1. The Explosion of Digital Content and TV
Mike Grant, Partner
2 November 2009

2. Growth in content consumption is obvious across the media sector
The evolution of digital broadcast distribution systems have supported rapid expansion in TV content
over 5000 TV channels now available in Europe, increasing by ~200 annually
satellite is currently the leading means of receiving digital TV
advent of HDTV (and in future perhaps 3DTV) will drive demand for further capacity
Broadband underpins user access to content
number of European homes with broadband is similar to number with digital TV (~50% of all homes)
capacity of terrestrial broadband networks is increasing fast
distribution of video content over broadband is an increasingly viable alternative to traditional TV distribution systems
Number of HD channels in Europe
Unweighted mean downstream speed / price for residential fixed broadband access in Europe
Source: SES, 2009, Analysys Mason, 2009

3. Exponential rises in Internet traffic continues
Mobile (UK)
Fixed (Netherlands) 2 4 6 8 10 12 14 16
Oct 2007
Nov 2007
Dec 2007
Jan 2008
Feb 2008
Mar 2008
Apr 2008
Relative traffic growth
Total growth
Uplink
Downlink
105%
Source: Minnesota Internet Traffic Studies (MINTS)
Source: Hutchison 3G UK Ltd

4. The industry faces three major challenges
An explosion
of content
generation
Professional
Professional
Online
Online
Personal
Personal
Content
Content
content
content
UGC
UGC
media
media
production
production
Competition
in content
aggregation
Content
Content
aggregation
aggregation
Distribution
Distribution
Fragmentation
of consumption
STBs
STBs
PVRs
PVRs
Media servers
Media servers
Devices and
Devices and
consumption
consumption

5. Time spent on TV and Internet by Americans
PC/laptop Internet usage continues to grow as video consumption becomes more viable
Online video consumption
On average, UK users spend around 60 minutes per day online
27 million users downloaded 3.2 billion videos in June 2008
average monthly DSL traffic per user rose from 2.4GBin Q to 4.1GBin Q according to the Carphone Warehouse
online advertising grew 40% in 2007 to GBP2.8bn, 19% of the total market
Time spent online by the US Internet community grew 6% YoY in 2008
78% of downloaded videos in Dec 2008
Watching videos is a prime activity on the Internet:
Google served 5.9bn videos to 150 million US users
French Internet users watch in average 88 online videos per month
However, users are generally watching for only limited periods – “snacking”
Online video viewing habits
Time spent on TV and Internet by Americans
Germany
USA
Number of videos per person per day
3.9
3.2
Ave viewing time per video
4.1 mins
3.2 mins
Total viewing time per person per day
16.2 mins
10.2 mins
+4% y-o-y
+6% y-o-y
Source: Ofcom, comscore, Nielsen, 2008, company reports
Source: Comscore November and December 2008

6. ... but overall TV consumption remains strong
TV viewing figures remain robust
Users are adopting new services
TV viewing benchmarks
Source: Ofcom
Content watched by US users who stream video
Virgin Media VoD usage 0%
10%
20%
30%
40%
50%
60%
70%
80% TV
Movie
theatre
Portable
DVD
Mobile
phone
% of Viewers Feb
2008
2007 10 20 30 40 50 60
Q3/07
Q4/07
Q1/08
Q2/08
Q3/08
Q4/08
40%
42%
44%
46%
48%
50%
52%
54%
Average VoD
views per user
pcm
views pcm
(millions)
VoD users (% of
TV subs)
Source: Virgin Media

7. … and users still engage most in front of the TV
Main reasons for using media platforms
90% Relaxation
30% Relaxation
3% Relaxation
Source: Ofcom Media Literacy report May A survey of UK users

8. Web technology is set to transform the TV proposition

9. Initiatives such as Project Canvas will offer a new level of experience to TV viewers
Draft Project Canvas service structure
Source: the BBC/ Register

10. Project Canvas indicative screenshots:
Managing content choices and discovery on “Web TV” will be key competitive differentiators
Project Canvas indicative screenshots:
Source: BBC

11. The transitioning from dedicated value chains to horizontal platforms will accelerate
Games
Newspapers
Broadcast TV
Radio
Dedicated production, aggregation, distribution and consumption functions
Rights owners
Production
Aggregation
Distribution
Consumption
Traditional
Future evolution
Multiplatform production, aggregation, distribution and consumption functions

12. Adapting to change will be key to success
Likely to be valued by the market
Those who retain ownership of rights to premium content
Device manufacturers who control form factor and function and are able to create premium aggregation experiences
High street experience and device distributors
Content aggregators who offer a compelling search and discovery experience that consumers want
Likely to be disintermediated or commoditised
Players with only content transport assets
Broadcasters with linear only propositions
Players reliant on sales of physical media
Disney recognise this and are reshaping their business.
As barriers to entry fall, the media industry is likely to shrink in size. Those who adapt to the new world will prosper

13. Analysys Mason Limited Bush House, North West Wing Aldwych
Dr Mike Grant
Analysys Mason Limited
Bush House, North West Wing
Aldwych
London WC2B 4PJ, UK
Tel: +44 (0)
Fax: +44 (0)