THEME-1: Impact of Technology: Technology has democratized film-making. Technology has changed film-financing. Technology is now on its way to disrupt film-content distribution. THEME-2: Changing Leverage of Incumbent PayTV Distributors THEME-3: The Changing nature Of Film Audience. While theaters and televisions will continue to exist, more and more of the newly emerging film audience won't be present there. How does one find out who they are and what they prefer ?

1. ArcInsight
PARTNERS
The New Wave of Film & Media Monetization:
Technology Innovations Change Everything
Pras Chaudhuri
ArcInsight Partners
Sep 27, 2012
San Francisco, CA
ArcInsight
Tech | Media | Entertainment | PARTNERS
| CONVERGENCE |
October 2, 2012 © ArcInsight Partners LLC Client Slide 1

2. ArcInsight
ArcInsight Partners LLC PARTNERS
An Introduction
Provides strategic advisory services focused on monetization opportunities created by the
convergence of technology, media & entertainment business models.
Conducts ongoing research into global media-consumption patterns at country-levels,
positioning of major M&E players, impact of consumer-devices, formats, technology-
enablers, viewer-experience design, eCommerce/mCommerce, Film & TV industry
developments in key countries (N.America, India & China, Europe to be initiated 2012).
Target clients include content-creators, distributors, aggregators, service-providers, and
technology-enablers.
Operates virtually from three strategic locations - United States (Silicon Valley &
Hollywood); India (Bangalore & Bollywood); Europe (Budapest, UK & France/TBD)
October 2, 2012 © ArcInsight Partners LLC Client Slide 2

3. ArcInsight
Convergence Dynamics PARTNERS
Convergence Dynamics
In The
Technology, Media & Entertainment Industry
TRENDS & INSIGHTS FROM
RESEARCH, INTERVIEWS AND CLIENT STRATEGY SESSIONS
CONDUCTED BY
ARCINSIGHT PARTNERS
October 2, 2012 © ArcInsight Partners LLC Client Slide 3

4. ArcInsight
The Media Industry Is In A Period Of Extreme Turbulence PARTNERS
Content creation
• User generated content
Content aggregation and packaging
• eTailers and “infinite inventory” players
Content distribution
• Multiple distribution channels and screens (theatre, TV, laptop, phone, special devices)
• Revenue models (ad sponsored, subscription, pay-per-view)
Consumer behavior and devices
Government mandated conversions to digital television
• Broadcast television was impacted by government mandates to convert to digital television transmission. While
incumbents incurred heavy conversion costs, new entrants leveraged existing digital technologies.
New entrants effectively attacking the middle and distribution-end of the media value chain
using technology.
• Among innovations available to current industry participants, new & potential entrants are new technologies that
are less vertically integrated and more componentized technologies (SOA, File-based workflow, shared-resource
technologies (Cloud computing and cloud platform), collaborative business models (Analytics, Digital supply chain
management, Agile methodology)
New media entrants leveraging disruptive capabilities
• digital media technical knowledge and skills to reduce barriers and compete with traditional media companies,
particularly in content aggregation, packaging and distribution pieces of value chain.
New entrants are building end-to-end digital supply chains
• that provide on-demand video using subscription and ad sponsored delivery based business-models.
Media industry understands the urgency.
• Broadcast & movie studios are investing in technological innovations (such as digitization) and architectural
innovations specially in the aggregation ad distribution ends of the value chain to be more competitive.
October 2, 2012 © ArcInsight Partners LLC Client Slide 4

5. ArcInsight
Technology Changes Everything….Ultimately PARTNERS
Technology Disrupted The Film-making Profession
Lowered barriers to entry (equipment cost, technical-training, experience) for new film-makers
(A DSLR camera, an Apple laptop loaded with editing software can make a full-length feature today)
Technology Is Disrupting Traditional Film-financing
Crowd-sourcing for ideas, talent & financing
Technology Is Disrupting The Film Marketing & Distribution Process
Traditional physical distribution & monetization channels for are under attack.
• Theatricals have been declining steadily as a revenue driver for film-studios.
• Physical sell-through (the largest revenue source in the most recent past) has started its declining trend
• Replaced by physical rentals, which is declining too
New electronic distribution channels that replaced physical are changing too
• Electronic sell-through (downloads)
• Electronic on-demand rentals / Transaction VOD
• Being supplanted by Subscription VOD
Streaming is now in.
• Seems like a race to the bottom for the movie industry.
Release windows disrupted too
October 2, 2012 © ArcInsight Partners LLC Client Slide 5

6. ArcInsight
Changing Leverage Of PayTV Content Distributors PARTNERS
The Incumbents - PayTV Players (Cable / Satellite / Telcos)
• The largest partners for content-owners in the aggregation space
• Pay the best price for film content
• Vast distribution platform to target large subscriber-base
Rapidly Rising Content-Creation Costs Rising PayTV Carriage-Fees Escalating PayTV
Subscription-Costs
70%-80% of all PayTV package content are channels controlled by major studio players
• “TWC-owned channels are now in all Top-10 & Top-20 channel-packages of all cable providers” (Jeff Bewkes, Chairman
Time Warner)
New “Over-The-Top” distribution technology has finally broken PayTV’s stranglehold on end-
consumers
• Other technology standards today will soon approach the quality of viewer-experience once delivered only for PayTV
PayTV providers hemorraging subscribers to lower cost OTT-based subscriber platforms
• Subscriber churn, cord-shaving & falling video-ARPU is a huge concern
• New subscriber increase & revenue coming from other services
Opportunity for smaller content-makers to attract/capture emerging viewers - showcasing alternate
content, delivered via lower-cost channels
- YouTube, Netflix, Hulu, others sponsoring content-creation
- YouTube channel content makes its way to a new TV series
- Possibility of sustainable business models finally emerging
October 2, 2012 © ArcInsight Partners LLC Client Slide 6

7. ArcInsight
Film Audiences Are Changing Too…..Seduced by Technology PARTNERS
Changing Consumption-Patterns
• Film viewers are not consuming content in the same manner as they used to.
• While theaters and televisions will continue to exist, more of the newly emerging film audience won't be present there.
• They do not care for TV guides or advertisements to tell them the best movies to watch. They mostly trust recommendations
from their friends, they share their opinions real time and they are willing to pay for the privilege.
Place-Shifting
• The next generation of viewers are online accessing the
world through the window of their computer screens,
gaming consoles, tablets and smart-phones.
• They want to watch content wherever they are.
Time-Shifting
• They do not wait to watch film scheduled on their TV
Guides.
• They want to watch on their own time.
More Content-Consumption. Higher Content-Engagement
• They are spending more time with television, and are often more engaged with film content than previously imagined.
Attractive Demo
• And they are the most coveted demographic for any marketer. How does one find out who they are and what they like?.
October 2, 2012 © ArcInsight Partners LLC Client Slide 7

8. ArcInsight
What Is Driving Today’s Market Growth In Online Video?
PARTNERS
October 2, 2012 © ArcInsight Partners LLC Client Slide 8

9. ArcInsight
What Is Driving Today’s Market Growth In Online Video?
PARTNERS
Unit Sales of Internet-connectable
Consumer Electronics
(Millions of Units, Annually)
800 Digital Video Media Players (#M)
Game Consoles (#M)
600 Blu-ray Disc Players (#M)
Smart TVs (#M)
400
Media Tablets (#M)
200
M
H
o
n
d
h
u
e
#
s
f
)
(
0
i
l
2011 2012 2013 2014 2015 2016
Source: Connected Consumer Electronics: Market Update
© 2012 Parks Associates
Content Owners Service Providers CE Manufacturers
October 2, 2012 © ArcInsight Partners LLC Client Slide 9

10. ArcInsight
New Technology Platforms Connect Film-makers Directly To Their Audience PARTNERS
Support Wider/Deeper Communication
• Share information with stakeholders
• Online focus-groups & social networks for Pre-release testing of content
Support Monetization
• Plug-and-Play technology Payment processing
• Social inputs for product placement decisions
• Social & metadata inputs for viewer profiling; Targeted marketing & advertising
Support Direct Viewer-consumption
• Allow direct purchase of content
• Allow streaming of content without the need for large local computing overheads
• Physical DVD creation on demand
Manage Delivery Of Content
• TV Everywhere and Over-the-Top (OTT) video, including Comcast Xfinity, HBO Go, Netflix, iPlayer, and Sky Go are
growing rapidly
• Making this possible are several groups of companies responsible for video delivery and management. Each offers a
unique piece of the solution
- Online Video Platforms (OVPs): Smaller content owners and those wanting social media integration and simple
platforms
- Managed Video Platforms (MVPs): Operators without technical expertise to deliver video service. Want turnkey solution.
- Content Management Systems (CMS): Largest operators with diverse assets, desire to manage video centrally.
- Content Delivery Networks (CDNs) : Handle logistics of video delivery for nearly all the players.
October 2, 2012 © ArcInsight Partners LLC Client Slide 10

11. ArcInsight
Tech., Media & Entertainment Industry: Convergence Dynamics PARTNERS
Viewer Access Viewer-Experience Delivery Viewer Monetization
Multi-screen rights /
Original Content $
Retrans rights
User-generated
Content Curation
Content Release Windows
PayTV/Broadcast/OTT
Subscription Paywalls $
Anytime Anywhere TV
Connected TV-as-a- $
Connected TV
Platform
Apps.
Devices
Search/EPG Viewership Tracking
Apps. Social Media
Dynamic In-video
Social Media $
Cloud-based Delivery Advertising
Digital-Lockers Virtual Goods $
Recommendation
Engines
Hybrid STBs Infrastructure Technologies
MPEG DASH Dynamic VOD Ad-Insertion Media-Assets Storage Context-based Search CDNs
Digital Lockers Cloud-based Transcoding Workflow-Mgt. Authentication Adaptive Streaming
Content Fingerprinting Rights & Royalty Mgt.
Metadata Industry Registry Metadata Mgt.
Regulatory
AllVid CableCard Privacy Rules
October 2, 2012 © ArcInsight Partners LLC Client Slide 11

12. ArcInsight
What Should A Film-Maker Do To Prepare? PARTNERS
ATTENTION Is The Scarcest Commodity Out There !
Multitude of audience segments
• Understand consumption habits & preferences of the new audience
Multitude of technology solutions out there
• Understand technology and their implications in the context of distribution
Multitude of distribution platforms & business models
• Understand economics of various online platforms as a basis for picking the most appropriate ones to consider
Multitude of consumption points & devices
• Understand the diversity of devices, their characteristics and usage patterns
• Understand strategies for creating viewer-experience on these diverse devices
• Leverage these devices to differentiate your content from the rest of the pack
Think Like An Agile Business
• Avoid the mindset that separates Film-Making & Film-Marketing as independent silo-ed sequential activities
• Identify, connect and engage target audiences throughout the film-making process
RENEW / UPGRADE /
AWARENESS PURCHASE PAY & INSTALL USE & SUPPORT
DISCONNECT
• Digital Payment Mgt
• Digital Advertising • Billing • Digital Customer Mgt.
• Recommendation • Order & Contract Mgt. • Payments • Service • Real-time Marketing
• Social Media & Mktg. • Digital Pricing • Refunds • Returns • Churn Management
• Bundling • Adjustment • Support •Usage Management
• Activation • Social Media CustomerCare
• Digital ID & Security
October 2, 2012 © ArcInsight Partners LLC Client Slide 12

13. ArcInsight
Additional Supporting Data PARTNERS
October 2, 2012 © ArcInsight Partners LLC Client Slide 13