Interactive TV June 2009 www.farncombe.eu

1. Interactive TV June 2009 www.farncombe.eu

2. Introduction • The presentation is an introduction to interactive TV in Europe and the Farncombe Consulting Group • We gratefully acknowledge AFDESI, Tracy Swedlow, Paymedia and Visiware for their participation

3. Contents 1 FARNCOMBE CONSULTING GROUP OVERVIEW OF iTV Q & A 3 2

4. Who we are Farncombe is an international consulting group specialised in media and telecommunications Our Clients Our Key Projects • Consulting • Commercial & Technical Strategy • New Products/Markets Planning • M&A, Due-Diligence • RFP & Contract Negotiation • Content Security Audit • Program Management • System Architecture & Integration • Interaction Design • Private Equities • Telecom operators • Broadcasters • Regulators/ Industry Groups • Content Providers • PayTV Operators • Broadcasters • Telco operators • Investor Community • Content Providers • Regulators/ Industry Groups • PayTV Operators Our People • We are specialised in the media and telecommunications sectors • Our senior team has practical, executive experience in industry

5. How Farncombe is Organised The Farncombe Consulting Group encompasses three distinct yet cooperative units, with offices in London, Basingstoke and Paris - we deliver a global end-to-end offering. Business Strategy Technology Customer Experience • Design agency specialised in user interface design • Based in Paris • Business, strategic advice • due diligence in the digital media sector • Based in London • Technology-based strategicadvice, and due diligence for digital media companies • Offices in the UK and France Business & Investment Strategy Commercial Strategy & Planning Technology & Operational Planning Implementation & Design

6. Farncombe Services: Focused Towards Consumers By integrating the design and technology elements in its strategy, the operator is ensuring the successful roll out of its products and services.

7. Selected Farncombe Customers 18 years of successful operations: 85% of our business generated by recommendations from previous customer. Broadcasters and Content Providers Telecom Companies Industry Groups/Regulators Technology Suppliers Investors

8. Farncombe Strategy – Founded on Experience Although Farncombe Strategy is a new addition to the Farncombe Group portfolio, its management team has deep experience in serving the industry. Telecoms & Digital Media Companies Financial Institutions & Private Equities

9. Contents 1 FARNCOMBE CONSULTING GROUP OVERVIEW OF iTV Q & A 3 2

10. Some Major Networks with iTV Interactive TV projects have been launched and deployed worldwide.

11. iTV Today... A reality check ! Challenges Applications Must-have iTV services: EPG, Weather, Program info, VoD, Catch-up TV Games and betting is the only money generating application Core business “customer care application” has made a big difference on Dish and cut calls to the call center (USA satellite network) Banking is too complex and not really worth it nor TV-shopping unless existing return path UI, Design & Branding iPhone builds up expectations User experience is limited by the middleware: different on almost every system worldwide, html at best Flash and the new chipsets will change this (but when?) Users want comfort with the brand moving between platforms Major platform operators are now focusing on user experience design iTV still has to prove it can attract audience and generate revenue Compelling applications that could be monetized are limited by the middleware Shared resources with all new media projects, leave less room for iTV marketing Collecting data is the critical element to see usage by real users • HDTV PVR is a main area of focus

12. iTV in the UK • UK has dominated iTV worldwide since the box was subsidized and connected – with a £99 penalty if disconnected • Some of the hit applications in the UK have been advertising, betting and games • This unique infrastructure has supported these types of applications • Advertising too difficult for accountability (real targeted advertising is 5 years away) • Many partners have pulled out due to huge fixed costs collected by SKY • BBC is govt funded and hence does a lot of innovative iTV projects. ( i player) • The UK model: A unique case • SKY unified platform approach enabled the creation of a unique iTVenvironement • Source: Thinkbox.com • The red (interactive) button use in the UK

13. Some Typical iTV services ... Images from VISIWARE

14. Mosaic, a popular presentation solution

15. Information and EPGs... Must have !

16. On Demand and User generated content

17. On Demand TV: BBC iPlayer • BBC iPlayer daily views • The BBC iPlayer is a window that opens up in the user’s web browser on their PC monitor, and allows TV or radio programming (7 days back) to be either downloaded or streamed live from the iPlayer website. It uses both the BBC’s own iPlayer software and Windows Media Player. It also supports Apple and Linux PCs • iPlayer content is also available on TV screens, on Virgin Media’s cable-based VOD service, and via the Nintento Wii games console. Sony PS3 compatibility is also being prepared • Average viewing time for a chosen programme is 22mins. On average, users watch two programmes per day, giving an average viewing time of about 40 mins/ person/ day. About 35% of programmes are viewed all the way to the end • For selected series, all episodes of the series are available for up to 13 weeks (Series Stacking) • 44% of all UK online users has used iPlayer, and levels of repeat use of BBC iPlayer were good – only 13% of users had only used it once, and 17% had watched more than 20 programmes. • A free online catch-up TV service for BBC programming. Combining the linear + catch-up views, the iPlayer increased the audience of some programmes by as much as 10%. Thousands, download/streaming requests Source: BBC

18. On Demand TV: Virgin Media VoD • Virgin’s VoD monthly views • Virgin Media’s cable-based VOD service is available to all UK 3.5ml digital cable subscribers. Around 50% of these are regular users • Virgin Media claims that total views of all on-demand programming had exceeded 357ml and averaged 45ml views/ month by Q3’08 • The BBC catch-up service alone was averaging 11.5ml views/ month in the latter half of 2008 • Virgin recently announced a deal with ITV to allow access to the ITV Player, ITV’s on-demand catch-up service, through its VOD service • The agreement will allow customers to view over 40 hours of programming from ITV-1, 2, 3 and 4 each week. Popular shows will all be made available for 7 days after being broadcast •  Virgin viewers will also be able to access 500 hours of archive content, such as ITV comedies, documentaries and dramas, as long as the content is more than six months old and ITV owns the rights • Virgin Media TV subscribers will also be able to watch ITV content online via their computers. • A catch-up TV service that includes the pick of last week’s best television from the BBC, Channel 4, E4, More4, Bravo, Living, Virgin1 and recently ITV Player. Millions Source: Virgin Media

19. French Catch-up TV • 52 % of French Internet users access an online catch-up TV service. 25% of them describe themselves as ‘regular users’ of such services • American series are the most popular catch-up TV genre, accounting for 35% of catch-up TV views. News programmes account for a further 31% of views • 76% of regular users access the online facility to watch programming they were unable to catch when transmitted. 56% of them say they repeat-view programmes they originally began watching on their TV sets, indicating that catch-up TV does not cannibalise standard TV viewing • 56 % of regular catch-up TV users say the service has not changed the time they spend in front of their TV sets. For 30% of them, this type of viewing has increased. • Market trends in France • Launched in March 2008 as an online service for PCs, M6 Replay allows users free access to most M6 programmes once they have been broadcast, for a period of 7 days • Available via the website M6replay.fr, which has 1.9ml unique visitors/ month, M6 Replay generates 10ml views/ month • In January 2009, M6 struck a deal with Orange for M6 Replay to be made available on ADSL TV; in the following weeks on mobile (through the Orange World portal) and during the course of 2009 on PC (through orange.fr) • Until the M6 deal, Orange’s catch-up TV service consisted of an exclusive arrangement with France Télévisions for its TV subscribers to watch the PSB’s five channels; France-2, France-3, France-4, France-5 and France-Ô. • M6 Replay case study • Canal+, M6, Arte, and Orange offer commercial catch-up TV services (TF1 to follow soon). PSB France Télévisions is forced to offer a free catch-up TV service by end-2011. • Source: GroupM

20. Key Take-Away A hybrid landscape creates opportunities and challenges: The key success factor in the new media age is to align Strategy, Technology and the User Experience design. Best strategy is to now strategize for next generation TV including interactivity, OTT and other new media Good time to work in it now - on networks which have not yet made the huge investment Role of STB is shifting, and internet standards become more important Consumer are expecting internet content on TV, using their own devices Defining and aligning commercial & technical strategy is key to ensure service delivery platform will meet customer expectations

21. Advancing iTV The launch of Next Generation Applications and the increasing demand for on demand TV are means to further support iTV services • Schedule and manage recordings from any U-verse receiver in a home rather than only from the home's DVR-equipped receiver • Record from a distance: Launching a new interface for remote DVR management service to allow customers to schedule and manage their DVR recordings from any Web-connected PC • Watch SD & HD recorded shows on up to 8 connected TV's in a home, all from a single DVR • View VoD recommendations based on past video rental history • A range of interactive TV features: personalized weather, sports, traffic and stock information, local and national weather forecasts on-demand and access to personal photos from flickr.com on the TV • Galleryplayer (watch paintings on screen) Next Generation Applications: AT&T’s U-verse • Rising TV consumption on the internet and growing adoption of PVRs demonstrates consumer’s expectation to watch TV on demand • In multiple countries, popular TV Channels have all launched various forms of Catch-up TV offering in order to maintain the audience in a viewing environment related to the original TV Channel • German consumers are also looking for on demand entertainment, and considering the strong market share enjoyed by FTA TV, German broadcasters have a unique opportunity to answer consumer demand and ultimately increase their revenue by capturing on demand viewers On Demand TV

22. Pay-TV operators Public broadcaster Platforms will lead in the development of new ways of consuming TV, but in time any broadcaster, content owner, etc. should be able to participate on these platforms. Commercial broadcaster Drivers Recommendations for Market Players Simplified, consumer focused initiatives and cross platform content deliveryare part of a winning strategy. Focus • Broadband, VoD and virtually unlimited local storage redefine the digital TV landscape • Cost is reducing of these technologies, making them mainstream and disintermediating platform owners • Improve the TV viewing experience • Help consumers find content quicker • Deliver content that their customers want, rather than building complex back end systems to define customer insight strategies • Move to targeted advertising (Web and TV) • Ensure accessibility of content and relevance of content across platforms • Work with many distribution vehicles/ platforms • This is about video rather than intricate applications based on statistics • Avoid overly commercial interactive enterprises which have a negative impact on trust and loyalty, e.g. things solely created to generate premium rate revenues

23. Thank you www.farncombe.eu www.farncombestrategy.com

24. Q & A • Contact details Lara Lerville Director, Sales and Business Development Farncombe Consulting Group E-mail: lara.lerville@farncombe.eu Tel: +33 1 71 18 29 86 Mob: +33 6 83 88 21 53