© 2005 Accenture All Rights Reserved. December 2007 Video 2.0: Transition from Broadcast to the Internet

2 © 2005 Accenture All Rights Reserved. AT&T has done outstanding job setting “Three Screen” vision

3 © 2005 Accenture All Rights Reserved. …but how close are they to realizing that vision?

4 © 2005 Accenture All Rights Reserved. Most IPTV are still at the early stages. So why hasn’t IPTV been successful? BT AT&T (Lightspeed) Swisscom Telenor Korea Telecom Bell Canada Telmex Brasil Telecom Telecom Austria Reliance Infocomm Bharti T-online (Germany, France, Spain) Qwest Singtel ADC (Thailand) Telemar Wind … Fastweb CTI (Hong Kong Broadband) Homechoice (now part of Tiscali) Sasktel Softbank Versatel Telefonica Neuf Belgacom Noos France-Telecom Magline Chunghwa Telecom Telecom Italia Verizon KPN Manitoba Telecom Services (MTS) SMG + China Telecom /Netcom AT&T Homezone Teliasonnera PCCW 1 Free 2 In a “Technical” or “Market” Trial (100s – 1000s of “friendly” trialists) Commercially Launched (most > 20,000 subscribers) Commercially Launched at Scale > 500,000 subscribers * Sources: Company websites, Gartner, MRG, Accenture Analysis. Data as at Sept 2006 * Note: 500,000 customers is still small by broadcaster standards 1 608,000 customers announced in Sept million “IPTV capable” subscribers … actual number of paying customers estimated at 300k

5 © 2005 Accenture All Rights Reserved. Typical Communications Service Provider (CSP) view of IPTV based on NG Broadcast TV and VoD over IP...but are they solving the wrong problem?

6 © 2005 Accenture All Rights Reserved. Accenture research shows that consumers around the globe are looking for new ways and want more control over they consume their video Source: Accenture Global Digital Home Consumer Survey, April-May 2006 (n=10,171)

7 © 2005 Accenture All Rights Reserved. Over-the-top Video on Demand (VoD) could capture much of the on-demand market

8 © 2005 Accenture All Rights Reserved. China 82% United States 36% Canada 40% United Kingdom 32% Italy 46% Germany 20% Japan 39% South Korea 43% Our research shows significant numbers want to create and share their own content creating huge opportunity for user generated content Source: Accenture Global Digital Home Consumer Survey, April-May 2006 (n=10,171) Want to create/share own content (% respondents) Global Average = 44% Taiwan 68%

9 © 2005 Accenture All Rights Reserved. New devices and rip-and-go models allow us to distribute media within the home and take our content with us

10 © 2005 Accenture All Rights Reserved. DRM is not dead –biggest problem is the user experience, not interoperability, not features –people hate overt DRM User experience is derived from content owner contracts and until they change, DRM will be intrusive… which is bad for business Cost of licensing content may be too high for distribution firms to profit and drive appropriate volumes Content owners can change prices and usage terms, but they seem unwilling to do that at this time – concerned about longer term value erosion Content owners may be betting on HD-DVD and Blu-Ray as a vehicle to lock down content and keep prices at legacy levels per unit Apple has sold more than 2B songs at 99 cents but made limited if any margins Standards consortia talk about interoperability… but are they a vehicle to monetize IP for DRM IP owners… Can the value chain afford them? Perhaps the biggest question is what will happen with DRM and how will that effect the business model?

11 © 2005 Accenture All Rights Reserved. Mobile video provides ubiquitous access to content Hutchinson Hi3G 3-D Games Video Content and Services Music

12 © 2005 Accenture All Rights Reserved. Time and place shifted will change the way we “experience” video

13 © 2005 Accenture All Rights Reserved. Search/Recommendation is required to help the consumer find content in an exponentially expanding world of content

14 © 2005 Accenture All Rights Reserved. We are quickly seeing a rise in programmable rich media/video interfaces being exposed to the Web 2.0 world – enabling a whole new set of applications Source:

15 © 2005 Accenture All Rights Reserved. The race to deliver “Three Screens” is on… Consumer Electronics Portal Software Provider Service Provider