SO MANY CHOICES: DEVICES MOTIVATING CONTENT CONSUMPTION

Transcription

1 PREPARED FOR EMA DIGITAL MEDIA PIPELINE CONFERENCE SO MANY CHOICES: DEVICES MOTIVATING CONTENT CONSUMPTION SEPTEMBER 2013

2 SETTING THE STAGE

3 THE EVOLUTION OF CONTENT CONSUMPTION Several key themes The intersection of content and technology innovation The death of single-purpose devices The growth of digital Transition from products to services Tension point for device makers and content creators: unprecedented number of revenue opportunities, evenly matched by unprecedented fragmentation and consolidation 2

4 THE BIG PICTURE MAIN THEMES Two transitions: 1) product cycle transitions, and more importantly, 2) broader business model transitions encompassing new markets Competitive battle lines are blurring, as business models and company profiles show increasing hybridization and crosspollination Competitors are partnering with each other in interesting ways to address emerging opportunities Viacom-Sony Netflix-console manufacturers GameStop-Steam 3

5 THE NEW NORMAL

6 THE DEVICE AS THE GATEWAY TO THE CONSUMER Content/Delivery Operators gain access to the consumer by adding a layer of services to chosen devices Cable Operators Satellite Operators Streaming Movies/TV Providers DVR Providers Operating Systems Access Points Functionality TV/Movies Music TV Smartphones/Tablets PC Web Browsing Consoles Games Communication In choosing a device, consumers make supplemental choices regarding the software utilized on each platform as well as its functional applications 5

7 PLUGGING INTO SERVICES Legend: Paid services Descending order of market size opportunity 1.1 billion phones 1 billion 575 million 114 million 90 million 46 million 36 million 36 million 26 million 22 million 10 million 4 million Services Hardware Access Points 6

8 CONSUMER PERSPECTIVE Unprecedented number of choices Distribution channel: boxed product versus digital Location: living room versus portable/on-the-go Delivery mechanisms: disc, digital download, streaming Business model options: retail purchase, subscription, download, free-to-play, rental, apps Devices: TV, PC, Smartphone, Tablet, Console, Set Top Box, etc. Entertainment/media verticals: TV shows, movies, music, games, web programming 7

9 CONSUMER PERSPECTIVE (CONT D) Competition for share of day Device loyalty Brand/content loyalty Desire for greater control over the content that they consume Consumers want to access their content at all times, regardless of location or device 8

10 DEVICE MANUFACTURER PERSPECTIVE Single-purpose devices are dead Consumers want devices that can do multiple things well Devices must be a part of a broader entertainment ecosystem 9

11 THE IMPACT OF DIGITAL

12 WHERE HAVE ALL THE RETAILERS GONE? Key Video Game Retailers * Over the years, many retailers have exited the US video game business Concentrated environment gives retailers more leverage Retailer Brands That Have Exited the Business or Been Consolidated* Toy Store Filed for bankruptcy in Jan 04 Operated 650 stores in the US Toy Store Filed for bankruptcy in Jan 04 Operated 100 stores in the US in 1991 Consumer electronics retailer Filed for bankruptcy in Nov stores at time of liquidation Video game specialty stores Rebranded as GameStop stores Filed for bankruptcy in Sep 10 Subsidiary of Dish Network Rebranded as GameStop stores Video game specialty stores Merged with Babbage s in 1994 Consumer electronics retailer Stores liquidated starting n Feb 07 Rebranded as GameStop stores Child World stores liquidated in mid 1992 Once had 182 stores Filed for bankruptcy in Jan 06 Trans World Ent. purchased Musicland stores in Mar 06 * Figures for US market only 11

13 THE NEW PUBLISHING LANDSCAPE 12

14 DIGITAL IS THE GREAT DISRUPTOR AND ENABLER While retail will remain important in the value chain, digital is one of the most disruptive forces at the intersection of content and technology today Digital is the impetus for the expansion from products to services Connected, multi-purpose devices are enabled by the presence of digital 13

15 COMPETITIVE IMPLICATIONS

16 IDG S 4 PILLARS The 4 Pillars Hardware Access Points Online Store Software Operating System Cloud Storage Service Amazon customized Android

17 ECOSYSTEMS WILL TRUMP PLATFORMS In the new normal, building out an ecosystem will be the highest priority Although platforms will remain critical, many consumers are becoming more platform and device-agnostic While earlier consumers might be an ipod or Xbox loyalist, the newer generation of content consumers will show greater loyalty to content brands, across a variety of media verticals The ecosystem paradigm will be more important to generating maximum value and market share versus winning on a single platform 16