TV & Media 2013 Report Identifying the needs of tomorrow’s video consumers

Ericsson ConsumerLab Anders Erlandsson Niklas Heyman Rönnblom Atli Ericson

Key findings › The growing importance of Mobile devices in the TV Media space

› Even late adopters are becoming advanced › The birth of aggregated, pick-and-mix TV solutions

Source: Ericsson ConsumerLab TV & Media 2013 Study

TV Media 2013 Study, Short Presentation | Commercial in confidence | © Ericsson AB 2013 | 2013-09-09 | Page 2 (20)

Ericsson ConsumerLab annual research

100,000 RESPONDENTS

REPRESENTING

1.1 billion PEOPLE

MORE THAN

40

COUNTRIES

TV Media 2013 Study, Short Presentation | Commercial in confidence | © Ericsson AB 2013 | 2013-09-09 | Page 3 (20)

15

MEGACITIES

STUDIED

Representing >550 Million consumers

Expert interviews › Niclas Ekdahl, CEO Viaplay › Jose Raimundo Lima, Technical and Operations › Kjell Häglund, Chief Editor Executive Director, SBT DGC & Weird Science › Suzanne Stein, Ass. Prof. › Dante Compagno Neto, OCAD University Toronto & Head of TV Business, GVT Foresight Expert 2020 Media Futures Project

Qual: 30 in-home interviews (Sao Paolo, Seoul, Stockholm & New York) Quant: ~15 000 online interviews (1000/country) + booster for age 60-69 (Brazil, Canada, Chile, China, France, Germany, Italy, Mexico, Russia, Spain, South Korea, Sweden, Taiwan, UK, US) Source: Ericsson ConsumerLab TV & Media 2013 Study

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Traditional TV Habits Consumer TV/Video Consumption on a more than weekly basis 100% 90% 83% 80%

79%

83%

Scheduled broadcast TV

27%

DVD/Blu-ray etc.

15%

Pay-per-view

70% 60% 50% 40% 30%

31%

30%

20% 10%

15%

17%

0% 2011

2012

2013

Physical media continues its downward trend, while pay per view and scheduled broadcast viewing remains fairly stable BASE: Extended 9 markets (US, UK, Germany, Sweden, Spain, China, Taiwan, Brazil & South Korea), [Showing more than weekly usage] Source: Ericsson ConsumerLab TV & Media 2013 Study

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On-Demand Habits Consumer TV/Video Consumption on a more than weekly basis 100% 90% 80% 70%

61%

62%

63%

36%

31%

60% 50%

47%

40% 30%

38% 35%

29%

20%

Streamed on-demand/time shifted TV & Video incl. YouTube Own recorded broadcast TV Downloaded Movies & TV shows

10% 0% 2011

2012

2013

Streaming and YouTube viewing grows, while recorded broadcast TV and downloaded content looses momentum BASE: Extended 9 markets (US, UK, Germany, Sweden, Spain, China, Taiwan, Brazil & South Korea) [Showing more than weekly usage] Source: Ericsson ConsumerLab TV & Media 2013 Study

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Late adopters catch on… Stream on-demand/time shifted TV & Video incl. YouTube, more than weekly 100% 80%

75%

75%

71% 60%

60%

48%

40%

40%

41%

40%

20%

2011

0%

2013 16-19

20-24

25-34

57%

35-44

“the computer and the internet is a natural part of my TV and video consumption habits”

45-54

55-59

60-64

65-69

“I want to decide when to watch something rather than following a schedule”

+24% increase from 2011 to 2013 amongst late adopters

BASE: Extended 9 markets (US, UK, Germany, Sweden, Spain, China, Taiwan, Brazil & South Korea), [Showing more than weekly usage] Source: Ericsson ConsumerLab TV & Media 2013 Study

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From Sunrise to sunset… 85%

Watch any type of TV & video content at least several times a week … 55%

49%

35%

28%

23% 9%

16%

15% 6%

11%

People using TV (PUT)

Traditional linear TV curve Prime time appointment viewing

Breakfast background TV

Prime access Emerging TV curve background TV, (advanced viewers) zapping, and Late night impulse viewing impulse viewing Morning

Noon

Afternoon

Early evening

Evening

BASE: All 15 markets Source: Ericsson ConsumerLab TV & Media 2013 Study

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Night

Mobile viewing Increases Average hours watching video on each device per week TV-screen 2013 TV-screen 2012 Desktop computer 2013 Desktop computer 2012 Laptop 2013

42% of the respondents use the Laptop, Smartphone or Tablet to watch TV/Video outside the home on a weekly basis

Laptop 2012 Smartphone 2013 Smartphone 2012 Tablet 2013 Tablet 2012

At home

Other screen 2013

Away from home

Other screen 2012

0

2

4

6

8

10

12

14

16

18 hours

72% use mobile screens for video viewing each week BASE: Extended 9 markets, [Those who have and use respective device] Source: Ericsson ConsumerLab TV & Media 2013 Study

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second screen usage I use secondary device (e.g. smartphone, tablet or laptop) while watching TV in order to … (Showing at least weekly usage among those who rank a viewing type as very important (7 on a 7-graded scale)) Read email while watching TV/video content

75%

63%

Use apps or browse the Internet to kill time, not related to the content I am currently watching Use apps or browse the Internet to find out more information about the content I am currently watching Use social forums at the same time as watching TV/Video content Discuss the TV/video content that I am currently watching with others online Watch two or more programs, live events or shows at the same time

68%

56%

66%

49% 55%

40%

49%

29%

44%

25%

Compete with others watching the same show

14%

Watch the same program or show from two different camera angles

14%

Interact with the show through voting

13%

Live betting on a sports event at the same time as you are watching

13%

27% 27% Live TV Event Junkies

27% 24%

TV Sport Fans TV Serie Aficionados Movie Buffs

People who value live event and sport viewing are generally much more active using secondary devices while viewing BASE: All 15 markets, [Left graph showing weekly or more usage among all consumers. Right graph showing weekly or more usage amongst those who answered top 1 on a 7-graded scale: “I agree completely” to the questions (from top to bottom above): “Being able to watch live events other than sports is very important to me”, “Being able to watch live sports is very important to me”, “Being able to watch good TV-series is very important to me” and finally “Being able to watch good movies is very important to me”] Source: Ericsson ConsumerLab TV & Media 2013 Study

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The UGC explosion

82% use YouTube or similar services at least monthly Long viewing on large screens

Short fragmented mobile viewing

Reliable and trustworthy

User Generated Content

Something for everyone

If I needed to know something, I’m going straight to YouTube, straight to Do-It-Yourself… YouTube is great because it’s raw [unbiased] content… and they show you actually, physically [how to do it], so I think that’s pretty cool. Chase, 24, New York, USA Source: Ericsson ConsumerLab TV & Media 2013 Study

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Prosuming TV & Video Consumer are treating content as they please, pickingand-mixing their own versatile TV/video solution Sports & Live events

TV-Shows Series

New movies

Play streaming

Linear TV DVR

Older movies

T-VOD/ PPV S-VOD

Pirate streaming

Illegal downloading Legal downloading

(Example showing some common associations between source and type of content)

Consequences It isTV going be ingredient the viewers’ market moreand than the producers’. › lock-in binding time avoidance › Linear is justtoone Kjell Häglund, DGC & Weird Science, Sweden › Replaced or reduced large bundles › Quality content is very important Source: Ericsson ConsumerLab TV & Media 2013 Study

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Cord cutting/shaving Cord shaving & cutting phenomena is increasing Thinking back one year have you change your managed TV package?

7

7

11

21

19

12

65

58

Extended 9 markets - 2012

Extended 9 markets - 2013

› US: Increase 24%, Reduced/eliminated 25% › Germany: Increased 9%, Reduced/eliminated 26% › China: Increased 30%, Reduced/eliminated 8% BASE: Extended 9 markets (US, UK, Germany, Sweden, Spain, China, Taiwan, Brazil & South Korea) Source: Ericsson ConsumerLab TV & Media 2013 Study

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Increased No change Reduced Eliminated it

The Impact of on demand Subscription-VOD services › Easy to add to existing setup › Inexpensive, easy and fun to use › Available across devices › Easy to share

Transaction-VOD services › Not part of the everyday TV setup › Avoided due to high cost › Only used for specific content › 24 hour viewing limit is a barrier

S-VOD is changing the traditional role of linear TV Relaxed viewing

We’re pimping out Appointment our Netflix viewing password across town. Ha ha! Naomi, 28, US

Linear TV VOD Source: Ericsson ConsumerLab TV & Media 2013 Study

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Piracy losing ground 40%

Spain

When you watch on-demand video, which services do you use?

35% 30%

25% 20% 15%

10% 5%

File sharing

20 percentage points

2011-2013

0%

Base: Spanish on-demand (streaming & downloading content) users (606 users out of 1000)

60% 50% 40% 30% 20% 10% 0%

Base: US on-demand (streaming & downloading content) users 508 users out of 1000)

* The highlighted services are related to piracy one way or the other BASE: Spain & US [Watch streamed movies, streamed TV-programs/TV-series or downloaded movies or TV-series at least several times a month] Source: Ericsson ConsumerLab TV & Media 2013 Study

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US

Important services 2013 The most important services/options when it to how consumers want their future TV/Video experience

1. 2. 3. 4. 5.

Free from ads/commercials Excellent quality (HD quality) Time shift/On demand Usability, super simplicity À la carte TV/Video content 6. 7. 8. 9. 10. 11. 12. 13.

Top 5

Extreme quality (4K/UHDTV) Push to see the content best suited for you My TV/Video content on all my devices Internet on my traditional TV screen Theatrical releases directly in the TV One search, watch and pay interface Advance on online video search 3D TV 14. 15. 16. 17. 18.

Personalizable TV Screen info Video telephony Access Apps on traditional TV screen Watch different camera angles Interactive TV

BASE: All 15 markets Source: Ericsson ConsumerLab TV & Media 2013 Study

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Bottom 5

Willingness to pay 2013 Compared to 2011

Which of the following features/services do you consider worth paying for? Excellent quality (HD quality)

Top 5

35%

Free from ads/commercials

30%

Time shift/On demand

27%

Extreme quality (4K / 4xHD)

25%

À la carte TV-/video content

22%

3D TV

19%

Theatrical releases direct on the TV

17%

+3% 14% +1% 13% +5%

Access Internet on your traditional TV screen

17%

Usability, super simple interfaces My TV-/video content on all my devices Adv. online video search (actors, scenes....)

12%

Video telephony

10%

Interactive TV

10%

Push to see the content best suited for you…

Bottom 5

Personalizable TV-screen info (Apps,… Accessing/watching different camera angles…

+3%

9%

Access Apps on your standard TV screen One search, watch & pay interface for…

+1%

8% 6% 5% 4%

BASE: Extended 9 markets (US, UK, Germany, Sweden, Spain, China, Taiwan, Brazil & South Korea) Source: Ericsson ConsumerLab TV & Media 2013 Study

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+2%

+3%

One personalized experience Consumers are looking for one super simple, convenient, experience aggregating their TV and video Be up to date and flexible Aggregate services sources and content Aggregate interface and navigation

Aggregate discovery and recommendations Preferably one easy, individualized video experience/solution

Aggregate payment and billing

I don’t think that the mass market will tolerate less than having it all in one, or at the most two, different services. Niclas Ekdahl, CEO Viaplay Source: Ericsson ConsumerLab TV & Media 2013 Study

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Key findings The growing importance of mobile devices in the TV Media space › 72 percent use mobile devices (smartphone, tablet or laptop) for video viewing at least weekly and 42% do it outside the home › 75 percent multitask by using mobile devices while watching TV and 1 in 4 watch multiple video sources at the same time Even late adopters are becoming advanced video users › 41 percent of the 65-69 year olds in the study watch streaming on-demand/time shifted TV and video content, including YouTube, on a more than weekly basis The birth of aggregated, pick-and-mix TV solutions › À la carte TV Video content is ranked as the fifth most important aspect of the TV and video experience › The quest has begun to become THE easy-to-use, à la carte TV solution that aggregate the consumers TV & Video needs Source: Ericsson ConsumerLab TV & Media 2013 Study

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