Economics of Mobile Programming

2015 SNL Kagan, a division of SNL Financial LC. All rights reserved.

One SNL Plaza, Charlottesville, VA 22902 | Phone: 866.296.3743 | www.snlkagan.com

Published May 2015 | ISBN: 978-1-939835-437

2 0 1 5 E D I T I O N

E C O N O M I C S O F

MOBILE

Economics of Mobile Programming SNL Kagan Industry Report

2015 SNL Kagan, a division of SNL Financial LC. All rights reserved. i

Contents

Executive Summary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2Mobile ads vs. video subscription services revenue, U.S. (chart) . . . . . . . . . . . . . . . . 2Comparing multichannel video subs and subscription OTT subs, Q4 2014 (chart) . . . 3

The Addressable Market: Sizing the U.S. Smartphone and Tablet Audience . . . . . . . . . . . . . 4Smartphone and tablets in use, U.S., 2008-2014 (chart) . . . . . . . . . . . . . . . . . . . . . . . 4

Carrier Video Subscription Services Are No Competition for OTT/TV Everywhere . . . . . . . 5Carrier-branded mobile video subs, 2007-2014 (chart) . . . . . . . . . . . . . . . . . . . . . . . . 5Carrier-branded mobile video revenue, 2007-2014 (chart) . . . . . . . . . . . . . . . . . . . . . 5OTT and mobile video year-end subs, 2007-2014 (chart) . . . . . . . . . . . . . . . . . . . . . . 6Comparing multichannel video subs and subscription OTT subs, Q4 2014 (chart) . . . 6OTT and carrier-branded mobile video device compatibility . . . . . . . . . . . . . . . . . . . 7Price differential between OTT & carrier-based mobile video services, 2015 . . . . . . . 7Free mobile video content, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7Mobile video pricing by service provider, 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8AT&T Mobile TV, Sprint TV & T-Mobile TV prime package network content, 2015 . . . 8

Carrier Subscription Services Dwarfed by Mobile Video Ad Revenue. . . . . . . . . . . . . . . . . . 9Mobile ads vs. video subscription services revenue, U.S. (chart) . . . . . . . . . . . . . . . . 9Mobile ad revenue, 2010-2014 (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Top seven mobile advertisers, 2014. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9Global monthly active users, YE 2013 (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10Mobile ad company deals database, 2009-2014 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

The iPad's Evolution Into a TV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Weekly viewers of full-length TV/movies on smartphone/tablet, U.S. (chart). . . . . . . 11Mobile video viewing by age generation (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11Most popular iPad free app genres, 2011-2015 (chart) . . . . . . . . . . . . . . . . . . . . . . . 12Top entertainment apps, Q1 2011 vs. Q1 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12Leading OTT iPad app rank, Q1 2015 (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Hollywood free iPad app leaders, Q1 2015. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13Basic cable network iPad app ranking, 2012-2015 (chart) . . . . . . . . . . . . . . . . . . . . 14

The Most Popular Mobile-Video Content . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15Viewing of paid mobile video by age generation (chart) . . . . . . . . . . . . . . . . . . . . . . 15Ranked interest in viewing paid mobile-video content on a smartphone . . . . . . . . . 15Ranked interest in viewing paid mobile-video content on a tablet. . . . . . . . . . . . . . . 16No. 1 highest interest in viewing paid mobile video content by gender . . . . . . . . . . 16

Highest-Rated iPad Video Apps . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16iPad video app rankings based on consumer ratings - broadcasters . . . . . . . . . . . . . . 16iPad video app rankings based on consumer ratings - basic & premium cable nets . . 17iPad video app rankings based on consumer ratings - multichannel operators. . . . . . 17iPad video app rankings based on consumer ratings - OTT . . . . . . . . . . . . . . . . . . . . 18

The Pass-Back Effect Finally Gets OTT Traction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18Selected OTT kids' content aggregators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19


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The OTT Onslaught and Consumer Appetite for Multiple Video Subscriptions . . . . . . . . . 19Video provider preference (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19Launch dates for select OTT aggregators, 2014 & 2015 (chart) . . . . . . . . . . . . . . . . . 20Age groups by video provider preference (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . 20Multichannel video subs and cord cutters by video provider preference (chart) . . . . 20

Rise of the Streaming Stick and Streaming Media Player . . . . . . . . . . . . . . . . . . . . . . . . . . 21Selected streaming media players & sticks launch dates (chart) . . . . . . . . . . . . . . . . 21Apple TV streaming media player vs. Google Chromecast (graphic) . . . . . . . . . . . . . 22Selected streaming media players and sticks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Second-Screen Hype Subsides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23Viggle revenue, Q1 2012-Q2 2014 (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23

LTE Broadcast and ATSC 3.0 Update. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Mobile Video Technology Experts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24Mobile video technology experts by revenue, global, 2012-2014 . . . . . . . . . . . . . . . 24

OTT Library Analysis: Netflix, Hulu Plus and Crackle . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Netflix, Hulu Plus and Crackle streaming catalog figures, Dec. 14 . . . . . . . . . . . . . . 25Hulu Plus' library, Dec. '11 - Dec. '14 (chart). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25Hulu Plus' movie catalog Dec. '14, yearly breakdown (chart) . . . . . . . . . . . . . . . . . 25Netflix's streaming library, Dec. '11 - Dec. '14 (chart) . . . . . . . . . . . . . . . . . . . . . . . 26Netflix's movie catalog Dec. '14, distribution by year (chart) . . . . . . . . . . . . . . . . . . 26Netflix's TV season catalog Dec. '14, distribution by year (chart) . . . . . . . . . . . . . . . 26Crackle's movie catalog Dec. '14, yearly breakdown (chart). . . . . . . . . . . . . . . . . . . 27Crackle's TV series catalog Dec. '14, yearly breakdown (chart) . . . . . . . . . . . . . . . . 27

TV Everywhere Library Update . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28TV Everywhere movie universe (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28Analysis of TV Everywhere movie catalogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29TV Everywhere TV series universe (chart) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29Analysis of TV Everywhere TV series catalogs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29U.S. multichannel service provider video app highlights . . . . . . . . . . . . . . . . . . . . . . 30

Contents


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About the Publisher

SNL Kagan is the ultimate resource for complete financial intelligence and analytics on the broad and dynamic media & communications industry, including the broadcasting, cable, TV network, motion picture, wireline, wireless, satellite, and Internet media sectors. The SNL Kagan suite of products integrates comprehensive data, forecasts, expert analysis and breaking news into an electronic database and analytical tools that are available online and updated around the clock. Whether you're an investment banker or media company executive, a research analyst or a portfolio manager, SNL Kagan provides you with unlimited 24/7 access to the relevant information you need to understand evolving trends, anticipate change and make the best decisions. SNL Kagan combines the 40-year heritage of Kagan Research with parent company SNL Financial's 25 years of experience in providing essential guidance to Wall Street and America's top corporations.

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This research report is prepared and circulated for general informational purposes only and is not an offer, nor a solicitation to make an offer, to buy or sell any securities or options, futures or other derivatives related to such securities. Investors should seek financial advice regarding the appropriateness of investment strategies discussed or recommended in this research report. The information contained herein was obtained from sources SNL Kagan believes to be reliable, however SNL Kagan has not independently verified all the information given in this document. Accordingly, no representation or warranty, express or implied, is made as to the accuracy, completeness or fairness of the information and opinions contained in this research report. Some of the information in this report may be based on historical information, which may not have been updated. Statements regarding past performance may not be indicative of future returns and statements regarding future prospects may not be realized. All opinions and estimates expressed are our current opinions and estimates as of the date appearing on this material only and are subject to change without notice. SNL Kagan, its parent, its affiliates or employees preparing this report may have a position in securities of any company or derivatives related to such securities referred to or recommended in this report. An employee of SNL Kagan, its parent or affiliates may be a director of a company referred to or recommended in this report. SNL Kagan, its parent or affiliates may perform for, or solicit business from, any entity mentioned in this report.

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Managing Editor Luke Meade

Publications Project Editor Mac Mathews

SNL Kagan Industry Report

Economics of Mobile Programming


2015 SNL Kagan, a division of SNL Financial LC. All rights reserved. 2

Executive Summary

The days when smartphone and tablet users were primarily early adopters are over. At the end of 2014, we estimate 237.7 million smartphones and 118.2 million tablets were in use in the U.S. for a combined total of more than 355 million.

Since peaking at 5.0 million in 2009, carrier-branded mobile video subs fell 63.3% to an estimated 1.8 million at the end of 2014. Demand for the services has been killed by OTT, TV Everywhere and ad-supported mobile video. Services like Hulu and Google Inc.'s

YouTube generated $1.54 billion in mobile-video ad revenue in the U.S. in 2014, more than eight times the revenue generated by carrier-based video subscriptions.

Of the 5,090 online Americans surveyed by SNL Kagan in February 2015, one in five were weekly viewers of long-form TV and movie content on smartphones and tablets. Just over one-third of survey respondents had viewed long-form video on their smartphone or tablet in the last 90 days. Unsurprisingly, younger audiences are the most active mobile video viewers.

According to a third-quarter 2014 SNL Kagan survey, the most popular mobile-video content tends to mirror the traditional online video market, dominated by short-form video (e.g. YouTube) and movies (e.g. Netflix), followed by TV shows (e.g. Hulu Plus). Survey respondents showed only modest interest in mobile-video delivery of TV news or, surprisingly, sports.

According to iTunes, some of the highest-rated iPad video apps as of April 2015 were The CW, History, Time Warner's HBO GO and DISH Anywhere.

When we insert Netflix and Hulu Plus into our list of leading multichannel providers (alongside cable, satellite and telco), Netflix comes out on top with 37.7 million subscribers as of the fourth quarter of 2014. Hulu Plus ranks sixth, ahead of AT&T U-verse and Verizon Communications' FiOS, with 6.9 million subs. At the end of 2014, Netflix and Hulu Plus each had about 6,000 movie titles available on demand, compared to Crackle's 113.

0

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2010 2011 2012 2013 2014

Mobile ads vs. video subscription services revenue, U.S.

Mobile video ad revenueCarrier-based mobile video subscription revenue*

($M)

* Excludes Verizon's NFL Mobile. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



In addition to Netflix and Hulu Plus, a flurry of new OTT services launched in 2014 and 2015, including CBS All Access, HBO NOW, YouTube Kids and NOGGIN. Virtual service providers (VSPs) also blossomed in early 2015: DISH's Sling TV launched Jan. 5 and Sony's PlayStation Vue launched March 18. While not a VSP, Verizon's FiOS division launched a slimmed-down ("skinny") video package called Custom TV on April 17.

For the OTT and VSP services, the question is whether consumers will be comfortable managing several different video subscriptions. Our third-quarter 2014 online survey of 2,552 Americans found that across all ages, the majority still prefer dealing with a single multichannel video operator: 62% of respondents preferred a single provider, compared to 38% who preferred multiple video providers.

Mobile video is also blurring into regular TV video, thanks to the growth of streaming media players like Apple TV and streaming sticks like Google's Chromecast. In many cases, these devices can (or they require the user to) use smartphone and tablet apps as the remote control.

Second-screen hype has subsided in the last couple of years, with venture capitalists abandoning the space and existing players exiting through acquisition or "pivoting" to change business models.

The blurring of unicast and broadcast remains in the early stages. ATSC 3.0 could be a candidate standard as early as 2016. LTE broadcast is also still in the experimental phase, with a couple of trials completed since the last edition of this report. We think AT&T Mobility or Verizon Wireless could launch LTE broadcast handsets and services in the latter half of 2015.

The companies providing hosting and streaming video services to mobile-video content owners and aggregators grew revenue by nearly 20% collectively year over year in 2014. MLB Advanced Media tops the list by revenue; the company most recently won the back-end streaming business of HBO's new OTT service HBO NOW.

37.7

22.420.4

14.011.0

6.9 5.9 5.6 4.3 4.1

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(1)

Comparing multichannel video subs and subscription OTT subs, Q4 2014 (M)

(1) SNL Kagan estimates. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



The Addressable Market: Sizing the U.S. Smartphone and Tablet Audience

For the first time, more smartphones and tablets are in use in the U.S. than there are Americans. At the end of 2014, we estimate 237.7 million smartphones and 118.2 million tablets were in use in the U.S. for a combined total of over 355 million, while according to the U.S. Census, the country had a total population of 320 million.

This does not imply all Americans have a smartphone and tablet, but most Americans have access to one or the other. For instance, while the U.S. has 237.7 million smartphone subscriptions, per capita we estimate 216 million Americans own a smartphone, as some owners have more than one phone (usually one for work and one for personal use). A similar overlap exists with tablet users: many also own a smartphone.

Today's massive addressable market of mobile users means usage can scale fast. For instance,

we have noticed a strong uptick in short-term performance for many leading mobile game publishers in the past couple of years. In 2008, when the ceiling of users with smartphones was under 30 million, even a hit game or video app would experience a relatively modest growth curve. Now the needle moves much more quickly.

For mobile video, and mobile entertainment in general, the days when the smartphone and tablet user base was composed mainly of early adopters are in the past. But despite the large potential user base, consumers remain reluctant to pay for wireless carrier-based video subscription services. On the other hand, OTT, TV Everywhere and free-to-view ad-supported mobile video services continue to gain the interest of American video consumers.

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2008 2009 2010 2011 2012 2013 2014

Smartphone and tablets in use, U.S., 2008-2014

Smartphones in use Tablets in useTotal mobile devices in use US population

(M)

2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



Carrier Video Subscription Services Are No Competition for OTT/TV Everywhere

A fter peaking at 5.0 million in 2009, carrier-branded mobile video subs fell 63.3% to an estimated 1.8 million at the end of 2014. We estimate revenues decreased from just under half a billion dollars to $185 million over that time a drop in the

bucket compared to the 2014 top-line revenues of AT&T Mobility, Sprint, T-Mobile US and United States Cellular.

While Verizon Wireless continues to run its NFL Mobile subscription service, details of which are included in our mobile sports wrap-up here, the company otherwise exited the mobile-video subscription business in late 2012. This move alone removed about 1.4 million subscribers from the industry.

Declining subs cannot be blamed on flagging mobile-video consumption. According to Ooyala's third-quarter 2014 global video index report, mobile and tablet devices made up 30% of all video views in the quarter, up from 14% in the third quarter of 2013.

Video consumption on smartphones is on the rise thanks to widespread LTE adoption, Wi-Fi offloading and the expanding popularity of larger-screen smartphones like the iPhone 6+, which offer a better mobile-video viewing experience.

In addition to a better network and larger phones, demand has also been strong for video OTT services like Netflix and Hulu Plus. Over the same period in which subscriptions to carrier-branded mobile video services nose-dived, streaming subscriptions accelerated. Netflix streaming subs grew at a CAGR of 25.9% between 2007 and 2014, compared to a CAGR of negative 6.7% for carrier-branded mobile video subs.

3,010

4,273

5,030

4,278 4,065

2,610

2,057 1,846

1,000

2,000

3,000

4,000

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6,000

2007 2008 2009 2010 2011 2012 2013 2014

Carrier-branded mobile video subs, 2007-2014(000)


225,764

382,147

491,656 489,577442,539

400,761

201,108

185,212

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2007 2008 2009 2010 2011 2012 2013 2014

Carrier-branded mobile video revenue, 2007-2014($000)




When we insert Netflix and Hulu Plus into our list of leading multichannel providers (alongside cable, satellite and telco), Netflix comes out on top with 37.7 million

subscribers as of the fourth quarter of 2014. Hulu Plus ranks sixth, ahead of AT&T U-verse and Verizon Communications' FiOS, with 6.9 million subs.

Established OTT providers such as YouTube, Crackle and Amazon Instant Video were joined by a slate of new OTT services in 2014 and early 2015, including HBO NOW, NOGGIN, YouTube Kids, CBS All Access, Pluto.TV, World Wrestling Entertainment's WWE Network, and Tennis Channel Plus.

Virtual service providers also made a big splash in early 2015. DISH's Sling TV launched in January 2015 and Sony's PlayStation Vue launched in March. While not a VSP, Verizon's FiOS division launched a slimmed -down

("skinny") video package called Custom TV in mid-April 2015.

DISH's $20 per month digital video service includes live, linear TV programming from networks including CNN, ESPN, Disney Channel, Food Network and TNT, among others. A rumored streaming-video service is also expected in the second half of the year from Apple.

TV Everywhere services offered through AT&T's U-Verse and Verizon's FiOS cable divisions generated more adoption momentum in 2014 than the mobile-video services on the wireless side of those businesses. According to SNL Kagan estimates, telco TV Everywhere unique users grew to 6.7 million in 2014, up

from an estimated 3.6 million at the end of 2013. One reason for the relative success of the TVE services is their flexibility, ease of use and extensive programming libraries.

Subscribers are also defecting from carrier-branded mobile-video services because the business model is less competitive and the value proposition less compelling than with OTT and TV Everywhere.

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OTT & mobile video year-end subs, 2007-2014

Netflix streaming subs

Hulu Plus subs

Carrier-branded mobilevideo subs


(M)

37.7

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14.011.0

6.9 5.9 5.6 4.3 4.1

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(1)

Comparing multichannel video subs and subscription OTT subs, Q4 2014 (M)

(1) SNL Kagan estimates. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



One key competitive disadvantage for carriers is content. Their services offer limited programming and fragmented VOD options which, unlike Netflix, do not include movies or any full seasons of TV series. And while carrier services include some in-season TV programming, they offer far less episode stacking than Hulu Plus. For example, at mid-season, we found three episodes of "Grey's Anatomy" on T-Mobile TV and the same number on AT&T Mobile TV, while Hulu Plus offered all episodes of the 11th season.

Another shortcoming of carrier services is that they are anchored to the phone. Because carriers are constrained by content-licensing agreements, the availability of their mobile video services on tablets and streaming sticks is mostly nonexistent. T-Mobile TV is the only service available on tablets (which is limited to Android and Windows devices) and none of the carrier-branded services is directly compatible with Google's Chromecast streaming stick. This limits the appeal of carrier-branded video for consumers who have grown to expect cross-platform functionality from their mobile video services.

Pricing is also a headwind to adoption, as the carrier-branded services are priced at a premium to the subscriptions offered by their OTT counterparts. AT&T Mobile TV and Sprint TV cost 25% more than Netflix and Hulu Plus, while a month-to-month T-Mobile TV subscription costs 63% more.

Carriers differentiate themselves from the OTT players by offering additional add-on content packages targeted at different audience segments. According to Sprint, the children's programming package "Playground TV" performs particularly well; T-Mobile even raised the price of its one-month, three-month and six-month "Playground TV" subscription packages by 20%, 33% and 26%, respectively, in 2014, hinting at the inelastic demand for children's programming among parents.

OTT and carrier-branded mobile video device compatibility Provider ------ Tablet Platform ----- ---- Handset Platform ---- Chromecast

iOS Android Windows 8 iOS Android Windows 8Hulu Plus x x x x x x xNetflix x x x x x x xAT&T Mobile TV x x xSprint TV x x xT-Mobile TV x x x x xx = app is available for platform. As of 2/17/2015. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

Percent price differential between OTT and carrier-based mobile video services, 2015

ProviderPrice

(monthly)% > OTT

pricing($) (%)

Hulu/Netflix 7.99 (2) -AT&T Mobile TV 9.99 (1) 25Sprint TV 9.99 (1) 25T-Mobile TV 12.99 (1) 63(1) Carrier pricing refers to the monthly price of prime packages offered by AT&T Mobility, Sprint, and T-Mobile USA.(2) Netflix & Hulu Plus pricing is for single user plans with no concurrent streaming across devices.Pricing as of 1/17/2015. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

Free mobile video content, 2015Networks Sprint TV T-Mobile TVAccess Hollywood xAP xComedy Time xFOX xFOX Sports xFOX News xFree Music Channel xPBS Kids xSaturday Morning TV xTED x xThe Broadway Channel xThe Weather Channel x xWorldview xTotal 7 8As of 2/17/2015. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



At present, AT&T Mobility boasts the most comprehensive programming lineup, with 51 networks included in its $9.99 subscription package, followed by T-Mobile with 34, and Sprint with 31. Sprint TV and T-Mobile TV also include free content from seven networks in their mobile video apps that don't require a subscription. Sprint TV used to offer 17 networks, including the Disney Channel, ESPN Mobile TV and ABC for free; however, due to programming costs, Sprint TV eliminated 10 of these networks, including all Disney properties, from its free-content lineup in 2014.

Mobile video pricing by service provider, 2015Hulu Plus Netflix AT&T Mobile TV Sprint TV ----------- T-Mobile TV ------------ United States Cellular

Content Pack per month per month per month per month 1 month 3 months 6 months($) ($) ($) ($) ($) ($) ($) ($)

Free Content (2) yes (3) no no yes yes yes yes - Prime (1) 7.99 7.99 9.99 9.99 12.99 33.99 49.99 9.99En Espanol - - 7.99 4.99 9.99 25.99 37.99 7.99Life and Style - - 6.99 - 7.99 20.99 30.99 - Playground TV - - 6.99 9.99 5.99 15.99 23.99 4.99Urban Zone - - 4.99 9.99 5.99 15.99 23.99 - Sports Pack - - - - - - - 5.99Crackle Movies - - 5.95 - 6.99 18.99 36.99 - (1) Prime refers to the most comprehensive single package available from the wireless carrier-based services.(2) Limited content carriers bundle into their customers data packages at no extra cost.(3) Limited programming is available on the free version of Hulu at no cost to viewers. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

AT&T Mobile TV, Sprint TV and T-Mobile TV prime package network content, 2015Networks in each package

AT&T Mobile TV (1)

T-Mobile TV Prime (1)

SprintTV Xtra (1)

Networks in each package

AT&T Mobile TV (1)

T-Mobile TV Prime (1)

SprintTV Xtra (1)

$9.99 $12.99 $9.99 $9.99 $12.99 $9.99 ABC x x x Fox News x xA&E x x x fyi. x x xABC Family x x x GT Mobile xABC News Now x x x History Mobile x x xACC Network x Lifetime x x xAnimal Planet x x x LOGOTV x x xATAKU x x MHz Worldview xAzteca America x Mobile by Bravo x x xBabyFirst TV x MTV x xBET x My Kazoo TV xBloomberg x NBC Mobile x x xCampus Insiders x NBC Sports x x xCBS x Nickelodeon x x xCBS News x Nickelodeon Preschool x xCBS Sports x Nickelodeon Espanol x xCine Mexicano x Oxygen x x xComedy Central x x x PBS Kids x xComedy Time x Salacious Streets TV xCMT Mobile x Saturday Morning TV x xCrackle x SPIKE x x xDiscovery x x x Syfy x x xDiscovery for Families x Teen Nick x x xDisney Channel x x x Telemundo xDisney XD x x x TR3S x xE! x x x Univision xESPN Deportes x USA x x xESPN On Demand x x x VH1 x x xFOX Business x x Total 51 34 31Fox Mobile Entertainment x xAs of 2/17/2015. Compares the most comprehensive content packages from each of the carriers services. (1) Programming lists exclude music stations. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



Carrier Subscription Services Dwarfed by Mobile Video Ad Revenue

In addition to OTT and TV Everywhere eating carrier video subscription services' lunch, ad-supported free-to-view mobile video has exploded.Since 2010, mobile advertising has managed a strong 85.3% CAGR in top-line revenue, excluding traffic-acquisition costs, and we estimate the market topped $12.78 billion in 2014. Mobile video advertising is estimated at 12.0% ($1.54 billion) of the total pie. The majority of mobile video ad revenue in 2014 came from Google's YouTube, with Hulu LLC also a rising star.

Off-deck mobile video ad revenue surpassed carrier-based mobile video subscription revenue in 2013. While in 2010 Mobile video ads were just 10% of carrier-based

video subscription services, now the reverse is true. Ad-supported mobile video services in the U.S. like Hulu and YouTube generated more than eight times the revenue carrier-based video subscriptions generated in 2014.

Looking at all mobile ad revenue, not just video, the top seven publishers owned about 82% of the space's revenue in 2014. Total U.S. mobile advertising revenue grew 67% annually from $7.64 billion in 2013 to $12.78 billion in 2014.

Google continued its dominance with an estimated market share of 46% in 2014, followed by Facebook at 20% and Twitter and Pandora Media both at about 5%.

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Mobile ads vs. video subscription services revenue, U.S.

Mobile video ad revenueCarrier-based mobile video subscription revenue*

($M)

* Excludes Verizon's NFL Mobile. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

0

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Google/AdMobFacebookTwitterPandoraYahoo!Apple/QuattroMillennial MediaOthers

Mobile ad revenue, 2010-2014($M)

U.S. only, excludes traffic acquisition costs. 2015 SNL Kagan, a division of SNL Financial LC, from company filings & SNL Kagan estimates. All rights reserved.

Top seven mobile advertisers, 2014-------- U.S. mobile advertising revenue -------- 13- 14

% Chg.10- 14

CAGRMkt Shr.2010 2011 2012 2013 2014

(%) (%) (%)Google/AdMob ($M) 444.6 872.9 1,887.5 3,438.3 5,853.6 70 90 46Facebook ($M) - - 209.3 1,244.9 2,560.0 106 - 20Twitter ($M) - 3.5 83.9 308.0 648.7 111 - 5Pandora ($M) 24.7 80.6 193.0 384.1 601.7 57 122 5Yahoo! ($M) 44.5 71.0 106.5 223.8 482.0 115 82 4Apple/Quattro ($M) 78.8 90.6 131.3 170.7 204.9 20 27 2Millennial Media ($M) 32.4 65.3 106.0 138.0 190.1 38 56 2Others ($M) 458.8 808.2 1,150.7 1,732.0 2,243.1 30 49 18Total ($M) 1,083.7 1,992.1 3,868.1 7,639.8 12,784.2 67 85 100% Chg. (%) 96 84 94 98 67As of October 21, 2014. Excludes traffic acquisition costs. 2015 SNL Kagan, a division of SNL Financial LC, from company filings & SNL Kagan estimates. All rights reserved.



A common thread for all top seven properties is having a large reach. Each on their own can reach tens of millions, a threshold required to attain the interest of the big-spending

national advertisers.

Knowing those users is also critical for ad targeting. Facebook and Twitter in particular, by nature of being social networks, sit on a treasure trove of user demographics that are available without relying on cookies. This demographic detail, their large reach and ability to serve as a "one-stop-shop" for brands looking to reach mobile users have helped the two grow market share from zero in 2010 to a combined 25% in 2014.

Five of the top seven (Facebook, Twitter, Pandora, Apple and Millennial Media) rely primarily on display advertising. Facebook and Twitter are having success with sponsored timeline posts, a

display format sometimes referred to as "native" advertising. By contrast, we estimate 77% of Google's mobile ad revenue comes from search.

Millennial Media was the seventh-largest mobile advertising platform by revenue in 2014, due primarily to its $238.4 million JumpTap acquisition, which closed in November 2013 at an estimated 1.9x forward-year revenue multiple.

Of the 15 mobile-ad deals we have tracked since 2009, mobile-ad companies have sold at an average forward-year revenue multiple of 3.2x. This is several turns lower than the overall mobile deals revenue multiple of 6.2x forward-year revenue, based on the 95 mobile-media deal comparables in our database.

1,230 1,100

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241

76

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Facebook Google* Yahoo! MillennialMedia

Twitter Pandora

(M)Global monthly active users, YE 2013

As of October 8, 2014. Includes mobile and desktop users. * Estimated YouTube reach. 2015 SNL Kagan, a division of SNL Financial LC, from company filings and SNL Kagan estimates. All rights reserved.

Mobile ad company deals database, 2009-2014

YearDate

announced Buyer TargetDeal

value

*Est. FY annual

revenue of seller

Rev. mul.

($M) ($M) (x)2009 11/09/09 Google AdMob 750.0 95.0 7.9 2010 01/05/10 Apple Quattro Wireless 275.0 23.0 12.0 2010 01/20/10 Opera AdMarvel 8.0 4.0 2.0 2011 02/14/11 Tremor Media Transpera 15.8 7.2 2.2 2011 04/25/11 ValueClick Greystripe 70.6 31.0 2.3 2011 09/29/11 Viggle WatchPoints 2.5 0.0 NM2012 02/16/12 Opera Mobile Theory 18.0 26.3 0.7 2013 01/02/13 Phunware TapIt 23.0 12.0 1.9 2013 04/01/13 Millennial Media Metaresolver 11.8 2.0 5.9 2013 08/12/13 Millennial Media JumpTap 238.4 122.7 1.9 2013 09/09/13 Twitter MoPub 350.0 100.0 3.5 2013 12/03/13 Blinkx Rhythm NewMedia 65.0 32.6 2.0 2014 01/07/14 Yahoo! Aviate 80.0 0.0 NM2014 07/21/14 Yahoo! Flurry 300.0 210.0 1.4 2014 09/23/14 Millennial Media Nexage 107.5 47.2 2.3

Mobile Ad Deal Totals / Weighted Averages 2,316.8 713.0 3.2 As of October 21, 2014. * Forward year revenue estimate for the year following acquisition NM = Not meaningful. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



The iPad's Evolution Into a TV

The larger screen offered by a tablet has always been perceived as a benefit for mobile video viewing. Now data is validating that perception.In the third quarter of 2013, we asked online survey respondents if they watched full-length TV and films on their smartphone or tablet, and 11% answered that they did so weekly. When we asked the same question again in February 2015, the answer was 20%. Hulu's own reported usage data also confirms this trend.

Expanding the scope of the question from a week to a three-month period, 35% of survey respondents said they had viewed long-form content on a tablet or smartphone in the previous 90 days. And differences in viewing trends by age group underscore that younger audiences are adopting mobile video at a faster clip than older generations. For instance, 41% of Millennials surveyed used their tablet for full-length TV and film viewing, compared to just 16% of Baby Boomer tablet users.

According to our data analysis, video-specific apps as a percentage of all entertainment apps grew to 65% of the category in first quarter 2015, up from 55% in first quarter 2011. While the entertainment genre which most publishers decide to use for video-heavy apps has declined in share over the years, that has more to do with confused iPad publishers than a waning interest in mobile video. For instance, in 2011, many app publishers classified their apps as entertainment when games (Pocket Ants HD) or news (People Magazine) was probably a better fit.

11%

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Weekly viewers of full-length TV/movies on smartphone/tablet, U.S., % adult internet users

(%)

Survey sample size: 1,021 5,090


20%

29%31%

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41%

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Preteens Teens Millennials GenX Boomers Seniors

Viewed a full-length movie/TV show on a smartphoneViewed a full-length movie/TV show on a tablet(%)

Mobile video viewing by age generation

Q. Which of the following statements or activities accurately reflects the [preteens or teenagers] in your household? Used a smartphone/tablet to view a full-length movie or TV show. Base: Preteens 549, teenagers 390. Q. Which of the following activities have you performed on your [device] over the past 3 months? Base: Smartphone users 1,748, tablet users 1,401. 2015 SNL Kagan, a division of SNL Financial LC. All rights reserved.



Other iPad identity changes include news apps shrinking from a nearly 10% share of top free iPad apps in first quarter 2011 to a measly 0.1% in the first quarter of 2015. Mobile games have boomed, with free iPad game apps growing from a 30.4% share to more than 50%, comparing the same periods. And as consumers have tested the device's ability to replace a laptop, the productivity genre has grown from a 2.5% share in first quarter 2011 to more than 10% in first quarter 2015.

When it comes to the kind of video consumers are watching, over-the-top wins. The only video-specific apps to chart every week in the first quarter with the exception of The Weather Channel were Netflix, Hulu Plus, Amazon Instant Video and YouTube.

For the first time, thanks to first-quarter premieres of its popular original series "House of Cards" and its new show "Unbreakable Kimmy Schmidt," the Netflix iPad app remained in the top 10 of all iTunes free iPad apps all quarter long. The next-most-popular OTT app was Amazon's Instant Video app, which ended the first quarter as the 39th most popular free iPad app. Hulu Plus' rank steadily rose throughout the quarter and it ended the period in 54th place. Google's Chromecast app made a cameo. Of no surprise to longtime watchers of this space, Google's YouTube Kids performed very strongly out of the gate, as American parents continue to employ phones and tablets as pacifiers.

Top entertainment apps, Q1 2011 vs. Q1 20152011 2015

---------------Video-specific apps as % of all entertainment apps---------------55% 65%

ABC Player 123D Sculpt+ABC's Grey's Anatomy Sync Amazon Instant VideoAdult Swim CBSBones Disney Movies AnywhereBuzz Wire! Disney Royal CelebrationsDIRECTV App for iPad FOX NOWDiscovery Channel HD Hello Kitty Nail SalonFandango Movies - Times & Tickets Hulu Plusfinger drums! NBCFlowpaper NetflixHulu Plus Olaf's AdventuresIMDb Movies & TV Talking Larry the Bird for iPadLaser Lights Talking Tom & Ben News for iPadLive From the Red Carpet The Voice Official AppLive TV Box Lite Tom Loves Angela for iPadlove finger scan Tom's Love LettersMeander U-versemood finger scan WATCH ABCMovies by Flixster, with Rotten Tomatoes - Free XFINITY TV GoNetflix YouTube KidsOscar Backstage PassOverDrive media ConsolePBS for iPadPEOPLE MagazinePocket Ants HDPocket Pond HDPopular Science+SnagFilmsTalking Bacteria John, John & John for iPadTalking Gina the Giraffe for iPadTalking PANDA HDTalking Roby the Robot for iPadTalking Tom Cat for iPadTiVoTrue GritTWCable TVVogueXFINITY TVNon video apps in bold. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

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Games Productivity Entertainment News(%)

Genre market share by instances in weekly top 100 lists during quarter.Includes free iPad apps only.Data starts January 19, 2011. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data. All rights reserved.

Most popular iPad free app genres, 2011-2015



Looking at just the content producers active on iPad, Walt Disney Co. dominates. The first quarter marked the 14th quarter in a row the Mouse House has topped our free-iPad-app list. In first quarter 2015, Disney had 18 different apps chart in the top 100 free iPad charts in iTunes. The WATCH ABC app was its strongest performer, followed by the games Marvel: Contest of Champions and Frozen Free Fall.

Hollywood free iPad app leaders, Q1 2015

Rank Content producer App(s)

Weekly instances

in Top 100 Genre(s)1 Walt Disney (ABC Digital Disney

Electronic Content Inc., Disney Enterprises Inc., Gameloft, LINE Corporation, ZEN Studios Ltd., ESPN Inc.)

WATCH ABC (11), MARVEL Contest of Champions (9), Frozen Free Fall (6), Disney Infinity: Toy Box 2.0 (3), Cinderella Free Fall (2), Disney Movies Anywhere (2),Disney Royal Celebrations (2), Mickey's Magical Math World by Disney Imagicademy (2), Spider-Man Unlimited (2), Cars: Fast as Lightning, ESPN, ESPN Tournament Challenge, LINE: Disney Tsum Tsum, Marvel Pinball, Mickeys Magical Arts World by Disney Imagicademy, Olaf's Adventures, Temple Run: Oz, WatchESPN

48 Games, Entertainment, Sports, Education

2 Amazon Amazon App (12), Amazon Instant Video (12), Kindle (12)

36 Lifestyle, Entertainment, Books

3 Comcast / NBCUniversal (Gameloft, NBCUniversal Media LLC, Comcast Interactive Media)

Despicable Me: Minion Rush (12), XFINITY TV Go (3), NBC (2), NBC Sports Live Extra, The Voice Official App

19 Games, Entertainment, Sports

Google Inc. (video apps only) YouTube (12), YouTube Kids (5), Chromecast (2) 19 Photo & Video, Entertainment, Utilities, Navigation

5 Apple Inc. Beats Music 12 MusicHulu LLC Hulu Plus 12 EntertainmentNetflix Inc. Netflix 12 EntertainmentPandora Media Inc. Pandora Radio 12 MusicSpotify Ltd. Spotify Music 12 MusicThe Weather Channel LLC The Weather Channel App for iPad 12 Weather

11 Time Warner Inc. (Zynga Inc., Cartoon Network, Turner Sports Interactive Inc.)

Looney Tunes Dash! (3), LEGO Star Wars: The Complete Saga (2), NCAA March Madness Live (2), Legends of Ooo - Adventure Time, Sky Streaker

9 Games, Sports

12 Clear Channel Broadcasting Inc. iHeartRadio for iPad 8 Music13 CBS Corp. CBS (5), CBS News, CSB Sports 7 Entertainment, News, Sports14 Viacom Inc. Nick Jr. (4), NOGGIN (2) 6 Education15 News Corp. (FOX Broadcasting, Electronic

Arts Inc.)FOX NOW (3), The Simpsons: Tapped Out 4 Entertainment

16 DreamWorks (No Yetis Allowed Ltd., Reliance Big Entertainment UK Private Ltd.)

Pocket Shrek, Real Steel Champions 2 Games

17 AT&T Inc. (AT&T Services Inc.) U-verse 1 EntertainmentSoundCloud Ltd. SoundCloud 1 MusicTotal 232

Title placements in weekly top 100 lists as collected by SNL Kagan.Includes free iPad apps only.SNL Kagan collects the top 100 free iPad apps every Wednesday. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data. All rights reserved.

1112131415161718191

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YouTubeNetflixAmazon Instant VideoHulu PlusYouTube KidsChromecastDisney Movies Anywhere

2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data. All rights reserved.

Leading OTT iPad app rank, Q1 2015

---------------------------------------------------------------------------



Buoyed by e-books and video, Amazon claimed the second spot in our Hollywood tables. Tied for third were Comcast/NBCUniversal Media, which was helped by Despicable Me: Minion Rush and the TV Everywhere XFINITY TV Go app, and Google's selection of video apps, including newbies Chromecast and YouTube Kids.

The Weather Channel is the only basic cable network app to never chart lower than the No. 100 position since we started collecting this data in September 2012. Viacom's Nick Jr. app and Disney's WatchESPN were the only other basic cable network apps appearing in the top 100 lists in the first quarter. Overall, throughout the years basic cable network iPad apps have performed relatively inconsistently, with the exceptions of WatchESPN and The Weather Channel.

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The Weather Channel WATCH TNT for iPad vh1 app WatchESPNCNN app for iPad WATCH TBS for iPad WATCH ABC Family NickNick Jr. MTV A&E HISTORYLifetime WATCH Disney Channel WATCH Disney Junior WATCH Disney XDAnimal Planet for iOS BET NOW Comedy Central Univision DeportesFXNOW

Includes free cable network iPad apps ranking in the top 100 free apps for the mentioned weeks. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data. All rights reserved.

Basic cable network iPad app ranking, 2012-2015

A comprehensive listing of Hollywood free and paid iPad and iPhone video app leaders is available in Appendix A of this report.



The Most Popular Mobile-Video Content

F indings from the third quarter 2014 SNL Kagan Consumer Insights survey suggest that consumer preferences in mobile-video content tend to mirror the traditional online video market, dominated by short-form video (e.g. YouTube) and movies (e.g. Netflix), followed by TV shows (e.g. Hulu). Survey respondents showed only modest interest in mobile-video delivery of TV news and, surprisingly, sports.

According to the survey, millennials represent about half of total viewers watching paid mobile video. The survey also found that traditional gender preferences for TV

programming also extend to mobile video.

Overall, 35% of survey respondents reported viewing full-length TV shows or movies on mobile devices (smartphones or tablets) in the previous 90 days. According to the survey, nearly six in 10 viewers of paid video on smartphones are millennials. Paid mobile video includes OTT services like Netflix, or a TV Everywhere service such as Comcast's XFINITY or HBO GO. Millennials also account for approximately half (49%) of respondents viewing paid video on a tablet.

Among those viewing paid mobile video, short-form video and full-length movies received the most interest for viewing from a smartphone. TV shows also ranked high.

Survey respondents who reported viewing paid video on a tablet over the previous three months showed very similar interests in content. Compared to smartphones, slightly fewer people ranked short-form video as being of high interest for tablet viewing. However, more respondents reported high interest in viewing full-length movies and TV shows on a tablet.

Ranked interest in viewing paid mobile-video content on a smartphone

-- % viewing paid video content on a smartphone --Full-length

moviesShort-form

video TV

newsLive

sportsTV series

programs(%) (%) (%) (%) (%)

1= highest interest 30 36 7 13 152 22 17 18 17 273 14 16 25 17 284 18 17 28 17 215= least interest 17 15 23 36 9Q. Please rank your interest in viewing the following types of video content on a smartphone. Base: 441 smartphone owners who view paid video content on the device. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

59%32%

8%

49%

34%

17%

Millennials

GenX

Boomers

Viewing of paid mobile video by age generationPaid video on a smartphone

Paid video on a tablet

Q. Which of the following activities have you performed on your [smartphone, tablet] over the past 3 months - viewed a streamed movie or TV show from an online video subscription service/viewed a streamed movie or TV program from your pay TV service provider website/viewed a streamed movie or TV program from a premium TV network? Base: Smartphones 1,748, tablets 1,401. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



According to the survey, mobile-video content preferences do not appear linked to age, as millennials, GenXers and Boomers all have very similar interests in paid mobile-video content.

The type of on-demand video services being used, such as TV Everywhere, premium network VOD, online subscription VOD, or online catch-up TV services, as well as the frequency of using these services, also have little correlation with mobile-video content preferences.

Examining mobile-video preferences by gender shows similar interests among men and women for full-length movies and TV news. However, men are much more interested in viewing live sports on mobile devices. In contrast, women expressed greater interest in viewing TV shows, as well as short-form video, on smartphones.

Highest-Rated iPad Video Apps

According to iTunes' collection of customer reviews, some of the highest-rated video iPad apps in first quarter 2015 were The CW, History, HBO GO, DISH Network's DISH Anywhere, and World Wrestling Entertainment.

We broke down the leading iPad video apps into four categories: broadcasters, cable networks, multichannel providers and over-the-top. We then ranked the apps by the number of stars consumers have rated them, with a rating of five being the best. Normally, we rank ties alphabetically; however, in this case we sorted ties so that the app with the most total reviews rises to the top the logic being that the more people are in the sample, the stronger the rating.

For the broadcasters, the top spot was actually a three-way tie, with four stars attained for The CW, FOX NOW, and PBS.

Ranked interest in viewing paid mobile-video content on a tablet

---- % viewing paid video content on a tablet ----Full-length

moviesShort-form

video TV

newsLive

sportsTV series

programs(%) (%) (%) (%) (%)

1= highest interest 38 25 6 11 202 23 21 14 15 273 17 23 20 16 244 12 18 33 17 205= least interest 10 14 27 41 8Q. Please rank your interest in viewing the following types of video content on a tablet. Base: 533 smartphone owners that view paid video content on the device. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

No. 1 highest interest in viewing paid mobile video content by gender

Full-length movies

Short-form video

TV news

Live sports

TV series programs

(%) (%) (%) (%) (%)SmartphoneMen 31 32 6 20 11Women 28 41 8 4 20TabletMen 36 27 7 17 13Women 41 22 5 3 29Base: 441. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

iPad video app rankings based on consumer ratings - broadcasters

Rank Broadcasters1-5

rating

All version reviews

Live prog.

Full episodes/VOD AirPlay

1 The CW 4.0 65,844 XFOX NOW 4.0 18,601 XPBS for iPad 4.0 5,465 X X

4 NBC 3.5 30,624 X X X5 WATCH ABC 2.5 54,983 X X X

CBS 2.5 31,163 X X7 FOX Sports GO 1.5 1,918 XTotal ratings for all app versions. Ties ranked by total reviews.Video app rankings based on consumer reviews as of April 24, 2015.Includes free iPad apps only. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data.All rights reserved.



Most of the broadcaster apps offer full-episode video on demand and live programming (in some cases, only with authentication). The CW's top spot is not a surprise, considering the long legacy the company has had supplying its younger fan base with on-demand app content.

Of the 23 leading basic cable network iPad apps, A+E Networks' History and A&E apps tied for first with 4.5 stars, followed by a four-way tie between Walt Disney Co.'s WatchESPN, FOX News, Lifetime Television and Nick Jr., each with a four-star rating. HBO GO tops the list of the three premium network iPad apps with a rating of three stars.

Of the nine leading multichannel provider iPad apps, DISH comes out on top with 4.5 stars. Comcast's XFINITY iPad apps scored four stars, followed by DIRECTV and AT&T's U-verse at 3.5 and three stars, respectively. None of the multichannel provider apps support Apple's AirPlay interface.

iPad video app rankings based on consumer ratings - basic and premium cable nets

Rank Basic cable nets1-5

rating

All version reviews

Live prog.


1 HISTORY 4.5 20,457 X XA&E 4.5 19,226 X X

3 WatchESPN 4.0 102,074 X X XFox News for iPad 4.0 78,041 XLifetime 4.0 18,562 XNick Jr. 4.0 420 X X

7 The Weather Channel 3.5 116,714 CNN app for iPad 3.5 27,920 X X XWATCH Disney Channel 3.5 16,795 X X XUnivision Deportes 3.5 16,323 XNick 3.5 10,808 XWATCH Disney Junior 3.5 6,223 X X XWATCH Disney XD 3.5 4,495 X X X

14 Comedy Central 3.0 1,556 XAnimal Planet for iOS 3.0 539

16 NBC Sports Live Extra 2.5 23,680 X XMTV 2.5 3,934 X XWATCH TBS for iPad 2.5 2,616 X XVH1 2.5 1,426 X XBET NOW 2.5 165 X X X

21 WATCH ABC Family 2.0 13,310 X XWATCH TNT for iPad 2.0 3,463 X X

23 FXNOW 1.5 2,771 X

Rank Premium nets1-5

rating

All version reviews

Live prog.

Full episodes/

VOD AirPlay1 HBO GO 3.0 23,012 X X2 Showtime Anytime 1.5 8,809 X X X

Starz Play 1.5 2,048 XTotal ratings for all app versions. Ties ranked by total reviews.Video app rankings based on consumer reviews as of April 24, 2015.Includes free iPad apps only. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data.All rights reserved.

iPad video app rankings based on consumer ratings - multichannel operators

Rank Multichannel operators1-5

rating

All version reviews

Live prog.


1 DISH Anywhere for iPad 4.5 15,667 X X2 Comcast (XFINITY TV / XFINITY TV Player / XFINITY TV Go) 4.0 40,311 X X3 DIRECTV (DIRECTV App for iPad) 3.5 72,276 X X4 U-verse 3.0 23,697 X X

Verizon FiOS Mobile 3.0 13,714 X X Cablevision (Optimum for iPad) 3.0 4,440 X X

7 TWCable / TWC TV 2.5 15,026 X X Bright House (Bright House TV) 2.5 3,061 X X Cox TV Connect 2.5 2,445 X

Total ratings for all app versions. Ties ranked by total reviews.Video app rankings based on consumer reviews as of April 24, 2015.Includes free iPad apps only. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data.All rights reserved.



Finally, of the nine leading OTT iPad apps, WWE and Google's YouTube Kids topped the charts with four stars. Of note is the low sample of total reviews for each of the apps: fewer than 6,000 total reviews for WWE and just 1,129 for YouTube Kids. Tied for third place in the OTT charts by ratings are Netflix, Crackle, and Disney's relatively recent Movies Anywhere app, all with 3.5 stars.

Netflix also has the most reviews of all the video iPads we compared at 261,742; YouTube has the second-highest number of reviews at 153,006, followed by The Weather Channel with 116,714.

The Pass-Back Effect Finally Gets OTT Traction

A number of recently released OTT apps focusing on younger audiences seem to be taking advantage of a trend we've been writing about for years: parents using smartphones and tablets to keep their kids occupied during a drive or at dinner.

The Disney Movies Anywhere iPad app launched in February 2014 and entered the iTunes charts at No. 1. The app provides a walled-garden marketplace for easy access to popular Disney films. Exactly a year later, Google's YouTube Kids app was released and also entered the charts in the top position among free iPad apps in the week of Feb. 25, 2015. The YouTube Kids app promises a "kid-safe" YouTube experience.

Then, in March 2015, Nickelodeon launched its new OTT subscription app, NOGGIN, aimed at preschoolers. The service costs $5.99 per month and includes age-appropriate hits like "Blue's Clues" and "Ni Hao, Kai-lan." Kabillion's app, launched in February 2015, is also geared toward kids under 5.

Other notable kids-focused OTT services include Ameba TV and Kidobi. For paid apps, subscription fees are roughly in-line with NOGGIN's roughly $5 monthly fee.

iPad video app rankings based on consumer ratings - OTT

Rank OTT1-5

rating

All version reviews

Live prog.


1 WWE 4.0 5,902 X X XYouTube Kids 4.0 1,129 NA X

3 Netflix 3.5 261,742 NA X XCrackle 3.5 24,732 NA X XDisney Movies Anywhere 3.5 8,893 NA X X

6 Chromecast 3.0 2,020 NA XYouTube 2.5 153,006 NA X XAmazon Instant Video 2.5 13,954 NA X X

9 Hulu Plus 2.0 47,842 NA X XTotal ratings for all app versions. Ties ranked by total reviews.Video app rankings based on consumer reviews as of April 24, 2015.Includes free iPad apps only.N/A = not applicable. 2015 SNL Kagan, a division of SNL Financial LC, analysis of Apple iTunes data.All rights reserved.



The OTT Onslaught and Consumer Appetite for Multiple Video Subscriptions

In addition to the mainstays of Netflix, Hulu and Amazon, a flurry of new OTT services launched in 2014 and first quarter 2015, including CBS All Access and HBO NOW. A couple of Virtual Service Providers (VSPs) have also popped up in 2015, including DISH's

Sling TV and Sony's PlayStation Vue. As the lines between providers blur, one thing is certain: consumers have never had so many viewing options.

Including HBO NOW and NOGGIN, nine new OTT services have launched already in 2015. And with all of these OTT and VSP options, the question is whether consumers will even want to manage several different subscription services for video.

Selected OTT kids' content aggregators

Service

Selected Financial Backers

Estimated # of titles Content cost Selected content partners

Revenue models Selected devices with apps

Ameba TV NA Thousands of episodes

$3.99/month Picture Box Distribution, Decode Entertainment, NCircle Entertainment

subscription Android, iOS, Xbox 360, Google TV, Roku, Chromecast, LG Smart TV

Jim Henson Family TV

Jim Henson Company

NA Free ad-supported Jim Henson Company advertising Roku, Amazon Fire TV

Kidobi NA Thousands of videos

Free (ads, limited content); $4.00/mo.

Endemol, Bellum Entertainment, Sky Vision

advertising, subscription

Android, iOS

Kidoodle.TV A Parent Media Co.

~90 TV series $4.99/month Hasbro, DHX, Nelvana subscription iOS, Android

Kindle FreeTime Unlimited

Amazon Hundreds of seasons

$4.99/month (1 child), $9.99/month (up to 4 children); discounted plans for Prime members

Sesame Street, Nickelodeon, Disney

subscription Kindle Fire, Kindle Fire HD

Sesame Go Sesame Workshop

~200 episodes $3.99/month; $29.99/year

Sesame Street, Pinky Dinky Doo

subscription Web-browser

Toon Goggles

Calpacific Equity Group

Thousands of episodes

Free (limited content); $4.99/mo.

Animasia, Astral Studios, SMC Entertainment Group

subscription iOS, Android, Roku, Kurio 7, Meep!, WD TV Live, Nook, Polaroid Kids Tablet, OUYA, Nook HD, Google TV, Windows 8, smart TVs (Vizio, Samsung, Sharp, Panasonic)

ToonsTV Rovio Entertainment

16 series "channels"

Free ad-supported Rovio Entertainment, National Geographic Kids, Hasbro

advertising iOS, Android, Roku, Samsung Smart TVs

As of October 15, 2014. NA= not available. "Web-browser" is specified for Sesame Go as that is currently the only available way to use the service. 2015 SNL Kagan, a division of SNL Financial LC, estimates and analysis. All rights reserved.

35%

20%

7% 27%

11%

One Provider: Multichannel videowith no on-demandOne Provider: Multichannel videowith on-demandOne Provider: Multichannel videowith all content on-demand

Multiple Providers: Multichannelvideo and online services bothwith on-demandMultiple Providers: All on-demand

Video provider preference

Question: Which of the following best represents your preferred method of acquiring TV entertainment?Base: Total Respondents - 2,552 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

One Provider:

62%

Multiple providers:

38%



For instance, a wrestling, tennis and ESPN fan might be able to pay for each of three nontraditional subscriptions separately OTT apps from World Wrestling Entertainment and the Tennis Channel's, plus DISH Network's Sling TV VSP (which includes ESPN) but will they really want to?

Our third-quarter 2014 online survey of 2,552 Americans found that across all ages, nearly two-thirds of respondents (62%) preferred dealing with a single multichannel video provider, compared to 38% who preferred multiple video providers.

Unsurpris ingly, our survey results indicate millennials were more likely to reply that they were comfortable with multiple providers for their video entertainment, while older demographics tended to prefer a single provider.

25% 17% 12% 8% 17%

21%15%

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18%23%

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12% 17%27% 23%

17%

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both with on-demand

Multiple Providers:All on-demand

18-24 25-34 35-44 45-54 55-64 65+

Age groups by video provider preference

(%)

Question: Which of the following best represents your preferred method of acquiring TV entertainment?Base: Total Respondents - 2,552 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

9%20%

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Multichannel Video Subscribers Cord Cutters / Cord Nevers

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Multiple Providers: All on-demand

Multichannel video subscribers and cord cutters by video provider preference(%)

Question: Which of the following best represents your preferred method of acquiring TV entertainment?Base: Multichannel Video Subscribers - 2,211; Cord Cutters / Cord Nevers - 341. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.

Disney Movies Anywhere

SoompiTV (formerly Kdrama)

WWE Network

Pluto.TV

Sesame Street Go

Tubi TV

Docurama Channel

Tennis Channel Plus

Bollyvod

ScreenHits

Paula Deen Network

CBS All Access

Urban Movie Channel

Midnight Pulp

Yaveo

Break Movies

Kabillion Jr.

Shout! Factory TV

XiveTV

CONtvCuriosityStreamNOGGINPilotly

HBO NOW

Feb-14

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Dec-14

Feb-15

Apr-15

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Jul-14

Sep-14

Nov-14

Jan-15

Mar-15

Launch dates for select OTT aggregators, 2014 & 2015




For instance, 20% of respondents who said they preferred multiple sources for TV and online video (linear and on-demand) were in the 18-24 age group, compared to just 8% who were 65 or older. On the flip side, only 9% of those who preferred a single multichannel video provider (with no on-demand) were in the 18-24 age group, compared to 25% for those over 65.

Cord cutters/nevers responded that they were more likely to prefer multiple services with on-demand video than other consumers. According to the survey, these cord cutters/nevers are also nearly twice as likely to prefer all video content to be from on-demand sources.

Rise of the Streaming Stick and Streaming Media Player

Bridging the gap between OTT, mobile devices and the TV are streaming media players and streaming sticks. These are peripheral devices with the primary function of pushing online and mobile video to a TV screen.

While the larger streaming media players often ship with their own remote controls, many also have the option of using the device's mobile app on a smartphone or tablet as the remote control. Most streaming sticks require a smartphone or tablet app to be used as the device's remote control.

The three headliners in the space are Apple TV, Roku's boxes and Google's Chromecast. SNL Kagan estimates Apple had cumulatively shipped 25 million Apple TVs worldwide as of Jan. 15, 2015. Roku had cumulatively shipped 10 million streaming media players in the U.S. as of Sept. 16, 2014. We estimate Google has shipped 13 million Chromecasts globally since their mid-2013 launch.

2007 2008 2009 2010 2011 2012 2013 2014 2015

Mar-07Apple TV

2010Netgear NeoTV

Jul-13Chromecast

Aug-13TiVo Roamio OTA

Sept-13Sony 4K Ultra HD Media Player

Oct-13Samsung Smart Media Player

Jan-14Nuvola

Apr-14Amazon Fire TV

Jan-15VUDU Spark

Mar-15Mohu Channels

Oct-14Amazon Fire TV Stick

Oct-12Roku Streaming Stick (HDMI)

May-08Roku

Nov-08WD TV

Selected streaming media players & sticks launch dates


Our comprehensive OTT aggregator database is available in Appendix B of this report.



Streaming media players, such as Apple TV, Amazon Fire TV and Roku, are physically larger than the thumb-drive-sized sticks. They connect to a TV via an HDMI cable, and to the Internet through either Wi-Fi or Ethernet. The TiVo Roamio streaming media player can be used as a DVR in conjunction with a pay TV subscription and allows up to 450 hours of HD recording. But unlike any of its competitors, the device requires a $14.99 monthly service fee to operate. The Mohu Channels media player offers the functionality of its competitors and also provides an antenna to receive broadcast TV signals.

Streaming media sticks are smaller than streaming media players and have garnered significant popularity since Google launched Chromecast in July 2013. A number of competing devices have premiered, including the Amazon Fire Streaming Stick, the Roku streaming stick, and the Vudu Spark. These devices connect to the HDMI port of an HD TV, and rely on Wi-Fi to stream content to a TV. Because streaming sticks rely on Wi-Fi rather than Ethernet, they are more susceptible to buffering delays and generally have less processing power than streaming media players.

tv vs.


Apple TV streaming media player vs. Google Chromecast

Selected streaming media players and sticks

Device name Company Selected content suppliers Free Premium Other features Device costLaunch date

Amazon Fire TV Amazon Netflix, Hulu Plus, Amazon Instant Video, HBO GO, YouTube

Yes Yes Gaming, dedicated gaming controller

$99.00 Apr-2014

Amazon Fire TV Stick

Amazon Netflix, Hulu Plus, Amazon Instant Video, HBO GO, YouTube

Yes Yes Voice control remote $39.00 Oct-2014

Apple TV Apple Inc. Netflix, Hulu Plus, HBO GO, HBO NOW, YouTube

Yes Yes Airplay $69.99 Mar-2007

Chromecast Google Netflix, YouTube, Hulu Plus, HBO GO Yes Yes Cast content from selected apps or browser

$29.99-$35.00 Jul-2013

Mohu Channels Mohu Netflix, Hulu Plus, YouTube, TED Yes Yes OTA incorporation $149.99 Mar-2015Netgear NeoTV Netgear Netflix, Hulu Plus, VUDU, YouTube Yes Yes Hundreds of channels $29.99-$59.99 2010Nuvola NanoTech Netflix, Hulu Plus, YouTube, M-GO,

Paramount PicturesYes Yes 4K streaming $299.00-

$949.00Jan-2014

Roku Roku Netflix, Hulu Plus, Amazon Instant Video, YouTube, HBO GO, Showtime Anytime

Yes Yes Motion control games $49.99-$99.99 May-2008

Roku Streaming Stick (HDMI)

Roku Netflix, Hulu Plus, Amazon Instant Video, YouTube

Yes Yes Motion control games $49.99 Oct-2012

TiVo Roamio OTA TiVo Netflix, Hulu Plus, Amazon Instant Video, Vudu, YouTube

Yes Yes OTA DVR $49.99 + $14.99/month (1-year commitment)

Aug-2013

Samsung Smart Media Player

Samsung Netflix, Amazon Instant Video, YouTube Yes Yes Linear TV pass-through $179.99 Oct-2013

Sony 4K Ultra HD Media Player

Sony Netflix, Sony Video Unlimited 4K Yes Yes 4K streaming $499.99-$699.99

Sept-2013

VUDU Spark VUDU VUDU Yes Yes VUDU only $24.96 Jan-2015WD TV Western

DigitalHulu Plus, VUDU, YouTube, SnagFilms Yes Yes Wide range of support

for local file formats$99.99 Nov-2008




Honorable mentions for prototypes stemming from Kickstarter campaigns include Mohu Channels, which incorporates OTA and streaming tech, and Matchstick, an inexpensive streaming stick based on Firefox OS.

Second-Screen Hype Subsides

According to a February 2015 SNL Kagan survey, nearly two-thirds (65%) of U.S. online adult respondents said they surfed the Internet while watching TV. But while multitasking is common, second-screen apps remain a small niche of this activity.

Most standalone second-screen apps, including leaders Viggle and Beamly, have yet to crack more than a few million active monthly users despite years of operation. And while the stand-alone second-screen apps struggle with a small, fragmented audience base, Twitter and Facebook have amassed hundreds of millions of unique monthly mobile users. Many venture capitalists have abandoned the space as the second-screen hype never materialized into the audience sizes advertisers need.

As a result, in the past couple of years, many second-screen services have either been acquired or changed their business focus. One early second-screen app, GetGlue, changed its name to tvtag, was acquired by i.TV, and was then shuttered, all within the span of a year. And even with backers including NBCUniversal Media and Viacom,

one of the more popular second-screen apps, Beamly (formerly ZeeBox), is in the midst of adjusting its business model and focus.

The only public company of the bunch, Viggle (a penny stock operating on a "going concern" basis) generated $22.3 million in 2014 revenue. Cash flow remains elusive, and revenue growth has not folllowed the hockey-stick curve investors might expect from a mobile company. We estimate Viggle monthly active users were fewer than one million at the end of 2014.

0

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Q12012

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Q32012

Q42012

Q12013

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Q32013

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Q12014

Q22014

Q32014

Q42014

Viggle revenue, Q1 2012-Q4 2014($000)




LTE Broadcast and ATSC 3.0 Update

While neither service is available commercially to the public, Verizon Wireless and AT&T Mobility have been actively experimenting with LTE Broadcast technology. Verizon showcased LTE Broadcast during the 2014 Super Bowl to an invited audience in Bryant Park, New York. AT&T also showcased its LTE Broadcast technology during the first-ever College Football Championship game on Jan. 12, 2015. Both Verizon Wireless and AT&T Mobility plan to commercially launch their respective LTE multicast services, and compatible devices, in the second half of 2015.

ATSC 3.0 is another proposed technology standard and the group behind it the Advanced Television Systems Committee expects the standard to move into candidate status in 2016. The standard would redefine broadcast spectrum to also enable two-way one-to-one connections in addition to broadcast one-to-many.

Mobile Video Technology Experts

Companies providing the technology behind mobile video streams (transcoding, hosting and streaming) grew revenue by 19.4% compared to 2013. It was a welcome turn of events after the floundering of KIT Digital, and its eventual bankruptcy, which muted the 2013 performance of the group. But the category as a whole is in sound shape. A bright spot is in international markets where OTT and TV Everywhere are in

earlier stages of adoption.

We estimate this group cracked a billion dollars in 2014 revenue, up from $860.3 mil. in 2013. MLB's MLB Advanced Media division tops our charts by revenue thanks to providing streaming services for several leading media properties including ESPN, WWE, CBS and most recently HBO NOW.

We estimate QuickPlay, which has focused heavily on international markets for several years, outgrew its competition in 2014 with an estimated 32% year over year revenue growth.

Mobile video technology experts by revenue, global, 2012-2014

Annual2012 2013 2014 chg.($M) ($M) ($M) (%)

MLB AM 277.5 356.8 442.0 23.9Brightcove (BCOV) 88.0 109.9 125.0 13.8MobiTV 69.4 75.0 88.5 18.0QuickPlay 45.0 61.0 80.5 32.0Envivio (ENVI)* 39.1 41.7 43.2 3.6Other 304.6 215.9 248.2 15.0Total 823.6 860.3 1,027.5 19.4* Fiscal year. 2015 SNL Kagan, a division of SNL Financial LC, estimates. All rights reserved.



OTT Library Analysis: Netflix, Hulu Plus and Crackle

Over-the-top (OTT) video services generate a lot of activity in the content-acquisition space, and have also increasingly moved toward producing original content. Our estimates show that Netflix's library of movies has gradually decreased over the past two years as Hulu Plus's has expanded. Although Sony's Crackle is a popular platform for long-form content viewing, we estimate that its library is quite small.

The three services rely on different models: Netflix is subscription-only; Crackle is ad-supported only; and Hulu Plus requires a subscription, but also shows ads. These differences, as well as the number of users, have an impact on revenue and thus the quality and amount of content each provides. The comparison is not apples-to-apples (especially with Crackle included), but does dig into a few quantitative characteristics of each library.

Whether its plan was to outright increase its content library or if that happened secondarily, Hulu Plus has shown impressive growth in the scale of its content. Through December

2014, movies available to Hulu Plus subs increased by 150.9% compared to December 2011, by 75.7% since December 2012 and by 44.2% since December 2013. Available TV series grew 138.7%, 66.2% and 28.3% over the same periods, respectively.

Hulu Plus library, Dec. '11 - Dec. '14

2015 SNL Kagan, a division of SNL Financial LC, estimates from company and industry data. All rights reserved.

lu Plus library,y Dec. 11 - Dec. 14

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Movies

Netflix, Hulu Plus and Crackle streaming catalog figures, Dec. 14

Netflix Hulu Plus CrackleMovies 6,558 6,223 113TV series* - 3,819 71* The number of seasons and episodes varies by series. 2015 SNL Kagan, a division of SNL Financial LC, estimates from company and industry data. All rights reserved.

Hulu Plus' movie catalog Dec. '14, yearly breakdownNumber of movies


mber of movies

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The total figures for Netflix's content library have consistently moved in the opposite direction as Hulu's. While there is movement on a month-to-month basis, the overall trend is clearly a negative one, with movies on Netflix's streaming service having fallen steadily, but gradually, over the past few years. From three years prior, the number of movies has dropped 35.4% through December 2014, 29.3% since December 2012 and 5.4% since December 2013.

Analyzing the estimated total library figures provides high-level insight into the general size of the collection, while the library's distribution by year is useful to understand its age. Netflix's movie library as of December 2014, for example, shows a distinct increase in the number of films for each year beginning in the mid-nineties, with the most populated year being 2012, for which there were 885 films. The median year for a film in the library is 2009.

Netflix movie streaming library, Dec. '11 - Dec. '14


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Netflix's movie catalog Dec. '14, distribution by year Number of moviesber of movies

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Documents

Economics of Mobile Programming