Web Media Symposium, Fraunhofer Institut Berlin, Nov. 5th 2010

1. Fraunhofer Institut
Web Media Symposium
November 5°, 2010
The role of Telcos
in the new, Social App-Enriched
TV Ecosystem
Antonio Pavolini
Senior Analyst, Media Industry
antonio.pavolini@telecomitalia.it

2. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The Sofa Screen is under Siege
Millions of connected devices (TVs in the first
place) make it possible for Web Videos, in all their
forms, to be enjoyed on the sofa screens
As a consequence of that, a new OTT TV ecosystem
– where biz models are still to be defined - emerges
alongside the traditional ecosystem based on
vertically integrated video distribution
Pure OTT players are therefore obliged to rethink
their web applications, born as “social”, towards a
Lean Back proposition…
…whilst traditional broadcasters , on the other
hand, must find new value propositions able to
compete in the new context (on demand, catch up
TV, “deep” digital identity, social applications…)
Telcos, a.k.a. those who manage the infrastructure
and distribution platforms, are looking for an “ideal
role” in the new scenario

3. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The Device-Related aspect tells only a part of the Story…
BB STB
Apple TV
Game console
Es: xBos 360, PS3
Lettori Blu-ray/
DVD
Broadcast:
Satellite, Cable
BroadBand
Network
Internet IP
(Unmanaged)
BB STB “Ibrido”
(DTT, Sat, Cable, IP)
Es: Tivo, CuboVision
Traditional Set Top Boxes:
Cable, Sat, DTT ,
hybrid,IPTV
BB STB Open
Es: Roku
TV set Internet-enabled
Es: Sony Bravia, Philips Net TVTV set DTT
Embedded
TELCO IPTV
OTT TV
BOXES
IP
(Managed)
The traditional Pay Tv Set Top Box is only one of the
many ways consumers can access rich video content
on the sofa screen . A whole new set of devices are
aimed at allowing Online Video consumption on TVs
through the Broadband connection
“Over The Top TV Boxes”
Internet Enabled Tv Sets

4. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Backend players: Simple guys, Complex guys
After a first wave of
free, best effort
solutions, the web
video market is
increasingly populated
by OTT “managed”
solutions , that require
a more complex
distribution platform
with the aim of
keeping the pace with
the increasing volumes
and ensuring Quality
of Service
Cost & Complexity of
distribution solution
AudiencexSingoloContenuto
Block
busters
Managed Distribution
Video Sharing Platforms
Mainstream Web TV
Best effort
Independent Content Providers
IPTV
OTT Video Streaming PlatformsUGC
Online Stores

5. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The new kids on the block
 “Cannibalizers”: Google TV
 “Splinternet makers”: Apple Tv
(Take 3)
 Aggregators: (Mainstream &
Independent)
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2
3
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6. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Different Aims, Different Strategies
Broadcasters
Consumer
Electronics
Telcos
Aim
Non
duplicable
Assets
Strategy
 Offer Diversification
 Better market
segmentation aimed
at increasing its value
 New Device Sales
 Defence of native
egemony on the home
environment
 Offering Diversification
 Incentive to broadband
subscription upgrades
 Finding new revenue sources
 Premium Content
 Brand
 User Experience
Control
 Brand
 QoS
 3 screens
 Client base and tools to manage it
(CRM, billing…)
 Lock-in on exclusive
content, keeping
control on the user
experience on online
content
(intermediation)
 Lock-in on Devices,
allowing selective
openings to Widgets
and OTT Applications
 Partnership with
Telcos, aimed at
offering Quality of
Service
 Pay: two-side business model
offrering differentiated QoS to
Independent and/or not vertically
integrated Content Providers
 Free: Best Effort and Rev-Share
from Context & Targeted Ads
 App Store with OpenSDK
 User Experience as leverage
between Premium and Open Sea

7. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The Role of Telcos
 The Gap between TV and the
Internet is narrowing
 Content Owners endorse
Web Distribution
 New Advertising Technologies
offer fresh opportunities
(tracking, interactivity,
targeting, tailoring, etc.)
Scenario
Service Providers
enable
Multiplatform
Video Content
Distribution
From
Walled
Garden
To
Open
Platform

8. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Distribution solutions are increasingly getting taylored
8
Distro solutions are increasingly
taylored depending on the
nature of the content
Biz models diversify on the basis
of the upstream costumers
carachteristics (in this case
Content Owners)
Telco operators tend to offer
wholesale solutions to vertically
integrated players…
…and more complex solutions,
where they can leverage their
distinctive assets along the chain
(QoS, CRM, Deep Digital Identity,
recommendation, Billing,
Context-based ADV…) to
independent content providers
Broadcast
Wholesale CDN
Wholesale CDN+
Custom solution
Different models, different revenue sources for every upstream segment
Distribution Platform: CDN +
Digital Identity + CRM

9. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
There’s new room for business in the emerging user trends
Long Form/Short Form Lean Back/Lean Forward Discovery/Search Pay per View/Pay To Own
Audio/Video
Growing content interaction
and consequent attention
scarcity determine a crisis for
log form content at the benefit
of short form
Long form finds a safe haven in
richer (and closed) UX
environments (Blu-Ray,
Theaters, 3D)
Mainstream TV and Radio
mainstream suffer from time
schedule fragmentation
Independent Content Providers,
free from time schedule ties,
take advantage of “daily spare
time segments” that were not
dedicated to media
consumption
The challenge to turn desktop-
born, high-interaction, lean-
forward content into something
“sofa friendly” and “lean back” is
getting more important (Yankee
Group, 2010)
Solution has nothing to do with
ergonomics (remote control)…
…and has a lot to do with a better
overall UX (OVEC, 2009)
From schedules to queues to
personalized or reccomendation-
based playlists
Desktop keeps being the ideal
connected TV configuration
environment , but…
…mobile application increase their
role in social features
On the Sofa Screen (TV), or while
driving a car (Radio) users still
prefer to “Stumble Upon”
interesting content, in the typical
Discovery Mode that has been
governed by traditional
broadcasters for years...
…but linear TV and Radio are not
anymore the only ones who decide
“What’s in the Discovery”;
recommendation engines and
friends lists gain a growing mole in
creating the User’s playlists
Search still remain the preferred
access approach to content on
Desktop and Mobile devices.
Italy is the Country where PTO is the
less preferred pay model for digital
content (OVUM)
Italy has an high willingness to pay for
enjoying the content regardless of
owning it:therefore PPV and rentals
can be successful(Yankee Group 2010)
Italians accept pre-roll advertising ,
due to their long standing exposure
to commercial television (OVUM)
Italy presents good opportunities in
offering OTT TV features as a
premium service, in cluded in a tiered
offering with a premium price to be
paid for accessing the application
store. (“all you can eat”)
Text/StillPics
Digitization moves text content
towards connected devices
Devices are specialized for
content nature : ebook (long)
tablet (short + medium) others
(short)
Tablets create new
“consumption areas” in the
home environment (fourth
screen)
Both in mobility and on the “home
fourth screen”, text-based long
form content basically remain
“Lean Back”, as they don’t require
frequent user interaction
Short/medium form (newspapers,
blogs, magazines, pics) are more
engaging , and are more friendly to
targeted/context based adv
Text based content is still
governed by the search access
approach, better if integrated
with a powerful reccomendation
engine (Kindle Amazon, iTunes)
aimed at increasing the purchase
decision rate
Ebook publishers are reluctant to
introduce “all you can eat “,
subscription based, access to their
online stores, as it happened with
some music offerings
Newspapers and magazines, instead,
are distributed as “applications”, paid
a monthly basis.
Short form content (blog, online
paper versions, etc.) are ad funded
and rely on the blogger’s self
marketing needs

10. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
3
1
Three
Possibile
Scenarios
OTT TV: “Open”
 WebApps Public APIs are called by all devices, on device-based
applications
 Users and developers get full control of the opportunity that lies behind
diversification of apps and content
OTT-TV: “CE-driven/Splinternet”
 Hardware manufacturers “taylor” online content and services in order to
optimize them for selected devices, taking full control of UX
 Users and developers lose control of the “long tail” opportunity; in
exchange, they obtain a more affordable UX environment
OTT-TV Open/Telco Driven:
 Telco operators create an open environment for Users and Developers,
(where content and apps choice is free) ,but offer differentiated services
on a two-sided platform for content owners and downstream customers
2
Three roads to OTT TV
10

11. Fraunhofer Institut
Web Media Symposium
November 5°, 2010
Thank You!
Antonio Pavolini
Senior Analyst, Media Industry
antonio.pavolini@telecomitalia.it

12. Fraunhofer Institut
Web Media Symposium
November 5°, 2010
Backup

13. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
No need of an App Store, if you don’t crowdsource in an open way
 As the iPhone case widely demonstrated, an open
Application Store that can leverage on crowdsourcing,
with an SDK open to third party developers (keeping control on
what apps are phisically distributed on the official store) is key
to reaching a critical mass not only on “service” applications
but also on “content applications” that offer CPs a personalized
environment for distributing their “signed” library
 This solution is ideal to generate value from free content with
public APIs, as it transfers the effort of building the
application to the developer’s community
 At the same time, it gives users access to the widest possible
free catalogue (a problem for broadcasters, not for telcos).
 When Premium (Pay) Content is involved, the developement of
an application (that leverages on the high powered telco
backend), can be part of the Telco’s proposition to Content
Providers
13

14. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
App Stores and Willingness to Pay: Tiered Offers a Winner?
14
“Uptake of internet TV will probably result
in a hike in broadband prices in the UK.
“When services such as YouView and
Apple TV arrive on the scene, it won’t be
long before there is considerable
consumer demand for Internet TV.
Thompson suggests that while it might
give ISPs ‘the excuse they’ve been looking
for’ to shift broadband prices away from
the ‘all you can eat’ model, it will
potentially also necessitate the investment
in next-generation broadband services
which the country needs.”
Mark Thompson, Director General BBC

15. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Cross Device Experience
In the OTT-TV arena a Telco can develop a cross-device proposition aimed at getting benefit from its exclusive
capability to offer a seamless experience in any place at any time, on any device
At Home
Far from Home
Third party STBDedicated Set Top Box Connected TV
Mobile Devices Any Web Access
 Strategy on width of
User Base
 Widgets on connected
devices, selecting
those with the most
open platform
 Total control of Digital
Identity
 Focus on “dead time
maximization” for
“lean forward”
interaction activities

16. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Playing with Flexibility and Scarcity
As the current Broadband network cannot sustain
the growing demand for online video
consumption, the value of managed distribution
solutions grows
Managed OTT efficiently addresses the subset of
online video content on which the building of new
biz models for the sofa screen is possible
These are the editorial quality contents that are
not bound with the traditional distribution
chains, that have always been controlled by
vertically integrated broadcasters
In a new Ecosystem centered on editorial quality
prosumer content (Independent Content
Providers) there is no “One size fits all” business
model, just because it’s not anymore the
distributor to set all the chain rules
Multiplatform Managed OTT-TV is a very promising opportunity for a Telco
operator to build a Two-Sided Business Model
Many Content Provider that are currently
integrated in the traditional chains may be
willing to migrate towards online distribution,
with the aim of getting more independence
The telcos own the only business elements
that are horizontal to all online distribution
business models:
Quality of Service
3 Screens Digital Identity Management
CRM and Billing Management
Telcos can expose these assets to Independent
Content Providers in order to maximize the
business models that THEY build
TWO GOOD NEWS

17. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The Era of Polarized Models
PAY: Mainstream Content ProvidersFREE: Independent Pro Content Providers
Content Category
If the Content Provider is also the Content
Owner (ex. PGA or Formula 1) it’s the
sponsor who subsidize the QoS, Billing and
Caring Platform provided by the Telco
Operator. As the user directly pays the
Content Owner, the traditional Media chain
is disintermediated
Telcos can provide CPs with a white label
platform allowing content to natively reach
three screens
Free content can be made available through a
“Pay Just Once” application (iPhone/BBC
model) in rev-share with Content Providers
Model
Description
Two-sided: il Content Provider pays the Telco
for a Platform ensuring QoS…
...while users pay a fee that can be shared
by Telco and Content Provider
Online Video Free Services, natively released on
public APIs for desktop use, can be redistributed
on OTT TV with third party apps written by
Content Providers themselves. Telcos can expose
their digital identity platform and their
recommendation engine to return value to the
application and offer context-based advertising
(preroll, display)
Variables
Rev. Share Fee + Quality of ServiceRevenue Share from Advertising

18. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
The new engagement rules with content providers
A new
paradigm
As OTT TV is a distribution platform open to all Content Providers (with no cultural
obstacles, as broadcasters have, aimed at defending mainstream/premium content )
business models primarily depend on Content Owners
This means that Service Providers have to build a Business Model around the nature of
the content alongside with the Content Owner, looking for “shareable” sources of revenue
If a Service provider has the ambition to place itself at the center of the new Ecosystem ,
new engagement rules with Content and Application providers have to be set
These rules go far beyond the traditional negotiation process with majors/publishers
What the Telcos can Offer What the Telco are looking for
Quality of Service and Quality of Experience even in
condition of Traffic Congestion
Reach of a big multiplatform customer base
multipiattaforma (ADSL on fixed lines, 3G for
mobile lines)
Anytime, Anywhere, Cross-Device
Parental Control and DRM
Billing, CRM e Tech Support
Mass Market Proof Marketing /Communication
Resources
Digital Identity Management (recommendation
engine, context based adv) aimed at maximizing
Client Contact AND Application Value
Content :
Professional
Rights Cleared
Strongly differentiated by mainstream TV
able to reach a wide public individually, or a
critical mass of niches, able generate
significant revenue
That does not require a strong localization
effort (dubbed/subtitled) o language-neutral
(ex: Music, Vimeo, Arte Live Web)
Applications:
That do not create discontinuity in the UX
That do not set new knots for the Ecosystem

19. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Focus: Google TV: cannibalizing all biz models?
19
► Google is to launch its own OTT TV software-
based proposition (Google TV)
► Based on Chrome, this software will allow
navigation on the sofa screen among all the video
content that is normally available via desktop
browser, as Open Source Applications like Boxee
have already made possible
► Google TV will also provide a TV-friendly interface for
popular Social Media apps like Facebook or
Twitter
► A SDK will help independent content providers
develop widgets to access their content, and –
most important – participation in the advertising rev-
sharing program, the real core of the biz model as
already happens with AdSense on desktop apps
► Google announced Partnerships with Sony
(Connected TVs) and Intel (chipset for a future
dedicated STB)
► The big 4 broadcasters (NBC, ABC, CBS and FOX)
seem reluctant to sign a distro agreement with
Google
*Source: The New York Times
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20. Fraunhofer Institut
Web Media Symposium – Berlin, November 5th 2010
Focus on Blip.tv: Platform Provider is an OTT thing?
20
“We are not an internet company: we are a
media company. Our competitors are not
the likes of internet startups. Our
competitors are NBC or CBS. Our business
model is not complex: we sell advertising
and retain a revenue share”.
Dina Kaplan, CEO & Co-founder Blip.tv
48.000 Prosumer shows
Best shows receive 100.000$ + of rev
share every year
Top prosumer show received 1.000.000$
in 2010
 Distribution agreements with Sony Bravia, iTunes,
AOL, Boxee, Roku, Vimeo, TiVo. Myspace TV,
YouTube…
 “Aggregators and audience multipliers”
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