2. Overcoming IPTV Challenges Opportunities and Advantages Create Momentum To Overcome Adversity Ken Lowe VP Strategic Marketing Sigma Designs, Inc.

3. 3 US Video Market Potential US Households & Subscribers –US Households: 116M –TV Households: 112M –PayTV Subscribers: 97M * Data based on 2006/2007 census and estimates Income & Expenditures –Median HH Income: $ 48.2K –H/H Income >$100K: 19.2% –Avg PayTV Cost: $60/mo

4. 4 TV Service Operator Mix Key Trends Emergence/growth of telco (IPTV) services Emergence/growth of triple-play services

5. 5 Service Crossovers

6. 6 Major Feature Trends Trends Portend a Paradigm Shift High Definition Whole Home DVR Wider Media Choices

7. 7 High Definition Enables expanded quality and capability –Large screens with life-like image quality –Multi-channel viewing, mosaic browsing, web portals Requires 5X more bandwidth per channel Broadcast Forces a tradeoff of HD or quality against the number of channels IPTV Enables an unlimited number of channels for the bandwidth of one.

8. 8 Whole Home DVR Matches program choices to viewer time windows Currently a US market phenomenon Requires multiple simultaneous channels Broadcast Requires one tuner per simultaneous channel recorded (or viewed). IPTV Can record as many channels as bandwidth allows.

9. 9 Wider Media Choices Video-On-Demand (VOD) – expanding home theatre concept with premium content. Over-the-top-Internet (ala YouTube) – expanding the Internet TV concept. Home Media Center (photos, music, video) – expanding TV as an access portal concept. Broadcast Requires second mechanism with IP like capabilities. IPTV Unifies access and display of all media types.

10. 10 CPE Evolution High Definition Television Media Processor SoC Client Software Hard Disk Memory Video Decoding (H.264, VC-1, MPEG) Graphics Acceleration Audio Decoding Input & Security Control Host CPU Display Output Control IO Ports Modems & Tuners

11. 11 Network Evolution Telco Voice Delivery Low Speed 2-way Phone Network Data/Packet Delivery High Speed 2-way IP Network Video Delivery High Speed 1-way Broadcast System Cable Satellite Terrestrial

12. 12 Broadcast Advantages/Issues Bandwidth: currently sufficient for well over 100 channels with some SD and HD mix Infrastructure: currently passes > 100M homes Incumbancy: widespread usage & comfort Cable Issues: –Gracefully addressing trends (HD, DVR, Media Types) –Movement to DOCSIS 3.0 and Tru2way – new infrastructure Satellite Issues: –One-way medium … uncertain solutions for new media types and no opportunity for triple play offerings.

13. 13 IPTV Advantages Channel Selection: –Enables unlimited number of channels –No trade-off with HD or QoS IP Protocol Advantages: –Instantaneous channel changing (tiered servers) –Enables all-IP services integration Simultaneous Channel Access w/o Cost: –Enables multiple channel viewing –Enables near limitless DVR recording

14. 14 IPTV Challenges Consumer education and demand development Innovative service offerings – multiview, etc. Cable adoption … broadcast to IP transition –Movement to DOCSIS 3.0 enables/accelerates IPTV –Increased investment (>$13B/yr currently) Telco coverage … more homes passed –AT&T now … Verizon poised …others needed –Large continuing infrastructure investments Telco bandwidth expansion –Need 5-8 Mbps per TV per room serviced for HD

15. 15 Conclusions Video Service is a Large Revenue Opportunity but Triple-play Service Will Be Larger IPTV Offers Many Advantages and the IP Network Phase is Just Beginning IPTV Will Eventually Become The Dominant TV Delivery Method … Shared By Telco and Cable

16. 16 Question & Answer Q & A

17. Thank You