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Copyright ® 2011 Rovi Corporation
Jim Taylor
Chief Technologist, Rovi Corporation
MEDIA-TECH Las Vegas, March 2011
Transitioning from Physical to Electronic Content Delivery
Copyright ® 2011 Rovi Corporation
Digital Content Spending
• Among US consumers spending money on mobile music or books, digital content is closing in on 50%
- Music downloads: $13.31
- CDs: $17.94
- E-book downloads: $15.34
- Paperbacks: $20.23
― Source: Bango TNS Omnibus Survey, January 2011
Copyright ® 2011 Rovi Corporation
Mobile Video traffic
• Mobile video traffic will exceed 50 percent for the first time in 2011.
• 2015 global mobile data traffic (75 exabytes) will be equal to 19 billion DVDs.
– Cisco Systems
Copyright ® 2011 Rovi Corporation
Web-Connected TVs
• Worldwide broadband-enabled TV households will grow from 130 million in 2009 to over 360 million in 2014.
• Active connected TV households will grow from 40 million (30%) in 2009 to 170 million (44%) in 2014.
– TDG
Copyright ® 2011 Rovi Corporation
Streaming TV
• 180 million users (85% of all US Internet consumers) watch online video each month
- 200 videos per person and around 13 hours per month.
- Why watch TV on Internet? • 70% - missed TV episode
• 57% - convenience
• 56% - watch old episodes
• 42% - less advertising — Comscore
• Number of people streaming a TV program increased to 41% in Q4 2010, up 3% from the same period in 2009
— Interpret
Copyright ® 2011 Rovi Corporation
Streaming Movies
• Netflix hit 20M subscribers in Jan 2011 and is passing Comcast (23M) to become the #1 video subscription service in the US
- One third of new subscribers choose $7.99/month streaming-only plan
- Netflix’s share of movies downloaded or streamed reached 61% between January and February 2011, followed by Comcast at 8%, and a three-way tie for third at 4% among DirecTV, Time Warner Cable, and Apple
• For comparison, Pandora has 75 million listeners
—NPD
Copyright ® 2011 Rovi Corporation
Will Packaged Media Die?
• Yes …
• … but not nearly as soon as pundits say.
• Music downloading began around 1995, and it has taken 15 years for it to account for half the revenue of CDs
Copyright ® 2011 Rovi Corporation
Bits on Discs Bits in Clouds
1980 1990 2000 2010 2020 2030
CD
DVD
BD
Online music
Online movies
Copyright ® 2011 Rovi Corporation
Online Video is Hot
• But…
• It still represents a fraction of home video revenue
• Few companies are making money on it
• Electronic sell-through (EST) and rental (replacements for DVD and BD) lag far behind subscription
- Although low subscription prices may be unsustainable
Copyright ® 2011 Rovi Corporation
Barriers to Success of EST
• Fragmented and incompatible solutions - iTunes, Xbox, PlayStation Network, CinemaNow, Vudu, etc.
• Reliability and ease of use vary wildly
• Consumer perception of high prices
• No disc-like experience -Menus, chapters, extras, subtitles, audio tracks, interactivity
Copyright ® 2011 Rovi Corporation
DECE/UltraViolet
• Global brand for digital content, similar to DVD and Blu-ray
• Centralized rights locker for multi-user accounts to purchase content from many retailers for download and streaming to many devices, plus physical media options
• Standards to facilitate participation of content providers, retailers, DSPs, DRMs, and devices
• 70+ member companies
Copyright ® 2011 Rovi Corporation
Comparison
Blu-ray UltraViolet
Author Encode, author, AACS
($/title)
Encode, package, encrypt
($/title)
Produce Replicate ($/disc) N/A
Distribute Ship, warehouse, return Files to DSPs
“Shelf space” Shrinking Unlimited
Purchase Disc in store or by mail “Rights” in store or online
Rent Disc in store or by mail Not yet
Watch instantly Not possible Stream or download
Watch (offline) Blu-ray player UV player; must download first
Quality HD, multichannel audio HD, multichannel audio
Extras Extensive Not yet
Online updates BD-Live Not yet
3D <100 titles Not yet
Copyright ® 2011 Rovi Corporation
Delivery Chain
Packag
ed
O
nlin
e
Multi-format authoring
DVD/DVD conversion
Manufacture on
demand (MOD) eCopy
Copyright ® 2011 Rovi Corporation
Delivery Chain
Packag
ed
Manage Assets
Encode
Author
Master
Replicate
Duplicate
Distribute
Warehouse
Return
Display
Package
Copyright ® 2011 Rovi Corporation
Delivery Chain
Packag
ed
O
nlin
e
Manage Assets
Encode
Author
Master
Replicate
Duplicate
Distribute
Warehouse
Return
Display
Package
Manage Assets
Encode
Author
“Master”
Distribute
Display New formats
CDN
(direct to consumer)
Virtual storefonts
Copyright ® 2011 Rovi Corporation
Conclusion
• It will take more than a decade to shift mainstream from physical media to online
• Technology transitions take much longer than most people think
• Consumers are crossing the same bridge -DVD and BD players won’t disappear (consider in-car DVD)
• Online delivery is growing fast but is still a niche
Copyright ® 2011 Rovi Corporation
Change Happens
• Embrace or be extinguished -Consider the effect of laser printers on printing business
• The industry will change, but content will still flow
• Physical and online will co-exist
• Plan for a tough transition -Survive at the top of old businesses
-Ramp up new businesses
-Become a co-dependence enabler