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Discusses the business models needed in new media
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1TELEFONICA S.A.Corporate Content Unit
Digital Content Creation – Where will the Funding Come From? The Telefónica Experience
Angel Blasco.Head of Films. Corporate Content UnitJune, 25th 2008
Telecommunications and Media Forum Madrid, Spain
2TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross – Platform Content
Conclusions
Summary
3TELEFONICA S.A.Corporate Content Unit
Telefonica Group: Market Size
4TELEFONICA S.A.Corporate Content Unit
What do we do in content?
Spain
LatAm
Telefónica Europe
MarketsMarkets
Highlights of results
Cable & MMDS
•800 k customers
•Bra •Per
• One of the worldwide leaders; 550+ k homes
IPTV
•Bra•Chi •Col
•R Checa
• 53 MM UVs
• More than 8 MM video users
• 20 MM users
• Bigger than any off-deck player
Satellite TV
•500+ k customers
•Bra•Chi •Per•Col •Arg•Ven
FTA TV leaderin Argentina
Internet Portals
Mobile Portals
FTA TV & other
Internet PortalsPay TV
5TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross Platform Content
Conclusions
Summary
6TELEFONICA S.A.Corporate Content Unit
Content Creation – Content Adaptation - Services
From a Business Point of View, Digital Platforms are:— Content Platforms
— Service Platforms
— Promotional Platforms
Key Driver of Content is the “Interest” of our Customers
New Platforms have great potential for “Target segmentation”
Interactivity, Screen Size, Speed, Portability… shape Content of each platform
Content may be “Adapted” from other Platforms or “Created”— From Newspapers to Music or Movies
— From “Mobisodes” or “Mobigames” to “You Tube” or “Uniqlock”
Content may be “Professionally Produced” or “User Generated”
… Or “User Moderated”
A Whole Universe of Services around the Customer
7TELEFONICA S.A.Corporate Content Unit
Interactivity: VoD, interactive services and other featuresVideo on Demand
Delivery platforms with full control over content
Interactive Services
Interactive content that can complement and enhance customer experience
Internet & e-mail Maps Information
Camera Choice
Other features that make content new experience customer
8TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross Platform Content
Conclusions
Summary
9TELEFONICA S.A.Corporate Content Unit
Pay TV
Active since 1997; pioneered IPTV in 2004
IPTV as core technology choice
DTH and Cable to ensure Content offer in selected areas
Move towards personal TV
Personalized line-up selection
PVR VoD Catch-up TV
Telefónica TV activities
10TELEFONICA S.A.Corporate Content Unit
Internet
Active Portal since 1999
Expanded by content download/streaming services
Terra TV Sonora/
Pixbox
More than 53 MM unique visitors per month
Top 3 or 4 in all markets. Usually sole non-GYM performer among market leaders
Telefónica Internet (PC) activities
11TELEFONICA S.A.Corporate Content Unit
Mobile
One of the mobile forerunners in content
Mobile portals in all markets
Strong non-SMS data revenues
Early mover in Full-track
downloads Video Open
mobile internet
Telefónica Mobile Internet activities
12TELEFONICA S.A.Corporate Content Unit
Specific reasons to enter contentDescription
Extend and improve associations
Brand spillovers
Access to new elements of discretional spending
Up to 100% more than existing base
GROWTH FOCUSEDGROWTH FOCUSED
New revenue sources
Support to differentiation
Content/service players extending its market position into telecoms services
Content distributors exploiting infrastructure to provide telecoms services
Avoid churn and pricing pressure
Competitive matching
Protection againstdownstream moves
DEFENSIVEDEFENSIVE
13TELEFONICA S.A.Corporate Content Unit
Some experiences about availability of Content
DSL with music subscription
included in the monthly price
TV over 3G - Live F1 (Ad Funded)
Terra TV FreeoD – Series & Movies
Sample Developments
integrating creation,
adaptation, and distribution of
content on multiple platforms?
Full tracks Download O2 UK
and others
Over 1 Million tracks on your mobile for only 6€ per month
IPTV
14TELEFONICA S.A.Corporate Content Unit
Flexibility: “Time shifting”
• PVR on net• PVR on net • PVR on deck• PVR on deck
“Te lo Perdiste” PVR
New services give customer full control over the TV: forward, stop, rewind….
New services give customer full control over the TV: forward, stop, rewind….
15TELEFONICA S.A.Corporate Content Unit
Flexibility: “Place shifting”
• Mobile TV offer’s already allows access to TV channels on simulcast
• Spain: 40 channels, of those:• 20 channels in simulcast: MTV, Hollywood, Historia, Odisea, Intereconomia etc
• 20 channels with special version exclusive for mobile (“Loops”): Paramount Comedy, Nick, Boomerang etc.
• Mobile TV offer’s already allows access to TV channels on simulcast
• Spain: 40 channels, of those:• 20 channels in simulcast: MTV, Hollywood, Historia, Odisea, Intereconomia etc
• 20 channels with special version exclusive for mobile (“Loops”): Paramount Comedy, Nick, Boomerang etc.
16TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross Platform Content
Conclusions
Summary
17TELEFONICA S.A.Corporate Content Unit
Where will the Funding come from?
Dealing with the “Right to
See”
ProducersProduce
The Product
Equity Investors
Library value
Soft MoneyGrants Subsidies
SponsoringProduct
Placement
SequelsPrequelsSpin-offs
Advertising
Pre – SalesMGs
SalesRevenue Sharing
Film – DVD - TV
New Media
Financing Producing Distributing Exhibiting
Loans
Prizes
Deferrals
18TELEFONICA S.A.Corporate Content Unit
Allocation of Players in the value chain
Final Customer
Final Customer
DistributorsDistributors
AggregatorsAggregators
Rights
Holders
Rights
HoldersCreatorsCreators
As online distribution increases,allocation of revenues will move down stream the
chain
19TELEFONICA S.A.Corporate Content Unit
Financing models in online distributionTransactional – Subscription – Free On Demand
Upfront Fee
Revenue Share(With or W/O
MG)
Ad Share (With or W/O
MG)
•Integrated Music with ADSL
•VoD – IPTV•Full Track download
•(Aggregator or content Provider)
•Mobile VoD over 3G •(Aggregator or content Provider)
•Terra TV Spain•F1
20TELEFONICA S.A.Corporate Content Unit
Adjustment of business models to digital convergence
Bundles
Live content and interactivity
Aproaching to date to date window and
longer Viewing Periode for customers
Flat Rate and Dual Delivery Services
Free Content on PC in the same window
that uses Free to Air TV Operators
Exclusivity Rights for Music Concerts
Nature of content makes networks the
natural distribution
system
21TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross Platform Content
Conclusions
Summary
22TELEFONICA S.A.Corporate Content Unit
Evolution of cross-platform offers will push integration
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While commuting, Maria watches the Best-of-the-Week of OT in her mobile
Once at home, she downloads a more extended version of OT weekly summary to the PC
Maria downloads the full-track of the last OT programme, and also receives the ringtone and wallpaper in her mobile
Beep Beep!!! An alarm sounds it its mobile: OT is going to start in 5 minutes!!! She runs to the TV
The program is over and Maria joins the OT forum from the PC and draws up a ranking of the best songs
Maria chats through TV IM with Carlos about today’s singers’ performances
Voting starts! Send an SMS with the name of your favourite singer to make him win
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23TELEFONICA S.A.Corporate Content Unit
Telefónica Overview
Content Creation – Content Adaptation - Services
Content in Telefónica
Funding: Looking for Business Models
Cross Platform Content
Conclusions
Summary
24TELEFONICA S.A.Corporate Content Unit
Summing up
Telefónica:
leading growth
in digital
entertainment
Opportunity brought
by industry changes
Broadband explosion
Digitalization of content
New user needs and expectations
New competitors
Telefónica broad
scope in content
All platforms Pay TV Internet
services Mobile
Rationale Defensiv
e Growth-
driven
Strategic focus
enabling effective
entry
Support of a strong marketing machine
Bundling Effectiveness
in content acquisition and economies of scale
Innovation: technology and beyond
Increasingly able to create 360º cross-platform offers
Already a leading
player and speeding
up
Content, broadband and digital services 14% of revenues
Growth well above (5x) overall company growth or telecom market
25TELEFONICA S.A.Corporate Content Unit
Some Conclusions
1. Content will “find its way” to the Consumer, depending the “interest” it may generate.
2. Cross plataform is a multiplier when something hits that interest
3. The Best ideas are still to come
4. We try to approach “Content” as a “Stand alone business”, not only as a “hook” for selling something else.
5. We’d like to monetize content, services and promotions in a way that doesn’t “burn” the customer. Therefore the importance of creating communities, transparency, and balance between “real value” and “perceived value”
Thank you