management meeting gvt_umgi_07.08_v1.2
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Managment MeetingSão Paulo, August 8, 2013
2
1 Initial PMC Strategy
PMC Product Overview2
3
4
PMC Results
Opportunity
Summary
5 New Business Model
3
Develop an integrated and unique customer proposition in the Brazilian market taking advantage of:
■GVT’s cutting edge broadband technology and value chain control■Universal Music content catalogue and entertainment service development know how
Empower GVT brands with unique marketing and communication assets
Develop a new revenue stream
■ Innovative music service■ Paid subscription for non GVT customers■Unique content offers (up to unlimited MP3s bundle packages)■ Aggregate more content in the future
Initial PMC Strategy
4
#1 Increase Sales Increase the broadband gap offer thru differentiation Give brand stature through association with
important artists
#2 Keep customers for a longer period
Increase customer loyalty
#3 Increase POP´s audience and stickness
Increase audience and time spent in POP portal with new exclusive content
Increase POP´s revenues with new paid services
Expectations on Music adding value to GVT
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#1 Increase Sales Increase the broadband gap offer thru differentiation Give brand stature through association with
important artists
#2 Keep customers for a longer period
Increase customer loyalty
#3 Increase POP´s audience and stickness
Increase audience and time spent in POP portal with new exclusive content
Increase POP´s revenues with new paid services
Expectations on Music adding value to GVT
Main Strategy
6
1 Initial PMC Strategy
PMC Product Overview2
3
4
PMC Results
Opportunity
Summary
5 New Business Model
7
PMC overviewONLINE MUSIC SERVICE FOR GVT BROADBAND CUSTOMERSThe music and video streaming service is available on the web, Mobile, tablet and GVT TV.
News
Music and video playlists
Exclusive shows
Exclusive albums
Radio
Facebook login
Social media updates and interactions
Web
Mob
ile A
ppTV
App
Oct/10
Launch New activation process
Apr/11 Jun/11 Nov/11 Jan/12 Feb/12 Jun/12 Sep/12
New layout
Sony contentConcert
New search
New layout(actual)
Daily PlaylistsFacebook likes
campaign
First live show transmission
New logoFavorites
RadioFacebook login
Nov/11 Mar/12 May/12 Jul/12 Sep/12
Mobile Applaunch
Version1.2
Versions1.31.4
Version1.5
Version 1.6New logo,
Favorites, Radio,Facebook login, Video playlists,
New player
Mar/12 May/12 Sep/12
TV Applaunch
New version with bugfixes
New Version New logo, Shows
and Videos, Favorites, Radio,Video playlists,
Screen saver
PMC development timeline
8
Web
Mob
ile A
ppTV
App
Oct/10
Launch New activation process
Apr/11 Jun/11 Nov/11 Jan/12 Feb/12 Jun/12 Sep/12
New layout Sony content Longforms New search
New layout(actual)
Daily Playlists Facebook likes
campaign
First live show New logo Favorites Radio
Facebook login
Nov/11 Mar/12 May/12 Jul/12 Sep/12
Mobile Applaunch
Version1.2
Versions1.31.4
Version1.5
Version 1.6New logo,
Favorites, Radio,Facebook login, Video playlists,
New player
Mar/12 May/12 Dez/12
TV Applaunch
New version with bugfixes
New Version New logo, Shows
and Videos, Favorites, Radio,Video playlists,
Screen saver
PMC development timeline
9
Dez/12
Ivete Sangalo live streaming
concert
Dez/12
Ivete Sangalo live streaming
concert
Sep/12
Ivete Sangalo live streaming
concert
PMC development timelineW
ebM
obile
App
TV A
pp
2010 2011 2012
Portal Launch
Features New activation process New Look & Feel Sony Content Longform New Search
Mobile App launch
Features Daily Playlists Facebook likes campaign First live show New logo Favorites Radio Facebook login Ivete Sangalo live streaming concert
Features Version 1.2 - bugfixes Version 1.3 - bugfixes Version 1.4 - bugfixes Version 1.5 – bugfixes Version 1.6 - New logo, Favorites, Radio, Facebook login, Video
playlists, New player Version 1.7 - Ivete Sangalo Live Streaming concert
TV App launch
Features New version with bugfixes New Version
New logo, Shows and Videos, Favorites, Radio, Video playlists, Screen saver
Ivete Sangalo live streaming concert
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11
cost per user
R$ 1,0468Label Pool Clearing
cost per userR$ 0,9030
MKT Content
> 200K active users
Up to 200K active users
UMGI agreement
MKT Fee
MKT Fee 12,25% MKT Fee Net50%
50%
HR Artist image copyright
Marketing Initiatives GVT & PMC Live concerts and showcases Exclusive video or audio Cultural contests
Taxes
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1 Initial PMC Strategy
PMC Product Overview2
3
4
PMC Results
Opportunity
Summary
5 New Business Model
13
PMC results overview
272,000ACTIVE USERS
DOWNLODED APPS
100,000
6 MILLIONSTREAMS/MONTH
1 MILLIONSTREAMS/MONTH
1 MILLION LIKES ON FACEBOOK
240 KPLUS 1 ON GOOGLE+
1 MILLIONMUSICS
50,000VIDEOCLIPS
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PMC customer base and gross additionsCustomer base evolution (thousands)
Jun 2013:10% penetration over broadband customer base53% penetration over TV customer base
Gross additions (thousands)
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13
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36 3337
2225 27
21
28
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Taylor Swift project
User activation was boosted by the projects with UMGI
Ivete Sangaloproject
Highlights■ Gross additions is composed of 83% TV’s customer
■ Exclusive content and highlight at Pay TV increase the customer base
■ Taylor Swift and Ivete Sangalo Projects boosted the gross additions
■ The lack of excluvsive content in 2013 lower the gross additions
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13
188211
241 249 253 261 270 275 285272
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PMC: active User ExperienceMusic and video streams (thousands)
Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13
4,977
3,864 3,9084,214
3,6333,109
3,711
3,060 2,733
2,166
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1,133 1,064 1,158 956 697
1,000 794 780 767
Music Video
Video release on Pay TV
Unique Login (thousands)
sep/13 oct/13 Nov-13 dec/13 Jan-13 Feb-13 Mar-13 Apr-13 May-13 Jun-13
7991 98
120
8391
8274
84
55
Ivete Sangaloproject
6 MM MUSICSTREAMS PER MONTH
DOWNLOADED MOBILE APPS
100.0001 MM VIDEO
STREAMS PER MONTH
PMC in social mediaFACEBOOK
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+256.417PLUS+1 ON GOOGLE +
+1.186.987LIKES ON FACEBOOK
+8.417SEGUIDORES ON TWITTER
GOOGLE PLUS
250AVERAGE REACHMIL USERS
2,5AVERAGE REACHMILLIONS USERS
150AVERAGE REACHMIL USERS
Marketing Initiatives
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PMC Key Takeaways
#1
#2
#3
#4
PMC TV is the most important factor for PMC activation
PMC helps improve GVT customer engagement
The investment on promotions are not bringing the desired activations and buzz results
Exclusive and relevant content drives PMC activations like Justin Bieber pre-listening , Ivete Sangalo Project and Taylor Swift showcase
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19
1 Initial PMC Strategy
PMC Product Overview2
3
4
PMC Results
Opportunity
Summary
5 New Business Model
PMC StrenghtsST
REN
GTH
PMC customer base relationship 300K active users
Strong presence in social media More than 1 million likes on Facebook and more than 190K plus 1 on Google Plus
3 years product and delevop experienceStrong relationship with record labelsConsistent platform
Young audience proximitySpecialists journalist in musicMusic drives young audience
High cost of actual modelCost per active user turn the current business model unhealthy
Create Value Added for GVT customers
Give proper value to a priceless asset Add a new revenue
PRO
BLEM
S
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Music is a TOP interest on the target consumer: 20 – 35 years in Brazil GVT is a well known brand scoring 90% of ‘aided brand awareness’ Despite that fact, the brand awareness decrease to 31% on ‘unaided awareness’ However, GVT is ahead of NET and Embratel (28%) and Telefonica (16%) PMC is a excellent sales driver – 36% of PMC users define it as important/much important on choosing GVT GVT is a strong brand – recognized by being the best offer and best service PMC users registered a positive perception, higher level of satisfaction with the provider and are more likely to
recommend to friends and family Recommendation is a key factor when choosing a telecom offer
GVT Brand Consideration
GVT Customer - PMC User
GVT Customer - Not PMC User
Non-GVT Customer - Music Important
Non-GVT Customer - Music Unimportant
95%
92%
74%
61%
GVT Brand Recommendation
Satisfaction with current provider
Loyalty to current provider
90%
90%
53%
48%
95%
92%
77%
83%
74%
68%
44%
57%
GVT and music relationship
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PMC on Facebook has more likes than others online music player like XBOX music and Rdio 2nd brazilian online music service in Brazil on Facebook likes (Radio UOL is the first) Less than a year, PMC grew more than 1 million likes with Facebook Ads campaign and interactions
PMC is gaining relevance in social media
Portal Pop GVT TV GVT PMC
1.6 MM
0.056 MM 0.3 MM
Likes on Facebook’s GVT Produts (MM)
XBOX Music
Rdio Deezer worldwide
Spotify Worldwide
Itunes Worldwide
0.8 MM
2 MM
3.7 MM
30 MM
… compare with others worldwide music services (MM)
1.2 MMPMCPMC 0.4 MM
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PMC
Global recorded music industry’ growth
■ In 2012, the brazilian music market grew 5% comparing with 2012 with R$ 392,8 MM
■ Brazil digital sales took off in 2012, following the launch of itunes at the end of 2011, with revenues expected to have nearly doubled in the past 12 months
■ The total recorded music market grew by 11.2% in the first half of 2012 and by 8.6% in 2011
■ In 2013, Deezer, Xbox Music, Tim Music, Unlimited Music were launched in Brazil
■ Spotify is expected to be launched in Brazil on September 2013
Brazil: A market set to surge
Global music revenues (US$ billion)
2007 2008 2009 2010 2011 2012
24 44 43 54 61
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Digital
Share on market
+28%
Brazil digital music revenues (R$ million)
+83%
2007 2008 2009 2010 2011 2012
16.4 13.9 12.2 10.4 11.1 16.5
3.1 4.3 4.7 4.8 5.15.6
19.5 18.2 16.9 15.2 16.1722.1
Physical + others Digital
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Online music playersSubscribers Catalog Business Model
n/a 12 MM 7 days trial
Unlimited Web
Streaming R$ 8,99
Mobile + off-line
R$ 14,90 R$ 22,90*R$ 29,90*
Highlights
Oi PartnershipSolid multi screen plataform
6 MM paid subs
24 MM total subs
20 MM Free – Ad supported
UnlimitedStreaming
$4,99
Streaming +Mobile Offline $9,99
4 MM paid subs
10 MM total subs
20 million 15 days Trial
Streaming Ilimited R$ 8,90
Mobile + off-line
R$ 14,90
n/a 28 MM Download a la carte: US$ 0.99/ US$ 1.29Album a la carte: R$ 18
63% share digital music revenue29% share global music revenue
Orange partnership4 million pay subscription
150 countriesBrazil launched in January 2013
Worldwide expansion with 28 territoriesWill be launch in September 2013
SFR Partnership
n/a n/aUnlimited streaming + download(Mobile, PC and Game Console)
$10 a month
• Launched in late October 2012• Windows 8 will have shipped 350 million
units by the end of 2012.
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1 Initial PMC Strategy
PMC Product Overview2
3
4
PMC Results
Opportunity
Summary
5 New Business Model
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Develop a new service
Current business
model discontinued
Convert PMC base to a
subscription paid music
service base
High added-value features and catalog
Add Warner, EMI and Som Livre + New
Features
Change the cost model to a new revenue stream model
New identity: new brand, new look & feel... Only the paid
subscription model available
Assumptions adopted
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New Business model offers
R$ 4,90 R$ 6,90 R$ 12,90
PMC Base OTT service Base
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R$ 6,90 R$ 12,90
OTT service Base
New Business model offers
Exclusive offer for PMC userFeatures:
• audio• videoclip• offline Mode• SVOD (15 titles catalog)• Available on web, mobile,
tablet and GVT TV
R$ 4,90
Eliminate the current cost business model
PriceFeatures
R$ 4,90
PMC Base
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R$ 4,90 R$ 12,90
PMC Base OTT service
New Business model offers
New GVT costmers offer para novos
Features:• audio• Videoclip• Offline Mode• SVOD (15 title catalog)• Available on web, mobile,
tablet and GVT TV
Generate new revenue
Features Price
R$ 6,90
R$ 6,90
Base
30
R$ 4,90 R$ 6,90
PMC Base Base
New Business model offers
OTT clientsFeatures:
• Audio• Videoclip• Offline Mode• Available on web, mobile,
tablet, Connected TV e Game Console)
Add Value for GVT customers
Features Price
R$ 12,90
Market Price
R$ 12,90
OTT service
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Revenue x Costs
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Revenue x Costs
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Agreements statusReceived Propostal Waiting Proposal Project Presentation
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Agreements statusReceived Propostal Waiting Proposal Project Presentation
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Agreements statusReceived Propostal Waiting Proposal Project Presentation
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Launch requirementsRecord Label’s Agreements
Copyright’s Agreement
Develop Plataform
Payment Method
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HR Organizational Structure
Gerente de música
Editorial
Analista Sênior / GP Pleno
Programador da Rádio Jornalista - Editor
Jornalista Jornalista
Comunicação & Relacionamento
Coordenação Comunicação e Relacionamento
Analista sênior de comunicação
Analista pleno de comunicação
Analista de rede sociais
Analista de Relacionamento
AnalistaWeb design
Produto
GP Sênior Analista de marketing Sênior
Analista de marketing Pleno
Comercial &Novos Negócios
GP Sênior
Estratégia & Marketing
GP Sênior
Áreas do novo serviço
Manutenção da equipe atual (em cinza no organograma) – 1 HC + 5 terceiros
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Development timeline
Quality Assurance(~1 mês)Assinatura
Contrato(~2 meses)
ProductDesc.
(~1 mês)
M0 M2 M7 M8
Launch
M4
Integração STB (~5 meses)
Desenvolvimento IT (~5 meses)
Implementação (~3 meses)
RFQ & Compra Serv.(~2 meses)
Status
Riscos
Ponto de Atenção
39
Development timeline – Expected Launch Q1 13’
Q2
New
Mui
sc B
usin
ess
Business
Product
Strategy
BP development
BP Approval
Q3 Q4 Q1
Features development
Record Deals Agreements
Launch strategy
Headcount
4 - 6 months
Layout development
IT developmentLaunch
New Music Service
40
#1
#2
#3
#4
#5
The new revenue stream model offsets content costs with revenue e keeps the GVT customer loyalty
The revenue share model offers a business division risk
The low capex involved makes this new model very attractive
The music industry is expanding and 2013 will be an important year for digital music in Brazil with the release of worldwide player such as Deezer and Spotify
With 3 years music product experience makes easier to ensure a more consistent and assertive development
New Business Model Key Takeaways