
$27.5
$14.2
$3.4$9.9
$32.8
$17.4
$5.7$9.7
USDigitalAdRevenue Google Facebook EveryoneElse
1H2015 1H2016
+19%
+23%
+68%-2%
Source: IAB, Facebook, Google, Digital Content Next
THE BELL TOLLS FOR LEGACY TV
For the last 20 years, digital has disrupted print. For the next 20, it
will disrupt TV.
TRADITIONAL TV HAS PASSED ITS PEAK
Households With Pay TV Vs. Subscription OTT, % Of US Homes
Source: Nielsen, Leichtman Research Group
86%82%
41%
53%
Q414 Q115 Q215 Q315 Q415 Q116 Q216
Pay-TV SubscriptionOTT
TRADITIONAL TV VIEWERSHIP IS FALLING
Average Time Spent Per Day Watching Traditional TV, HH:MM
Source: Nielsen
4:43
4:19
4:114:09
Q22013 Q22014 Q22015 Q22016
YOUNGER TV VIEWERSHIP IS COLLAPSING
Source: Matthew Ball, REDEF, Nielsen
Meanwhile…
MODERN TV NETWORKS ARE EXPLODING
0
50
100
Q32012 Q32013 Q32014 Q32015 Q32016
Domestic International
Amazon Prime Subscribers
0
20
40
60
80
2012 2013 2014 2015 2016 2017E
0
5
10
15
2011 2012 2013 2014 2015 2016
Netflix Subscribers
Apple TV Installed Base Hulu Subscribers
0
50
2012 2013 2014 2015 2016 2017
Millions
Global US
Millions
Millions
Millions
ITUNES, NETFLIX DWARF CABLE NETWORKS
Source: News Reports, Company Filings
$20
$7
$3 $-
$5
$10
$15
$20
$25
2007 2008 2009 2010 2011 2012 2013 2014 2015
Billion
s($)
iTunes
AMC
Netflix
Cable Network Vs. Digital Content Revenue
YOUTUBE NOW BIGGER THAN CBS
Modern Digital Ad Revenue Vs. Traditional TV Revenue
Source: Company Reports, UBS
$-
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
2007 2008 2009 2010 2011 2012 2013 2014 2015
Millions($)
CBSAdRevenue
YouTubeAdRevenue
AMCNetworks
NETFLIX SAW MORE HOURS PER MONTH THAN ANY OTHER TV NETWORK
Total Hours Of Viewing, Per Month, Per Network
Matthew Ball, MEDIA REDEF
We can watch what we want to, when we want to —
anywhere, on any screen.
MODERN TV NETWORKS ARE JUST BETTER
So what’s going to happen?
First, TV won’t “die.”
Old media don’t die. They get niche-ified. (See radio and print.)
There are three parts of “TV” — and two are thriving.
1. Modern digital TV networks will continue to thrive.
2. Access providers will continue to thrive.
3. Traditional TV networks will go through ~decades of consolidation and pain.
THERE ARE TOO MANY LEGACY NETWORKS
Channels Receivable And Watched, Per US TV Household
Source: Nielsen
151.4168.5
179.1 189.1 197.4208 205.9
17.8 17.5 17.8 17.5 20.9 19.9 19.8
2010 2011 2012 2013 2014 2015 2016
Avg.TVChannelsReceived Avg.TVChannelsWatched
THERE AREN’T ENOUGH (GREAT) SHOWSAverage Original TV Series Each Year Vs. Survival Rate
Source: Matthew Ball, MEDIA REDEF
EVEN TRADITIONAL STRONGHOLDS LIKE SPORTS ARE STARTING TO SEE DECLINES
Households With ESPN, Millions
Source: Nielsen, WSJ
NFL Football RatingsThrough first 4 weeks, 2015 vs. 2016
96.17
94.4
92.94
90.99
89.01 88.78
Jul'14 Feb'15 Jul'15 Feb'16 Jul'16 Aug'16
Lost7.4Mhouseholds in2
years
NBCSundayNightFootball: -13%
FoxSunday:-3%
CBSSunday:-3%
CBSThursdayNight:-15%
ESPNMondayNight:-17%
FORTUNATELY, TV IS AWASH IN MONEY
US Revenue, Billions ($)
Source: Media Partners Asia, 2016
PayTVSubscriptions,
145.6
TVAdvertising,72.32017E 217.9B
Total
So TV networks will suffer in style.
THE NEXT BIG THING
NOT SMARTWATCHES OR GLASSES — THESE AREN’T MEDIA CONSUMPTION DEVICES
Why Apple Watch Owners Wouldn’t Buy Another Apple Watch
Source: Fluent
34%
31%
16%
12%
4%
3%
Tooexpensive
Notuseful
Ugly
Waitingforabetterversion
Featuresduplicatedbysmartphone
Requiressmartphone
VR/AR HAS POTENTIAL, BUT IT’S STILLTOO EARLY…
Global VR Headset Shipments Forecast, Millions
Source: BI Intelligence Estimates
0.78.2
12.017.3
24.4
33.0
42.6
55.1
2015 2016 2017 2018 2019 2020 2021 2022
Wearehere
THE NEXT BIG THING: SOCIAL VIDEO
45
6
8
10
Q2'15 Q3'15 Q4'15 Q1'16 Q2'16
4
6
8
10
12
Q1'15 Q2'15 Q3'15 Q4'15 Q1'16
6.0 6.3 6.5 7.08.0
Q2'14 Q3'14 Q4'14 Q2'15 Q4'15
Daily Video Views, By Platform, Billions
+200%
+150%+33%
Source: Facebook, Snapchat, KPCB, Bloomberg, Activate, BI Intelligence Estimates
THIS IS A NEW KIND OF STORY
• “Thumb stopper”
• Sound optional
• Intimate and conversational
• (Often) square or vertical
• Shareable
SOCIAL VIDEOS TRAVEL ACROSS PLATFORMS
THE OPPORTUNITY IS MASSIVE
0
500
1000
1500
2000
2500
3000
Oct-15 Nov-15 Dec-15 Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16
Business Insider Monthly Video Streams, Millions
Social videos can be evocative, entertaining, and effective.
INSERT“BUCKETOFWARMCHOCOLATE
CHIP COOKES”
Social videos can change behavior and compel action.
THE RAINBOW BAGEL
“We got slammed like you couldn’t believe. I haven’t slept in weeks. It’s been crazy since Christmas, but Business Insider really put us over the top.”
-Francine LaBarbara, Marketing Coordinator, The Bagel Shop
TUBING IN THE HAWAIIAN WILDERNESS
• 30+ million views
• “I don’t know how it happened but WOW”
• Phone’s ringing off the hook and reservations booked
THE SPIDER CATCHER
• 110+ million views
• Sales skyrocketed 500% on Amazon
INSERT Thequeenofbadrobots