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FiOS IPTV

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					  FiOS IPTV
Abraham Pinales and Krystal Muise
                        Situational Analysis
•       Subscription Television Market Overview
    •      85 Million U.S. TV Subscribers
    •      $86.3B Yearly Revenue
    •      $26.6B Advertising Revenue
•       Market Trends
    •      Increased HDTV and Video On Demand (VOD)
    •      Decrease program viewership due to internet viewing (Hulu, YouTube, etc)
•       Competing Networks
    •      Cable Networks (Comcast, Cox, Time Warner)
    •      Satellite Networks (Dish Network, Direct TV)
    •      Fiber to the Home (FTTH) Networks (AT&T, Verizon)
                        Verizon FiOS IPTV
•What is Internet Protocol Television (IPTV)

     •       Television service delivered using Internet Protocal over the FTTH network
     •       Two way digital broadcast signal
         •      Allows for the integration of Television and other IP based services
         •      Allows for more interactive programing
     •       Increased VOD capabilities
                                           Cable TV                      Satellite TV                    FiOS TV                     IPTV (FTTH)


        Network Type                     Copper (Coax)                     Satellite                    Fiber Optic                   Fiber Optic

        Network Notes                       Shared                        Individual                    Individual                     Individual

     Market Share leaders

        ?Market Share
                                FiOS IPTV Features
                                    Time Warner, Comcast

                                               65
                                                                   DirecTV, Dish Network

                                                                              28
                                                                                                         Verizon

                                                                                                            2
                                                                                                                                     Verizon, ATT

                                                                                                                                           2



Max Marketed Bandwidth (MBPS)                  25                             10                           50+                            50+

       Bandwidth Notes            Shared Network bandwidth is   Increased HD Content has         Individual fiber networks      Individual fiber networks
                                    influence by # users on   limited Satellite networks from provided the largest bandwidth provided the largest bandwidth
                                    network at a given time    offering additional broadband      capacity to individuals        capacity to individuals
                                                                  speeds. Agreements w/
                                                                          Telco’s




        # HD Channels                        150+                           150+                           150+                          150+

      VOD Titles Souce                    VOD + PPV                      VOD+ PPV                       VOD+PPV                   VOD, PPV, Internet

        DVR Capability                         Y                              Y                             Y                              Y

     Bundling Capability            Triple Play (Voice, Data,     Double Play (Data, Video)    Quadruple Play (Voice, Data,   Quadruple Play (Voice, Data,
                                              Video)                                                Video, Wireless)               Video, Wireless)




    Interactive Advertising                 Limited                         None                         Limited                           Y

  Interactive Channel Surfing                  N                              N                             N                              Y

  Integration of IP equipment                  N                              N                             N                              Y

      Interactive Widgets                      N                              N                         Y(limited)                         Y
                     Opportunity Attractiveness
   Threat                                                  Threat Description                                                 Level



                 Highly competitive market. Customers have various options to obtain TV content which include CATV,           High
                 Satellite, FiOS and Internet streaming. Most competitors in this market have invested billions of dollars
 Competition     to deploy their networks to the individual customer and create attractive features/services to keep them.


                 There are several barriers that prevent easy entrance into this market. The regulatory requirements for
                 becoming a distributor of TV content is both costly and lengthy. The approval process can take years         Low
                 and the process for develop a network to reach individual consumers can be measured in the tens of
New Entrance     billions of dollars.



                 There are many substitutes available. Some of the substitutes currently available are CATV, Satellite,      Medium
                 FiOS, and internet streaming. Each of these substitutes has features/ services that make them unique in
 Substitution    the market.



                 The internet and other advances in technology have allowed customers to be more knowledgeable. The Medium
                 internet makes it easy for customers to compare services and features provided by competitors, as well as
 Buyer Power     make price comparisons.


                 Contracts for content, including shows and ads, are based on the number of subscribers. A high level of
                 competition in the market makes it important to differentiate the product to provide features that are      Medium
                 useful to both the subscribers and the suppliers. The customizability of IPTV will allow suppliers to
Supplier Power   target specific segments of viewers.
               Concept Test
•   Test Platform using existing FiOS TV customers
    free 60 day trail period
•   500 volunteer customer asked to participate
    • 250 participants will be given platform #1
    • 250 participants will be given platform #2
•   Data will be collected through out the trial
    • Preference and Satisfaction Data using
      Concept Testing Survey
    • Revenue data based on widget usage and
      content subscription
                     Concept Test Sample Survey
                                                                                                                                                            Very Much
                                                                                                                   Disagree            Agree
                                                                                                                                                              Agree

Tell us how you would rate the following statements regarding your experience withe FiOS IPTV
                                                                                                                       1         2       3         4            5



                                                 The Interactive Tutorial was helpful



                                                Program guide Menu was easy to use



                                   I was able to easily find the desired Video on Demand Content



                                     I was able to easily find the desired Internet Video Content


                                                                                                                     Poor       Fair   Good     Very Good   Excellent
                                      FiOS IPTV improved my overall TV watching experience

                                                                                                                       1         2       3         4            5



                                     Overall, how satisfied were you with the FiOS IPTV platform



                                                                                                                   Not Likely          Likely               Very Likely




                         How likely are you to subscribe to the FiOS IPTV Service at a monthly rate of $24.95



                    How Likely are you to subscribe to the recommend the FiOS IPTV Service to friends and family

 What other subscription TV Services have you used in the past?
   Cable TV (such as COX, Timewarner, Comcast)

   Satellite TV (such as Direct TV, Dish Networks)

   Personal DVR (such as Tivo)

   Other __________
            Launch Strategy

•    Customer Acquisition:
    • Provide switching options to existing
      customer
    • Pull customers from other markets within the
      company
    • Acquire new customers from outside the
      company
•    Challenges:
    • There is a learning curve that customers
      must overcome.
                          Pricing



                                            IPTV
                                 HDTV Content
Price                               /FiOS
                     Digital Cable
                       /Satellite
            Basic Cable

        Analog

                           Features
            Customer Loyalty



•    Bundling Strategy
    • Combined with other Verizon products
•    Customization
    • Widget, VOD, Internet and HDTV content
•    Marketing of VOD and Widgets based on past
     usage Trends
 Total FTTH Cost (per customer)

     Network Build Expense             $2,200
   Installation and Equipment          $718
  Marketing Cost of Acquisition        $130
     Interest and Other Cost           $576



                                    Customer Lifetime Value
              Total                    $3,624    per customer


            IPTV Cost

            R&D Cost                   252.2         (M)
  Marketing Cost of Acquisition         130      per customer


   Total Number of Subscribers          1.8         million
     Estimated yearly growth            55%
        Estimated churn                 35%
           Net Growth                   20%
IPTV Penetration Rate (Estimated)       30%
        Monthly Revenue                $24.95




                                       Year 1      Year 2        Year 3     Year 4     Year 5     Year 6     Year 7      Year 8
Total FiOS TV Customer Volume(M)        1.8          2.2          2.6        3.1        3.7        4.5         5.4         6.4
     IPTV Customer Volume             351,000      419,850      504,698    605,067    726,451    871,500    1,045,956   1,255,046
          IPTV Revenue                105,089      125,703      151,106    181,157    217,499    260,927    313,159     375,761
         FFixed Expense               252,215         0            0          0          0          0          0           0
        Variable Expense               45,630      54,581        65,611     78,659     94,439    113,295    135,974     163,156
          Total Expense               297,845      54,581        65,611     78,659     94,439    113,295    135,974     163,156
               Net                    -192,755    -121,633      -36,137     66,361    189,422    337,054    514,239     726,844


    Customer Life Time Value
  IPTV Customer Volume (initial)      351,000      228,150      148,298     96,393     62,656     40,726     26,472      17,207
       IPTV Revenue (000)             $105,089     $68,308      $44,400    $28,860    $18,759    $12,193     $7,926      $5,152
       Cum Revenue (000)                          $173,398      $217,798   $246,658   $265,417   $277,610   $285,536    $290,688


              CLV                     $828.17
                 Derivatives


•   Gaming: combination with X-box.
•   Widgets that will allow more customization
•   VoIP used for Teleconferencing
                Alternatives



•   HD and VOD content focus
    •Will not create enough differentiation
    •Competitive advantage not sustainable
        •
       Easily duplicated by competition
Questions??

				
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posted:7/16/2011
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