0 spt hd network analysis (draft) december 19, 2007
TRANSCRIPT
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SPT HD Network Analysis (DRAFT)
December 19, 2007
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
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SPT Engaged IBB to determine if SPT should launch a Linear Network and if so, what are some possible options in terms of genres, economics and carriage
1. What are the economics/ROI of HD channels? Does the ROI support launching one or more HD channels?
If yes, then…
2. What business model? (Advertising, Carriage Fee, Premium Subscription)
3. What demographics should be targeted?
4. What niche/genre/content? Where is the demand? What are the market gaps?
5. Where are SPT’s capabilities/strengths?
6. What capabilities does SPT need to develop?
Deliverables
• Go/No-Go Recommendation for Launching One or More HD Networks
• Recommendations of Target Demo, Genre and Business Model for Potential Channels/Networks
• Projections of Potential Carriage Partners, Timing, and Expected Terms
• Financial Model with ROI for Potential Network or Networks
• Gap Analysis of Required Content Operational, Organizational, Technical Capabilities for SPT to Launch One or More Networks
Questions
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IBB leveraged its own industry expertise and analysis, as well external research and interviews with a cross-section of SPT personnel
Nielsen and and Magid HD Survey
Internal Analysis of SPT/ Sony Assets and
Capabilities
Preliminary Financial Model
Filter and screen options against specific criteria such as potential audience, competition, advertiser/service provider needs, etc.
HD Channel Strategy Analysis
Preliminary Programming
Options
IBB Industry Knowledge
Based on inputs, determine preliminary list of options to consider for HD channel
Arrive at recommended list of programming/ genre options
Recommended Programming
Option(s)
Criteria Screening of Options
Develop first cut of revenue and cost model for initial evaluation of multiplatform network (linear, VOD, broadband)
Preliminary Financial Model
Iterate upon model based on developing programming strategy
IBB External Research and Analysis
SPT Research on Demographic and Genre
Gaps
What capabilities, systems, processes and technology does SPT require in order to launch and operate a linear network?
Evaluate Market Entry Options
• Organic entry with DBS, MSO, and IPTV providers
• Acquisition of existing network
• Multicast broadcasting and must-carry regulations
Operations and Technology Gap
Analysis
Executive Summary
Opportunity• New HD slots are creating opportunity with satellite and IPTV cos; but there is a limited window
to act• Carriage with cable cos. and ultimately, long-term success, requires compelling content
targeted at the right market
Market Analysis• In HD, Young Men, Young Women, and Women overall are underserved• Overall, Young Men are underserved• Market gaps are more about underserved demo than underserved genres or content types
Channel Voice• Recommend focus on young men as it meets Sony capabilities, current HD gap, and overall
TV market gap
Method of Entry• Focus on “Build” today; but explore creative alternatives (like acquisitions or multi-cast) in
parallel
Economics• Investment of X required, but creates attractive IRR of X% and could ultimately lead to
Next Steps• Approach Sat Cos. In parallel with exploring acquisition opportunities
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
Overview of Market Opportunity
Good News• New HD slots are creating opportunity• The bar isn’t particularly high for quality of content required to get
carriage
Bad News• Slots are filing fast and there are limited market gaps• Over the long-term, “HDTV” won’t be a differentiator, it will just be “TV”
Implications• HD can be a hook to get carriage with Satellite and IPTV cos. Now• Carriage with cable cos. and ultimately, long-term success, requires
compelling content targeted at the right market
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Furthermore, developments in Cable MSO, DBS and Telco segments present a window of opportunity which SPT can leverage to gain carriage
Available Slots and SPT Implications
Drivers
• Both launching new satellites in 2008 (DirecTV 11 to be launched in Q1 2008/ Dish in 2008-9 to expand HD offerings)
• DirecTV > 150 national• Dish > 100 national• Negotiations should begin
with DirecTV
• IPTV architecture with fiber to the home or node inherently allows hundreds of HD channels with exact number depending on how far fiber extends toward the customer premises and whether MPEG-2 or MPEG-4 compression is used
• Verizon FiOS extends all the way to the home, while AT&T U-verse has fiber to the node only
• Verizon plans over 150 HD channels by 2008, capacity for > 250 in MPEG2 format and > 500 in MPEG4 format
• AT&T currently facing pixelation issues but slots should be between MSOs and Verizon in number
• Conversion of analog channels creates room for greater number of digital or HD channels (greater than one-to-one conversion)
• Node splits also impact the number of channels that can be offered and MSOs shift node size on a market-by-market basis
• Switched Digital Video (SDV) technology theoretically allows infinite number of HD channels – SDV implementation is based on demographics and competition on a market-by-market basis
• MSO’s will need to be handled on a case-by-case basis
• Most likely initial candidates would be Charter, Cox, Cablevision
We believe that carriage with DBS and IPTV providers will be relatively easier. Negotiations with MSO may take longer – companion VOD and Broadband may help.
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Platform Provider Current HD Channels (2007)
Expected by 2008/2009 Potential Slots Available in 12-24 months
DBS 70+ (actual)
Plans for 100
150+ by mid-year 2008 ~50+
67 100+ by mid-year 2008 ~30+
MSO 25 500 (SDV rollout) >250
50+ 100+ ~40-50
~50 100 (by year end 2008) ~40-50
~30 85 (2008) ~30
IPTV ~30 150+ (2008) > 75-100 (potentially more)
~40 ? Dependent on solving technical issues
HD Channel Capacity by Platform (Directional Estimates Only)
Source: Morgan Stanley, IBB Analysis
• Future HD channel capacity are estimates only – exact amounts will vary• Available MSO channels vary significantly based on market infrastructure (750 MHz versus 860 MHz) as well as degree of analog
reclamation• SDV channel capacity will vary based on the popularity of the channels deployed (i.e. total number of channels deployed is influenced by
the statistical likelihood of a subscriber in each node watching each channel)
While providers vary in capacity to offer HD slots, DBS and IPTV providers have a structural advantage over Cable MSOs
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While all HD Networks claim to offer HD programming, only HDNet and MGM HD broadcast in the best HD quality (1080i)
720p MPEG2Upconverted SD
720p MPEG4Upconverted SD
1080i MPEG2 Upconverted SD
1080i MPEG4 Upconverted SD
1080i MPEG2 Full HD
1080i MPEG4 Full HD
• ESPN• ESPN2
• Big Ten• TBS• FX• A&E• Cartoon• Speed• Fuel• Sports Net NY
• Universal HD• TNT• Discovery HD
Theater
• CNN• NFL• HGTV• Food• USA• Sci-Fi• Smithsonian• History• National Geographic• Discovery• TLC• Music HD• CNBC• The Weather
Channel• HBO• Cinemax• Starz• Showtime• TMC• VS/Golf• YES• NESN
• HDNet Movies• HDNet
• MGM HD
Full HD
Source: DirecTV; note that all HD channels are not included
HD offerings will continue to proliferate – high quality and targeted content will be key for SPT
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However, both established players, as well as new entrants are launching HD plays making it a very competitive environment for new comers
Movie/TV Studios
• Beginning to “upconvert” library content into HD compatible formats
• Newer productions being produced in native HD
Broadcast Networks
• All major broadcast networks offer simulcast of SD and HD – not all content is in HD format
Emerging Content Creators
• New content creators create and broadcast content exclusively in HD
• Differentiation based on HD format as well as niche oriented content
Cable Networks
• Most cable companies simulcast in HD similar to broadcast networks
HD Offerings
As we look across the spectrum of HDTV networks, no gaping holes emerge as opportunity for SPT in terms of genre, demographics and programming
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The strong demand around HD, both from the consumers, as well as Cable MSO, DBS and Telco services make this a great opportunity for SPT
HD today is distinct and therefore provide a strong hook for carriage. However, we believe that over time, HDTV will become almost synonymous with TV
TV Households and HD Receiving Households (mn)
127126125124123121120119118117
35
46
57
68
7786
93 97100 102
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Total TV Households HDTV Receiving Households
Source: Jupiter, IBB Consulting analysisSource: Jupiter, IBB Consulting analysis
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
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Competitive landscape and weakness in existing players’ offerings provide an opportunity for a hip, sophisticated, Male-slanted HD Network
Older
Younger
Male-Oriented
Female-Oriented
Competitive Mapping
While channels focused on male demographics exist, non-sports competition is limited, particularly with respect to original dramas
Potential opportunity with respect to male-slanted, original dramas
Do an SD version and an HD version
Do an SD version and an HD version
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
Movi
es
Dram
a or a
ctio
n
Progra
ms
Play-
by-pla
y
SportsConcerts
Sitcom
s
Docum
enta
ries
How to P
rogra
ms
Big e
vents
Wea
ther
Natio
nal n
ews
Local n
ews
Trave
l
Realit
y Shows
Musi
c Vid
eos
Childre
n
Soaps
However, research suggests that there is still a high degree of consumer demand for additional HD content focused on movies, drama, action
Desire of HDTV Viewers for Additional Channels/Programming by Category
Source: Magid 2007 HD Survey, Desire for Additional Programming by Category16
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Sports, movies, scripted dramas and documentaries are leading in terms of what consumers are watching in HD today
42.8% 38.0%
9.6%28.1% 19.4% 11.1%
23.8%
32.6% 49.9%
41.9%
46.3%48.5%
31.0%
57.7%
24.2%11.9%
47.8%24.6% 31.3%
56.2%
18.3%
0%10%20%30%40%50%60%70%80%90%
100%
Frequently Occasionally Never Don't Know Refuse
Source: Nielsen 2007 HD Phone Survey, Base=All Respondents (511)
How Often Viewers Watch Program Categories in HD
18Magid Survey 2007: Index of household income, education and profession
Low Socio-economic status
Middle
High socio-economic status
While current HD viewers tend to be in the older, higher income demo, the next tranche of HD adoption will come from a younger, lower income households
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HD Category HH Description Overview
Viewers 15.7M Own and view HD TV
• Exclusive high-end audience where 30% reside in HH with six figure incomes
• Skews male and older with nearly 66% are 45 or older
• High adoption of new TV technology and unhappy with HD channel options
Sideliners 7M Own HDTV but have not adopted programming
• Younger consumers, both males and females with relatively lower household income
• Not satisfied with older slanted HD content • Would like to see younger focused content• Will make programming arrangements when
more channels are available
Shoppers 27M Shopping for new TV set and considering HDTV
• More likely to indicate that their new TV set will be HD than ever before
• More likely to cite HD program viewing as a key motivator for their HD purchase
• More likely to arrange for satellite HD
Conservatives 63M All other • Don’t own a HD set and have no plans to purchase one in the next 12 months
• 33% of them suggest they will replace their primary TV in the next 2 to 3 years.
Consumers in broad age/income categories cite better content and younger focused programming as a key driver to their HD purchase and adoption
US TV HH %
Magid Survey 2007
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
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SPT and Sony have various key assets that make a HD Network a natural extension to its brand and various businesses
"We have an HD value chain that no one else in the business has. [This] high-definition value chain that starts with cameras and goes through projectors and television sets and ends up with the PS3.
You can see an HD necklace with all the pearls connected." - Sir Howard Stringer
SPT Production Capabilities
SPT Advertising Sales
Sony Electronics HD Ties
SPT Library
The HDNA Campaign
SPT Broadband Networks
SPTI Assets
SonyBMG Assets
Linear Channel
Play
• Long track record with high quality dramas and sitcoms
• Recent success helping cable nets to establish brands/positions
• Dedicated ad sales group knowledgeable about SPT
• Experience with ad sales for Mojo, Tennis Channel, Smithsonian Network
• Bravia HDTVs
• Professional HD cameras and production equipment
• Consumer HD cameras
• PlayStation Blu-Ray capabilities
• Additional consumer resonance between Sony and HD following this campaign
• Multiplatform systems and processes can be leveraged
• Potential to leverage content from Crackle or other networks
• Linear networks and operational capabilities: SET, AXN, Animax, PIX
• Concert library and capabilities to create original programming
• Artist relationships that could be leveraged for programming
• Feature film and TV episodes – rights windows can be exploited to SPT/network advantage
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In addition to a possitive IRR, a US Linear Network also will provide various non-quantifiable strategic benefits and advantages to SPT and Sony
Diversify Revenue Streams
Network can be programming showcase
However, it must not be a “dumping-ground” for programming that cannot be sold elsewhere
New Outlet for Original and Library
Programming Depending on branding
and positioning of hypothetical network, Sony brand may extend into entertainment and also support Sony United
Extend Sony Brand
Significantly expands linear inventory for SPTAS
Assuming baseline or aggressive play will be a reasonably large cable network client for SPTAS
Expand SPTAS Inventory/Capabilities
Strategic Benefits
Initial investment leads to relatively stable affiliate and advertising revenue streams
Depending on branding and execution, an SPT network can be a catalyst for Sony United
• Facts and survey
– Sony brand– What genres does the sony brand hit (per
interviews)
SPT team members interviewed believe that a U. S. Linear Network is long overdue and that SPT has the capabilities to create a differentiated play
• “We should have had distribution [through a U.S. linear channel] ages ago. It’s crazy that we don’t.”
• While most/all seemed confident that SPT could create a high-quality and popular network if given required resources and carriage negotiations are successful, nearly everyone questioned whether Sony management will support the startup and continued investment necessary to launch and sustain a successful network
• Branding and Positioning of the network will be critical to success – if the network can stake out a differentiated position with branding that resonates, then SPT has a wealth of production capabilities and library assets that can be manipulated to fit the needs of the network
Key Themes
• Original Programming is seen as a necessary differentiator by everyone− All agreed that a library play with the Sony name alone will not be sufficient− The network will require original programming and it must fit well with the designated brand and personality
so that consumers and advertisers know what to expect from the channel
• Despite many great assets across Sony, must be cautious of scattershot approach of all different types of programming on one channel – there is room for maybe 2-3 sub-genres but must be very careful to ensure they still fit overall positioning and brand
• Several individuals believe there is a competitive gap in targeting/reaching men– ESPN and Spike are really the only male-focused channels, and Spike has more of a low-brow approach with ineffective original
programming– Potential for a male-slanted channel with somewhat more sophisticated approach (Mojo-like in feel but original dramas instead of
lifestyle programming)
• Should be conscious not to forget women, but SPT library leans more toward mixed gender or male-slanted than toward exclusively female-focused content that is desirable in HD (i.e. non-soaps)
Programming Thoughts
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Streamline; call out top 5 findings at a higher levelStreamline; call out top 5 findings at a higher level
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While the SPT team members believe that SPT possesses core capabilities that are needed to launch and run a network, certain gaps still exist
• Excellent communications/relationships between different groups within SPE – organization is less siloed than other studios
• Only studio where all rights are handled by one group making it easier to manage rights strategically to SPE’s and the channel’s benefit
• Substantial multiplatform assets and processes that can be leveraged immediately (e.g. encoding, transcoding, storing assets, etc.)
• Potential content in other Sony divisions (Games, Electronics, SonyBMG, etc.)
• Potential operational partners in GSN and SPTI
• Holding back or lowering the cost of rights: SPT processes and thinking are geared toward maximizing sale value for assets – while the channel must pay for content like any other network, there are instances where holding back rights or lowering the price for the channel will be for the greater good of SPT
• Significant concern about the lack of “programming” experience and network affiliate relations – these skills must be developed or acquired
• Need to develop/partner/acquire systems and processes for scheduling/avails, trafficking and distributing content, as well as advertising assets to distribution partners
SPT Advantages
SPT Challenges
Streamline; call out top 5 findings at a higher levelStreamline; call out top 5 findings at a higher level
Summary of Findings
Unmet HD TodayUnmet HD Today Underserved Demos in GeneralUnderserved Demos in General
Plays well to Sony StrengthPlays well to Sony Strength
WomenWomen
Young MenYoung Men
MoviesDramasMovies
DramasYoung WomenYoung Women
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
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Our Programming Analysis began with SPE/Sony capabilities and assets and then filtered the options based on market demand and competitive gaps
Other Sony Assets that Could Be
Leveraged
SPT Production Capabilities and Library Assets
• Findings based on internal interviews and IBB’s understanding of SPT’s capabilities and assets
• What else does Sony possess that could be leveraged in a similar way to how Warner benefited from DC Comics?
Demographic and Genre Gaps (i.e.
External Demand)
Big Enough to Support a Full
Channel?
Recommended Option or Options
• Can the programming concept support a full channel or is it only a block of programming?
• Consumer Demand• Competitive Gaps• Advertiser
Preferences• Service Provider
Preferences
• One or more options that remain following this analysis
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Our analysis indicated that SPT has the capability to serve a wide range of demographic groups and programming genres
Other Sony Assets that Could Be
Leveraged
SPT Production Capabilities and Library Assets
Recent production successes with edgy male and female-oriented original dramas
Long history of sitcom success – production and library assets
Large film library that could anchor ad-supported movie channel
Soap Operas
FEARnet
PlayStation game titles, characters, properties
Sony Electronics tech insights
SonyBMG concert footage, archives
SonyBMG artist relationships (e.g. Foo Fighters)
SPTI anime rights/ relationships
Potential Channels
General Interest channel combining many content genres and types similar to a broadcast network
Library Movie channel similar to MGM Network or Pix on MediaFlo
Male-Slanted channel utilizing original drama and comedy production as well as numerous applicable library assets
Female-Slanted channel utilizing original drama or lifestyle production and library assets (more limited)
Early-Adopter Lifestyle channel with voice similar to Wired magazine
Edgy Lifestyle channel utilizing SPE relationships with popular actors/ entertainers to star in programming
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However, based on our evaluation criteria, a hip, sophisticated, Male-slanted HD Network seems to be the best match for SPT’s and Sony’s strengths
Demographic and Genre Gaps (i.e.
External Demand)
Big Enough to Support a Full
Channel?
Recommended Option or Options
Male-slanted, 18-40, differentiated by original dramas
Early Adopter – primarily younger, tech-savvy males
General Interest –too much competition
Library Movies (e.g. MGM) – likely to receive weak carriage
Male-slanted, 18-40, differentiated by original dramas
Female-Slanted – too much competition
Early Adopter – primarily younger, tech-savvy males
Edgy Lifestyle – competition
Male-slanted, 18-40, differentiated by original dramas
General Interest channel combining many content genres and types similar to a broadcast network
Library Movie channel similar to MGM Network or Pix on MediaFlo
Male-Slanted channel utilizing original drama and comedy production as well as numerous applicable library assets
Female-Slanted channel utilizing original drama or lifestyle production and library assets (more limited)
Early-Adopter Lifestyle channel with voice similar to Wired magazine
Edgy Lifestyle channel utilizing SPE relationships with popular actors/ entertainers to star in programming (e.g. Scripps with a twist)
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SPT’s value propositions around a hip, sophisticated, Male-slanted HD Network can be compelling for all industry stakeholders
Why Would Consumers
Tune in?
What’s in it for Advertisers?
Why would Carriers be Interested?
• Cross-platform offering: HDTV, VOD and Broadband• Compelling content for men
• Action, drama, hip and sophisticated male lifestyle • Technology/gadgets based on Sony inside
perspective of the latest innovations and products
• Quality programming from day one• Ability to market an all HD network and potential
charter carriage opportunities with significant cross-promotion and PR for the initial carrier(s)
• Channel would be attractive to advertisers, hence generate revenues for the carrier
• Brand equity associated with quality, technology, media, consumer electronics
• Ability to target valuable demographics – high-income, males 18-40; and secondarily females 18-40
• Multiple consumer touch points through consumer electronics, movie/TV releases, etc.
• Potential for sponsorships to be affiliated with programming across platforms
Watch compelling and targeted content
Access hard to reach
demographics
Gain an additional high-quality, full HD
network
Anticipated Programming Evolution
Largely library with limited new programming
Increase new programming, tap into other Sony family products
Broaden thrid party
Re
ven
ue
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
• Next Steps
• First slide: Pros and Cons of build, buy (G4), partner (with fins or strategics)
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BUILD WILL REQUIRE INVESTING TO ENHANCE EXISTING CAPABILITIES AND CREATE NEW CAPABILITIES
Network Operations and Technology AreasSPT Relative Rankings
Content Production / Acquisition
Content Production / Acquisition
Research / ProgrammingResearch / Programming
Advertising SalesAdvertising Sales Technology and OperationsTechnology and Operations
Affiliate Sales / RelationsAffiliate Sales / Relations
• Significant Research capability but some resources will need to be focused on SPT network exclusively
• Programming skills/experience in terms of developing 24/7 programming wheel needs to be built internally
• Significant Research capability but some resources will need to be focused on SPT network exclusively
• Programming skills/experience in terms of developing 24/7 programming wheel needs to be built internally
• Excellent experience with affiliate sales of content assets
• Need to develop resources/skills in relation to network affiliate relations (i.e. negotiating carriage and marketing of channel within affiliate divisions/regions)
• Excellent experience with affiliate sales of content assets
• Need to develop resources/skills in relation to network affiliate relations (i.e. negotiating carriage and marketing of channel within affiliate divisions/regions)
• Long history of producing content for other networks that should apply to supplying content to SPT network
• Long history of producing content for other networks that should apply to supplying content to SPT network
• Licensing and Rights systems/software in place
• Have systems/processes for encoding, transcoding, and storage of assets
• Lack systems and staff for scheduling, trafficking, network operations, satellite uplink – may be able to leverage these capabilities from GSN or SPTI networks
• Licensing and Rights systems/software in place
• Have systems/processes for encoding, transcoding, and storage of assets
• Lack systems and staff for scheduling, trafficking, network operations, satellite uplink – may be able to leverage these capabilities from GSN or SPTI networks
• In-house capabilities with ad sales for other networks (e.g. Mojo, Tennis Channel, Smithsonian) but staffing will need to be built out to handle a full SPT network
• Broadband ad sales capabilities and experience exist as well in relation to Crackle and other digital clients
• In-house capabilities with ad sales for other networks (e.g. Mojo, Tennis Channel, Smithsonian) but staffing will need to be built out to handle a full SPT network
• Broadband ad sales capabilities and experience exist as well in relation to Crackle and other digital clients
REWORK SLIDE
Simple table?
REWORK SLIDE
Simple table?
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However, based on various market conditions, the economics can vary. SPT may consider few steps to reduce cost and mitigate risks
• Take a more conservative approach to programming costs in the initial years since break even time is not affected significantly
• Consider outside equity partners to supplement programming and reduce SPT investment requirements. Partners can be:
o Other content providers (such as Lionsgate)
o Financial investors (such as Private Equity shops, Dubai Holdings, etc.)
o Cable MSO/DBS Services (such as Comcast or DirecTV)
• Consider using cheaper sources of content and new content formats (such as User Gen pods that Current TV uses). Perhaps Crackle can play a role in this.
• Consider cheaper ways to market the shows and build momentum leveraging on-line sources (similar to VuGuru, PromQueen, etc.)
• Good quality original programming (which may come with higher cost) can help establish the network earlier on and set it apart
• Other partners may want control
• Financial partners may want an exit event earlier than otherwise expected
• Partnership with MSO(s) may alienate the DBS players and vice versa
• The bar for such content needs to be set very high. Also, the quality/format of programming needs to fit with the network’s personality
• This certainly can’t replace traditional branding and marketing – specially earlier on.
Suggestions Potential Issue(s)
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The Magid 2003 brand survey commissioned by Sony has many insights that might still be relevant
• The Sony brand is perceived to stand for: quality, movies, technology, and media centric – it will set the bar for the channel quite high
• A Sony channel is seen as being a logical service for the company to provide
• Focusing or branding the channel on young, wired, connected adults would alienate a significant number of potential viewers
• A programming slate of re-runs, marginally interesting content resulted in low scores and contrary to the image of Sony as a brand
• The Sony name was a definite plus for respondents – however, respondents didn’t want the channel to become an infomercial for Sony
• Quality of programming will need to be very high and compelling to keep in synch with the Sony brand perception
• This further suggests that a “Sony” channel is long overdue
• Channel positioning should not necessarily focus on young, wired, connected adults – although content offerings specific to this demographic might be compelling
• While library content is essential and practical, compelling original programming can make or break this network
• The programming and ad sales team will need to be careful about the amount and nature of Sony oriented contents and ads
Key findings from Magid 2003 Survey Potential Implications
We recommend working with a branding expert to refresh the market research, particularly with the Male-slanted focus, and finalize the brand strategy
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Sattelite and IPTV are the most likely near-term candidates for carriage and should be approached immediately
FY09 FY10 FY11 FY13FY12Baseline
DirecTV: Premium
Dish: Premium
Charter: Standard
Cox: Premium
Verizon: Standard
AT&T: Standard
Comcast: Standard
TWC: Standard
Cablevision: Premium
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
• First slide – EBITDA line chart (baseline case only) (with cume cash flow written below) and Subscriber and Ratings growth line chart
• Second slide – Revenue stack bar next to Cost stack bar chart
• Project Overview
• Demand for New Channels
• Factors Impacting Sony’s Channel Voice– Competitive landscape in HD and SD– HD user demographics and tastes– Sony internal capabilities
• Recommended programming focus
• Method of entry
• Economics
• Next Steps
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We believe that SPT should aggressively embark upon a multi-pronged effort to pursue the various network options
• Agree on network economics and genre
- Finalize channel economics through discussions with extended group (finance, SPTAS)
- Work with content, production and distribution groups to gain consensus on genre
• Determine availability of content
–Work with SPT content group (Chris Elwell) to determine availability of specific titles for selected genre
–Determine windowing options for each title
–Prepare sample programming wheels for consideration
• Once decision made to go-ahead with network launch and content availability is determined, initiate immediate discussions with the potential carriage partners, particuarly DBS companies (DirecTV, Dish) and IPTV (Verizon)
• In parallel, evaluate alternative network launch options
–M&A viability (G4, MOJO)
–Multicast broadcast network
• After content and genre agreed to, engage a branding agency to update existing market research, determine network brand and positioning