emerging media forecast · 4 emerging media in context •and young audiences are not abandoning...

Emerging Media ForecastJune 2007

2

EMERGING MEDIA IN CONTEXT

Traditional Medium Equivalent / Ad-Supported Revenue Driver

Radio/Music

Information Seeking

Commerce / Shopping

Individual or Corporate Behavior Driver

TV Online/Print Out-of-Home Marketing Services

Other Marketing

UGC Production

Content-on-Demand

Social Content Consumption

Niche Content Consumption

New Place Consumption

Asset Management

Game Playing

•Venture capital activity reflects expectations of change

Source: MAGNA Global

3 Source: MAGNA Global, US Census, Veronis Suhler, OPA

EMERGING MEDIA IN CONTEXT•But “Traditional” media dominates by wide margin

050,000

100,000150,000200,000250,000300,000350,000400,000450,000500,000

2002 2003 2004 2005 2006

TV

Radio

ConsumerInternetNewspapers

ConsumerMagazinesSearch

Mill

ions

of P

erso

n-H

ours

Per

Yea

r

2.9bn36.6bn

53.7bn

57.0bn

292.5bn

466.5bn

Total US Population: Hours Spent With Media

4

EMERGING MEDIA IN CONTEXT•And young audiences are not abandoning traditional media

Young Audiences' TV Viewing Trends

15.0

17.0

19.0

21.0

23.0

25.0

27.0

29.0

1991

-92

1992

-93

1993

-94

1994

-95

1995

-96

1996

-97

1997

-98

1998

-99

1999

-00

2000

-01

2001

-02

2002

-03

2003

-04

2004

-05

2005

-06

2006

-07

Hou

rs o

f Vie

win

g Pe

r Wee

k

P2-5

P6-11

P12-17

P18-34

Source: MAGNA Global analysis of Nielsen Media Research data

5

EMERGING MEDIA IN CONTEXT•“Packagers” (networks, publishers) continue to drive industry

MediaPackagers

Producers DistributorsCreators

ConsumersAdvertisers

$

$$ $

$

Devices / Access Points

$


$

Industry Structures Held Together By Regulations,Economic Efficiency and Copyright Law

6

EMERGING MEDIA IN CONTEXT

• So although emerging media = emerging opportunities…

• …look beyond early adopters

• Change is constrained for most media• Business model issues• Limits to market appeal• Difficulty to change behavior• Negative utility with more choice

7

SEARCH

•Media search tools have existed in many forms

8

SEARCH

•Three players have come to dominate online search

9 Source: MAGNA Global, US Census, IAB

SEARCH

•E-commerce is a key driver of search spending•When does search become too large a share of revenue?

Search Spending as % of E-Commerce Sales

0.0%1.0%2.0%3.0%4.0%5.0%6.0%7.0%8.0%

1Q00

A

2Q00

A

3Q00

A

4Q00

A

1Q01

A

2Q01

A

3Q01

A

4Q01

A

1Q02

A

2Q02

A

3Q02

A

4Q02

A

1Q03

A

2Q03

A

3Q03

A

4Q03

A

1Q04

A2Q

04A

3Q

04A

4Q

04A

1Q

05A

2Q

05A

3Q

05A

4Q

05A

1Q

06A

2Q

06A

3Q

06A

4Q

06A

1Q

07A

10 Source: MAGNA Global, US Census, Veronis Suhler

SEARCH

•And search spend reflects effectiveness for SMEs and dot-coms

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$3.00

2002 2003 2004 2005 2006

Search

Newspapers

ConsumerMagazinesConsumerInternetTV

Radio

Advertising Dollars Spent Per Hour of Media Consumption

$0.07

$0.30

$0.90

$0.34

$2.44

$0.12

11

SEARCH

•Paid search to exceed $11 billion in 2008•Led by more searches per person and better monetization

Paid Search

$6,799.0

$8,770.7

$11,094.9

$0.0

$2,000.0

$4,000.0

$6,000.0

$8,000.0

$10,000.0

$12,000.0

2006A 2007E 2008E

(In m

illio

ns)

+29.0% +26.5%

Annual Growth

Source: MAGNA Global, IAB/PWC

12

EMERGING OUT-OF-HOME

•Platforms include cinema, digital billboards and retail networks

13

EMERGING OUT-OF-HOME

•More digital billboards and new digital networks drive growth•But most activity remains at the local level


Emerging Out-of-Home Advertising

$1,090.5

$1,371.8

$1,711.0

$0.0$200.0$400.0$600.0$800.0

$1,000.0$1,200.0$1,400.0$1,600.0$1,800.0

2006A 2007E 2008E

(In m

illio

ns)

+25.8% +24.7%

Annual Growth

14

SOCIAL NETWORKING

•Social sites emerged in late 90s as potential substitutes for portals•But post-Geocities, emphasis has been on social connectivity

15

SOCIAL NETWORKING

•Growth is mostly share gains from other publishers •Historically monetized as residual internet traffic

Social Networking and Total Internet Page Views

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000Ja

n-06

Feb-

06

Mar

-06

Apr-

06

May

-06

Jun-

06

Jul-0

6

Aug-

06

Sep-

06

Oct

-06

Nov

-06

Dec

-06

Jan-

07

Feb-

07

Mar

-07

Apr-

07

May

-07

Page

Vie

ws

Social Networking: + 98.6%

Total Internet: + 2.6%

Source: MAGNA Global analysis of Comscore data

16

SOCIAL NETWORKING

•Social Network growth slowing, but will exceed $1 billion in 2008•Dollars driven by volume of inventory and better monetization


Social Network Advertising

$276.0

$685.0

$1,020.0

$0.0

$200.0

$400.0

$600.0

$800.0

$1,000.0

$1,200.0

2006A 2007E 2008E

(In m

illio

ns)

+148.2% +48.9%

Annual Growth

17

ONLINE VIDEO

Source: MAGNA Global, RIAA

6,000

8,000

10,000

12,000

14,000

16,000

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

Rev

enue

s ($

000s

)

TotalDigitalSales

RetailSales

Manufacturers' Shipments of Recorded Music

Napster Launched (June 1999)

BitTorrent, Kazaa, Grokster, etc. active

iTunes Launch (March 2003)

•New media can dramatically affect an industry•Music industry often cited as case study for the video industry

18

ONLINE VIDEO

Source: McKinsey, NAA, Monster Worldwide

•New media can dramatically affect an industry•…and classified advertising provides another example

19

No

Yes for some some of the time or no for most most of the time

Yes for some most of the time or yes for all some of the time

Often for most people under most circumstances

Yes for all people under virtually all circumstances

ONLINE VIDEO

General Print YP Radio TV

Sufficient Range of ContentSufficient Technical QualityEquipment SubstitutionSufficient Customer ServiceEfficient NavigationCheaper to SubstituteIncreased Convenience

SUMMARY

Limited TV content available today

Internet can’t deliver high res video well

IPTV: no STB integration

QoS is critical for video

Hard to navigate to find audio/video

Online bandwidth=more cost than free media

Print and radio are typically portable

Print is tactile

Prospects for online media substitution limited by drawbacks relative to

traditional media

•But TV won’t be impacted as other media (yet!)


20

ONLINE VIDEO

•Conventional TV popularity: 90x vs. Online in 2011?•Yes, if last year’s online growth rates persist

Source: MAGNA Global, Accustream

145.8x

119.8x99.2x

82.7x69.4x

58.6x

0.0x20.0x40.0x60.0x80.0x

100.0x120.0x140.0x160.0x180.0x200.0x

25% 30% 35% 40% 45% 50%Different Scenarios:

Assumed 5-Year Compounded Annual Growth Rate of Online Video

Popu

larit

y Fa

ctor

of C

onve

ntio

nal

TV in

201

1

2006 Growth Rate Was 38.8%

Above Trend

Below Trend

21

ONLINE VIDEO

•Online video spend growing >50% annually, but <1% of all TV•Significant increase in supply and advertiser interest driving results


Online Video Advertising

$235.0

$365.5

$560.0

$0.0

$100.0

$200.0

$300.0

$400.0

$500.0

$600.0

2006A 2007E 2008E

(In m

illio

ns)

+55.5% +53.2%

Annual Growth

22

ADVANCED TV

•Advanced TV (VOD, RFIs, iTV) has been slow to emerge•User experience remains poor•Content is better, but limited•Advertising infrastructure still under construction!

Advertising Infrastructure Components•Unduplicated/unique reach

•Uniform technological standards

•Establishment of creative formats

•Smooth buying process

•Provision of robust user data

•High-quality service / product standards


23

ADVANCED TV

•VOD is largest component, followed by RFIs and other iTV•VOD likely generates $85mm in 2007, $105mm in 2008

Advanced TV Advertising

$107.0

$140.0

$178.0

$0.0$20.0$40.0$60.0$80.0

$100.0$120.0$140.0$160.0$180.0$200.0

2006A 2007E 2008E

(In m

illio

ns)

+30.8% +27.1%

Annual Growth


24

MOBILE

•Mobile (WAP, video, SMS, LBS) attracts great interest, few $ today•Infrastructure issues potentially similar to advanced TV•Consumer proposition is being defined•Long-term opportunity to use mobile devices for CRM•Many new products compelling, but scale remains too small for

most national advertisers given their broader objectives


25

MOBILE

•Growth driven in near-term by introduction of new supply •Carriers opening up “decks” and new mobile ad models

Mobile Advertising

$55.0

$105.0

$194.0

$0.0$20.0$40.0$60.0$80.0

$100.0$120.0$140.0$160.0$180.0$200.0

2006A 2007E 2008E

(In m

illio

ns)

+90.9% +84.8%

Annual Growth


26

GAMING

•Gaming growth likely slower than for other new media•Many advertisers remain interested, but few invest

Game-Related Advertising

$187.2$216.9

$238.6

$0.0

$50.0

$100.0

$150.0

$200.0

$250.0

2006A 2007E 2008E

(In m

illio

ns)

+15.9% +10.0%

Annual Growth


27

SUMMARY

•Annual emerging media growth = ~ 30% in 2007 and 2008


EMERGING MEDIA AD EXPENDITURES (in millions) 2006A 2007E 2008E

Search $6,799.1 $8,770.9 $11,095.1• Annual Growth ------ 29.0% 26.5%Emerging Out-of-Home 1,090.5 1,371.8 1,711.0• Annual Growth ------ 25.8% 24.7%Social Networking 276.0 685.0 1,020.0• Annual Growth ------ 148.2% 48.9%Online Video 235.0 365.5 560.0• Annual Growth ------ 55.5% 53.2%Advanced TV 107.0 140.0 178.0• Annual Growth ------ 30.8% 27.1%Mobile Marketing 55.0 105.0 194.0• Annual Growth ------ 90.9% 84.8%Gaming 187.2 216.9 238.6• Annual Growth ------ 15.9% 10.0%

Total $8,749.8 $11,655.1 $14,996.7• Annual Growth ------ 33.2% 28.7%Less Estimated Duplication (Search via Social Networking) 0.0 (135.0) (250.0)Total Emerging Media $8,749.8 $11,520.4 $14,747.0• Annual Growth ------ 31.7% 28.0%

28

APPENDIX

•Emerging media services and devices forecasts


0.0%

20.0%

40.0%

60.0%

80.0%

100.0%

120.0%

140.0%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

% o

f US

Hou

seho

lds

US Digital Cable, Satellite andTelcoTV Households

US DVR Subscriptions

US VOD Households

US Broadband Households

US Satellite RadioSubscriptions

US HD Subscriptions

US Digital TV Shipments

US Mobile PhoneSubscriptions

29

NOTES ABOUT METHODOLOGY

• Estimates and forecasts reflect data for the United States only

• General methodology involves deriving “bottoms-up” estimates and forecasts for each supplier of media in each emerging media sector

• Estimates and forecasts include media expenditures (or approximate allocations) only, and exclude marketing services and related activities such as production of creative assets

Contact: Brian Wieser, CFATel: 917-542-7008 Email: [email protected]

emerging media forecast · 4 emerging media in context •and young audiences are not abandoning...

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