sony online content discussion march 2010. draft page 1 executive summary type and volume of content...
TRANSCRIPT
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Executive Summary
• Type and volume of content selected may vary depending on our goals for a service
– Hardware focus – seek content and/or viewing experience that differentiates our hardware and drives new purchases
– Service / network focus -- seek content that provides existing Sony hardware owners a compelling addition to (or alternative to) Cable / Broadcast Nets, Netflix, Hulu, and cable VOD
• Although $1-$2BN of content would not provide the range of content available through cable service or broadcast TV, it would eclipse the spend of current online pure-plays
– To provide a full range of channels, MSOs spend $7-$8BN in affiliate fees
– Broadcast networks spend roughly $3BN on programming
– Cable network programming spend varies widely (from tens of millions to several billion)
– Hulu and Netflix Streaming are spending an estimated $100 to $225MM on content
• In the near-term, Sony should allocate spending across a mix of approaches to provide a compelling experience
– License existing content (e.g., films, sports, TV series)
– Commission compelling originals as HBO, Fox, and AMC have done to build their brands
• Costs to a nascent digital network may be nearly twice as much as for established networks as producers may be less likely to bear a deficit
– Offer content under new on-demand models (e.g. early window)
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Programming Spend by Provider ($ MM)
$8,808
$7,046
$4,559
$2,846
$1,460
$879
$223
$117
$31
$226
$100
$0 $2,000 $4,000 $6,000 $8,000 $10,000
DirecTV
Comcast
ESPN
Avg. Big 4
HBO
TNT
Syfy
NESN
Fine Living
Hulu
Netflix Streaming
Subscription TV Providers
Basic Cable / Regional
Sports Networks
Affiliate Fees
Source: SNL Kagan, SEC filings, Wall Street research, SPE Corporate Development research(1) Represents LTM programming expenses for US and Latin America as of 9/30/09. Source: SEC filings(2) Represents LTM programming expenses as of 12/31/09. Source: SEC filings(3) Represents content owner revenue share for 2009. Between 70% and 75% of total ad revenues are taken by content providers. Source: SNL Kagan(4) Streaming content acquisition costs for 2009 only. Source: Wedbush Morgan analyst report
.
(1)
(2)
Broadcast / Leading
Cable Networks
Premium Cable Net.
Online
Affiliate Fees
Content Provider Revenue Share
License Fees for Streamed Content
License Fees for Programming incl Originals
(3)
(4)
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$713
$367
$108
$32
$57
$0 $100 $200 $300 $400 $500 $600 $700 $800
NFL / Fox
NBA / TNT
BCCI Cricket
Broadcast
Cable
Source: SNL Kagan, Company filings, Wall Street research, SPE Corporate Development research(1) Annual figures. Fox paid $4.27BN for a 6 year NFL deal; TNT paid $2.2BN for a 6 year NBA deal. Four years of BCCI Cricket world-wide rights went for $430MM (2) Assumes $2.6MM total spend on 22 episodes(3) Assumes $2.1MM total spend on 15 episodes .
TV Series Prog. Costs
BCCI Cricket
(1)
(1)
(1)
Broadcast Network Rights for a Major Sport
Cable Network Rights for a Major Sport
International Sports Rights
Broadcast Network-Quality TV Programming
TV Sports Broadcast
Rights
Broadcast Series
Cable Series
Cable Network-Quality TV Programming
(2)
Cost to License Selected Properties for a Single Year ($ MM)
(3)