The power of television

Transcription

1 The power of television Capital Markets Day October 13, 2016 Digital Entertainment Christof Wahl

2 Agenda I Digital Entertainment at a glance II Growth strategy III Summary & outlook 2

3 We executed a technology product push Introduced innovative HbbTV sales products Launched new Channel Apps Launched Quazer as VoD TV platform Further expanded our AdTech business Launched content marketplace glomex 3

4 complemented by strong performance and attractive M&A deals Secured No. 1 in premium video New maxdome distribution deals Studio71 with offices in five countries Minority investment in Pluto TV & merger with Quazer Strategic merger of 7Games and gamigo 4

5 We constantly grew in revenues with strong international footprint External revenues 1) Digital Entertainment [in EUR m] 429 CAGR +20% ~17% 2) Share of international revenues H LTM 3) 1) Financials in new Segment structure; 2012 and 2013 as disclosed for Digital Entertainment and Adjacent 2) Based on revenues generated by international companies outside German-speaking countries in H LTM incl. consolidation of CDS beginning in 08/2015 3) Including Online Games business, deconsolidated as of Q3 5

6 Leading assets in our portfolio are the foundation for our growth strategy Content Production Aggregation Distribution Monetization PayVoD #7 1) Top3 7) #1 5) #1 4) AdVoD New New #1 2) MCN # Market Position #4 3) 1) Red Arrow among top 10 production groups, operating independently from US studios; Source: Companies annual reports, BroadcastNow 2015 Indie survey, Press articles 2) Source: ComScore YouTube Partners Report June 2016 (desktop only, content; incl. music MCNs, Maker and Fullscreen not listed) 3) Source: SocialBlade excl. music MCNs and without claimed views as of July ) Related to SevenOne Media, sources: Nielsen Media Research, gross, premiumonly (excl. YouTube, Facebook, etc., excl. secondary marketing) 5) Source: forsa, GfK, Nielsen, ComScore & Phaydon Research 6) Source: Video views of P7S1 AdVoD, MCN and PayVoD platforms and mandates 7) Sources: forsa, GfK, Nielsen, ComScore, & Phaydon Research based on June 2016 New ~30bn video views in H ) 6

7 Agenda I Digital Entertainment at a glance II Growth strategy III Summary & outlook 7

8 Our core market Germany has significant growth potential German net digital advertising market 1) [in EUR bn] +9% CAGR 6 8 CAGR : -4% +7% Other Display incl. Social German digital advertising market is becoming both a local and global market +8% Search E +48% AdVoD incl. Social 2) Programmatic advertising as main growth driver 1) Source: Magna Global (June 2016) and P7S1 estimate 2) AdVoD incl. in-stream video and in-page video and social videos 8

9 while the major opportunity lies in the U.S. market Global net AdVoD market 1) [in EUR bn] +32% CAGR 28 CAGR : We are well positioned in the most attractive AdVoD segments in Germany +16% Rest of World 2) E +45% +48% >15x market opportunity in U.S. but investing in U.S. market allows us to tap into a market c. 15x bigger than the German AdVoD market We plan to expand assets and capabilities in order to capture growth potential in the U.S. market 1) Source: Magna Global (June 2016) and P7S1 estimate; AdVoD incl. in-stream video and in-page video and social videos 2) Rest of world excluding social videos 9

10 Six strategic measures to grow internationally and achieve our vision 1 Strengthen German-speaking AdVoD business AdVoD 2 3 Build European AdTech cooperations Roll-out global content marketplace glomex 4 Grow personalized VoD platform in U.S. and Germany MCN 5 Strengthen Studio71 through partnering to speed up global reach PayVoD 6 Utilize B2B partnerships and build unique maxdome positioning 7 Vision: Build integrated & global Digital Video Ecosystem Local/German play International play U.S./German play 10

11 Strengthen German-speaking AdVoD business We continue to expand our ad sales portfolio with innovative products Instream, display & content marketing 360 Programmatic 7Screen New Addressable TV New Grow targeted video display ads and branded entertainment concepts in premium environment Established premium programmatic private marketplace in Germany Launched ad special sales unit 7Screen to secure stake in fast growing DOOH 2) market Pushed HbbTV top product Switch-In for Addressable TV +54% video views Double digit Top 3 market growth 1) revenue growth 1) >40 campaigns position 3) realized 4) 1) H vs. H ) DOOH = Digital Out of Home 3) P7S1 estimation 4) All Switch-In campaigns (incl. Switch-In XXL) Jan-Aug

12 Strengthen German-speaking AdVoD business Our end-to-end AdTech solution ensures control of the full value chain Budget AdTech Media & Data Demand Side Platform Supply Side Platform Ad server Agency Access to exclusive media Designed for premium customers Top-notch local service Neutral & transparent technology EU data protection compliant 12

13 Build European AdTech cooperations We aim to quickly gain scale by building a European AdTech solution Media Alliance Partners: UK Poland Scandi.,CEE NL, Finland Partner AdTech trial AdTech client Spain Greece, SEE France Italy Turkey Create sufficient scale to compete with global AdTech giants Mitigate dependency of dominant & non-transparent global AdTech providers Protect data sovereignty of user data for targeting at European standards Internationalization of AdTech business by winning our European Media Alliance partners as clients and cooperation partners 13

14 Roll-out global content marketplace glomex We have launched glomex, a content marketplace Content owners glomex Publishers Open, global B2B marketplace for premium video content glomex enables content owners and publishers to optimize content distribution at scale and to overcome the problem of complex contracts between content owner and publisher 14

15 Roll-out global content marketplace glomex bringing together content owners, publishers and advertisers Benefits for content owners Benefits for publishers Increase revenues by multiplying audience Open up new revenue streams with flexible advertising solutions Best-in-class technical infrastructure and digital rights management Video Value Service Media Exchange Service Media Delivery Service Free access to giant pool of professional video content Single point of contact for technology and licensing needs Drive user engagement with relevant content and performance analytics Benefits for advertisers New audiences Highly targeted video inventory Revenue model based on revenue shares 1) and transaction payments 2) 1) Underlying revenue model relevant for video value services 2) Underlying revenue model relevant for Media Exchange Services (based on EUR per video view) and for Media Delivery Service (based on EUR per min.) Note: Video Value Service: Video Player that allows for best video and best advertising experience (incl. ad block prevention solution); Media Exchange Service: Strong ubiquitous frictionless content syndication and content market place ensuring max. monetization; Media Delivery Service: Multi-tenant video delivery platform combining innovation, quality and flexible pay-asyou-go model 15

16 Services Roll-out global content marketplace glomex glomex taps into a EUR 12bn global AdVoD market with a unique offering Highly attractive global AdVod market Unique value proposition combining all services 3) EUR 12bn global AdVoD net advertising market 1) Community management 70% of the publisher market 2) remains closed due to a lack of a single point of contact solution Top quality video content has become a must-have without an affordable solution Content provisioning Marketplace Ad management Video delivery 1) Source: Magna Global (June 2016) and P7S1 estimate for 2015; VoD incl. in-stream video and in-page video and social videos 2) For premium content owners, does not include YouTube, Facebook and Ad Networks 3) P7S1 internal analysis 16

17 Fictional video Factual video Grow personalized VoD platform in U.S. and Germany Quazer addresses unfulfilled needs for lean-back video streaming... >60% market growth 1) New Innovative lean-back video streaming close to today s linear TV experience Innovative curation of niche channels >40% market growth 1) Unique mix of documentaries and non-fictional programs On-demand/lean-forward Lean-back Quazer follows the vision of creating TV-like experiences in the fast growing factual video segment 1) CAGR for based on P7S1 estimation Note: Non-exhaustive overview 17

18 Grow personalized VoD platform in U.S. and Germany with very positive consumer acceptance results Transforms content to linearized VoD for individual and niche audiences >60 factual channels live and promising take up of users with focus on year-olds First product version on Web, App Store, Play Store and on Apple TV4 First results from consumer testing 1) : 430k live test user 45 min avg. viewing time/mau 2 Advertising funded business model with targeted short instream ad breaks 1) KPIs based on September ) Monthly active user 18

19 Grow personalized VoD platform in U.S. and Germany Next step is to merge Quazer with U.S. based Pluto TV Free, linearized, lean-back video streaming We have acquired a strategic minority stake in U.S. based Pluto TV and merged it with our German linear VoD platform Quazer Pluto TV is a new generation of linearized, lean-back video streaming and best positioned in U.S. linear VoD market ~14% P7S1 stake in combined business +5 m Pluto TV active users Scripps co-investor Together with other strategic investors, we plan to further grow Pluto TV and Quazer and distribute relevant P7S1 content 19

20 Strengthen Studio71 through partnering to speed up global reach Studio71 has signed international superstar The Rock Social Media Star with 55m fans on Facebook, 50m followers on Instagram and 10m followers on Twitter >1m subscribers after 5 months >7m video views/ month #6 most-subscribed channel within first months First powerful example of our strategy to create own and original channels with celebrities of all fields Note: Figures based on YouTube performance 20

21 Strengthen Studio71 through partnering to speed up global reach We continuously increase monetization of our YouTube channels Average monthly revenue per YouTube channel [in EUR m] +110% y-o-y growth Q Q Q Q Q3 2016E 21

22 Strengthen Studio71 through partnering to speed up global reach and will continue our unique growth strategy >100 new top creators 2) Signed more top creators Realized bigger productions Top 10 movies 3) 27bn video views in H ) 38 campaigns Excelled at cross-promotion Built best-practice branded >35% between online and TV entertainment business revenue realized 4) growth 5) 1) Based on global video views of Studio71 in H ) New creators signed with more than 250k subscribers 3) Top 10 TVoD movies with Natural Born Pranksters being top 10 movie in 18 countries 4) In ) Based on branded entertainment/integrations revenue H1/2016 vs. H1/

23 Utilize B2B partnerships and build unique maxdome positioning maxdome secures Top 3 position with strong subscriber growth Top 3 PayVoD players Amazon, Netflix and maxdome account for >90% of market 3) +44% +71% scribers 1) views 2) SVoD sub- Total video Top 3 market position 3) maxdome maintains strong position in highly consolidated subscriber market 3) Product re-launch in April 2016 with curated recommendations addressing needs of local market audiences 1) End of period Q vs. end of period Q ) H vs. H ) Sources: forsa, GfK, Nielsen, ComScore, & Phaydon Research based on June

24 Utilize B2B partnerships and build unique maxdome positioning maxdome stays partner of choice for key local distribution partners Travel partnerships Cable partnerships Mobile partnerships First mover for in-train entertainment in Germany providing maxdome service 2) to ICE train passengers of Deutsche Bahn Deep product integration with leading cable operators in Germany Tariff bundling with leading mobile reseller in Germany 80m passengers per year 1) 10m potential households 3) 9m mobile customers 4) 1) Source: Deutsche Bahn 2) 50 titles for free, 1,000 titles in SVoD train package, TVoD titles to be selected, access via Deutsche Bahn Wi-Fi on train 3) Combining total potential household reach of unitymedia, telecolumbus 4) Source: Freenet Group Reporting 24

25 Studio71 and maxdome profitability We have a plan to reach our target margins for Studio71 and maxdome Key profitability measures for Studio71 global Key profitability measures for maxdome 1 Broaden revenue streams by widening content distribution 1 Push new, unique customer proposition as curator and content guide 2 Further expand branded entertainment sales 2 Utilize B2B best-in-class distribution deals 3 Grow premium content ownership and internationalize own brands 3 Further exploit potential of concept sales 4 Continue to internationalize business (e.g., through partnerships) Profitable in Q and FY Invest in own IP through strong synergies with RedArrow and TV Profitable in Q and FY

26 Build integrated & global Digital Video Ecosystem Our vision is to build an integrated & global Digital Video Ecosystem Content Production Aggregation Distribution Monetization Focus on strong creators and produce proprietary digital content (own the rights) Build platformagnostic content verticals in masssegments (e.g. food, lifestyle, comedy) and attractive niches Distribute own & 3 rd party content on own & 3 rd party B2C platforms using proprietary B2B distribution tech Monetize globally through ad sales (incl. programmatic and branded entertainment), PayVoD and content rights sales 26

27 Build integrated & global Digital Video Ecosystem... based on three core strategies Content Production Aggregation Distribution Monetization 1 Leverage global content production synergies 2 Create global digital platforms and best monetization Thematically focused content AdVoD digital platforms Ad agency/ad sales Red Arrow Digital Commerce platforms Own Webstar content BEAUTY LIFESTYLE & FASHION HEALTH & WELLBEING e.g. PayVoD platform 3 rd party content (e.g. automated content) FOOD OUTDOOR Content marketplace 3 Leverage international partnerships to drive global scale 27

28 Build integrated & global Digital Video Ecosystem First international partnership in Digital Entertainment started Deal description Digital Entertainment deals from European Media Alliance AdTech trials with Yieldlab as SSP Usage of Yieldlab as SSP maxdome trial case glomex international partnerships NEW Our new Portuguese Media Alliance Partner: SIC P7S1 asset + Media Alliance partner involved 28

29 Agenda I Digital Entertainment at a glance II Growth strategy III Summary & outlook 29

30 Summary & outlook: We are on track to reach our new 2018 target Digital Entertainment CMD target (ext. revenues) [in EUR m] 227 CAGR +20% 429 CAGR +11% 563 Rec. EBITDA margin target range of 10-15% in H LTM New 2018 target Going forward, we need to realize a CAGR of 11% to reach our new 2018 target and have proven to grow faster Note: Financials H LTM and 2018 in new segment structure; 2012 as disclosed for Digital Entertainment and Adjacent; H LTM including Online Games business, deconsolidated as of Q3 30