The Connected Consumer

Copyright © 2007 The Nielsen CompanyCopyright © 2007 The Nielsen Company

The Connected ConsumerThe Connected Consumer

Scott L. Brown SVP Strategic Relationships, Marketing & Technology

Scott L. Brown SVP Strategic Relationships, Marketing & Technology


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Most of You … Perhaps Not AllMost of You … Perhaps Not AllBY THE MOTION PICTURE ASSOCIATION OF AMERICABY THE MOTION PICTURE ASSOCIATION OF AMERICA

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THE FOLLOWING THE FOLLOWING SHORT FILMSHORT FILM HAS BEEN APPROVED FOR HAS BEEN APPROVED FOR

Most of You … Perhaps Not AllMost of You … Perhaps Not AllBY THE MOTION PICTURE ASSOCIATION OF AMERICABY THE MOTION PICTURE ASSOCIATION OF AMERICA



AgendaAgenda Assessing the connected consumer

– Emerging consumer trends

– Factors driving new technology development

– Which devices are key and why Today and tomorrow

– Looking forward

– Likely outcomes

Assessing the connected consumer

– Emerging consumer trends

– Factors driving new technology development

– Which devices are key and why Today and tomorrow

– Looking forward

– Likely outcomes


The Connected Consumer HomeThe Connected Consumer Home

PastPast

PresentPresent

FutureFuture


Connected Consumer HomeConnected Consumer Home

1967 – the average home owned 1.3 CE devices 2007 – the average home has 26 CE devices and

will spend an average of $1,500 on gear

“High speed” in the 60s conveyed one thing; today it means 55 million homes connected tothe Web

1967 – the average home owned 1.3 CE devices 2007 – the average home has 26 CE devices and

will spend an average of $1,500 on gear

“High speed” in the 60s conveyed one thing; today it means 55 million homes connected tothe Web

001010100001110


Connected Consumer TrendsConnected Consumer Trends

The kind of content delivered to the electronics gear

Underlying partnerships and services that are unfolding

Ease with which the technology works

Stoking consumer excitement

Transporting, storing, and consuming digital media

The kind of content delivered to the electronics gear

Underlying partnerships and services that are unfolding

Ease with which the technology works

Stoking consumer excitement

Transporting, storing, and consuming digital media


Demands of Connected ConsumerDemands of Connected Consumer

1. HDTV picture size & quality

2. The utility of broadband access

3. Wants timeshifting and material everywhere in the home

4. Expects mobile and wireless capability

1. HDTV picture size & quality

2. The utility of broadband access

3. Wants timeshifting and material everywhere in the home

4. Expects mobile and wireless capability


The rage - heavy sales tied to “true” new 1080P HDTV format

Emergence of 2nd tierlow cost players – Olevia– Visco– Akai– Tatung … and others

The rage - heavy sales tied to “true” new 1080P HDTV format

Emergence of 2nd tierlow cost players – Olevia– Visco– Akai– Tatung … and others

1) Picture Size and Quality 1) Picture Size and Quality


Trend Toward Flat PanelsTrend Toward Flat Panels New price war unfolding

Worldwide sales – 42 million LCD units vs. 8 million plasma units sold in 2006

– Plasma shipping weight is key

Middle income homes finding large flat panel HDTV within reach

New price war unfolding

Worldwide sales – 42 million LCD units vs. 8 million plasma units sold in 2006

– Plasma shipping weight is key

Middle income homes finding large flat panel HDTV within reach


Price Forcing More Feature GrowthPrice Forcing More Feature Growth Commoditization forcing a tide that lifts all

features (DVR, DVD, Home network, etc.) Commoditization forcing a tide that lifts all

features (DVR, DVD, Home network, etc.)

6%8%

17%

25%

38%

0%

10%

20%

30%

40%

Income>$30k

$30k-$50k $50k-$75k $75k-$100k >$100k

6%8%

17%

25%

38%

0%

10%

20%

30%

40%

Income>$30k

$30k-$50k $50k-$75k $75k-$100k >$100k

HD-Capable Set at Home

By Annual Income

HD-Capable Set at Home

By Annual Income

Source: LRG


True ceiling $800-900True ceiling $800-900“You’re a damn fool!” “You’re a damn fool!”

Psychological ceiling - $700Psychological ceiling - $700

“I should have listened to my mother about you”

“I should have listened to my mother about you”

Sweet Spot - $500Sweet Spot - $500

“For once, you’re smarter than you appear”“For once, you’re smarter than you appear”

42”HDTVHDTV AcquisitionHDTV Acquisition


Web ConnectivityWeb Connectivity Smart TVs – broadband/PC capable

– RGB, Ethernet, iLink 1394

– Sony marketing Smart-TV adaptor/streaming

– Soon, little difference between surfing the Web on TV and watching TV on PC

Consumer expectations drive CE to Web integration - convergence

Smart TVs – broadband/PC capable

– RGB, Ethernet, iLink 1394

– Sony marketing Smart-TV adaptor/streaming

– Soon, little difference between surfing the Web on TV and watching TV on PC

Consumer expectations drive CE to Web integration - convergence

oror


Picture Size & Quality SummaryPicture Size & Quality Summary Web connectivity is now key for new

advanced HDTV sets

HDTV set penetration is now driving demand for HD content

Amount of HDTV content within the program bundle is a differentiator

Web connectivity is now key for new advanced HDTV sets

HDTV set penetration is now driving demand for HD content

Amount of HDTV content within the program bundle is a differentiator


2) Broadband2) Broadband

Broadband is the “cardiac” component of all bundling strategies

– Triple/Quad play reduces churn by 40%

OCAP boxes and IPTV boxes usher in new generation of consumer interaction

Broadband is the vehicle for digital video content, interactivity and Web access

Broadband is the “cardiac” component of all bundling strategies

– Triple/Quad play reduces churn by 40%

OCAP boxes and IPTV boxes usher in new generation of consumer interaction

Broadband is the vehicle for digital video content, interactivity and Web access


Broadband Video ContentBroadband Video Content

0

20

40

60

80

100

2005 2006 2007 2008 2009 2010

Broadband HHs HHs w/HDTV

HHs w/PayTV HHs w/Internet Video

0

20

40

60

80

100

2005 2006 2007 2008 2009 2010

Broadband HHs HHs w/HDTV

HHs w/PayTV HHs w/Internet Video

Instatt


Broadband Creative ExpansionBroadband Creative Expansion

New Microsoft Vista O/S available

– Enables point/click Web publishing user generated content

– Inexpensive Web original/short stories

Unparalleled growth - millions of inexpensive video assets to the Web

New broadband devices are stoking consumer expectations

New Microsoft Vista O/S available

– Enables point/click Web publishing user generated content

– Inexpensive Web original/short stories

Unparalleled growth - millions of inexpensive video assets to the Web

New broadband devices are stoking consumer expectations


Blossoming Broadband Connectivity Blossoming Broadband Connectivity

Inte

ract

ivit

y

TraditionalContent

Low

High

Bandwidth &Functionality

OpportunityOpportunity

ConsumerInvolvement WithContent

Web Activity

User GenContent

SocialNetworks Garden

Clubs

High

EdgeContent

WebOriginal

VideoRSS

Mobile

P2P


Broadband – Service Provider GoalsBroadband – Service Provider Goals Enable consumer involvement with

entertainment

Feature branded home page and EPG

– Provider walled gardens and control of access to the consumer

– Transactional business

You think churn is a big deal now?

Enable consumer involvement with entertainment

Feature branded home page and EPG

– Provider walled gardens and control of access to the consumer

– Transactional business

You think churn is a big deal now?


Broadband SummaryBroadband Summary

Selling a CE device Unicast Interactivity HD Usage: Assume 8

hours of HD use– 8Mbs for HD x 60sec x 60min

x 8 hours = over 200 gigabits/per day/per home

Selling a CE device Unicast Interactivity HD Usage: Assume 8

hours of HD use– 8Mbs for HD x 60sec x 60min

x 8 hours = over 200 gigabits/per day/per home

Yikes!


3) Timeshifting – Can’t Live Without It3) Timeshifting – Can’t Live Without It How it is made available

– Standalone, In-home network, Networked, Game Console, In-Set or Home Media Server

HD DVR becoming new standard

Interactivity & DVR storage combined

Studios worry that DVRs will produce a “digital leak.” Digital Rights Management embedded in all HD content

How it is made available

– Standalone, In-home network, Networked, Game Console, In-Set or Home Media Server

HD DVR becoming new standard

Interactivity & DVR storage combined

Studios worry that DVRs will produce a “digital leak.” Digital Rights Management embedded in all HD content


HD DVR/DVD BurnerHD DVR/DVD Burner

HD DVD/DVR burner from Toshiba with a one-terabyte hard drive

Can record and store up to 130 hours of high-definition broadcasts and burn HD DVD discs

Ethernet enabled, multi-tuner

33lbs and $3,470

HD DVD/DVR burner from Toshiba with a one-terabyte hard drive

Can record and store up to 130 hours of high-definition broadcasts and burn HD DVD discs

Ethernet enabled, multi-tuner

33lbs and $3,470


TV/DVR Around The HomeTV/DVR Around The Home Motorola Follow Me TV with new advanced

DCT6400 set-tops, plus integrated networking support

DVR, music, photo on all TVs including HDTV interface

Uses existing in-home coax

Motorola Follow Me TV with new advanced DCT6400 set-tops, plus integrated networking support

DVR, music, photo on all TVs including HDTV interface

Uses existing in-home coax

Family RoomFamily Room CoaxCoax

BedroomBedroom


DVR Proliferation to PC & HandheldDVR Proliferation to PC & Handheld Yahoo acquired Meedio. Turns PCs into DVRs

and digital media organizers linked them with television sets

Sansa View - 8GB of storage on a 4-inch screen

– SDHC for 8, 16, 32GB, etc.

– Drive-free, efficient

Yahoo acquired Meedio. Turns PCs into DVRs and digital media organizers linked them with television sets

Sansa View - 8GB of storage on a 4-inch screen

– SDHC for 8, 16, 32GB, etc.

– Drive-free, efficient


Timeshifting SummaryTimeshifting Summary

DVR proliferation to every platform

DVR, interactive services, content staging and profiling

DVR a future content upload device

Networked DVR (Cablevision & Start Over) will expand to complement in-home DVR

DVR proliferation to every platform

DVR, interactive services, content staging and profiling

DVR a future content upload device

Networked DVR (Cablevision & Start Over) will expand to complement in-home DVR


4) Wireless and Mobile4) Wireless and Mobile

WiFi 802.11g for in home or hotspot use

New 802.11n standard permits wireless HDTV signals within the home

Super 3G and WiMAX are “mobile internet” with speeds of up to 100 Mbs

WiFi 802.11g for in home or hotspot use

New 802.11n standard permits wireless HDTV signals within the home

Super 3G and WiMAX are “mobile internet” with speeds of up to 100 Mbs


WiMax Going Mainstream WiMax Going Mainstream

Motorola announced that Chicago will be one of the first major cities installed with Sprint Nextel

– Motorola will help build the high speed infrastructure for launch in early 2008

Intel planning market trials of WiMax late this year and forecasts availability to 100 million users by the end of 2008

Motorola announced that Chicago will be one of the first major cities installed with Sprint Nextel

– Motorola will help build the high speed infrastructure for launch in early 2008

Intel planning market trials of WiMax late this year and forecasts availability to 100 million users by the end of 2008


Wireless Wireless

Wireless service providers destined to expand and offer choice

Price for web access will come down

– Wired vs. wireless

Net Neutrality could also cause disruption with two tiers of pricing

– Premium based on data volume

– Standard but slower flat plan

Wireless service providers destined to expand and offer choice

Price for web access will come down

– Wired vs. wireless

Net Neutrality could also cause disruption with two tiers of pricing

– Premium based on data volume

– Standard but slower flat plan


Wireless HandheldWireless Handheld

V Cast Mobile TV for live full-length television programming to selected phones via Qualcomm's MediaFLO technology

Service launches end of March with eight channels - CBS, NBC, MTV, Fox and ESPN

$15 per month for V Cast streaming video

V Cast Mobile TV for live full-length television programming to selected phones via Qualcomm's MediaFLO technology

Service launches end of March with eight channels - CBS, NBC, MTV, Fox and ESPN

$15 per month for V Cast streaming video


Broadcast TV On CellsBroadcast TV On Cells Free wireless will be available (A-VSB)

New Samsung chipset enables a mobile phone to pick up standard terrestrial TV

– Broadcasters must transmit a separate signal over existing TV and radio towers

No mobile TV package required

Digital Multimedia Broadcasting, DVB-H Modeo and Hiwire

Free wireless will be available (A-VSB)

New Samsung chipset enables a mobile phone to pick up standard terrestrial TV

– Broadcasters must transmit a separate signal over existing TV and radio towers

No mobile TV package required

Digital Multimedia Broadcasting, DVB-H Modeo and Hiwire


Wireless and Mobile SummaryWireless and Mobile Summary 802.11 wireless is an expanding local

commerce vehicle

– More handheld interfaces – iPhone

WiMax is a huge gamble, and if it is cost sustainable, could pull market share from traditional service providers

802.11 wireless is an expanding local commerce vehicle

– More handheld interfaces – iPhone

WiMax is a huge gamble, and if it is cost sustainable, could pull market share from traditional service providers


Today & TomorrowToday & Tomorrow

Technology Enabling Technology Enabling


More Cool Is Coming?More Cool Is Coming?


So Is The Consumer Connected?So Is The Consumer Connected?

Vision is strong … but the reality isn’t quite there

Are we missing what the consumer really desires?

Digital is about communication!

Vision is strong … but the reality isn’t quite there

Are we missing what the consumer really desires?

Digital is about communication!


Interaction Will Be KeyInteraction Will Be Key

Consumer involvement with content is destined to grow and new devices enable it– Rise of social networking confirms it

Service providers trying to deliver a personal video stream to each individual subscriber– Bandwidth is the constraint … also analog support

Consumer involvement with content is destined to grow and new devices enable it– Rise of social networking confirms it

Service providers trying to deliver a personal video stream to each individual subscriber– Bandwidth is the constraint … also analog support


Some of the Rules Are ChangingSome of the Rules Are Changing

Television transitioning to embrace direct marketing to complement mass marketing

“Over The Top” - TV programming will be delivered over the Internet, bypassing today's traditional cable and satellite providers

Television transitioning to embrace direct marketing to complement mass marketing

“Over The Top” - TV programming will be delivered over the Internet, bypassing today's traditional cable and satellite providers


Personalization/Targeting Will GrowPersonalization/Targeting Will Grow

Preference engines for locating content within vast storage universe

– Choicestream, Google, Yahoo, MSN

Your HDTV becomes a communications platformin the home

– And it will learn about you!

Preference engines for locating content within vast storage universe

– Choicestream, Google, Yahoo, MSN

Your HDTV becomes a communications platformin the home

– And it will learn about you!


Now This Is PersonalizationNow This Is Personalization

If I was Oprahyou all would be taking one home!

If I was Oprahyou all would be taking one home!


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The Connected Consumer

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