OTT Reaching Maturity

JUAN RAMON ZARCOMANAGING DIRECTOR

SILICON VALLEY VENTURES GROWTH PARTNERS LLPJRZARCO@SVVGP.COM

Introduction

Netflix aggressive international expansion – more subscribers

Other Content Providers Entering the Market Market niches by smaller OTT providers FCC opening the door for more OTT content via cable box OTT market is reaching maturity with more entrants, more content, and greater

diversification Strong marketing and content needed for survival

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Netflix 3

Netflix 2 – Margins Stabilized 4

Netflix 3 - International 5

Strong U.S. currency, inelastic subscriber fees (<U.S.), less localized content

Netflix - 4

“From today onwards, we will listen and we will learn, gradually adding more languages, more content and more ways for people to engage with Netflix. We’re looking forward to brining great stories from all over the world to people all over the world.”

CEO Ed Hastings.

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But New Entrants, Inflexible Business Model, Infrastructure Netflix charges US$10 a month internationally, requires credit card

There are now 2,571 fewer titles; that is a 33% drop in the number of movies and 25% fall in TV shows.

HBO Crackle (SONY) Hulu Comcast Amazon with its Cloud system, AWS, offering monthly content and infrastructure

advantage Google? Apple? China – Youku, iQiyi Independent Operators

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Independent Operators and Content OTT-Platforms

Vimeo, TAPP Pivotshare

Content

Hungry Monk Yoga (US$15/Month) Chris Cox Horsemanship

(US$20/Month)

OASLife (US$20/Month) Zombie Go Boom (US$5/Month)

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Amazon Entry and Infrastructure Costs US$99.00 per year Downloadable Content for later viewing $8.99 per Month for Video, $10.99 per month for Amazon Prime (Books,

Videos) As of December 2014, Amazon Web Services operated 1.4 Million servers

across 11 regions and 28 availability zones Compare Netflix and, based on the 3-cents-per-gigabyte assumption, it

costs Netflix about 6 cents to deliver one SD movie and 9 cents to deliver one HD movie. Those numbers would be about 25% lower if the length of the movie were 90 minutes instead of 2 hours. It would also be a little lower or higher depending on the exact bitrate, since some movies are streamed higher and some lower, and Netflix only has about 400 movies available in HD. Netflix uses about 1,000 of the storage systems with CDN. Note that Netflix uses AWS for storage and distribution.

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Regulatory Changes

Cable set Boxes

President Obama lobbying with the FCC to open up cable boxes to other content providers (April 15, 2016)

Impact to co-ax and satellite providers to open up their boxes to Netflix, Google, Apple, etc.

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U.S. Media Consumption 11

The Big Whale - China 12

Mobile is Critically Important 13

U.S. Market Saturation

Amazon has substantial infrastructure advantage over Netflix Netflix reducing the number of titles International market opportunities exist but local competitors and

localized content and business process must conform Competition for each U.S. consumer’s 11 hours per day is finite Margins will shrink, content will be more fragmented

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Juan Ramon Zarco Managing Director

Silicon Valley Ventures Growth Partners llp jrzarco@svvgp.com

thank you!köszönöm!