The latest in Mindshare's 'Future Of...' series focuses on connected TV. Our view is that the connectivity that viewers enjoy on the sofa via the second screen will prove of more significance to media and marketing than the connected TV itself.

2. “A TV connected to the
internet via a set top box,
a games console, or the
TV itself”
2

3. 3

4. “Connected viewers will be
more important than
Connected TVs”
4

5. 1. Connected TV penetration & usage will lag behind Second Screens
5

6. Connected TV is behind and won‟t catch up
Household penetration (%)
90
2nd Screen Devices
80
70
60 Connected TVs
50
40
30
20
10
0
2008 2009 2010 2011 2012F 2013F 2014F 2015F
Source: TGI / Enders Analysis / Mindshare estimates
6

7. There are question marks over consumer appetite for CTV
Reported Connection Rates
Reasons for purchasing last TV set (%)
of Connected Devices (% HH)
Better picture quality 36
PS3 (wireless) 80
Bigger screen size 32
Wanted digital-ready TV 20
New Samsung (wireless) 75
Bargain price 15
Wanted a new TV to save space 10
Xbox 360 50
Bought a console 5
Wanted a more energy-efficient TV 5
Samsung (total) 50
Wanted TV capable of accessing internet 3
3DTV 2
Source: Mintel 2011 Source: Informa / Videonet
7

8. Pay operators will be the primary gatekeepers to CTV
8

9. The number of homes with „open‟ CTV access will be
relatively small over next 5 years
Connected Households by TV platform 2016F (m, %)
Sky
6.0
(23%)
Unconnected 10.6
(41%)
3.6
(14%) Virgin
1.3 4.6
(5%) (18%)
Other Freeview
Source: Enders / Mindshare estimates
9

10. By contrast, second screen usage has grown organically
Do you multi-screen in tandem with TV?
How often? What are you doing?
Daily 23 Browsing online 81
3-4 Times per week 9 Social Media 48
2-3 times per week 9 Gaming 22
Once a week or less 14 Related Content 21
Never 44 Chatting online 19
Source: Oliver & Ohlbaum Consumer Survey 2011
10

11. Second screens are platform agnostic
11

12. Connected TV penetration & usage will lag behind Second Screens
Most of the opportunities that Connectivity creates are better suited to the Second Screen
12

13. A Connected TV opens the door to many opportunities
Companion content
On demand content
Social Interaction
Content sharing
Transactions
13

14. But the fundamental role of TV remains the same
Passive Entertainment Social focal point The big screen, quality
experience
14

15. Companion content on the second screen goes with the
grain of natural viewing behaviour
15

16. Personal nature of social makes it better suited to
second screen
‘Having social
applications on your
phone or tablet is
perfect. If you had it on
your TV, you would be
distracted from the main
attraction (the TV show)’
‘General’ Social
16

17. Social TV commentary is more complementary and less
intrusive on the second screen
Social TV commentary
‘My concern would be the conflict within
families between those using the screen for
social things and those using it for
entertainment.’

18. Social TV recommendations on the second screen can
be more personalised
‘I would prefer it if the TV
could link to other devices so
those wanting to chat online
could do so without
impacting the viewing
experiences of others’
Social programme recommendation

19. Viewers are keen on transactions prompted from the TV
Wow! Nice one… At
last an idea that
would really, truly
benefit me through TV
Content driven transactions
19

20. The opportunity for browsing makes the second screen
the natural place for transactions
The whole advantage of
the Internet is the ability
to shop around and find
the best deal, not just buy
what you see first
Second screen ad tags (Zeebox)
20

21. The Second Screen allows TV to be both personalised & communal
21

22. Question is who will control the second screen experience?
Programme Broadcaster Platform 3rd Party Social Network
22

23. Connected TV penetration & usage will lag behind Second Screens
Most of the opportunities that Connectivity creates are better suited to the Second Screen
Connected TV usage will mostly focus on Video
23

24. Consumers still primarily want TV from their TVs
61 Preferred apps on a Connected TV platform (% agreement)
48
36
34
30
28 27 26
24
13
10
7 6
4
BBC Normal Skype YouTube 4OD ITV Facebook LoveFilm Amazon iTunes Tesco Flickr Twitter John
iPlayer TV Player Lewis
Q. Please select the four apps you would like to use on a Smart TV
24

25. TV usage will continue to grow, driven by video viewing
TV Usage (Mins per day, Inds)
262
246 10 Other
5 4 27 VOD
18
15 PVR timeshift
219 210 Live
2011 2016F Source: BARB / Mindshare estimates
25

26. Services that depend on inter-device connectivity will
gain traction
Home network Content bookmarking Remote control
content sharing
26

27. Limited appetite for „long tail‟ of apps on the connected TV
‘The TV serves a
purpose; it does
what it says it does
and does not need
to do anything more
than that – that’s
what computers are
for.’
27

28. The applications of connectivity will migrate to
different screens
Transactions
On demand content
Social Interaction
Content sharing
Companion content
28

29. Connected TV penetration & usage will lag behind Second Screens
Most of the opportunities that Connectivity creates are better suited to the Second Screen
Connected TV usage will mostly focus on Video
For advertisers, the real opportunity lies on the second screen
29

30. Addressable advertising is made possible through CTV,
and viewers are broadly open to the idea
‘faceless’ 3rd parties
vs
Trust in brand Decline of serendipity
& ‘event’ ads
30

31. But there are many structural challenges to overcome
Data
Analysis
Trading Creative
31

32. Addressability outside of the pay operators will be
constrained
Connected Households by TV platform 2016F (m, %)
Sky
• Harder to build viewer data
6.0
(23%)
Unconnected 10.6
(41%)
• Likely limited to VOD
3.6
(14%) Virgin
1.3 4.6
(5%) (18%)
Other Freeview
Source: Enders / Mindshare estimates
32

33. We estimate that
addressable advertising
will make up
less than 8%
of TV ad revenue by 2016
33

34. Second screen presents greater opportunity for advertisers
• Platform agnostic
• Greater potential reach
• Diversity of applications
34

35. Opportunities lie alongside both programming…
Brand provided companion content
35

36. Opportunities lie alongside both programming…
Programme prompted transaction
36

37. …and the ad break
Synchronised second screen brand ad
37

38. …and the ad break
Synchronised
second screen
DR ad
38

39. Connected TV penetration & usage will lag behind Second Screens
Most of the opportunities that Connectivity creates are better suited to the Second Screen
Connected TV usage will mostly focus on Video
For advertisers, the real opportunity lies on the second screen
39

40. “Connected viewers will be
more important than
Connected TVs”
40