1
Conclusions: broadcasters can play an important role in
Convergence 3.0
• Supplying high quality content which users can easily
access
• Help network operators secure investment in new
broadband networks
• Contributing to standards and protection for children and
other vulnerable groups
2
Broadcasters’ approach to the internet: three phases
Stage
Broadcasters’ use of the internet
Phase 1: Incremental
A minor supplement to the things they were
already doing
Phase 2: Strategic
Creating initiatives to exploit the internet as
a new medium in its own right
Phase 3:
Transformative
Recognition of the new opportunities
provided by high capacity broadband
We are now in the early stages of the ‘transformative’ phase
3
So far, broadcasters have had a positive effect on internet
development, although the scale is hard to quantify
• Promotion
• Providing rich content and shared resources
• Raising awareness and encouraging digital literacy
4
Quality content still hugely important
No. of views up to
June 2007 (millions)
• Consumers clearly value professionally produced quality content
1
2
3
8
12
18
YouTube channel rank
2059
117
3747
191
26
820
286
No. of videos uploaded
87
60
45
31
CBS
Universal
Music
NBC
RCA
Warner
Records
24
NBA
Source: YouTube
5
Securing trust and confidence online: traditional
broadcasters are well placed to help
Question asked: “Please indicate the top three media sources you
depend on for information on these topics”
TV
Newspapers
Magazines
Internet
Rank of the
internet
News
91%
63%
10%
16%
3
Business News
40%
36%
8%
13%
3
Sports News
62%
42%
6%
11%
3
Source: Forrester, Q2 2006
6
High-speed broadband infrastructure will require
significant investment
Proposed broadband infrastructure investment by country
Target year
2007
2006
2007
2008
2010
2008
2010
95%
62%
46%
75%
80%
50%
28%
Belgacom
DT
Belgium Germany
SBC
USA
Verizon
USA
KT
Korea
HKBN
Hong Kong
NTT
Japan
Target
homes
(millions)
11
2
16
20
12
1.8
47
Investment
planned
€3bn
€300m
€3.4bn
€6.7bn€8bn
n/a
€100m
€37bn
Technology
FTTN
FTTN
FTTN
FTTH
FTTH
FTTH
FTTH
Source: Capgemini
7
Promoting consumer and citizen welfare
• Three broad suggestions in developing policies
- Encourage competitive markets (lowering entry barriers
and ensuring that consumers are sufficiently wellinformed to make effective choices)
- Define and safeguard the public interest in the new
convergent world (self-and co-regulation)
- Encourage broadcasters, other content owners and
network operators to find ways sharing risks and
rewards
8
Aims of the report
• This an independent study which examines:
- The role that broadcasters have so far
played in the development of the internet;
- The challenges and opportunities ahead, as
convergence progresses;
- How broadcasters and the internet can
work more closely in future; and
- The key policy issues for debate.
• This presentation contains the provisional
findings
10
The traditional broadcasting model differs considerably
from the online world
Broadcasting
Online
One-to-many
Many-to-many
Linear
Non-linear
Built narrative content
Interactive and participative
Geographically constrained
Global
Regulated in public interest
Broadly unregulated
Zero marginal cost per user
and an established
distribution infrastructure
Zero marginal cost per user but
likely to require significant
investment in infrastructure
However, these differences are reducing as we move
towards a more converged communications world
11
But the internet has already offered significant scope for
an extension of broadcaster activity
• Scale and freedom from geographical limitations
• Digitising (and monetising) the content archive
• New opportunities to deliver more specialist content in
a commercially viable manner
• Increasing the richness and depth of broadcast content
• Building a stronger, more participative and more loyal
audience
• Reducing costs
12
Broadcasters’ use of the internet can be described in three
phases
Stage
Broadcasters’ use of the internet
Phase 1: Incremental
A minor supplement to the things they were
already doing
Phase 2: Strategic
Creating initiatives to exploit the internet as
a new medium in its own right
Phase 3:
Transformative
Recognition of the new opportunities
provided by high capacity broadband
We are now in the early stages of the ‘transformative’ phase – many
broadcasters are now using third party platforms, such as YouTube,
to distribute their audiovisual content
13
So far, broadcasters have had a positive effect on internet
development, although the scale is hard to quantify
• Promotion
- Television is still, by far, the most dominant
medium – time spent consuming television is 8
times higher than time spent online
• Providing rich content and shared resources
- Funding, talent, production resources, etc.
• Raising awareness and encouraging digital literacy
- Particularly true for some specific demographic
groups
The importance of information and entertainment in driving
internet take-up suggests broadcaster influence has not been
trivial
14
In many countries broadcasters are already leveraging
their brands to build significant online presences
The most popular European broadcaster internet sites ordered by country ranking
Internet property
BBC Sites
DR.DK
Publieke Omroep
MTV3.FI
YLE.FI
TV2 Danmark
V2 Sites
ORF.AT
VRT Sites
NRK.No
Groupe TF1
SRG SSR idée Suisse
Sveriges Television
Country
UK
Denmark
Netherlands
Finland
Finland
Denmark
Norway
Austria
Belgium
Norway
France
Switzerland
Sweden
Ranking
among top % Reach
100 web
(Jun '06)
properties
5
55.3
7
36.8
7
33.0
7
45.5
8
30.9
8
32.0
9
n/a
10
22.2
11
18.9
13
27.0
16
19.4
19
15.9
19
20.2
% Reach Increase of
(Jun '07) reach (%)
59.6
33.2
33.4
35.3
30.9
31.4
33.6
22.0
19.4
28.4
23.8
17.3
18.6
4.3
-3.6
0.4
-10.2
0.0
0.6
n/a
-0.2
0.5
1.4
4.4
1.4
-1.6
Source: EBU
15
And in many countries, broadcasters are developing
increasingly sophisticated online offerings
Video streaming
On demand
video
downloads
Podcasts
Mobiles
RSS
Communities
& forums
Usergenerated
content
Business
Model
BBC
Yes throughout
IPlayer – BBC
programming
only, 7 days
after airing
Yes, large
radio section
Yes
throughout
Yes
throughout
Yes for most
sections
Yes
Free, licence
fee
supported
ITV
Yes throughout –
although clips only
On demand for
30 days after
airing
Yes, minimal
Yes
Yes
Yes
Yes on ITV
Local
Advertising
Channel 4
Yes throughout –
although clips only
4OD – variable
availability
Yes, radio
section & T4
Yes
Yes
Yes for most
sections
Yes
Advertising
NBC
Yes, including fulllength episodes
Yes, from
MSNBC
Yes
Yes, from
MSNBC
Yes
Yes, through
video uploads
Advertising
ABC
Yes
Yes
Yes
Yes
Yes
CBS
Yes, including fulllength episodes
Yes
Yes
Yes
Yes
Italy
RAI
Yes
Yes, news and
other ‘web
channels’
Yes
Advertising
Netherlands
NED 1
(part of
NPO)
Yes
Yes
Yes
Yes
Yes
Free, licence
fee
supported
Sweden
SVT
Yes, including full
length episodes
Yes
Yes
Yes
Yes
Free, licence
fee
supported
Brazil
Rede Globo
Yes
Yes
Yes
Yes
Yes
Japan
NHK
Yes
Yes
Yes
Yes
Country
Broadcaster
UK
US
Yes
Yes
Yes
Yes
Advertising
Yes
Yes
Advertising
Advertising
Advertising
Source: Broadcaster sites and Human Capital analysis
16
Information and communication are the key drivers or
internet take-up
The drivers for internet take-up
46%
43%
Information
28%
Communication
20%
22%
Keep up with technology
26%
20%
20%
For the Children
Entertainment
Shopping/ banking/ booking
Recommended by friends
or family
16%
13%
Owners
Intend to get
12%
12%
11%
18%
Source: Ofcom, 2006
17
Looking ahead, we are entering a new “transformative”
phase
• High capacity broadband makes possible the
delivery of high quality long-form audiovisual
content
• Web 2.0
- Changing user/content relationships
- Increasing democratisation
- The increasing importance of search and
content navigation
• New business models
- Content provision
- Paying for the infrastructure
18
The broadcasting value chain is being transformed
Ideas
Talent &
Resources
Producer
Bundler
Devices
Gateway
The internet
Distributor
Navigation
Audience
• The content value chain, previously controlled by a small
number of broadcasters, has been opened up to anyone
with an internet connection and an idea
• In an online world, equipped with powerful search tools and
user recommendations, bundling is arguably much less
important
• Distribution, navigation and consumption are all made
possible through the internet
19
New online services have emerged, with richer content and
greater functionality
Site
Functionalities
User-created blogs, including text, pictures
and hyperlinks
User-created ‘encyclopaedia’
Photo sharing
Social networking, allowing uploaded music,
text and pictures
Video sharing
Live and pre-recorded video broadcasting
allowing captioning and insertion of prerecorded video packages
Live and pre-recorded video broadcasting
Live and pre-recorded video broadcasting
20
And whilst television remains hugely popular and
important, there has been clear migration online
Time spent using communications services 2006
-3.6%
-2.0%
158.0%
-8.0%
58.0%
6.9
3.7
fixed
mobile
250
change
2002-2006
minutes per day per person
216
200
170
150
100
50
0
36
television
radio
internet
Source: Ofcom
21
Both internet ‘reach’ and provision of content online
continues to grow at considerable rates
60%
30
40%
20
20%
0
USA
China
Japan
Germany
France
South
UK
Italy
Canada
Spain
Brazil
Netherlands
Australia
Mexico
Turkey
Russia
Poland
Belgium
Sweden
India
10
0%
Source: Point Topic
Active
Source: Netcraft.com
22
2007
40
2005
50
Hostnames
2003
80%
137.5
125.0
112.5
100.0
87.5
75.0
62.5
50.0
37.5
25.0
12.5
0
2001
Annual growth (Q1 2006
to 2007)
100%
1999
60
Millions of subscribers
1997
70
Growth in the volume of
hostnames and active websites
1995
Broadband subscriptions and
growth amongst top countries
In this third phase, broadcasters could, if they meet the
challenge, have a greater role to play
Broadcasters can help drive further internet development by:
• Supplying high quality content which users can easily
access
- Creating clear expectations for users about the nature
and reliability of available content;
- Providing the vital roles of aggregator and navigator;
- Helping later adopters to make sense of the internet.
• Helping the internet to adjust to a world in which it will have
to pay more attention to citizens’ concerns about standards
and protection for children and other vulnerable groups.
• Help network operators secure investment in new
broadband networks
23
Quality content is still hugely important, both for
consumers and in setting standards
No. of views up to
June 2007 (millions)
• Consumers clearly value professionally produced quality content
1
2
3
8
12
18
YouTube channel rank
2059
117
3747
191
26
820
286
No. of videos uploaded
87
60
45
31
CBS
Universal
Music
NBC
RCA
Warner
Records
24
NBA
• The economics of programme production still suggest that a high production
value programme needs mass audience exposure on a broadcast channel to
ensure a return on its upfront investment
• Although it is possible to create content specifically for the internet, the
promotional and marketing costs will be prohibitive in most cases
Source: YouTube
24
Securing trust and confidence online is also crucial, and
traditional broadcasters are well placed to help
• A GlobeScan survey revealed that the most trusted global news
brands tested include the BBC (with 48% across the 10 countries
saying they have a lot or some trust) and CNN (44%)
• Consumers, particularly for news and factual content, clearly place
most reliance on traditional broadcaster sources
Question asked: “Please indicate the top three media sources you
depend on for information on these topics”
TV
Newspapers
Magazines
Internet
Rank of the
internet
News
91%
63%
10%
16%
3
Business News
40%
36%
8%
13%
3
Sports News
62%
42%
6%
11%
3
Source: Forrester, Q2 2006
25
High-speed broadband infrastructure will require
significant investment
Proposed broadband infrastructure investment by country
Target year
2007
2006
2007
2008
2010
2008
2010
95%
62%
46%
75%
80%
50%
28%
Belgacom
DT
Belgium Germany
SBC
USA
Verizon
USA
KT
Korea
HKBN
Hong Kong
NTT
Japan
Target
homes
(millions)
11
2
16
20
12
1.8
47
Investment
planned
€3bn
€300m
€3.4bn
€6.7bn€8bn
n/a
€100m
€37bn
Technology
FTTN
FTTN
FTTN
FTTH
FTTH
FTTH
FTTH
Source: Capgemini
26
Broadcasters may work with network operators to help
secure this major infrastructure investment
• Enders Analysis estimate that the total cost of
deploying fibre to the home (FTTH) to 90% of UK
households would be €14bn
• Network operators may have to shoulder the burden of
investment, but are not certain of the returns
• Broadcasters may be able to help by agreeing
innovative deals with networks, to share risk and
rewards
27
There will also be important roles for policymakers in
promoting consumer and citizen welfare
• Over regulation will stifle growth and innovation; under
regulation risks a wild-west-style ‘free for all’
• We assert three broad suggestions in developing policies
- Encourage competitive markets by lowering entry
barriers and ensuring that consumers are sufficiently
well-informed to make effective choices
- Define and safeguard the public interest in the new
convergent world drawing on aspects of self-and coregulation, rather than transferring old style
broadcasting regulation to the broadband world
- Encourage broadcasters, other content owners and
network operators to find ways sharing risks and
rewards
28
As a result, we argue that there clear consumer and citizen
benefits from a symbiotic broadcaster/internet relationship
• There have already been some impressive
success stories as broadcasters begin to
recognise the opportunities of the internet
• As we move into a more converged media
and communications world, the future
development of broadcasting and the
internet will be increasingly closely linked
• Broadcasters and leading internet players
depend on, and will benefit from, working
closely with each other
29