MEDIA TRENDS – Q2 2011.pdf

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					May 2011

                               MEDIA TRENDS – Q2 2011

This quarter we can see that the effect of external conditions has influenced some outcomes of the
media and communications sector. The popularity of international events was reflected through
substantial ratings increases and the appeal of premium content, sport, original documentary and
original drama production continues as an industry focus.

The popularity of over the top services also continues to be reflected both through subscriber growth
and product development. At the same time positive growth has been seen by a number of media
and entertainment companies.        The number of existing subscription TV customers upgrading
services also grew this quarter. While penetration is still relatively small, the range of connected TV
services and products also continued to expand.

Issues associated with future spectrum re-allocation, the online environment and sports rights remain
the focus of regulatory reviews and parliamentary process. While advertising sector forecasts were
impacted by global events, technological advances continue to increase options for advertisers and
consumers. Digital switch-over rates continue to increase and the development of social media
strategies remains at the forefront of deepening viewer engagement with content.

           STV DISTRIBUTION                           AUSTRALIA

                                                      AUSTAR results reflect the effect of natural
UNITED KINGDOM                                        disasters in regional areas for Q1 2011

BSkyB adds 51,000 new customers and                   Flooding and cyclones in regional Australia
takes subscriber base to 10.1 million
                                                      impacted AUSTAR customers in New South
                                                      Wales, Victoria and Queensland in 2011.
BSkyB has reported that it now has over 10.1          AUSTAR put in place arrangements to assist
million customers with a rise of 51,000 in the        customers in affected areas. Total subscriber
quarter ending 31 March 2011. Over the same           numbers decreased by 8,578 to 755,641 in Q1
period BSkyB launched Sky Atlantic and Sky            compared to Q4 2010. My Star penetration
Living, secured exclusive rights to the Football      increased by 6% to 205,815 over the same
League and Carling Cup and launched the Sky           period and revenue remained stable at $174
Anytime+ video on demand product. Revenue             million.    There was significant sales
growth was up 14% to £4.8 billion.
                                   i                  improvement from February 2011 onward.

                                                      UNITED STATES
Virgin Media experiences 47% subscriber
slowdown but revenues climb 5.7% for Q1               DIRECTV    sees   increased    subscriber
2011                                                  numbers and revenue for Q1 2011

Virgin Media revenue for the first quarter to 31      DIRECTV experienced an unprecedented
March 2011 was up 5.7% to £982.3m when                increase in subscriber numbers adding a
compared to the same period last year. While          further 611,000 subscribers between January
there was a subscriber slowdown over that             to March this year. DIRECTV's first quarter
period Virgin Media reported a 22% rise in the        revenues of $6.32 billion increased 13% from
take-up of premium services and HD                    the same period last year mainly due to strong
penetration increased to 41% of customers.            subscriber and ARPU growth at DIRECTV U.S.
                                                      and DIRECTV Latin America.

                                                                                                 Page 1
May 2011

                                                      video game system, a Blu-ray player, and/or
 Over The Top (OTT) Set Top Box
                                                      the TV set itself. The research notes that
                                                      Internet connected devices in US homes had
                                                      increased by 24% over the past year with
UNITED KINGDOM                                        growth heavily driven by Netflix subscribers.
                                                      The report also highlights that 30% of Netflix
Supermarket giant Tesco takes an 80%
                                                      subscribers watch video from the Internet via
majority stake in movie streaming service
                                                      one of these connected devices weekly. In
                                                      comparison weekly use among all non-Netflix
                                                      subscribers was 3%.
In April 2011 Tesco took a majority stake in
Blinkbox, one of the most popular movie
                                                      Netflix continues to attract new subscribers with
streaming sites in the UK with over two million
                                                      growth over the past few years increasing
customers. The Blinkbox service is currently
                                                      substantially to 23.6 m subscribers.
available on PC, Mac and PS3 but the
company has announced that it will be
available on Samsung connected TV’s and                     Netflix new subscriber growth per year
other devices throughout 2011. Tesco’s stated         10,000,000
aim is to combine the purchase of DVDs with
digital copies. Tesco’s UK CEO Richard                 8,000,000
Brasher said, “we can link physical purchase of        6,000,000
a product to the building of digital collections in
a new and seamless way’’.                              4,000,000

Hulu files for Australian trademark                                2007      2008      2009      2010

Amidst the talk that Hulu is coming to Australia,
it has been reported that the TV and movie                      INNOVATION
streaming service filed for an Australian                A FOCUS ON CONNECTED TV’s
Trademark at the end of March 2011.
                                                      A report by research group DisplaySearch has
UNITED STATES                                         revealed that nearly 20% of all TV’s shipped
                                                      worldwide in 2010 featured connected TV
Google plans to overhaul YouTube to take              capabilities.   This growth is expected to
advantage of connected TV sets                        continue to over 123 million shipments in 2014.

YouTube is planning a number of changes to            DisplaySearch forecasts that the connected TV
its home page including the introduction              market will grow increasingly complex and
individually themed ‘channels’. Twenty of these       fragmented with enhanced broadcast services,
channels will feature some professionally             basic video on demand, configurable apps,
produced and original programming. The Wall           sophisticated search and navigation and
Street Journal reports that YouTube will spend        advanced user interfaces all competing for
up to $100 million to commission content              customer attention.
designed for the web.
                                                      An examination of some of the current products
Netflix the key to online video growth                in the connected TV space includes:

The Leichtman Research group has reported             Sony BRAVIA Internet Video - Available
30% of all households have at least one               across the BRAVIA LCD TV range. Allows
television set connected to the Internet via a

                                                                                                 Page 2
May 2011

consumers to stream approximately 20 specific     40% to Sky Atlantic’s schedule. In April, the
Internet channels to the TV including Yahoo!7,    medieval fantasy Game of Thrones premiered
SBS, Billabong, YouTube, Wired, Golflink,         as the channel’s most popular program to date
eHow, Video Detective, Podcasts, Lifestrong,      with an average 743,000 viewers beating
Ford Models, Epicurious, Blip and      audience numbers for Boardwalk Empire.
Internet Widgets are available on specific        Note: Game of Thrones will make its Australian
models.                                           debut on Showcase in July.

Samsung Smart Hub HDTV – The Samung               AUSTRALIA
Smart Hub comes with a built-in web browser.
It also features Samsung Apps from the HDTV       FOXTEL and AUSTAR make AFL broadcast
app store that offers social networking, sport,   history
paid and free games and information apps.
                                                  For the first time in Australian broadcast history
The TV’s have picture in picture functionality
                                                  FOXTEL and AUSTAR customers will be able
and come with a dual sided QWERTY-type
               xi                                 to watch every AFL Home and Away game, the
smart remote.
                                                  AFL Finals, pre-season competition and the
                                                  FOXTEL Cup game live and uninterrupted in
Telstra BigPond offers a number of IPTV
                                                  HD. Games will also be delivered via mobile
services through Samsung including BigPond
                                                  and broadband and through a dedicated AFL
TV, BigPond Movies.
                                                  channel. The Brownlow presentation, historical
                                                  and memorable matches from the vault will also
Panasonic Viera Connect – The Viera                              xiv
                                                  be available.
Connect updates Panasonic’s Viera Cast
internet TV. In the US Viera Connect offers
                                                  Australia’s first multiplatform family action
Hulu Plus, Netflix, YouTube, CinemaNow, and
                                                  thriller to start production in June
Amazon VOD and archives of several sports
sites.   Web apps like Facebook, Napster,
                                                  Commissioned by Movie Network Channels
Skype, Ustream, and Gameloft are also
                                                  and produced by Melbourne based production
included. The TV also features Viera Connect
                                                  company Circa Entertainment, Conspiracy 365
Market that allows third-party app downloads to
                                       xii        is a unique Australian television and multi-
personalise the TV viewing experience.
                                                  platform production targeted for the family
                                                  audience. The series is based on the
While some services on connected TV’s, such
                                                  bestselling novels by Australian author
as Telstra BigPond, are usually unmetered for
                                                  Gabrielle Lord. The 12-part family action thriller
BigPond customers the quality and download
                                                  will debut on Family Movie Channel in 2012.
hours of connected TV services are ultimately
influenced by the individual broadband plan of
                                                  Tim Winton’s cloudstreet to premiere on
the consumer.
                                                  Showcase in May

       NEW DEVELOPMENTS IN                        The Australian production of Tim Winton’s
          PROGRAMMING                             iconic novel Cloudstreet will premiere
                                                  exclusively on FOXTEL and AUSTAR on 22
                                                  May 2011. The three part series which tells the
UNITED KINGDOM                                    story of two fictional Australian families in and
                                                  around Perth in the 1940s and 50s will
Game of Thrones debut sets Sky Atlantic           premiere on Showcase, a Showtime Movie
ratings record                                    Channel.

BSkyB has been having ratings success with
the new channel Sky Atlantic which launched in
February this year. HBO programs contribute

                                                                                              Page 3
May 2011

FOXTEL secures the exclusive rights to new         Deadliest Catch, Flying Wild Alaska and
Steven Spielberg series Falling Skies              Mythbusters.

The 10-part series will air exclusively on FOX8    Warner Bros streams The Dark Knight via
shortly after its American debut in June.     It   Facebook for 30-Facebook credits
opens in the aftermath of a hostile alien
takeover of earth. As well as Spielberg as EP      Consumers are able to rent a copy of The Dark
the series involves Justin Flavel and Darryl       Knight by clicking on a ‘rent’ icon on the films
Frank, Graham Yost (Justified, The Pacific),       official Facebook page. For 30 Facebook
screenwriter Robert Rodat, who earned an           credits ($3) viewers have 48 hours to watch the
Oscar nomination for his screenplay for Saving     movie. While watching the film viewers are
Private Ryan as well as Mark Verheiden             able to post comments or interact with friends
(Heroes, Battlestar Galactica) and Greg            with full Facebook functionality. Warner Bros is
Beeman as co-executive producers.                  planning to roll out other films such as Harry
                                                   Potter and the Sorcerer’s Stone, Inception and
International events, sport and documentary        Life as we Know It over the coming months.
content drive ratings records
                                                   Netflix outbids HBO for original content with
The Royal Wedding was watched by more than         House of Cards
2.2 million people across UKTV, BBC World
News, CNN and E! Entertainment. The news           Internet video streaming company Netflix has
of Bin Laden’s death attracted 90,000 viewers      committed to original content through its
to SKY NEWS at 3.30pm on 2 May 2011. Live          purchase of the 26 episode season of House of
sports viewing broke ratings records in Week       Cards starring Kevin Spacey.        The Wall
14 with the Live: Eels v Cowboys NRL game          Street Journal has reported that Netflix outbid
proving to be the highest rated broadcast on       other cable companies to secure the
STV in 2011 to-date, and the original Australian   programming.
production, Kalgoorlie Cops, which premiered
in Week 16 was the highest rating documentary      DIRECTV offers VoD early release movies
on STV to-date.
                xvii                               60 days after theatrical debut

                                                   DIRECTV is partnering with Warner Bros.
UNITED STATES                                      Home Entertainment, Universal Pictures, Sony
                                                   Pictures Home Entertainment and 20 Century
AMC and Lionsgate officially make a deal           Fox to offer theatrical releases to DIRECTV HD
with Mad Men creator Matthew Weiner                DRV customers 60 days after theatrical debut.
                                                   Titles will cost $29.00 and will be available for
Weiner inked a new long-term agreement with        two weeks following the day they launch. They
producer Lionsgate which includes a fifth and      will then be taken off for a period and will return
sixth season with potential for a seventh          to the regular PPV/VoD window release and
season of Mad Men, the 1960s original drama        price after that time.

set in New York's advertising world. Note: Mad
Men airs on Movie Extra in Australia.
                                                       REGULATORY DEVELOPMENTS

Mythbusters and other Discovery Channel
programs get an ‘I’m Watching’ button              UNITED KINGDOM

                                                   Digital Economy Act free to proceed after
The Discovery Channel has launched an iPad
                                                   failed high court challenge
app with an ‘I’m Watching’ button so that
consumers can alert Facebook and Twitter
                                                   Telecoms providers BT and TalkTalk have
followers as to what they are watching. The
                                                   failed in their high court challenge to stop some
free app includes clips from Gold Rush,
                                                   elements of the Digital Economy Act 2010.

                                                                                               Page 4
May 2011

Under the Digital Economy Act 2010 ISPs will        for mobile broadband and 900 MHz Band –
be obliged to send notification letters to          Exploring new opportunities with a view to
customers accused of illegal downloading by         developing a future spectrum strategy for
rights holders. Repeat offenders could then         mobile broadband that makes the best use of
have their internet access slowed or blocked        current and future technologies.
under the plan.
                                                    Anti-Siphoning Bill and Broadcasting
Product Placement ‘P’ logo to be shown on           Services Amendment (Media Access) Bill to
UK screens                                          be introduced during Winter Sittings

Laws were changed to allow product placement        The Australian Government has indicated that
in UK television programs for the first time in     both bills will be introduced into the House of
February this year. Ofcom has launched a logo       Representatives in the Winter sittings 2011.
that must be showed when a UK produced              The Government released an exposure
program contains product placement. The logo        draft of the proposed anti-siphoning changes in
must appear for 3 seconds at the start and end      May.       The Media Access Bill relates to
of the program and after advertising breaks.        captioning levels and standards under
                                                    broadcasting legislation.
Ofcom consults prior to ‘largest ever’ 4G
wireless spectrum auction for mobile                UNITED STATES
                                                    House votes against ‘net neutrality’ but FCC
Ofcom has announced plans to conduct the            still has Senate support
largest ever single auction of additional
spectrum for mobile services. Ofcom has said        The House has voted to ban the Federal
that the amount of 4G spectrum will be more         Communications Commission (FCC) from
than 80% of the 3G auction that took place in       implementing its plans to ensure net neutrality
2000. Ofcom is proposing to put in place            that were put in place December last year.
safeguard caps to protect against long term         Republicans said that the plans were a power
competition issues. The time of the auction         grab by the FCC.
will be in the first quarter of 2012.
                                                    The vote was supported by the US Court of
AUSTRALIA                                           Appeals in the District of Columbia that ruled in
                                                    favour of the House.
Convergence Review Framing paper
released for comment                                The Washington Times reports that the FCC’s
                                                    net neutrality plans still have the support of the
The recently finalised Convergence Review
                                                    Democrat          controlled Senate    and     the
Committee has released the first of a number of                xxviii
calls for comment in the form of a framing
paper.    The paper outlines the indicative
                                                       ADVERTISING DEVELOPMENTS
timetable for the review and calls for comment
on the fundament principles that will guide and
shape     the     review    and      subsequent     Global ad expenditure predicted to grow by
                                  xxv               4.2%
recommendations to Government.
                                                    ZenithOptimedia has forecast that the global ad
ACMA releases discussion papers about
                                                    expenditure market will grow by 4.2% in 2011.
future wireless spectrum strategy
                                                    The forecast was revised down from 4.6% in
                                                    December because of political turmoil in Egypt
The Australian Communications and Media
                                                    and the natural disaster in Japan. The forecast
Authority (ACMA) has released two papers,
                                                    predicts that the US market will make gains this
Towards 2020 – Future spectrum requirements

                                                                                                Page 5
May 2011

year and next with North American ad spending       The latest Federal Government Digital
predicted to increase 2.6% at $164.8 billion in     Tracker survey for Q1 2011 reports that
2011.                                               that about 4 in 5 Australian households
                                                    can now watch digital television (79%),
NDS to deliver addressable advertising              two percentage points more than the
insertion  technology    and    enhanced            previous quarter.
audience measurement for DirecTV
                                                    The analogue signal was switched off
NDS is working with DirecTV on the seamless         in regional Victoria on 5 May 2011 as
insertion of household addressable ads into         the digital television rollout continues
both live and recorded video content from           across Australia.
DirecTV’s SD DVR hard drives. NDS says that
the technology will provide data that will          The Deloitte State of the Media
support ‘the revenue-generating potential of        Democracy survey has showed that
addressable advertising on the DIRECTV              watching TV is still the favourite media
platform with the ability to generate solid         activity for 71% of Americans.
feedback on the ads that have been viewed’.
                                                    Nielsen has reported that in the fourth
FOX SPORTS signs Toyota as the exclusive            quarter of 2010 almost 30 hours a
sponsor for its iPad app as part of a cross         month was time-shifted viewing by 25-
platform sponsorship deal                           64 year olds in the US.

The Toyota sponsorship deal which started in        In-Sat has reported that the global
late April will run for six months. as part of      tablet market will grow to 50 million
Toyota’s integrated sponsorship of FOX              units in 2014.
SPORTS shows both on TV and online. Adam
Weimers from Toyota said "this six month,           MagnaGlobal is predicting that the
exclusive, multi-layered, on-air, online and iPad   worldwide outdoor advertising market
partnership, will continue to allow the Toyota      will expand by 8.3% in 2011.
Aurion to reach it’s predominantly male target
market wherever, whenever and on whatever           Screen Australia has released the
device they desire."                                guidelines for its All Media Fund that
                                                    will encourage interactive or multi-
                                                    platform innovative, risk-taking
           TRENDS & STATS BRIEF                     storytelling.

        Digital UK has confirmed that London’s      The Nielson Company has reported
        analogue switch off will occur before       that the average American watched 34
        the 2012 Olympic games.                     hours 39 minutes of TV per week in Q4
                                                    2010. An increase of two minutes on
        An average of 4.142 million people          the previous year.
        tuned into CNN to watch the coverage
        of the death of Osama bin Laden. At
        one stage during the night viewer
        numbers hit 9 million people.               The Media Trends Report created by
                                                    Infodec for
        Ofcom has confirmed that digital            ASTRA
        television take-up has now reached
        92.5% of UK households.

                                                                                        Page 6
May 2011

 Sky Corporate,
    Virgin Media,
   Advanced Television, Hulu joining Aussie TV market?, http://www.advanced-
     Wall Street Journal,
     PC World,
     The Guardian,
    The Hollywood Reporter,
     The Hollywood Reporter,
     The Guardian,
      Convergence Review Committee,
       Washington Times,
     The Hollywood Reporter,

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