1. VOD: a new opportunity for independent distributors? Jean-Marie Le Guen NPA Conseil, Europa Distribution Conference, Estoril, Portugal, November 21st 2008 jmleguen@npaconseil.com

2. Why use VoD for movies? European Cinema metrics: 30.000 screens in 31 countries, 980 screens/country… but concentrated in urban areas: the untapped market is still big 2 admissions/ inhabitant/ year…directly related to density of cinema screens, compared to several hours a day of media consumption (radio, TV, books) 9.000 movies or 300 movies/ country/ year on average half of which are US: difficulties for european independant cinema to reach the audiences Distribution of copies: US blockbusters are more accessible and marketed, difficulties for European independent distributors to get access to cinema complexes where films get more exposure and word of mouth, smaller cinema theaters vie for US blockbusters too 80% of total admissions for a movie achieved in week 4 in France (CNC data) but movie lifecycle longer for European movies than US  Cinema screens remain at the heart of the movie industry but there is a need to find other means to reach the public

3. Advantages of VoD VoD is getting attraction because consumers benefit from it. The industry is jumping on the bandwagon.  Availability Digital networks are gaining momentum all over Europe (IPTV, ADSL, Cable, Satellite and…DTT)  Diversity 338 VoD services in 24 european countries as of june 2008, operated by TV channels, Telecom operators, Independent distributors and producers, Internet pure players…  Choice Catalogues from a few titles to over 2.000 movies  Opportunity Existence of VoD players with a knowledge in content promotion and movie marketing

4. What about online piracy? Though US Blockbusters and TV series are the most pirated contents, European cinema economy is most at risk (limited financial robustness) Digital piracy only increases the scale of copyright infrigement, but offline piracy exists Industry-wide initiatives at the forefront of the battle against piracy:  Government led initiatives to foster cooperation (Accords de l’Elysée in France, MoU on piracy in the UK…)  Need for new players to monetize their VoD services (ISPs, User Generated Content sites)  Emergence of new copyright protection means (Fingerprinting) A 5-steps process:  Increase in the availability of works (digitalisation, rights releases…)  Development of user-friendly services (DRM interoperability, portability, pricing and business models)  Education of the public on the consequences of piracy  Warnings to infringers  Sanctions Piracy will not disappear but eventually decline as the industry proposes legal, attractive alternatives

5. What is the market for VoD? Digital presence improves exposure of movies when launched simultaneously with DVD (Day&Dates) VoD may provide return rates of 60-70% compared to 20-30% for traditional video (Warner estimates, US Day&Date tests) Data on the French market: VoD market almost doubling each year to 50-60M€ in 2008 VoD= 3,5% of total video market in first 6 months of 2008 Top 30 movies generate 22% of total market value on VoD compared to 48% in theaters (2007 data, CNC, GfK, NPA) Subscription VOD attracts 25.000 new customers/ month (5€/month for unlimited consumption) Ad-funded model gets attention and needs to be stabilized CinemaDVDVoD Value share of french cinema in consumption44,6%17,1%25,6% Share of french cinema in offer43%-40% Sources: Cinema: CNC data for 2006, DVD: CNC-GfK data, VoD: NPA Conseil-GfK

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