Presentation given to members of the Norwegian Association of Advertisers (ANFO) on September 5, 2012.

1. You Say You Want A Revolution
How Television Is Changing For Good
Graham Lovelace presentation to
September 5, 2012

2. Video: Samsung ‘Television has changed, wonder what's next?’
http://youtu.be/Orbzwoc3Xb0

3. How TV Is Changing
• TV technology trends
• Connected TV:
From TV makers
From service providers
• Second screen apps and devices
• Social TV, social TV analytics
• The drive to make TV more efficient
• Does TV as we know it have a future?

4. TV Technology Trends
TV displays that are:
• Bigger and thinner

5. TV Technology Trends
TV displays that are:
• Bigger and thinner
• Sharp

6. TV Technology Trends
TV displays that are:
• Bigger and thinner
• Sharp, and getting
sharper: 4k

7. TV Technology Trends
TV displays that are:
• Bigger and thinner
• Sharp, and getting
sharper: 4k, 8k

8. TV Technology Trends
TV displays that are:
• Bigger and thinner
• Sharp, and getting
sharper: 4k, 8k
• Adding depth – 3D

9. TV Technology Trends
TV displays that are:
• Bigger and thinner
• Sharp, and getting
sharper: 4k, 8k
• Adding depth – 3D
• Able to watch you!

10. TV Technology Trends
‘This is all very exciting to the
world's biggest advertisers who
spend billions on TV advertising
but don't know who's in the
room when their ads air’

11. Connected TV – From TV Makers
TV makers’ holy grail:
• Recurring revenues
beyond low-margin sale
• Commercial approaches
broadly similar
• Underlying technologies
vary – fragmented
development environment

12. Connected TV – From TV Makers
Monetisation includes:
• Targeted ads:
Portal display
Recommended apps
In-app advertising
• Revenue shares:
App downloads
Video, game rentals

13. Connected TV – From TV Makers
‘I found the new Smart
Interaction – voice, gesture, and
facial recognition – unreliable
and awkward …’

14. Connected TV – From TV Makers
‘Many of the key apps,
including Facebook, Twitter and
the web browser, seemed crude
and hard to use without a
keyboard …’

15. Connected TV – From TV Makers
‘There are flashes of a great
future merging regular TV and
the web on the Samsung Smart
TV. But it needs more work’
- Walt Mossberg, WSJ.com

16. Quick Take #1
• TV makers are positioning themselves as the new gatekeepers:
Sourcing or producing content
Selling and serving advertising
Gathering relevant viewer data
• Laudable strategy, harnessing potential of convergence
• But the problem is:
TV makers are generally clueless about all of the above
And they generally fail to understand the need to provide a TV-
quality experience, and managed consumer service

17. TV Makers’ Holy Grail
• What could possibly go wrong?
Consumers buy shiny new internet-enabled TV, but do
not connect to internet
Consumers connect, but do not use internet functionality
• Research by McKinsey (UK and France, n=18,500):
Over half of the 10% of homes with smart TVs have
never connected them to the internet
Just 3% of those owning smart TVs use IP functionality

18. Quick Take #2
• TV makers’ ‘smart TV’ risks becoming a dumb idea
• Consumers are complaining of a poor user experience:
Slow, non-intuitive interfaces and clunky input device
Video buffering
Non-enticing app stores, app support:
New apps not supported by ‘old’ sets (less than 1 year!)
New sets not supporting ‘old’ apps (less than 1 year!)
Poor, or non-existent customer support

19. Quick Take #3
• That does not mean connected TV is doomed to fail
• The smarter players are the service providers offering
bundled TV and broadband:
They have the content
They provide the pipe
They know what it takes to offer a managed service
• They are using a range of devices – including connected
displays – to reach connected consumers

20. Connected TV – Service Providers

21. Connected TV – Service Providers
• BSkyB and News
Corporation in
latest $45m
funding round
• Roku streaming
stick launching
this Autumn

22. Is Apple About To Make A TV?

23. Is Apple About To Make A TV?
‘I'd like to create an integrated
television set that is completely
easy to use. It will have the
simplest user interface you could
imagine. I finally cracked it ’
- Steve Jobs

24. Is Apple About To Make A TV?
‘This is an area of intense
interest for us. We’re going
to keep pulling this string
and see where it takes us’
- Tim Cook, Apple

25. Is Apple About To Make A TV?
• Granted US patent
for interface design
• Integrates broadcast
channels with online
• Record button – so
device will have DVR

26. Quick Take #4
• Apple is unlikely to make a connected display:
Apple favours a ‘single global product’, TV tech is regionally fragmented
Apple would need to negotiate content deals, and permission to do
disruptive things with broadcasters’ content, in every major market
• Instead it will seek to put an Apple interface on the TV you
already own, offering a premium set-top box to service providers
• It will also continue to extend the iOS ecosystem to TVs using
AirPlay, mirroring iPad and iPhone content on the main screen

29. Second Screen
• Apps augment TV viewing:
Content discovery, participation
Input and control
• Synchronised with main screen:
Active: viewer has to check-in, tag
Passive: automatic
• Social integration (social TV)

30. Second Screen
• Exclusive UK tie-up with ITV:
50,000 tags Britain’s Got Talent final
Shazam-enabled Pepsi, Cadbury ads
• Exclusive US tie-up with NBC Olympics:
>1m tags for additional content
Half of users allowed location tracking
• Now developing behavioural in-app ad
targeting, and TV commerce

31. Second Screen
• Loyalty programme for TV
• Incentivises viewing by awarding points,
exchanged for gift cards, tickets,rewards
• Latest tie-up: free movies with DirecTV
• Social media advice: how to cheat it!

32. Quick Take #5
• Second screen apps offer opportunities for:
Data capture
Interactive advertising, highly targeted
TV commerce
New metrics, analytics
• Potential for disruption:
New entrants monetising second screen apps without the
involvement of the broadcaster or service provider

33. Second Screen
‘As much as Samsung and
others have promoted smart
TVs the reality is that
consumers with tablets think
their tablets are even smarter’

34. Second Screen
• Tablets are displacing PCs,
laptops and smartphones
• Displacing small TVs
• New place scenarios for TV

35. Second Screen
• EPG with live social ratings
and a connected TV remote
• Social networking platform
• Infotags created by
subtitles:
Links to related
information
Links to TV commerce

36. Second Screen
‘zeebox creates a direct channel
between advertisers and consumers
with powerful transactional
capabilities. The second screen is
entirely free to be commercialised’
- Ernesto Schmitt, zeebox

37. Quick Take #6
• Challenges for second screen:
Overcoming app overload – too many apps for the
same show competing for consumer attention
Achieving scale, reaching the masses:
Make it essential – the way to vote, play along
Make it easy – seamless integration with programming
Requires deals with service providers … just as
service providers are rolling out their own second
screen apps, so expect acquisitions

38. Video: Sky ‘Sky+ App for iPad’
http://youtu.be/KG5tlvW0f3A

39. Social TV
• People using social networks and social apps to:
Find, rate, share programmes
Chat with friends while watching
Participate with programmes
• Increasingly integrated with second screen apps
• Driven by rapid take-up of tablets and smartphones,
and meteoric rise of social networking
• TV and social networking: symbiotic relationship

40. Quick Take #7
• Social TV generates data which can power:
New forms of programme discovery, bypassing operator’s EPG
Interactive advertising, highly targeted
TV commerce, on the second screen
New forms of participation
• Can drive tune-in AND keeps viewers watching live
• Provides instant feedback for producers and advertisers
• Provides new audience insights and some form of engagement/
appreciation metric
• At the early stages of understanding social TV behaviours

41. Content Genres Influence Activity
Focus not required
HIGH SOCIAL Sports
Clearly defined breaks
Continuous action
Reality/ game
shows
Sitcoms
MID SOCIAL
Reality
dramas
Dramas
Action/
crime LOW SOCIAL
Focus required

43. Social TV Analytics
• Quantifying social
media commentary
mapped to TV
programming:
Volume (size and
share of voice)
Sentiment (positive,
neutral, negative)

44. Social TV Analytics

47. Drive To Make TV ‘More Efficient’
‘There’s a ton of waste in television
advertising. Advertisers demand that
in the 21st Century we leverage the
power of targeting that the internet
affords us … to deliver their message
to exactly the right person’
- Johannes Larcher, Hulu

48. Drive To Make TV ‘More Efficient’
Data-driven demand coming from:
Targeted TV advertising Online video advertising
• TV platform operators • Content delivery networks
• Data analytics providers • Advertising exchanges
• Ad tech software vendors • Real-time bidding platforms

49. Drive To Make TV ‘More Efficient’
Data-driven demand coming from:
Targeted TV advertising Online video advertising
Connected TV

50. Drive To Make TV ‘More Efficient’
‘Via connected TV platforms we
can do sophisticated forms of
targeting, from contextual to geo,
time-of-day, and IP targeting,
areas already more advanced than
traditional TV’

51. Quick Take #8
• There is huge confusion over traditional TV advertising
• Yes, there is scope for innovation:
Campaigns integrating social and search
Campaigns that extend to second screens
• But the traditional TV advertising model is not broken:
In many markets it already provides more targeting
opportunities than advertisers need or want
It is a quick, simple and YES, EFFICIENT way of reaching
potential customers within a large mass audience

52. The Future Of TV
‘The new technology from
TiVo and Replay… will spy
on you, destroy prime time
and shatter the power of the
mass market’
- Michael Lewis, 2000

53. UK Television Viewing First Half 2012 Amount Change
Live broadcast (all channels, average day) 4hrs 1min ↓ 1min
Commercial TV viewing (average day) 2hrs 36mins ↑ 1min
Timeshifted viewing (all homes) 10% ↑ 1%
Timeshifted viewing (DVR homes, 51%) 15.9% ↑ 1.2%
(47% recorded viewing is watched same day)
Ads watched (normal speed average day) 47 ↑ 1.6%
Note: laptop, tablet, smartphone viewing not
included, BARB estimates extra 1.2% viewing

54. The Future Of TV
‘Contrary to some expectations,
technology has not shattered the
TV schedule, but rather made it
stronger by making it more flexible.
Online social networks are likely to
enhance the schedule’s appeal, not
diminish it’

55. The Future Of TV
‘As well as satisfying our needs for
entertainment and information,
television is a key enabler of
another fundamental human need
– being social. Television is the
original social network’

56. The Future Of TV
Watching TV is the best way of relaxing at home

57. The Future Of TV
Watching TV is a good way of bringing the family together

58. The Future Of TV
Watching with others is more enjoyable than watching alone

59. Television Is Changing FOR GOOD
• Technology, and the convergence of broadcast and IP is
driving change right across the television industry
• It is bringing new ways of finding content, new devices on
which to watch it, new ways of making it even more social
• The fundamental experience of watching TV, and the
reasons why we watch it, is not changing
• Neither is the impact and reach of traditional TV advertising
• There will be innovation, but we will still be watching spot
ads in linear broadcasts for many, many years to come

60. @glovelace
Thank You!