CONNECTED TV HITS HOME THE IMPACT OF CONNECTED TV ON THE MEDIA

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CONNECTED TV HITS HOME: THE
IMPACT OF CONNECTED TV ON
THE MEDIA INDUSTRY

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Connected TV Hits Home: The Impact Of Connected TV On The Media Industry

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Connected TV Hits Home: The Impact Of Connected TV On The Media Industry

Connected TV Hits Home: The Impact of Connected TV
on the Media Industry
Shirlene Chandrapal - Director of Yahoo! Connected TV Europe - Yahoo Europe
Gidon Coussin - Co-Founder & VP of Global Business Development - Boxee, Inc.
Lesley Mackenzie - Group Digital Officer - LOVEFiLM.com
Jim Packer - Co-President - MGM Worldwide Television Phd
Vassilis Seferidis - Director, European Bus. Dev. - Samsung Electronics Europe
Moderator: Kate Bulkley - Columnist & Media Commentator

Kate Bulkley
Good morning and thank you for coming to this Impact of Connected TV on the Media Industry
panel. I’m Kate Bulkley, I’m an Independent Journalist, based in the UK and I’m here to
moderate this session.

This is going to be an interesting session, I don’t know how many of you were here for the MSN
Video session but one of the topics that came up was, “What’s happening with connected
devices, will MSN be on connected devices?” and they were all saying “Well yes, we’re not sure
exactly, but we’re looking at an iPad app and we’re looking at Samsung and Sony Television.
So clearly, everyone who has content is trying to figure out what to do about connected TVs
and connected devices.

In fact 2010, as I understand it, will be the year when the majority of TVs will be sold with some
kind of connection in the back, so that they can be actually connected to the internet. So we’re
blurring the lines basically between television and the internet, something that’s been going on
for a while, but it’s really going to, I’d say gather pace.

So that’s really what we’re going to be talking about here on this session, we’ll be talking about
the impact of Google TV, you know what Samsung is doing, what Sony’s doing, what the iPad
is doing to us all. Life is certainly getting more complicated, for anybody who has content, for

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Kate Bulkley (continued)
Producers, for Owners. There’s also more opportunities, however, to get to audiences in
different ways. So we’ll talk about the pros and cons of that and how to best do it. And what I
like about this panel is we’ve got really an array of people that are offering you new avenues to
get to consumers and audiences.

So I’m going to introduce them and then we’re going to basically use some topics, talk about
some things and then I’ll come to Q&A with you guys in the audience.

To my immediate left is Vassilis Seferidis, he is the Director of European Business
Development for Samsung, which of course as you know is a large manufacturer of television
sets. Next to him we have Gidon Coussin, he is the Co-Founder of a company called Boxee,
which you may not have heard about, I think it’s gotten a little bit more profile in the US. But
they are a player that’s starting to launch. I think you’re launching, what, at the end of the year?

Gidon Coussin
November.

Kate Bulkley
November and he is also Vice-President of Business Development, so this is the man who’s
doing it. Next to him we have Shirlene Chandrapal. She is the Director of Yahoo Connected
TV Europe right?

Shirlene Chandrapal
Indeed.

Kate Bulkley
Yes and next to Shirlene we have Lesley Mackenzie. Lesley Mackenzie is Group Digital Officer
of a company called LOVEFiLM, which is based in the UK but is also part owned by Amazon.
For those of you that come from the US, it’s kind of the Netflix of Europe. And last but not least
we have Jim Packer. He’s the Co-President of MGM Worldwide Television and MGM, as you
all know, has a big library. Jim tells me he has 4,000 movies and 10,000 series titles. So he

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Kate Bulkley (continued)
has a lot of content. So he’s what I call our content guy on the panel, with all these people who
are trying to get to audiences in different ways.

So to start, Vassilis, you know, let me ask you a question. I know you’re going to present some
slides as well, so you may hop up but, let’s talk about sort of the status quo. You know, where
are we in terms of connected TVs? How many are there now? How many do you think there
will be?

Vassilis Seferidis
So the connected devices are becoming increasingly sort of popular. We have launched a lot
of them in Europe. I’ve give you some data in my short slides.

A key sort of issue here is that, we stopped using the connected TV as a term right and we use
smart TV and that’s mainly because connectivity is something that we use also in the home,
sort of networking environment, where as smart TV refers very much to them applications and
so many other things that we can actually do with the TVs nowadays, apart from just connecting
it to the internet and sort of, you know, access the internet.

So just to give you an idea of what other people are saying about the connectivity of the TVs
and other devices. You can see from 2010, there was about, maybe 200 million software
devices and those are expected to rise to about 600 million by 2014. Now you can see also in
this that the main sort of part of the connected devices today are games, like Microsoft, we
were saying earlier, but we are expecting from next year that other types of devices like the Blu-
ray players and the TVs of course to actually surpass that and grow much faster than the
games consoles.

So these are very promising ways for the fast growing market and I think we more or less agree
with these kind of figures and the reason for that is that we have the re-indication of how line-up
looks like in 2010 and obviously we know what the next year and the year after is going to look
like.

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Vassilis Seferidis (continued)
Now this is the line-up for 2010, that’s the TV line-up only. We have a similar sort of line-up for
the Blu-ray players, which also incorporate the internet TV, our connected TV software platform
and from that, as you can see, we have four, five, six, seven, eight and nine series. Apart from
the four and five, which is like the sort of commodity market products, all the other sales to the
mass market and if you can see where we incorporate the smart TV, it’s effectively from the
mass market sort of products and above. So all those products will be somehow smart TV
products incorporated.

Kate Bulkley
And smart TV means connected TVs, yes?

Vassilis Seferidis
Connected TVs, right. Okay, now this is the page. The remote control has a special button,
which is the internet TV.

Kate Bulkley
So this will come up when you open your connected TV.

Vassilis Seferidis
So when you press this button, you have this screen coming up, which is effectively giving you
access to the different sort of applications. There are things we can do of course LOVEFiLM
and Lesley will be talking about that later. You can access YouTube and you can access other
types of devices.

Now the platform allows you to also have and develop applications for channel bounced off
services like the red button type of applications. But this is like something that was sort of
developed in sort of special cases.

Today we have a plethora of a lot of publications, ranging from simple Teletext type of services,
you know simple data information services like about weather, about traffic in the roads and
everything like that, up to the very sort of complex like, video on demand and catch-up services,

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Vassilis Seferidis (continued)
including iPlayer, as you can see up there, as well as a video on demand type of 3D service as
a trial.

Now, an important thing that happens this year in Europe is that we have a competition for
application developers, people who want to develop applications in our platforms. We have run
a similar sort of competition in the United States and Asia, where we invite sort of content
developers to develop applications for our smart TV and obviously we have this sort of you
know competition for the winning application to win. There are three territories in Europe, we
run this competition in France, Germany and the UK and if you want to get more information, I
have the pointers, so you can come and talk to me about this.

Kate Bulkley
So they apply and well you award them?

Vassilis Seferidis
It’s a telephone application, any application developer will apply for that. We’ll give them the
SDK, the developed application and then they can actually sort of submit the application for
consideration for the competition and the prize is quite a lot of money.

Kate Bulkley
How much money?

Vassilis Seferidis
Well we have allocated about half a million for the prize winnings.
Kate Bulkley
Half a million Euros?

Vassilis Seferidis
Yes.

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Kate Bulkley
So if you win, you get half a million Euros, well that’s enticing. Okay great, great. So this is the
address, apply now. Great Vassilis, that’s wonderful, perfect, if you just come back. So I’m
going to go to Gidon in a second but you’re basically now in the content business. Now all this
stuff that it has up on your screen, how do people get paid for that, in other words, if I put my
content, Kate Bulkley content is on your screen, how do you pay me? How does that work?

Vassilis Seferidis
So there are different models, applications who do not charge the user. Like the iPlayer, for
example, from BBC, they don’t make any money out of this. We don’t get any money. If there
is a pay sort of application, obviously we are looking for a revenue split.

Kate Bulkley
A revenue split?

Vassilis Seferidis
Yes.

Kate Bulkley
And what’s your revenue split, can you tell us?

Vassilis Seferidis
No, because that changes by application.

Kate Bulkley
By application?

Vassilis Seferidis
Yes.

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Kate Bulkley
Okay good, well, so you have to go and negotiate that. Fine. Okay, Gidon, tell us a little bit
about Boxee, I mean how is the consumer experience changing? We’ve seen you know what
Samsung is doing, right, with the Samsung TV. What’s going on at Boxee? How’s it changing
the landscape?

Gidon Coussin
Okay, so any of you heard of Boxee?

Kate Bulkley
A few, that’s good.

Gidon Coussin
So Boxee is a way for you to get all your digital media on a big screen. So we have software
that today is available for download and people, around 1.3 million users are using it that way,
they dedicate some device procure a remote somehow, which is a little bit cumbersome, but
they can use their iPhone as a remote and so on and then they have access to all their local
media, as well as all their favourite internet sources.

As opposed to Samsung and Google TV, we try to replace the whole experience. We believe
that for a growing number of people, especially the younger generation, the user experience
here is key and that’s what’s replacing the traditional TV on how we used to consume media. If
the EPG was good for 200 shows on a very finite grid, here it’s the whole new web is available
and there is a new way that you need to arrange this and I’ll give you a demo.

So this is the Boxee box that we’re launching in November. The box is actually under there.
It’s a very small device but very powerful. It has 1080p, full Flash, full web support. Any file
format that you want, we don’t care what you have in your home network, we’ll play it. The
remote is a very simple six key remote but on the other side of it is a full qwerty keyboard. You
can come up and see it afterwards. So as I said, when you launch Boxee and that’s both in the
software or in the hardware that’s available in Amazon right now. Go pre-order.

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Gidon Coussin (continued)
So the user can go and see his music collection and play anything that he has, we go out to the
internet, we bring back metadata, so you’re not browsing a list of files, you’re actually browsing
media libraries. So it goes to movies and so on, so you can play anything from your local and
internet sources.

But where Boxee becomes sexy is what we do in the discovery. So, it’s not about just going to
applications, we have an application store with more than 400 applications and more coming
every day, but the idea here is that in the discovery, we now have an ability to show you who
are you following on Twitter and Facebook and if any of those people posted some cool stuff
around media, we’ll grab it and put it there for you to discover.

Here is stuff that we curate. This is a concept that we want to approach and we get great
attraction here. So we just launched, I don’t now if you read, but it was publicised that we did
with TED. They see it as their future of TV, so this is an application that TED created.
Thousands and thousands of hours of TED shows. What I like the most is the surprise me
button. So basically it tries to recommend for you what to watch, so we’ll watch now.

So as I said, we curate stuff and we feature it and here is stuff that’s actually also somewhat
interesting. This is stuff that you do on the web, you can mark stuff on your PC, on your work
PC and say I want to watch later. Then you come back in the evening and you can start
viewing it on the big screen, as well as subscribe to shows and so on.

As I said, we have a complete app store with all the apps, built for 10-foot. So anything from
MOBTV to Netflix, to anything that’s out there today, we have available for you and I think the
premise around Boxee is, there is a way to be entertained from the digital media, which is not
the traditional way that we do today. You can still see what’s on, you can still pull up your legs,
check half of your brain out and you know, just be entertained in front of digital media. So if
that’s what you’re looking for, I think Boxee is a great solution, we like our chances with the
likes of Apple, who are a closed system and Google who see stuff more in a search kind of
way. So, for companies who are looking for another distribution channel, come talk to us.

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Kate Bulkley
I’ll ask the same question that I asked Vassilis, what’s your revenue share? I mean if you put
some content on there with somebody, how do you work out the economics?

Gidon Coussin
So today, anything that you put on Boxee, you control it. So you own it, all the advertising goes
to you.

Kate Bulkley
And they sell the advertising, you don’t sell the advertising?

Gidon Coussin
We don’t. There’s no licensing on Boxee, we don’t licence any content, we don’t syndicate
content, we just bring a great interface for people to reach your content. We have also a
payment platform that we’re launching soon and in that payment platform, we’re going to do a
model that’s very similar to the iPhone model, so people can put stuff behind the pay wall and
their rev share is going to be 80/20, we’re trying to be a little bit more aggressive than Apple.
So 80% goes back to the content creator, but he also delivers the actual content, so that’s the
caveat there.

Kate Bulkley
Yes, you have to a share in the technology to deliver it. Okay that’s good. So all about user
interface. Shirlene, now let’s go onto you. You know, Yahoo obviously, one of the big players
is getting into the TV space in a big way. What are you adding to the consumer experience?
You know, what are you adding to what content providers can you know get new audiences?

VIDEO

Shirlene Chandrapal
So it’s an open platform. So anyone can develop an application, whether that’s a large content
provider or whether that’s an individual. The distribution points are through partnerships, so we

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Shirlene Chandrapal (continued)
work with all of the TV manufacturers that you just saw on screen. We will also be introducing
other devices next year, set-top boxes, Blu-ray players, media players etc.

The premise of what we’re doing is perhaps slightly different to Boxee and these guys over
here, in that we believe that TV still remains the star of the show and we’re really trying to
compliment the TV experience and the living room experience. So with that in mind, there’s
probably three main use cases, multitasking, which we know may be 60% of the Western world
are doing today.

Kate Bulkley
So that’s the two screen experience, yes.

Shirlene Chandrapal
Yes, so you’re watching TV, you’re checking your Facebook or your eBay or Tweeting.

Kate Bulkley
But are you doing it on the main screen or are you doing it on your second screen?

Shirlene Chandrapal
We’re doing it on the main screen.

Kate Bulkley
Okay, so you’ve got your TV screen, but over here you’re doing your social networking?

Shirlene Chandrapal
Absolutely, yes. Now when a user wants to put away TV, they can do. So you know they can
then look at videos, TV shows, games, photo sharing, all of the things that people are doing in
their living room today.

And then the last use case is really focussed around content that augments the TV experience
and I think that’s probably the biggest opportunity for a lot of people in this room today in that,

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Shirlene Chandrapal (continued)
you have a TV show and you can develop a game that someone can play alongside or there’s
voting applications or there’s additional content, behind the scenes footage. There’s also the
ability for users to actually input and engage with the programme, you know with the content
manufacturers themselves.

So I think it just opens up you know the living room experience. But our approach has been to
try and address what people are doing today and what we believe that people will be doing
tomorrow. But we also believe it has to be open and we have to let the consumer make the
decision and we have to let the consumer drive the experience. So we’re not about dictating
how they do it and what they do and what the experience should be, we think we need to go to
the consumer, because that’s the religion of the internet. So that’s really our philosophy.

Kate Bulkley
That’s right, companies are falling, when they haven’t paid attention to the consumer. Let me
ask you the same question I asked Gidon and Vassilis, you know how do these guys
participate? Do you licence content and then give them a revenue share or do they just show
up or how does it work?

Shirlene Chandrapal
No. So our WDK or SDK is publicly available. Any content developer can go out to the
website, download the toolkit and develop an application. So we don’t acquire content, but we
do make it easy for content providers. We will have payment solutions, as you would expect.

Kate Bulkley
So it’s not just ad supported?

Shirlene Chandrapal
No, absolutely. I mean advertising is our business, it’s our bread and butter, advertising and
data and insights and we are looking at multiple solutions that allow us to monetise our own
content, monetise content of other content providers, but also look at how we can augment

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Shirlene Chandrapal (continued)
advertising on TV. So there’s a whole opportunity around combining data with some of the
technological developments that we see in the internet space and bringing some of that to TV.

Kate Bulkley
So if I bring my Kate Bulkley content to you, if I want to advertise around it, what happens? You
run that and then give me a share?

Shirlene Chandrapal
No. You can do that, if you wanted us to do that, then we can do that for you and you know
there will be a rev share, but for the most part, there is no cost associated to putting your
content out there. If we offer a service of some sort, whether it’s wallet or advertising, then
absolutely that’s a commercial agreement. But there is no commercial agreement to be on the
platform and get your content there.

Kate Bulkley
And just because they’ve got a lot of Press lately, what’s the difference between what Yahoo’s
doing and what Google TV is going to be, when it launches?

Shirlene Chandrapal
Is anyone from Google in the audience?

Kate Bulkley
Yes, how can she be about Google? No Google people here, go ahead, fire away.

Shirlene Chandrapal
So I think, our approach is very different in that, we’re not trying to bring the internet to the TV
as the internet is on the PC, we don’t necessarily think that’s the form for it. Okay, this is a
shared environment. I don’t think people want to do some of the things that they’re doing on
their PC, let’s hope not, in their main living room. So, you know, we’re not trying to ambush the
TV, it really is trying to compliment the experience.

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Kate Bulkley
So you’re not going to put a browser on there and have search?

Shirlene Chandrapal
No. I mean I think search and recommendations are a big part of the experience and I think
there are smarter ways of doing it, in that, you know you can bring the technology, but I think it
needs to make sense for the TV and the remote control. You know and other devices can also
exclude some of the older demographic from accessing content, so you need to simplify it to
really make it interesting for everyone.

Kate Bulkley
Okay, alright, well that’s clear. Thank you. Leslie, let’s talk to you for a moment. So obviously
you’re somebody who’s providing content to a lot of these devices. How do you see the world
looking, from your perspective at LOVEFiLM? You know, do you want to work with all these
people, how are you forging ahead?

Lesley Mackenzie
Well we’ve been in the world for about six months now. Does anybody know LOVEFiLM?
Hands. Yes.

Kate Bulkley
Yes, that’s pretty good.

Lesley Mackenzie
So that’s good. So we originally were an online DVD business, effectively physical DVDs
through the post and we started to transition the business in May of last year onto streaming on
the PC. But actually, in March of this year, moved that product to the TV and so we’ve got
about six months experience. We launched both on Sony and Samsung and so we’re probably
one of the few content providers that’s had experience on both.

I think, you know, one of the things I say, everybody talks about the States and I think the
States are probably about two years ahead. They’ve had these devices and some of these

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Lesley Mackenzie (continued)
applications a lot longer than the UK have and Europe have, although I can see in the next
months, this accelerating. You know the opportunity for LOVEFiLM is not just consumer
electronic devices, which I actually think might lead the way in marketing to customers about
connected TVs and Blu-ray players, but also games consoles, set-top boxes like Boxee, tablets,
iPad, but the key is the volume of distribution and the percentage of that base that’s connected.
Because there will be a lot of devices out there that actually don’t really get very much traction
and you could spend a lot of your internal time developing applications for it, without actually
being able to derive any benefit, if the volumes don’t come through.

Kate Bulkley
So you have to make some bets?

Lesley Mackenzie
You make some bets and you know, you can’t guess where the consumer’s going to go, but
you know for me at the moment, which we saw from the slide earlier, the consumer electronic
devices plus sort of iPads and tablets, I think, games consoles now but iPads and the TV
devices, TVs and Blu-rays actually could be the future. And then there will be a role for set-top
boxes but there could be a lot of set-top boxes out there and so I think it’s about the consumer
experience and how it’s marketed.

Can I just show you what we’ve actually launched, so you can actually see what our product set
looks like? So this is a service that we have on the Samsung device. You know one of the
things I would say is that, where before people thought you could take a website and stick it
onto a TV, you’re actually having to develop an application and they’re all applications now, so
you’ve got your iPad app, you’ve got your iPhone app, they’re all applications and the
applications have developed that are suitable for the device that you’re on and also have to be
relevant to what your customer expects to get from you. And so I think one of our learnings is,
it’s going to be quite a simple proposition and it has to be very easy to use, for people to
actually sort of engage in it. It’s also got to work, so it’s not just about how the product looks,
it’s about making sure when it streams, they get a good quality of streaming service.

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Lesley Mackenzie (continued)
That’s the starting point of the service. So on the icon you would jump into this. We give
people the option to watch now, browse DVD and Blu-ray and search across both. This is the
screen for watching out, it’s our product page. We can add to the rental list and we can select
the format. We can rate the title, we can read reviews and we can search across both the
physical and digital catalogue. And this is the entry point in and you can see it’s actually quite a
simple thing for consumers to use. The UI testing that we’ve done, the consumers have been
really positive and actually, one of the things we’ve learned is to do UI testing, especially on
these devices, because consumers give you very, very good feedback.

Kate Bulkley
So you like the user interface on the Samsung, that works?

Lesley Mackenzie
Yes that works. You’ll find for different devices, some of them are actually sort of browser
based, so you can design your own UI’s, some of them are templated, so you effectively feed in
metadata into a template that already exists and there’s certain devices that are actually
bespoke, so effectively, something like the Xbox or something like PS3, which has native code,
has to be a bespoke development. So it really depends on the type of device, how easy it
would be to develop for it and how easy it then would be, once you’ve developed something, to
rule it across other devices. This is the Sony entry point and this is the Sony interface and you
can see, it looks quite different. It is templated but I know Sony are looking to move to browser
based and therefore, this service will sort of evolve over time with them.

I think, you know, like I said, we’ve been doing it for six months. Just briefly, there’s about three
consumer insights I’ve had. Consumers prefer to watch films on the TV, no surprise. But they
watch a lot more on the TV than they do on the PC. Because we’re a subscription service,
because people can actually subscribe, not through the TV but they get promoted through the
TV devices, they actually come in at a much higher subscription price, so they’re much higher
up the ARPU, because they’re actually buying the service to be able to watch movies on the
TV, they’re subscribing to the service. So that’s a positive thing for us. But I do think there’s a
role to be played with a lot of the manufacturers on education, because there’s a lot of the

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Lesley Mackenzie (continued)
customers that maybe buy these devices that actually haven’t connected them yet and don’t
fully understand what they are and I think, you know, 2010 was a year where these devices
came into the marketplace. 2011 hopefully will be the year that everybody understands what
they actually do.

Kate Bulkley
I mean what kind of support do they give as well? Like let’s say my Samsung TV doesn’t work
and I can’t get LOVEFiLM to work, do they call you, do they call him, who do they call?

Lesley Mackenzie
You know you’re basically going on the platform, so you actually have to build quite close
relationships with that platform. We do anyway, because we really care about our customers.
So, you know, if they phone Samsung, the call centre people know what to say and know
whether it’s our problem or Samsung’s problem and when they call us, we’ve done the same
thing. So it’s a lot of integration.

Kate Bulkley
Good, that enough? Yes, okay. That was interesting, that’s very interesting, because you
know, the thing is, you’ve only been doing it for six months, you’ve already got some results.
So people are actually buying the films through the Samsung and are you seeing more buys for
the TV than through your PC service? Like how much more?

Lesley Mackenzie
More usage through the TV service than the PC service, but a higher ARPU through the TV
when a customer comes in on a promo code, because they’ve seen it on Samsung and Sony,
which is great.

Kate Bulkley
That’s great, okay, well very good. I’m sure that you’re going to be on more devices, so we’ll
look forward to hearing about that. Now Jim, from MGM’s perspective, you know you’re a

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Kate Bulkley (continued)
content guy looking at all these devices. How do you see the world now? How does the world
look for you?

Jim Packer
A spaghetti bowl, it’s a bit complicated.

Kate Bulkley
A spaghetti bowl, okay.

Jim Packer
I have to say that, you know, our life has been kind of transformed over the last five, six, seven
years because, many of the services that are out there and the providers that are out there, that
we’re in discussions with or have deals with, it just creates a right situation that is much more
complicated than it used to be, you know, five, ten years ago and this is a good example.

You know, you look at kind of the good old days, when people would come in, you had a couple
of main revenue streams and although this varies country by country, this is kind of the main
area that you would try to generate your revenue. You have a pay per view window on
theatrical movies, you’d usually get a premium cable windows and then you’d have some sort of
free TV, basic cable window with broadcast etc. Now take a look at today and we’ll flip the
slide.

So now you can get a sense of what my team does. We basically have to manage 4,000
movies and in addition to the 4,000 movies, we probably have 10-15 different rights we look at.
So we have to look at whether it’s exclusive, is it non-exclusive, is it a pay per view, is it VOD,
do we do it during somebody else’s window, does somebody else own the product, can we
even give it to someone? We have many meetings with people that have services and they
come in and they have a great service and they built an incredible interface, but the rights that
they want just don’t exist and I think that that’s one of the things that, you know, makes these
services very, very interesting but also very complicated.

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Jim Packer (continued)
I think when you look at what we analyse as a content provider, because at the end of the day,
you know, with all due respect, without our content, there’s not much in many of these services,
so the content is important. We kind of look at obviously dollars, is it worth the effort. We look
at strategic issues. We try to protect our traditional broadcasters, our traditional relationships.
We don’t necessarily want to start doing too many things that are, you know going to hurt the
normal process of revenue flow, because this stuff doesn’t come free, we have to actually make
it and we have to actually monetise it.

I also look at the consumer, you know, adoption. You know, quite frankly, I look at my house
and I’m lucky enough to have somebody come over. I’ve got an Xbox, a Playstation, a Voodoo,
an Apple box and if you said Jim, would you please hook all those up? I would say, no, I
couldn’t hook up one, I don’t even know where they are.

Kate Bulkley
I think Gidon will come over and hook up your box to the TV.

Jim Packer
Yes I know.

Gidon Coussin
You didn’t mention Boxees.

Jim Packer
I’ll have a Boxee soon, I hope, maybe I could borrow that one. So, you know, the bottom line is
it’s complicated and I think that, you know what we try to do is analyse, what our consumer’s
actually going to be able to use easily and I think one of the big areas that you’re all, you know
quite frankly, focuses on which is key, is the interface. I mean I look at it as, without a doubt,
one of the key things that’s going to change people’s habits in using things.

You know, I look at my kids who have all these boxes to choose from and when they want to
actually watch a movie and they’ve used them all, they go to Voodoo. You know, why do they

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go to Voodoo? Just because it’s easy, they get it, they get the movie they want, they can vote
on it, because they do ratings and it doesn’t take a lot of brainpower. So if my 12 year old is
figuring it through that way and actually looking at what’s easy. How do I get my content quick?
Then I think that adults and every demographic are going to do the same thing.

So that’s really, you know, some of the areas that I look at when we ultimately decide where to
put our content.

Kate Bulkley
You know, who are you on now, are you on any of these services, do you have stuff that you’re
putting on Yahoo or would you put stuff on Boxee, would you put stuff on Samsung? I mean
what are you looking at?

Jim Packer
Yes, I mean many of the partners, we have put content on their services, so yes.

Kate Bulkley
For instance Lesley would have some of your movies, right?

Jim Packer
Yes, she’s got some of our movies, we don’t have a lot with Yahoo because it’s just starting to
get going. We have deals with Apple, Xbox, Playstation. You know, we have, without a doubt,
a digital business that’s grown. I mean I think our growth rate has been you know 200-300% a
year. I mean, granted it was starting from a low number, but it continues to grow and surprise
us.

So I think that, you know, we analyse it and also look at the rights and you know, like I looked at
one of these things, one of the areas that I also look at is, what neighbourhood am I in? You
know, one of the reasons we’re careful with our movies, we don’t do too much on YouTube is,
you know I don’t necessarily want to come up with dancing cats. If somebody’s, you know,
going to search Ronin or somebody’s going to search Man in the Iron Mask, I want them to go
to an environment where they can watch that, you know and right now, I think the music

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Jim Packer (continued)
companies have done a very good job by segregating their music content and I think YouTube
has to figure out a way that, when you search for a certain product, I can be in a neighbourhood
where I’m not going to be embarrassed by what am I next to? So that’s important.

Kate Bulkley
That’s good. Okay, that brings us to something that we talked about last night when we were
talking in the rehearsal. You know, for Jim, when he talks about you know not messing up his
other revenue streams, right, I mean you’re talking about the pay channels and things like that.
How do you guys see the pay universe developing? In other words, you know all this stuff is
VOD, it’s all, you know, on demand content, it’s picking and choosing, it’s not really based
around channels, it’s not based around pay platforms. How do you see that developing,
Shirlene or Gidon, you start. Do you think that there will be a pay environment, you know like
Sky is a big pay provider, Direct TV is a big pay provider. How’s that all going to shake out?

Gidon Coussin
So I think, the traditional business model is under pressure, I think it’s going to continue. I think,
rightly so, I think it’s unreasonable that you pay 80 or 100 bucks a month and then someone
tells you what you get for it. In this new world, in the 21st Century, it’s all about discretion, I
want to pay for what I want to watch, not just for …So that model’s going to continue to get
under pressure. I think the flipside of it is that, internet doesn’t mean free. So they are going to
evolve other business models, advertising, subscription, ESPs, all those which I don’t think
anyone figured out yet, but I do believe that the experience as a whole of what we use today,
via cable or satellite, is going to continue to come under pressure. You know, if you think about
it, the question that then one needs to ask himself is, if you had only $50 to spend, would you
spend it on Broadband or Cable and I think everyone here would say, Broadband. Today, we
are at the point that we can’t live without. So it’s not reasonable that everything goes to our
Broadband connection but for video, premium video, we need another pipe for that.

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Kate Bulkley
Lesley, give us your view, because I know you’re coming from a slightly different part of the
piste. What do you think? Do you think Pay TV is dead basically and it’s all going to be
Broadband on demand?

Lesley Mackenzie
No, I think there might be different people that are providing aggregated services. But, you
know, I was at Sky News Corp for like 14 years and every new provider came in and said, I
want to do it a la carte, consumer’s choice. But when actually you put that, one you have to
market it to your consumer and secondly, you have to try and attract them to pay you and
you’ve got a number of companies all trying to do that, the aggregate value that you can get out
of that consumer base is lower. So there’s a reason why these aggregators, whether they’re in
the right form of cable on satellite, there’s a reason why these aggregators aggregate content
and charge one price actually are in existence.

The content providers need money to make new content and they’re possibly not the right
people to try and have direct relationships with, in a volume basis, to try and attract customers
to pay them. So, I think the model of the companies that are aggregating might change over
time, but I think the aggregated content model will still exist. Content providers need to get paid
to keep developing good content.

Kate Bulkley
Shirlene, when you look at this, I mean obviously you’ve got a proposition out there, but you
know, I’m picking on Sky because I live in the UK, so it’s the one I know the best. So Sky TV’s
a pay TV operator and they’re moving into the connected space, you know they’re going to start
connecting their set top boxes and they’ll have an offering from the Broadband. Do you think
you’ll be able to compete with that or do you think people will turn off their Sky subscription and
just have Yahoo TV? What do you think it’s going to look like or do you think what Lesley said,
you know, how do we get the money to the content providers?

Shirlene Chandrapal
I mean currently it’s a new world and consumers are consuming content differently and we

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Shirlene Chandrapal (continued)
need to be able to cater for that. Now I’m not saying that the old models go away, but they do
need to evolve, to be able to deliver services for the new generation of content consumers.

I think a lot of the pricing structures that we have can be maintained. Whether they’re by the
same providers on the same platform, that remains to be seen. I think, you know, to be frank,
Sky have probably enjoyed a good run. Whether they continue to enjoy that remains to be
seen because, it is now possible for some of that content to be accessible in other places, at
different price points.

So I think there’s some challenges ahead and everyone needs to bear in mind that we need to
keep an eye on where the consumer is going.

Kate Bulkley
Do you think there will be enough money in the system, if people just have Yahoo TV? In other
words, will they make enough money to be able to producer the kind of movies that MGM wants
to produce?

Shirlene Chandrapal
Good content can always command a price and I think, you know that’s the nature of the game,
right? People will be prepared to pay for what they consider they want. I think, how we do it
will evolve to things like, searching recommendation services, that might move away from the
traditional, you know, EPG model or some of the traditional Moxy models. But I don’t believe
that people are not going to pay for content. You know, I’m with Gidon on this, I don’t think the
internet is all about being free.

The other thing around the advertising piece is, you know in the traditional TV world, we said
the same ad to everybody at the same time. In the digital world we don’t do that, you know
every ad is different and tailor made to the person.

Kate Bulkley
So theoretically it’s targeted so the CPM can come up.

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Shirlene Chandrapal
Absolutely, you know, so there’s more sophisticated ways to do that.

Kate Bulkley
Gidon, you’re going to have a digital wallet, right, and I think you are as well.

Shirlene Chandrapal
Sure, yes.

Kate Bulkley
So there will be payment methods.

Shirlene Chandrapal
Absolutely, yes.

Gidon Coussin
Yes. I think it’s all about the subscription. As I said, you know, the overall spend is not going to
change, it’s even going to increase. But I think, like again in every other facet of our life, we
have more discretion today on what we choose to spend and I think the fact that today in my
files, I get like twenty hundred channels that I have no idea what they’re doing there. It’s just
unreasonable.

Kate Bulkley
Vassilis, what about you, is Samsung going to start you know helping support the content
business or are you basically trying to sell television sets?

Vassilis Seferidis
I’m a much simpler person right, I’m from the consumer electronics. I think everything comes to
demand, I guess right. I mean plus yourselves. How soon will be the time where you go to
Dixons or to any retailer and ask for an internet connected TV only, without the cable or satellite
or terrestrial tuner? No, I guess most of you will be assuming that one these tuners is going to
be there as the factor and then the internet will be coming as an add-on, which is nice to have,

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Vassilis Seferidis (continued)
but non-essential. And that sort of reflects back to me the viewing habits of most of us, I guess
and especially the average consumer, that 90% I guess, 80-90%, you consume Pay TV or
terrestrial or free to air, the normal sort of channels that people are used to. And it’s only sort of
maybe 20% or so right that can actually consume from the internet.

So it will take some time I guess, yes.

Kate Bulkley
You think it will take some time? So how long do you think it will take?

Vassilis Seferidis
Well it’s very much sort of, because there’s so much activity in this area.

Kate Bulkley
Because it could be confusing for consumers, there’s so much.

Vassilis Seferidis
Exactly. Obviously search and discovery is very important or how you do it, the user interface is
important and I think the whole industry is going to actually make this you know an easy
experience for the consumer.

Kate Bulkley
Okay, Jim, when you hear this, does it make your eyes roll back?

Jim Packer
No, I mean it doesn’t in some ways but I think that, you know I’m actually okay with whoever
wins it. You know one of the beauties of having this library and having content is, you know, I
don’t think everybody’s going to win on the panel. I mean I think there’s going to be some of
these services that will work, some of them that will get major growth and then I think there’s
others that just won’t click on.

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Jim Packer (continued)
You know I remember for the last four or five years I’ve had a lot of services come into my office
and talk to me about you know a new platform, a new way to do it and I always put them
through the test of, okay, well let’s try it on my computer in my office and if it doesn’t work on
the computer in my office, I usually don’t do a deal. It’s a simple, simple thing.

Kate Bulkley
I hope you have a good Broadband connection.

Jim Packer
And I’ve had many, many of them say, “Well, you know, you’ve got a filter and you’ve got this.”
I say, “I know, but if I can’t watch it on my computer, why do I want to do this? It’s a lot of work
to get this stuff on your platform.” So I don’t know, I think that, you know it’s an exciting time
and I think one of the things that I think is going to be helpful for everybody is quite frankly,
people watching more content. I mean they can watch it on their phone. I mean I look at the
amount of content that we have in circulation right now and we’ve never had more content in
circulation than we do now and we try to put the right content on the right provider. I mean I’m
a big supporter of the aggregators, I want them to be successful and I want it to be successful
for a long, long time. Certain product, the Bond movies, stuff like that’s going to only play in
certain places and then we have some content that quite frankly never used to see the light of
day and you know, if you’ve got a, you know, 1975 move, you know Robot Wars, which we
have, which quite frankly never ever went on TV, it might be just fine for an internet service like
Hulu. You know that’s the kind of thing that ultimately for us, these technologies become very
interesting because, we can actually go deeper in our library than we’ve ever gone and believe
it or not, even some of the stuff that we didn’t think would get viewed, because now all of a
sudden somebody has an option, they watch it. So I think that’s good for everyone.

Gidon Coussin
I just want to note, I think first of all cable and satellite and traditional TV works for a lot of
people and if it works, it’s great. But I think there’s a whole generation out there that, there’s
discussion and what Vassilis said is totally irrelevant for them. They’re not looking to go to a
Dixons and purchase something on top or to replace their existing cable, they’re just not

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Gidon Coussin (continued)
connecting to cable. They live in a new world in which they get any content that they want to
and they spend their time on Facebook when 20 years ago they used to spend that time in front
of a TV. So for this new audience, when they become the 20, 30 year old people who start
spending money, you better be there.

Kate Bulkley
They won’t change their habits you say. Lesley, what do you think?

Lesley Mackenzie
I think people still want to watch movies and they still want to watch sports and those will
always be pay products and so whatever form they’re delivered, but if it’s Sky and it’s Sky
Anytime, you can watch it anywhere. These people, when they’re 26, 36 with kids won’t say,
actually I’m just going to be on Facebook, they’ll be like us and they’ll want to watch the sports
games or want to watch the movies and those products are premium products. They’ll never be
given away for free.

Gidon Coussin
Again, no-one said free. It’s this leap that everyone thinks that the internet means free. I think
it’s on the contrary, the spend will increase, it’s just you’ll pay for what you want and you won’t
be force fed.

Kate Bulkley
It will be on demand, pay per view. Shirlene, what do you think?

Shirlene Chandrapal
There was a couple of interesting points that both Lesley and Vassilis said actually. One is that,
in a very short space of time, they’re seeing higher consumption on the TV. So they’ve made it
convenient and people are paying to view that content, okay and I think there’s a lot to be said
for that. You make it convenient for someone and they pay for it. I mean, you know, if you look
at what iTunes have done, that’s exactly what they’ve done on the mobile space.

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Shirlene Chandrapal (continued)
The other one was a point that Vassilis made. Now I think, when you do make it convenient for
people to access content and we work with one distribution partner, the TVs are all WiFi
enabled, they have a pull out qwerty keyboard on their remote. As part of the set-up process, it
forces you to actually activate your WiFi connection. The adoption rate today and they’ve been
in market for less than a year is 70%. If you get it right and I think, you know, that’s the key to
this, it can make a significant difference to content consumption and therefore it makes a
significant difference to content providers.

You know I download Apps on my mobile like everyone and I don’t know how much I’m
spending, because it’s just so easy. I get my bill and I think shit.

Kate Bulkley
It’s called stealth raising money. I just like get on iPad, I seem to be buying everything and I’m
just fearful what the hell my iTunes account’s going to be at the end of the month. You know, I
think oh I’ll have that one, I’ll have that one and of course it’s like you know little tiny 1.79, 2.49,
it all adds up.

Shirlene Chandrapal
You’ve got nothing left for shoes.

Jim Packer
I think the one thing that is also going to be very interesting is how quick you know the success
is, how big they will become and how quickly they will become big. I mean if you look at Netflix
in the US, four years ago, if you had said, okay how many subs do they have, how many are
watching instant streaming and would they ever actually buy content from major studios in a
pay window, would they ever be able to afford it? Sure, if we had a bet here and you said,
okay, who’s betting for them? You’d have a lot that would say, no, I don’t think they can do it
and I think that you’ve seen them really grow quickly, through technology. You know the …
entry for them has been you know much lower because they’re using anybody’s device. They
have a good user interface, which is one of the things I think is key. You know, I even look at
Apple and how quickly there’s 250,000 Apps on the Apps Store and my kids, same thing, seven

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pages, you know they get seven pages of Apps and you know luckily, most of them are free.
You know, because they have to get permission before they buy even the 99 cent ones.

You know the App Store wasn’t around three years ago. You know, now this thing has taken
off. So I’m actually encouraged that technology and some of the interfaces and the work is
going to provide you know some really big winners that are going to change the business.

Gidon Coussin
And if Netflix continues the trend of putting … movies, like they did with Airpix deal they’re in
effect an operator and are soon going to be bigger than Comcast in the US and you know it’s
not far from them being, you know, an operator without laying the fibre and the truck rolls and
all that comes along with it.

Jim Packer
Yes, but one thing you should know. We didn’t give them everything …, so one of the things
we talked about, my traditional partners. I care a lot about my traditional partners, I really, really
do, so we give them the movies before we give them to Netflix. So you know, there is
windowing that goes in. You know, as much as I think they’ve you know carved out a very nice
niche, you know their primary distribution is cable and satellite and Telco’s and that’s where the
movies will go first and then they will ultimately make their way to Netflix.

So you still have to window and you still have to prioritise.

Kate Bulkley
Shirlene, what were you going to say?

Shirlene Chandrapal
Yes, I was going to say, I mean imagine a future where the likes of Comcast aren’t necessarily
reliant on set-top boxes to deliver their content. Okay, that’s an opportunity for them to retain
the business models that they do, they might have to adapt it somewhere. But you know
there’s a significant possibility that, you know, you’re no longer dependant on these legacy

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Shirlene Chandrapal (continued)
boxes and the cost of these boxes, because you now have mechanisms that can actually allow
you to deliver subscription services and content in you know platforms like ours.

Kate Bulkley
Okay. Let’s just see if there’s some questions from the audience. There’s one here.

Audience Member
Thank you. Stuart from the MIPBlog. In a years time someone may have a connected TV with
an Xbox 360 and a set-top box. You know they might have three or four connected TV
services. How do you see that affecting consumer behaviour? Will they pick and choose
between different services, will they opt for one and could it be confusing if they have to pay
three or four different subscriptions, different pay models? How do you see this plethora of
services?

Gidon Coussin
I do think, over time, they’re going to consolidate. It doesn’t make any sense to have so many
CPU’s in their living room, it will consolidate and good candidates are the game consoles and
the TVs.

I think today there is a specific issue where the replacement of a TV is like, I don’t know, three
years cycle and the technology inside the connected TV is like already old when it comes out.
So those devices, the Blu-ray DVD’s, the Boxee boxes of the world and so on, for the next
three, four years are still going to remain the most relevant solutions in your living room, but
yes, it has to consolidate. I don’t want eight CPU’s in my living room.

Lesley Mackenzie
From our standpoint, you know where you’d pay one subscription and you would be able to
access it through multiple devices. So if you’re Dad or Mum watching it on the main screen,
you might have a kid upstairs, watching another movie through a games console and the big
Sister’s on her iPad travelling around, she’s connected by WiFi watching it. So it’s about one
subscription, not having to pay multiple times but available on multiple devices.

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Gidon Coussin
Just one addition. I think also, it’s not going to be just the living room, like Lesley said, I think
the notion of, where is the biggest monitor at the specific time is going to evolve. So sometimes
it’s a companion. I have an iPad and I have a big screen. One time the bigger screen is my
iPad and another time it’s a mobile phone and for all of them, at least Boxee wants to be the
experience. So for us, the notion of what’s the biggest screen also is going to evolve.

Shirlene Chandrapal
I think maybe I agree with both of them. I think maybe one point to add to that is that,
remember we’re talking about software here, that’s embedded in some of these devices and it
is designed to be updated over time, so you haven’t just thrown you know £700 away or
something and now you can buy these devices for as little as $250. So it is designed to be able
to do updates and thermal upgrades, so that the experience, as it evolves, allows you to have
the next version of the engine.
Kate Bulkley
I mean there’s a lot of choice out there and I think it will be a little confusing actually.

Shirlene Chandrapal
Absolutely, it will be, in the short term.

Kate Bulkley
I mean, I think as Jim has already noted, some of them won’t survive, I mean some of these
services won’t make it. But we’re in an interesting time right now because all this stuff is
happening and I think it’s going to be a lot about the marketing and the UI, as Jim says, you
know how the thing actually works when people get it and that will make them come back or not
and then we’ll see who’s left standing I think. Okay, let’s go to you.

Richard Cassaline
Yes, Richard Cassaline from Admarket.tv. First of all I want to agree with Gidon on his angle on
the millennials of Generation Y, I think they are an interesting demographic. But this is really a
question for Jim I suppose. What about the parallels with the music industry and what’s
happened there in terms of the record labels being providers? You know, is connected TV an

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Richard Cassaline (continued)
appster effect, I mean, will someone be able to bring up Pirate Bay on the Google TV for
instance? I mean, how could this you know impact your industry from that point of view?

Kate Bulkley
Oh, the BitTorrenting of content.

Jim Packer
It is a concern, but I think that, you know, our hope is first of all that you have a big 60 inch TV,
you don’t want to watch bad standard dev crap. So, you know, I mean I think, part of what I see
in the pirated sites and I go, sometimes the copies aren’t very good and when you have a 60
inch TV, I think you want good content and I think one of the things that the aggregators do well
is they provide, you know, a really good experience if you want to go to the HD channels and
yes you’re getting a lot of them for $50-80, whatever you’re paying, but it’s pretty darn good.
It’s very good quality.

So I think that, you know, that’s a way that we can you know be careful. I think we also have to
quite frankly be very diligent, it is an issue. You know, if it becomes easier to watch it and it’s
not legitimate, we have to be careful and also, quite frankly, we have to work with our partners.
You know if all of a sudden, you know one of the widgets on Yahoo TV is Pirate Bay, I’m going
to be making a phone call and you know go, “I don’t necessarily like that widget and do you
want my content or don’t you?”

Kate Bulkley
Shirlene, you’ve got to make sure you don’t have Pirate Bay.

Shirlene Chandrapal
Yes, we have terms of use and illegal content and inappropriate content and all of those things
are not enabled and allowed. But you know we work with our content providers to make sure
that, if something is up there that shouldn’t be, then we can pull it down immediately.

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Kate Bulkley
Is that the same with you guys? Yes?

Gidon Coussin
Yes, but I think, the flipside of it is the people who are torrenting files are paying, they’re paying,
just not these guys, they’re paying their Broadband, they’re paying their Usenet, they’re paying
all these services and a lot of money and the reason they’re paying, they want to get to the
content and I think, if you have that content available and if you package it right and you put it in
the right price and have it like differentiated, so we can get crap using BitTorrent but you can
get an HD without ads if you go to the content owner, people will pay. Again, I don’t think
people don’t want to pay, I think people just have the technology to get to content and they will
do so if there’s not an alternative. I know me has iTorrent and I stopped because I don’t need
to. I have Hulu, I have all the ability through Boxee, I don’t see the need for that.

Kate Bulkley
Jim, you have a face of astonishment.

Jim Packer
Well, you know, I guess bank robbers by gas but I don’t know, there’s something wrong with
that, I don’t know.

Gidon Coussin
But it’s a reality, if you want to look in the eyes and say, how do I deal with it? For example, I
give you an example of what we do at Boxee to veer people from that action. If you watch
something on Boxee and you share it, I can see it, okay Boxee is a social media player. But if
you saw something that you torrented, I don’t care, but what we will show the other user is the
legal option of how to see it. So if you watched the movie 300 and you torrented it, me Gidon,
opening up my box here, I’ll see, oh Jim saw this movie 300, what will be the options is to buy it
through Netflix or stream it from Hulu with ads and so on. So we took an illegal activity, turned
it into a legal one.

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Kate Bulkley
So you won’t offer the illegal one, you couldn’t click and watch the illegal one?

Gidon Coussin
No.

Kate Bulkley
Oh well that’s good, he’s got that at least.

Gidon Coussin
No, that’s the way you combat something, you say, what’s the reason? And the reason, they
want to get to the content.

Jim Packer
And I’m hopeful that, as technology gets better, that the technology is to stop that. I don’t think
you’ll ever stop it, the technologies to limit it, change habits, do things that ultimately you have
content providers getting paid for their content. You know the technology, while it’s very good
to get you know easy access to content, maybe it’s also easy to make sure it’s harder to get
stuff that you shouldn’t get and we are more diligent, we have a couple of people that are
dedicated to pulling stuff down and it does work, I mean you know, we go and we take stuff
down and I think that, you know, all of a sudden it gets a little harder for somebody, maybe they
consider a legal option. So, we just have to be diligent and hope that, you know, it gets better.

Lesley Mackenzie
I mean I think in reality, most of the devices are wall gardens. To get your application on, you
have to go through an approval process and one of the things in the approval process is, have
you got legitimate content? So, you know, with something like Samsung everything has to be
pre-approved before it gets launched, which allows illegal things to be taken out.

Vassilis Seferidis
That was the reason why we have intentionally chosen the walled garden approach in our
platform, because it gives you this control. You know obviously Boxee is another approach but

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Vassilis Seferidis (continued)
we thought that, it’s better to actually control the content of course on your platform, because
that’s the only way really you secure the integrity of you know the content from the providers.

Kate Bulkley
We have to draw a line under this panel, but I think we’ve had a fascinating conversation,
obviously some very different points of view up here. All these guys will be fighting it out for
your attention and for your audience’s attention over the next year, you know 18 months. I wish
them all well, I also wish our content providers well in getting through this maze, because it’s
exciting but also, you know there’s a lot of hurdles to leap. So could you please join me in
thanking our panel on Connected TV.

For more information about working with the team at Take 1 please call or email
Louise (louise@take1.tv) or Anna (anna@take1.tv) on 0800 085 4418 or +44 1580 720 923

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