SO MANY CHOICES:DEVICES MOTIVATING CONTENT CONSUMPTIONSEPTEMBER 2013
P R E P A R E D F O R E M A D I G I T A L M E D I A P I P E L I N E C O N F E R E N C E
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THE EVOLUTION OF CONTENT CONSUMPTION
• Several key themes
The intersection of content and technology innovation
The death of single-purpose devices
The growth of digital
Transition from products to services
• Tension point for device makers and content creators: unprecedented number of revenue opportunities, evenly matched by unprecedented fragmentation and consolidation
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THE BIG PICTURE – MAIN THEMES
• Two transitions: 1) product cycle transitions, and more importantly, 2) broader business model transitions encompassing new markets
• Competitive battle lines are blurring, as business models and company profiles show increasing hybridization and cross-pollination
• Competitors are partnering with each other in interesting ways to address emerging opportunities
Viacom-Sony
Netflix-console manufacturers
GameStop-Steam
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5Copyright © 2013 International Development Group
Content/Delivery Operators gain access to the consumer by adding a layer of services to chosen devices
Access PointsOperating Systems Functionality
TV/Movies Music
Communication
Web Browsing
Games
Cable Operators Satellite Operators Streaming Movies/TV Providers DVR Providers
TV PC
Consoles
Smartphones/Tablets
In choosing a device, consumers make supplemental choices regarding the software utilized on each platform as well as its functional applications
THE DEVICE AS THE GATEWAY TO THE CONSUMER
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PLUGGING INTO SERVICES
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22 million1 billion 10 million36 million 4 million114 million 36 million1.1 billion phones 90 million 26 million46 million575 million
Descending order of market size opportunityLegend:
Paid services
Hardware Access Points
Services
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CONSUMER PERSPECTIVE
• Unprecedented number of choices
Distribution channel: boxed product versus digital
Location: living room versus portable/on-the-go
Delivery mechanisms: disc, digital download, streaming
Business model options: retail purchase, subscription, download, free-to-play, rental, apps
Devices: TV, PC, Smartphone, Tablet, Console, Set Top Box, etc.
Entertainment/media verticals: TV shows, movies, music, games, web programming
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CONSUMER PERSPECTIVE (CONT’D)
• Competition for share of day
• Device loyalty Brand/content loyalty
• Desire for greater control over the content that they consume
• Consumers want to access their content at all times, regardless of location or device
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DEVICE MANUFACTURER PERSPECTIVE
• Single-purpose devices are dead
• Consumers want devices that can do multiple things well
• Devices must be a part of a broader entertainment ecosystem
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WHERE HAVE ALL THE RETAILERS GONE?
• Over the years, many retailers have exited the US video game business• Concentrated environment gives retailers more leverage
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• Toy Store• Filed for bankruptcy in Jan ‘04
• Operated 650 stores in the US
• Toy Store• Filed for bankruptcy in Jan ‘04
• Operated 100 stores in the US in 1991
• Consumer electronics retailer
• Filed for bankruptcy in Nov ‘08
• 567 stores at time of liquidation
• Video game specialty stores
• Rebranded as GameStop stores
• Filed for bankruptcy in Sep ’10
• Subsidiary of Dish Network
• Rebranded as GameStop stores
• Video game specialty stores
• Merged with Babbage’s in 1994
• Consumer electronics retailer
• Stores liquidated starting n Feb ‘07
• Rebranded as GameStop stores
• Child World stores liquidated in mid 1992
• Once had 182 stores
• Filed for bankruptcy in Jan ’06
• Trans World Ent. purchased Musicland stores in Mar ‘06
Key Video Game Retailers *
Retailer Brands That Have Exited the Business or Been Consolidated*
* Figures for US market only
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DIGITAL IS THE GREAT DISRUPTOR AND ENABLER
• While retail will remain important in the value chain, digital is one of the most disruptive forces at the intersection of content and technology today
• Digital is the impetus for the expansion from products to services• Connected, multi-purpose devices are enabled by the presence of
digital
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IDG’S 4 PILLARS
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Hardware Access Points
Software Operating
System
Cloud Storage Service
Online Store
Amazon‐customized Android 2.3
The 4 Pillars
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ECOSYSTEMS WILL TRUMP PLATFORMS
• In the new normal, building out an ecosystem will be the highest priority
• Although platforms will remain critical, many consumers are becoming more platform and device-agnostic
• While earlier consumers might be an iPod or Xbox loyalist, the newer generation of content consumers will show greater loyalty to content brands, across a variety of media verticals
• The ecosystem paradigm will be more important to generating maximum value and market share versus winning on a single platform
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