Social Media is redefining what Broadcasting really means

1. 15-18 June 2010, Singapore
The future of Broadcasting
Social Media is redefining what Broadcasting really means
Rob van den Dam
Institute for Business Value
© 2010 IBM Corporation

2. Majority of CEOs, including those of media and communications companies,
experience the New Economic Environment as distinctly different.
Face-to-face interviews with over 1,500 CEOs
The New Economic Environment
%
13% 18% 69%
More volatile
Deeper/faster cycles, 79%
30
Complexity
more risk gap*
More uncertain 60%
14% 21% 65%
Less predictable 49%
More complex
18% 22% 60% Multi-faceted,
interconnected
26% 21% 53% Structurally different
Sustained change
Currently Expect high/very Feel prepared
experiencing high level of for expected
Not at all/ To a large/ high/very high complexity over 5 complexity
To some extent
to a limited extent very large extent level of complexity years
2 © 2010 IBM Corporation

3. The future is highly uncertain and influenced by factors as government
policy, technology evolution, economy and industry dynamics
Clash of Giants Generative Bazaar
clash with OTT providers and OEMs? communication based on open access?
industry co-orporation to cope with OTT/OEM? provided by (co-operative of) infrastructure
vertical integrated / few players? owners on voluntary basis or under pressure
from local governments?
OTT players own networks / spectrum?
for any provider, person or object?
emerging market providers enter mature
markets? level playing field for everyone?
Expanding Market
2015
2015
Stagnant/Declining Market
Survival Consolidation Concentrated Market Shake-out
prolonged global/local economic downturn? Fragmented telco and media companies forced to
reduced spending by consumers? disaggregate their assets?
investor loss of confidence? industry fragmentation / many players?
cash crisis? initiatives from government, municipalities,
consolidation to survive? alternative providers?
3 http://www-935.ibm.com/services/us/gbs/bus/html/ibv-telco2015.html?cntxt=a1000065 © 2010 IBM Corporation

4. One thing is sure, the days of the media landscape as we knew it are
over, the internet is becoming the dominant broadcasting platform....
The
communications The
and media Open
landscape, where
Internet is
large
becoming the
organisations
dominant
were
broadcasting
controlling platform of our
the channels and civilization
messages is
increasingly
SHIFT IN
slipping away
COMMUNICATION
CONTROL
4 © 2010 IBM Corporation

5. ...and a large portion of the world population is sharing information - be
it news, opinion, thoughts, images or video - via this Open Internet
Media has become
VIRAL a mass of
WIKI’s COLLABORATIVE
conversations,
BLOGS based on two-way
BOOKMARKING FAST communication,
not on traditional
CONSUME one-way
ON A LARGE SCALE information push
models
FORUMS
CROWDSOURSING
PRODUCE
TWO-WAY SHIFT IN
VIDEOSHARING COMMUNICATION
PATTERN
5 © 2010 IBM Corporation

6. These 2 trends - shift to the Open Internet and to collaborative
communication - are shaping the future of the media landscape
Collaborative Gated Communities Shared Social Space
Defending the Traditional
Competing with the New
Communication Pattern
n
ctio
dire
t
ke
ar
Traditional M Open and Free
Broadcasting
Terrestrial Telecom IPTV
Broad providers
casters operators
Satellite Cable
Broad
One-to-One companies
casters
One-to-Many
provider-
Communication Environment
Open
controlled
Internet
6 © 2010 IBM Corporation

7. Traditional broadcasting has been the domain of broadcasters and
cable operators, but Telcos have entered the scene.
Which of the following consumer/residential services do you believe are most critical
for you to invest in over the next 5-10 years?
Social media 43%
IPTV/ Video on Demand 34%
Intelligent lifestyle services 30%
Fixed Mobile Convergence (FMC) 29%
End-user, security, authentication 27%
Mobile Payments 21%
Content storage 20%
Internet-basedCommunications 14%
Location-based /availability Services 13%
Face-to-Face
Mobile TV/Video 9%
9%
interviews with
3D Television /Video
Unified messaging 7%
Telecom
Mobile B2C transactions 7% Executives
Mobile e-Mail 5% (IBV 2009
Mobile / multi-player games/Virtual Worlds 5% Global Telecom
Video telephony 4% Industry Survey)
Voice conferencing 2%
Video conferencing 2%
7 © 2010 IBM Corporation
2009 IBM Institute for Business Value Telecom Industry Survey N=61

8. However, only a tiny proportion of Telcos expect IPTV to make
significant contributions to their revenues over the next 5-10 years
What do you believe will be the relative contributions of the following models/services to your
revenues over the next 5 – 10 yrs? IPTV
4%
14% 10% Revenue
30% 27% 26% Contribution
33%
96% Above 10%
86% 90%
70% 73% 74% Below 10%
67%
Source: 2009 IBM
Institute for Business
Value Telecom
Industry Survey
N=61
Traditional per Mixed tariff Tiered broadband Triple/Quad play Analytics to Internet IPTV
minute voice bundles incl. 'all- based on speed / reduce churn, communications (subscriptions
you-can-eat' quality improve cross/up- (e.g. VOIP, IM and advertising)
sell Social Networks)
Many Telcos see offering TV/video services mainly as a necessity to combat the trend
of losing subscribers to cablecos which are increasingly offering triple-play bundles
8 © 2010 IBM Corporation

9. The Open and Free model provides alternatives for linear television
and IPTV at the expense of Traditional and IPTV providers
Impact of Online Video Viewing on “Traditional” TV Viewing
50% US Respondents Segmented by Age
40% Watch slightly
less TV
30% Watch
significantly less
TV
20%
10%
0%
18 - 21 21 - 24 25 - 34 35 - 44 45 - 54 55 - 64 65+
New channel consumption is happening at the expense of traditional linear
television, particularly for the younger demographics
9 © 2010 IBM Corporation
Source: 2008 IBM Digital Consumer Survey. Total responses = 2800 across six countries: Australia, Germany, India, Japan, UK, US

10. The Open and Free model alters the equation for the Traditional and IPTV
providers – Clashes will be unavoidable for distribution ........
Voice
OTT providers as Hulu, BBC’s TELCO
IPTV
iPlayer and YouTube shift the
distribution problem to the
OTT Internet
infrastructure owners
provider
Example:
December 2007 launch of BBC’s iPlayer Infrastructure owners have options to cope
with the capacity problem caused by
resulted for ISP :
increasing of OTT traffic, including:
72% more customers using over 250MB Filter or block the OTT-traffic
100% more customers using over 1 GB Could violate net-neutrality principles
Adoption of clouds and content delivery
additional cost for PlusNet: network (CDN) architecture to relieve the load
over backbone and servers
+ 200%
http://community.plus.net/blog/2008/02/08/iplayer-usage-effect-a-bandwidth-explosion/
10 © 2010 IBM Corporation

11. ........and for advertising
All parties will fight for advertising relationships
Google TV
Google partners with Sony,
Intel for Google TV
Targeted Advertising
Google, Yahoo! and the like have shown how to use
search engines for profitable online advertising. Using
advanced technologies to match content - whether it is
a regular tv program or video from the Internet - , web
browsing patterns and email behaviour will result in
even more effective advertising
Google CEO Eric Schmidt: “Google TV will bring both search and context to traditional
television, with behavioral data to both. That would shift the $70 billion annual TV advertising
market in favor of Google’s strengths. W’re getting into the game by tilting the playing field.”
11 © 2010 IBM Corporation

12. Relying on subscriptions and PPV models is unsustainable in a
world where consumers do not expect to pay for all content
Global Users interested in Online Video Ad-supported versus paid content online
Add-Supported Consumer-Paid
90%
83%
80% 73%
69% 70%
70% 64%
62%
60%
50%
40% 38% 36%
31% 30%
30% 27%
20% 17%
10%
0%
Australia Germany India Japan UK US
Ultimately it all revolves around advertising relationships and the
possibilities the Internet offers for more efficient targeting
12 Source: 2009 IBM Digital Consumer Survey. Total responses = 2800 across six countries: Australia, Germany, India, Japan, UK, US © 2010 IBM Corporation

13. Many consumers will accept advertising in exchange for relevancy
and value
Under what circumstances will you be willing Willingness to Provide Information
to accept advertising? About Yourself
80%
If message and content are 2008 2009
71% 62%
relevant and personalised
60% 57%
If offered a discount for voice 50% 48% 49% 48% 50%
64% 45%
/text services in return
40%
If offered free shopping
61%
vouchers
If offered free music or video 20%
46%
downloads
If it is entertaining, innovative 0%
39%
or amusing Australia Japan UK US
If it is embedded in content I
19% People will provide information about
am already watching
themselves, opportunity exists for
more contextual marketing
0% 20% 40% 60% 80%
Source: 2008 and 2009 IBM Digital Consumer Survey. Total
Source: IBM Institute for Business Value Global Telecom Consumer Survey, 2009; n=6753 responses = 2800 across six countries: Australia, Germany, India,
13 Japan, UK, US © 2010 IBM Corporation

14. The Gated Communities is still a “walled garden” approach – but
one that facilitates collaboration services
TV and Web 2.0 convergence Personal media
– Bring internet Video to TV, create a new consumer experience management on TV
– Use the « context » of TV (what I am/will be watching) either live or Family calendaring
onDemand to integrate with Web2.0 services (forums/real-time messaging)
Wheather Forecast
SocialTV
– Recommendation among consumers (Live or OnDemand) News headlines, watch/share
– Communication among consumers
My YouTube Playlist on TV
Information / Entertainment / Communication
YouTube top20 on TV
– Bring personalized info in one click (wheather / traffic / news / stock)
– Integrate voicemail and telephony on TV FlickR on TV
Media Management and sharing My Personal channel
– TV is the natural screen to view/share family photos and videos, family
history could be managed like TV channels TV chat
Commercial parties applications My photos on TV
– Major brand TV presence = Direct access to loyalty card, promotions, etc.
– House Appliance (domotic) = Health, Alarm systems Thematic Web2.0 on TV
Community of developers, Pro-consumers Music streaming on TV
14 © 2010 IBM Corporation

15. There are different options for traditional providers to move to the
Gated Communities space
Open
Community
Community of developers, AppStore / Revenue
Pro-consumers Sharing model
Commercial parties
Apps developed by applications, e.g. major
partners but hosted brand TV presence
by the Service Provider
Applications developed
& hosted by the Scope of technical/
Service Provider Partnering capabilities
Service Provider applications as Media
Management and Sharing, Social TV,
TV Chat, Family calendaring, etc
15 © 2010 IBM Corporation

16. IPTV providers are experimenting with widgets but the question
remains whether ..............
Verizon Communications has
developed TV-based widgets
for Facebook, Twitter and
other features in an attempt to
make FiOS TV a more fully-
integrated TV an online
content experience. In
addition, plans to add the
ability to stream online videos
from YouTube.
It has also opened its widget
platform application
programming interface
to outside developers, and its
"Widget Bazaar " .
16 © 2010 IBM Corporation

17. ......telecom operators are seen as the logical providers for consumers to
turn to for online video and other entertainment content
Question: Over the next 5 - 7 years, whom will you expect to go to for online
video, music, games and other entertainment content? Select all that apply
80%
70% 68%
65% All ages
60% Under 25s
50%
42% 42%
40% 35%
30% 29% 29% 29%
30% 25% 23% 26%
20%
10%
0%
Internet Pay TV (e.g. Telecom Social Device Content
Information Cable) Provider Provider Networking Manufacturer aggregator
Provider (e.g. Sites (e.g. Nokia) (e.g. Apple
Google) iTunes)
Source: IBM Institute for Business Value: Global Telecom Consumer Survey, 2009
17 © 2010 IBM Corporation

18. Telcos are 2nd to 5th choice depending on age and country
US NL Spain UK Sweden Germany Australia China India
Internet Internet Internet Internet Internet Internet Internet Internet Internet
Information Information Information Information Information Information Information Information Information
Provider Provider Provider Provider Provider Provider Provider Provider Provider
Pay TV Pay TV Telecom Pay TV Telecom Telecom Telecom Telecom Pay TV
Provider Provider Provider Provider Provider Provider Provider Provider Provider
Social
Telecom Pay TV Telecom Device Content Pay TV Pay TV Telecom
Network
Provider Provider Provider Provider aggregator Provider Provider Provider
Sites
Social Social Social
Content Content Pay TV Pay TV Content Device
Network Network Network
aggregator aggregator Provider Provider aggregator Provider
Sites Sites Sites
Social Social Social
Telecom Content Device Device Device Device
Network Network Network
Provider aggregator Provider Provider Provider Provider
Sites Sites Sites
Social Social
Device Device Content Device Content Content Content
Network Network
Provider Provider aggregator Provider aggregator aggregator aggregator
Sites Sites
18 © 2010 IBM Corporation
Source: IBM Institute for Business Value: Global Telecom Consumer Survey, 2009

19. Shared Social Space is the domain of players as Facebook & YouTube
- throughout the world, people are turning en masse to these sites
Aug-04 Aug-06 May-10
1 Yahoo! Yahoo! Google
2 MSN MSN Facebook
3 Google Google Youtube
4 Microsoft MySpace Yahoo!
5 Passport Live Live
Twitter was the
6 eBay eBay Blogger
fastest-growing
7 Amazon Youtube MSN
Web brand growing
8 Offeroptimizer Microsoft Twitter
1,928 % from June
9 Fastclick Amazon Wordpress
2008 to June 2009
10 Doubleclick Orkut MySpace
11 go Blogger Google UK
12 Alibaba Google UK Microsoft
13 CNN Passport Amazon
14 BBC BBC Bing
15 165.254.12.202 Craigslist eBay
The largest Social
16 AOL Go LinkedIN Network in Asia is
17 Google UK CNN Flickr Qzone with over
18 Gator Alibaba Craiglist 300M active
19 eBay UK Megaupload Rapidshare members
20 Searchscout Imdb Livejasmin
Social Media Sites
Note 1. Ranking reflects top 20 English Language Web sites; the multilingual Wikipedia is not shown in this list
19 Note 2: The traffic rank is based on three months of aggregated historical traffic data, and is a combined measure of page views and users (reach). © 2010 IBM Corporation

20. With the “Digital Natives” at the forefront of this shift, older audiences
have followed the younger audiences to social networking sites
Adoption of Social Networking Sites by Age
US 2007 - 2009
100% 2007
85% 85% 2008
2009
80% 77%
74% 73%
68%
60% 56%
52%
50%
40%
31% 31%
24%
20%
0%
18 - 24 25 - 34 35 - 44 45 +
Source: 2008 IBM Digital Consumer Survey. Total responses = 2800 across six countries: Australia, Germany, India, Japan, UK, US. IBM 2007 digital
20 © 2010 IBM Corporation
consumer survey: Total responses = 2800 across five countries: Australia, Germany, Japan, UK, US

21. Because of the speed in which social media enables communication,
word of mouth now becomes world of mouth
If Facebook were a country it would be the world’s fourth largest between the US and Indonesia
> 1.5 million pieces of content (Web links, news stories, blog posts, etc.) are shared on Facebook daily
Currently YouTube has more than 2 billion views per day
There are over 200.000.000 blogs. 54% of bloggers post content of tweet daily
Twitter has nearly 100 million users who send on average of 600 tweets per second
People continue to spend more time on SN and blog sites than ever before
, with total minutes increasing 82% year-over-year
the average time per person increasing 67 % year-over-year
21 © 2010 IBM Corporation

22. Social Media is redefining what broadcasting really means
Citizen Haiti 2010
Journalism
Iran 2009
Fligth 1549 2009
China Earthquake 2008
Fast and viral
distribution on
large scale
22 © 2010 IBM Corporation

23. Subject to this disruptive force of changing human communication
behaviour, the option of doing nothing is a luxury few can afford
OLD MEDIA MINDSET
+
NEW MEDIA CONSUMER
=
DISINTERMEDIATION
23 © 2010 IBM Corporation

24. IBM Institute for Business Value for Telco and Media industries
Rob van den Dam
Global Telecom Industry Lead Visit the IBM
Institute for Business Value
IBM Institute for Business Value
rob_vandendam@nl.ibm.com (IBV) at:
www.ibm.com/iibv/
Tel. +31 651 284594
24 © 2010 IBM Corporation