Verbatim Brainstorm Output

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© STL
Partners


Digital Entertainment

2.0

Verbatim
Brainstorm Output


Digital Entertainment 2.0 Brainstorm,
6

April
2011,
Palo
Alto.

This interim document is for
participants at the event. It contains the unfiltered
delegate input and votes from the ‘Mindshare’ audience
-
response tool.
Further, detailed analysis of the brainstorming will be provided by the STL
Partners team shortly.




Contact

Andrew Collinson

Rese
arch Director, Telco 2.0 / STL Partners

+44 (0) 7802 587260

Andrew.Collinson@stlpartners.com


APRIL 2011




Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

2

Introduction
-

Digital Entertainment
2
.0

-

Growing the digital economy through open
innovation

Held:
0830
-
1
7.30

6
th April 2011, Crown Plaza Hotel, Palo Alto

Part of the
New Digital Economics AMERICAS Executive Brainstorm and Developer Forum
, and run in
parallel with
Mobile Apps 2.0
, the
4th Digital Entertainment 2.0 Executive Brainstorm

buil
t
on output from last
autumn's events held in

LA and London and continue
d

to explore "new business model opportunities for Film,
TV and Games in an increasingly multiscreen, HD/3D, mobile world".


For senior strategists in the communications, media and entertainment markets, the Palo Alto leg of our
interactive brainstorm series focuse
d

on Multiplatform Services & Digital Locker Strategies (looking in
particular at the opportunities around UltraViolet), Connected TV's and Tablets, and Lessons from Apple


Fostering Alternative Ecosystems.

The agenda a
nd event site is here:
http://www.digitalentertainment2.com/Americas_April2011/agenda.php




In the evening there
wa
s a special
AppCircus developer showcase/forum

with 20
0 local app developers and
a networking reception.


Presenters and Panellists

In each session, there were short stimulus presentations x 3 (from representatives from the Communications,
Media and Technology industries), followed by debate with participant
s using our ‘Mindshare’ interactive
technology, followed by a panel discussion.

This document contains the unfiltered output from the debate with participants.



Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

3

Contents

Session One: Multiplatform S
ervices & Digital Lockers

................................
................................
.............

5

Session Details

................................
................................
................................
................................
.........

5

Verbatim Input

................................
................................
................................
................................
..........

6

What to Stop, Start, and Do More Of


to develop the ecosystem?

................................
...............

6

Session Two: Digital Lockers & Ultraviolet

................................
................................
................................
..

9

Session Details

................................
................................
................................
................................
.........

9

Verbatim Input

-

PMIQ

................................
................................
................................
............................

10

PLUS


This is what I liked about what I heard

................................
................................
..............

10

MINUS


These are my issues and concerns

................................
................................
.................

10

INTERESTING


What new ideas have been stimulated by what I've heard

...............................

11

QUESTIONS


Specific questions for panelists and everyone in the room

................................

11

Voting

................................
................................
................................
................................
.......................

13

Question One


Winning Digital Locker Proposition?

................................
................................
..

13

Question Two


Value of Different Models to Content Owners

................................
....................

14

Voting Results

................................
................................
................................
................................
........

14

Question Three


Challenges to Adoption Rating

................................
................................
.........

15

Session Three: Connected Home 2.0

................................
................................
................................
..........

16

Session Details

................................
................................
................................
................................
.......

16

Verbatim Inp
ut
-

PMIQ

................................
................................
................................
............................

17

PLUS


This is what I liked about what I heard

................................
................................
..............

17

MINUS


These are my issues and concerns

................................
................................
.................

17

INTERESTING


What new ideas have been stimulated by what I've heard

...............................

18

QUESTIONS


Specific questions for panelists and everyone in the room

................................

18

Voting

................................
................................
................................
................................
.......................

20

Question Four


Ad
-
based Monetisation Models

................................
................................
...........

20

Question Five


Connected TV


Winners and Losers

................................
................................
..

21

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

4

Session Four: Lessons from Apple: How to foster vibrant content ecosystems

................................
...

22

Session Details

................................
................................
................................
................................
.......

22

Verbatim Input


What to do to grow the digital economy?

................................
..............................

23




Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

5

Session

One
:

Multiplatform Services &
Digital Lockers


Session Details

Two related and major trends are converging to transform the entertainment industry. The first is obviously
the
shift online; the second sees the emergence of the different devices


connected TVs, Tablets and
mobile phones
-

that is breaking the tie between the type of content and the delivery method. Individually
these have prompted an explosion in disruptive chal
lengers. However, the long term winners will be those
that are able to address both trends to deliver any content to all devices whether that is achieved by creating
a single distribution platform, a device
-
led multi
-
platform strategy or through the connec
ted home.

Video content is at the forefront of the transition and aggregation services such as Netflix and Hulu have
moved beyond the PC and onto TV and Tablets. Delegates at the most recent EMEA and US Digital
Entertainment 2.0 Executive Brainstorms sugge
sted that the other potential winner of this is likely to be
Apple, especially as it has the ability to distribute across all its device formats. However, content owners,
distributors, retailers and telcos have a common desire to ensure that Apple doesn’t
become the default
platform for all online distribution, as it has for music.

Leading the alternatives are digital lockers and initiatives such as UltraViolet (UV), the brand adopted by the
DECE (Digital Entertainment Content Ecosystem) consortium. This is

significant because it is an industry
development with major backing from all areas of the value chain. Recently been launched it shows much
promise but customer adoption is still at a very early stage.

What are the key steps that need to be undertaken to

make this a success? Who and how will its advocates
benefit from this success?


Key objectives of this morning session



Build understanding of the opportunities and challenges around multi
-
platform digital distribution



Positioning digital lockers in the
market and building insight, dispelling myths, clarifying
misunderstandings



Set out the key milestones for launching UV services and products



Identify key risks for all those involved (and potential barriers to success)



Share potential approaches to mitiga
te these risks



Identify next steps at an industry level and for individual organisations

Hypotheses



There will be a shake
-
up in the industry that will see many of the new platforms emerge and go bust.
New doesn’t equate to success.



Platforms that are incl
usive of as much content and as many formats as possible, such as digital
lockers, have greater chances of success as consumers have tired of repurchasing content for new
platforms.

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

6



Service Providers have experience and expertise in multi
-
platform distribu
tion that could position
them as important players in the content distribution ecosystem.

Key questions to debate



How fast will the transition from old methods of consuming media to new platforms be?



What are the factors that will define a platform’s succe
ss?



What is the strategic case for Service Providers to offer premium video content (in the early
windows)?



Is there enough demand and margin in on demand video to justify the investment for content owners
and the rest of the value chain? Which players gai
n the greatest strategic advantage?



Does Apple have too strong an advantage to be overcome and which weaknesses can be exploited?

Presenters and Panellists:



John Senior, Partner,
Bain & Co



Thomas Gewecke, President Digital Distribution,
Warner Bros



Keith McMahon, Senior Analyst,
Digital Entertainment 2.0 Initiative



Jason Forbes, SVP of Strategy, New Products & Marketing,
Time Warner Cable



Leszek Izdebski, Managing Director, Global Media Group, IBSG,
Cisco

Verbatim Input

What to Stop, Start, and Do
More Of


to develop the ecosystem?



What should the industry do to influence the development of the ecosystem to benefit its participants?
What should it stop doing, start doing, do more of? Why do you say this?

Start



Start: promoting legitimate availabil
ity content across multiple devices. Why: to reduce piracy and expand
options (
7
)



Start: taking a more Social perspective to the delivery of content (not just via f, twitter) (
8
)



Start: Silicon Valley & Telcos need to understand the complexity of the right
s structures AND what will
make content owners agnostic to a deal. If the $$ work, then deals would be made. (Money doesn't work,
for the most part.) Netflix can write big checks. That's why they are getting the content. (
9
)



Start: need to enlist portals a
nd carriers to abolish piracy or monetize it (ala Vobile) (
12
)



Start: To be flexible with revenue share. Why? Not all content is equal and in some countries need to
combat piracy (
15
)



Start: justifying clearly the value of the digital locker in the age of
On
-
demand offerings. Why: To align the
interests and objectives along the value networks (e.g. explain to customers, content owners etc. as to
why they should participate) (
17
)



Start: realizing that apple is not our friend with a 30% transaction tax and mo
nopoly type curation. They
are taking margin from content owners & distributors (
19
)



Start: being more open to new business models with less concern about cannibalizing existing models


Remember the Blockbuster lesson


they hung on to the physical distri
bution model to the end :
-
( (
21
)

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

7



Content owners start being more experimental with new models, reaching directly to consumers (
22
)



Start: simplifying content pricing and distribution of content. A show i can get for free on Hulu costs $2.99
on iTunes and i
s unavailable on Netflix. Content should not be free, but it should be at a price point that
consumers can watch and not pay more than with a cable subscription (
30
)



Start: understanding how TVEverywhere solves (and causes) rights problems and protect majo
r margin
and revenue streams in the ecosystem. Beware of becoming music industry (
35
)



Start: to accept that in a world where content is available instantly from multiple sources, "ownership" is
less relevant for a growing segment of consumers. SO WHAT? Pla
n for a world where rental and
subscription are more important, price accordingly (
37
)



Start: industry needs to work on common business models that all players can profit from. Content
Owners may need to give up some margin (
43
)



Start: creating equivalent
benefits of physical media in digital world (control, share, work on many
devices, etc.) Why? Without this, many consumers will never make the transition (
49
)

Stop



Stop: under pricing content


understand the overall revenue opportunity across windows and
hold on
prices to ensure that the content production business remains viable


realize that scale, margin, and
promotional power are important (
2
)



Stop: trying to erode consumer fair use rights in the digital domain. Why? Consumers are smart and
automatica
lly devalue the digital copy (
13
)



Stop: Telcos could experiment with new business models. For example making customer data available,
cloud services for content owners and consumers, and generally thinking more holistically about mobile
entertainment and
less as a traditional ISP (
16
)



Stop: building walled gardens for content sales


they're being rejected by consumers and also negatively
impact industry economics (
23
)



Stop: worrying about cannibalization and margins and focus on simple pricing and conveni
ence (and
eliminating windowing) (
25
)



Stop: studios/content producers need to be clear with the ecosystem as to their intents relating to
distribution, channel, and access to content. Why? the other traditional players are always on the defense
because the
y do not understand the intent (
38
)



Less: walled gardens, studio controlled experience (silos), device constrained ecosystem (unless digital
locker / DRM / device repurposing capabilities) (
44
)



Stop: pretending that you can get even more revenue from cons
umers than is currently in the pie. Why?
Consumer buying power has been eroded while content costs have gone up (
51
)



Stop: confusing the consumer and fragmenting the market with too many distribution technologies and
models for the sake of the deal. Narrow

the options to encourage and widen ecosystem support/adoption
and demand for content consumption (
53
)

More



More: focus on consumer experience (
4
)



More: fight with pirating (
5
)



More: content produces should experiment with distribution models (Facebook, Ne
tflix, iTunes) that
consumers are hungry for (
10
)



More: collaboration amongst ecosystem for aligning around content protection standards (
11
)



More: focus on a compelling user experience to deliver personalized content services and great
search/discovery/re
commendation not just digital lockers (
14
)

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

8



More: experimentation to innovate and get feedback instead of trying to get all the standards and
alliances. For example, TV Everywhere is going too slowly. (
18
)



More: innovations like what Time Warner is doing ar
ound the Connected Movie App. (
24
)



More: use digital distribution to enliven a consumer's existiore: NG purchases. Why? Rather than have a
static movie library allow the customer to browse the collection and enliven it with new material. This is a
revenue
opportunity. (
29
)



More: content ownership in the cloud must meet the bar of physical ownership to be viable (
31
)



More: investment by the industry to evolve HTML 5 as an alternative to native OS's (
34
)



More: need more work in standards for connected home an
d user experience (
39
)



More: focus on increasing PERCEIVED VALUE to CONSUMERS (
45
)



More: simple Cross
-
Platform Solutions (
46
)



More: the ability to move content from cloud through the growing home network is a key consumer
benefit. (
47
)



More: mixed platform

consumption models (
48
)



More: enable discovery of movies and availability of metadata since that digital websites only show the
winner content at one time as compared to Wal
-
Mart where there is a big shelf full of movies (
50
)



More: funding of startups, mo
re exits, faster acceleration of 4 "Any"s (
52
)



More: need some guarantee as to longetivity of content. a DVD is forever but who guarantees my cloud
movie provider will be in business 5 years from now (ala Blockbuster) (
20
)



More; content owners could make l
icensing for multi modal distribution less complex (
6
)



More: the Cloud isn't the only place to store content; people like to have control and ownership. the
'digital locker' can reside on their own devices, and then made available via software platforms to

be
readily accessed, shared, moved with or without internet access. (
32
)



More: need a plan to drive early adopters (
33
)



More: simple intuitive and universal UI (
36
)



More: who will own the identity race in the online video space? Facebook Connect,
Telcos/cableCos


TV
Everywhere? (
40
)



More: agnostic to network/ device/ source of content/ able to deal with physical/ digital media.... (
42
)


Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

9



Session Two:
Digital Lockers & Ultraviolet

Session Details

Hypotheses



2011 will be a critical year for
digital lockers (and DECE/UV in particular)



Getting services launched will mean coordinating a series of milestones across multiple
partners.



Meeting these will be critical.



Those looking to launch digital locker services face a number of challenges, no
tably in: customer
adoption, service provider and other channel partner engagement, commercial model development
and technical implementation.



These challenges represent areas of potential risk for all of those involved

Issues to explore
-

Meeting the cha
llenges, mitigating the risks



Consumer adoption:

Getting consumers to engage with digital locker brands and platforms: Register,
use, manage locker



Channel take
-
up:

Getting potential channels (eg. Service Providers and other retailers) to fit digital
lock
ers alongside existing on
-
line plays. Understanding the strategic role of premium content in
customer engagement and loyalty. Understanding the impact of streaming on telecoms networks
(esp. mobile)



Commercial models:

Defining a balanced ecosystem that wor
ks for all parties. Media preparation,
storage, delivery, rights management, settlement services, technical support, locker account support
(e.g. recovery)

Questions to address



What are the key milestones and associated deliverables for launching Digital L
ocker services this
year?



What are the key challenges in driving consumer adoption of digital lockers?



How can these be overcome?



What on
-
line and off
-
line case studies can we learn from in terms of commercial models? Who pays
for the digital locker infras
tructure and how do they pay?



Who “holds” the customer data and meta
-
data? How can this data be safely shared by customers for
recommendations and discovery?



What are the key ‘next steps’ for UltraViolet and retail partners?



Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

10

Presenters and Panellists:



Tim Dodd, VP & General Manager, Neustar Media



Mark Teitell, Executive Director, DECE



Tom Sauer, VP Corporate Strategy, AT&T



Jim Taylor, CTO, Rovi

Verbatim Input

-

PMIQ

PLUS


This is what I liked about what I heard



Plus: liked idea of repurposing legacy
DVD content into my rights locker rathering than burning into a
server so now available whenever and wherever I go. (
9
)



Plus: promise sounds good and if executed well it is a great idea (
10
)



Plus: leverages upon the synergies in the industry in a positive
way to address what appears to be a
burning consumer need. (
13
)



Plus: like the idea it's not linked directly to Telco
-
specific ID and policy platforms like SIM cards.
Presumably that's an *option* but not mandatory (
17
)



Plus: it sounds great in concept but

if wholesale pricing is set how does the rest of the value chain work
and what is the inferred consumer price and value point given there is incremental value but reduction in
physical cost? (
18
)



Plus: it would have been helpful to explore a problem state
ment rather than rush into a solution
statement. For instance storage and transfer of media from a consumer perspective is about more than
movies and TV


it includes photos and music. This comes across like yet another service to manage
being so narrowly
focused. (
19
)



Plus: not tied to specific fixed/mobile access subscriptions, ability to access (presumably?) across
multiple Telco accesses (e.g. if I have an Verizon Tablet, Comcast cable, T
-
Mo BlackBerry etc) (
20
)



Plus: QoE is key


if it works and it can

be used then it promises a lot (
22
)



Plus: focus on APIs to enable wide ecosystem to develop the multiple consumer use cases we can't
even think of yet (
24
)



Plus: love the idea of simple interoperability. Killer app for MUSIC if paired with access to the
best quality.
Similar idea with film. The value of owning is reliable access to the best possible quality...not the jewel
case (
29
)



Plus: downloads is included too... very important for mobile operators (
39
)



PLUS


UV is nice for the consumer but doesn't
it disable monetization opportunities in the different silos
of digital distribution that exist today? In other words, I can sell the same content twice to consumers
today. Using UV will it enable enough of an expansion in the market to make for this reven
ue? (
48
)

MINUS


These are my issues and concerns



Minus: Pricing?? (
11
)



Minus: if the content providers have aligned on a wholesale price point and an end consumer price point,
then is it cowboy county for other players in the ecosystem for what’s left???
(
14
)



Minus: what about usage rights? How do you allow competition to thrive if prices have been set (
15
)



Minus: to think that UV is going to succeed in copying the success from the Telecom Industry in terms of
creating a standard falls quite short when the
re is not a consensus of key players and it is not global yet
mainly due to a lack of global rights agreements from the Studio perspective. (
27
)

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
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BRAINSTORM OUTPUT

11



Minus: unclear on success this can really achieve without all the major players involved why have current
or pa
st trajectory of aggregating a LOT of usage


e.g., no Disney, Apple, Amazon, Google, Microsoft,
Gaming Cos, TV Network Producers, etc. involved


can there really become one standard without these
players on board? (
21
)



Minus: what about advertising? Ad
models online have proven they work and generate a lot of revenue.
There are still huge brand advertising dollars sitting offline, mostly on television programming


these will
come online and can become a major source of revenue (
32
)



Minus: seems very sel
l
-
thru/home entertainment focused; doesn't help upstream initial exploitations of
content (box office, broadcast). No data or consumption behavior aggregated there, right? (
35
)



Minus: how can we better bring the internet into the physical distribution poin
ts (e.g. movie theaters)?
Social / geo targeting / local ads / etc. all have a natural place at the physical places movies are being
consumed (
37
)



Minus: when will the Studios agree on a global rights to be distributed at the same time which would
ultimate
ly lead to the success of UV? As long as there is disparity in global distribution a U.S. only UV
service might not have the endurance to survive. (
43
)



Minus: can this work without Apple? It has such an important device presence and established
ecosystem..
. particularly with Music (
44
)



Minus: don't put that much emphasis on hardware. A nice add
-
on for people still buying discs, but better
focus on digital only. (
51
)



Minus: why would I switch from the all I can eat Netflix model? The content is there wheneve
r I want it
although only on limited devices. (
52
)



Minus: UV unlikely to ignite. 2 reasons: (i) The underlying difficulty and slowness of execution and (ii) the
questionability of consumer adoption amongst large segments who prefer rental/advertising (
57
)



Minus: the presentations felt more like a commercial than an exploration of consumer need and business
opportunity. (
53
)



Minus: counting on market forces to sort out delivery (streaming and downloads). But there is also a risk
that customer experience coul
d suffer if delivery is not cleared up. (
58
)

INTERESTING


What new ideas have been stimulated by
what I've heard



What are the escrow terms for DECE members? (
25
)



Are subscriptions supported


a la Spotify/Pandora for new aggregators in the premium video s
pace (
30
)



That there is hope from a digital format and licensing perspective and there is hope for ultimate ease of
use for consumers. (
33
)



I see lots of potential for creating content arbitrage plays.... (
41
)

QUESTIONS


Specific questions for panelists a
nd
everyone in the room



What is the UVU attitude towards Telcos (esp. mobile networks) applying "video optimisation" to content
without explicit permission? Will you attempt to monitor any undesired compression and/or circumvent it?
(
7
)



Who pays UV and how

much do they get? (
8
)



Do you honestly think you will beat Apple? (
12
)



DRM from the industry failed in DVD and Blu
-
ray


what safeguards are in place to avoid the same
problem in UVVU? (
16
)

Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

12



What happens in complex multi
-
device or multi
-
user scenarios? e.g.

Watching on a PC connected via a
MiFi, or a TV based on an Android video
-
out port? There will be a variety of future issues here with
multiple accesses bonded together, handoff from LTE(MVNO) to 3G(non
-
MVNO) and so on. Does
anything break the login / auth
entication model? (
26
)



If I buy from shop a, and view in shop b, who has this data, is this data available to marketers? (
28
)



Who owns the consumer and how does it impact B to B business models? (
36
)



What happens to my UV content when I'm roaming overseas
(e.g. connecting via WiFi in a hotel)? (
31
)



How will UV avoid fragmenting the value chain by potentially having too many providers creating
ecosystem confusion among participants (e.g. whom do I use?)? (
34
)



What really is the incentive for a company to ful
fill a streaming request of a UV movie they did not sell?
Can they really monetize this event? (
23
)



Interesting


Where have consortiums worked to standardize business models previously? (vs. market
leaders establishing formats / scale) (
38
)



How does all t
his fit with the move towards "social TV" and similar, with extra interactivity and back
-
channels to other people? Seems that this is all about legacy content model of big, linear chunks of audio
and video (
40
)



Need to redefine the concept of owning a movi
e. For example, children like to repeatedly view certain
movies. "Owning a movie" needs to be extended from the original track to additional digital goods,
communities, etc. linked to the original movie and keeps the ownership channel alive with the end
cu
stomer. (
42
)



How does this model work for subscription services? The customer will still pay twice. (
45
)



Are there business norms? e.g. if I buy the highest resolution copy to I get the low res copies on other
devices for included? What about regions/geo r
estrictions/languages? (
46
)



How does carrier Capex to expand broadband networks to stream all these Blu
-
ray movies? Include
carriage in purchase price of the movie? (
49
)



If I buy in shop A and try to view in Protal B, but B doesn't have an agreement with A
, what is my
experience? Can I see that I have rights but cannot act on them? (
50
)



If I buy from A and they go bust. Who fulfills My Downloads and streams (particularly if A never made any
agreements with others)? (
54
)



UV is totally focused on established
media. Does it have any relevance at all to new original independent
online media? (
55
)



How can UV help to monetize other digital and even physical assets for a given film or TV show? (
56
)



Why not give consumers the choice of how many devices they can use
the content on and have them
pay incrementally to entice more content providers? (
47
)



Is UV contemplating allowing an ad supported option? (
59
)



What about adjacent spaces which are huge like gaming and television networks (vs. traditional
Hollywood studios
, SA smaller market) (
60
)



What about advertising? This has all been property


and subscription
-
oriented revenue discussion (
61
)





Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

13

Voting

Winning Digital Locker Proposition?




What will be the winning consumer proposition for digital lockers (for all
online content)?




Digital Entertainment 2.0 Brainstorm, 5
April 2011, Palo
Alto.

|
APRIL 2011

© STL
Partners

BRAINSTORM OUTPUT

14

Value of Different Models to Content Owners


Rate from 1 to 5 the following commercial models for online video consumption in terms of which will
deliver most value to content owners?


1 = Low Value; 5 = High Value


Voting Results



Average
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Challenges to Adoption Rating




Please rate the importance of the following challenges for mass market consumer adoption of Digital
Lockers


1
-
5, where 1 means not important at all, and 5 means a very major challenge






Average
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Session Three:
Connected Home
2.0

Session Details

The connected home has long been a vision of futurologists. Now it is starting to become a reality with the
emphasis shifting from the PC to the TV and the mobile device. Video, and related applications such as
interactive games, are dr
iving consumers to the television and a battle is developing around set
-
top boxes
and TV
-
based applications. The mobile device, however, remains relevant as many consumers seek a
seamless viewing experience between the TV and the mobile and others see the
mobile device as the new
intelligent remote control.

In this session we explore
d

how this market will play out, identi
f
y
ing

where the key control
-
points are and
clarify
ing

what strategies are required from content owners and aggregators, device manufacturers,
operators and developers to make the vision a near
-
term reality.

Key questions to debate



Games have already proved that that the TV can be a sit
-
forward experience as
well as a lean
-
back
one. Increasing bandwidth on both the down
-

and up
-
link will increase the use of the TV as
destination for playing games, consuming multiple sorts of content and social networking.



The set
-
top box will continue to be a crucial control p
oint and the battle among broadcasters, cable
and telco operators and device manufacturers will intensify.



Networking around the home will also become increasingly important with competition between
wired and wireless solutions increasing.



Building a stron
g developer community will be critical if the TV is to move beyond simply being a
source for video consumption.



An integrated experience between the mobile and the home TV will become a competitive
advantage for those players that can offer this. Building
an integrated Electronic Programme Guide
(EPG) on to the mobile will be required if the mobile is to replace the existing TV remote control.

Key questions to debate




What are consumers really seeking from a connected experience and what is the relative imp
ortance
of the PC, TV and mobile in this?



Will the current excitement around the TV continue


will it become the central hub for connectivity
and, if so, what will drive this?



What is the best strategy for key players in the ecosystem
-

content owners and

aggregators, device
manufacturers, operators and developers to build a connected experience for consumers?



What role will the mobile device play in the connected home and beyond it?



What are the critical success factors for building a connected experience

encompassing the home,
buildings, things and people?



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Presenters and Panellists:



Rishi Chandra, Product Lead,
Google TV



Zia Zaman, Chief Strategy Officer, North America,
LG Electronics



Colin Dixon, Senior Partner,
The Diffusion Group



Mike Afergan, CTO,
A
kamai



Andy Capener, Director of Marketing, Service Provider Mobility,
Cisco

Verbatim Input

-

PMIQ

PLUS


This is what I liked about what I heard



Plus: good to see Google sticking to its long
-
term TV vision; well
-
articulated (
6
)



Plus: I liked the notion of
multiple screens in the living room. there are multiple feeds of content that can
be viewed in parallel, as well as multiple users per home. why not have a "mission control" wall (
9
)



Plus: liked LG concept of central big screen for linear content with side

screens with social and metadata.
(
10
)



Plus: winner of new ecosy
s
tem will likely be the player who figures out discovery/search (
12
)



Plus: offers a wide variety of possibilities of content and possibilities. (
24
)



Plus: agree that the goal is to be simple
(
26
)



Plus: we like the idea of at least 3 screen


social, meta data, and content (
27
)



Plus: connected home.

not connected TV.. (
31
)



Plus: real
-
time experiences on the tablets jointly with linear tv programming. (
44
)



Plus: our table agreed that getting the

content discovery and recommendation right is a critical success
factor. (
29
)



Plus: liked the Google analogy that the internet transition is similar to cable. (
64
)

MINUS


These are my issues and concerns



Minus: hard to be stimulating right after lunch...

(
5
)



Minus: think Google underestimates the costs, not to create, but to differentiate (read: market) and
differentiate content with scale. Long tail is fine...but as YouTube has discovered, tough to monetize
UGC. (
8
)



Minus: how different is Apple TV then
what is being discussed today? (
13
)



Minus: content discovery is a huge hurdle and until someone solves this in an intuitive way Connected TV
will struggle. (
34
)



Minus: there are so many proprietary approaches to how 2.0 content is delivered to TVs, that c
onsumers
will be frozen in confusion. The "paradox of choice" will stall any purchase at all, as the HD
-
DVD/Blue ray
debacle proved. (
35
)



Minus: idea of 'optimizing' content in the network without publishers permission is not going to be well
-
received (
38
)



Minus: Google says great content from everywhere. What happens as Google search results reveal
mostly pirated content? (
55
)



Minus: there doesn't seem to be much discussion of content rights issues and that may be a major
challenge for these Connected TV s
cenarios... remember the previous efforts from the mid 1990s? (
59
)



Minus: content is so 1990s. Life >>> Communication >>> Application >>> Content (
65
)

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INTERESTING


What new ideas have been stimulated by what
I've heard



Both Zia & Rishi see future of multi
ple devices simultaneously accessing TV (
19
)



Interesting to hear Google state that SmartTV is only 2 years in


the same time period they have been
working on it. (
22
)



We feel that the TV/content models described elevate one issue above all others: how con
sumers
discover content has to be fundamentally different than it is today. With millions of content "providers"
trying to reach markets as small as one, how will those connections be made? (
32
)



Sports may be the killer content for the 3 screen SmartTV (
43
)



Interesting


Who owns the consumer with Connected TV? (
45
)



Advertising on TV is new? Arguably TV was created for advertising... (
47
)



Interesting that merge of TV and Web means that content discovery will be king, then personalisation and
user preference
s perhaps captured by Telco for other purposes (if done with end user control) could be
useful. (
56
)



My computer can crash, my smart phone crashes. Do I want my "smart TV" to crash too? (
62
)



It seems like the central models that are being discussed for con
nected or "smart" TV all but eliminate the
traditional players in the broadcast/tv world. These are big stakeholders with a lot at stake, and not able
to move quickly so they are more likely to throw up roadblocks than collaborate or enable the evolution.
(
63
)

QUESTIONS


Specific questions for panelists and everyone in the
room



How will targeted advertising work (
11
)



Where are the new input devices coming into play with these new products? it seems like one of the
bigger barriers right know is the
clunkiness of the navigation... (
14
)



Advertising in traditional TV is broken up between multiple parts of the value chain (
16
)



With the like
-
mindedness of the speakers, how much collaboration is being done across the
manufacturers and providers? (
17
)



The T
V metaphor of just pressing a button to get new content conflicts with the Internet Browsing
metaphor and the current integration of web and TV is still too complicated, how do panelists propose to
improve? (
18
)



Why would a user not just use a tablet (or s
martphone or laptop or notebook or netbook) for all
interactivity; why would they use the TV? (
20
)



Customer centricity in a 200M channel universe? (
21
)



There have been prior attempts to get web
-
browsing on TV; what will make these attempts more
successful?

(
23
)



How can we enable a viewing experience with simultaneous video, tele
-
conferencing and searching with
friends or family in a different location at the same time? (
25
)



There seems to be missing the idea that some interaction involves "everyone in the r
oom" and some is
personal/private (
28
)



How can advertising be wrapped in so that you can deep dive on areas of interest instead of being forced
to watch a standard ad load? (
30
)



The ability to make TV content accessible to users to like, clip, share, annotate, and remix and
synchronize and link other content is what will make these platforms truly differentiated from the current
multi
-
screen ad hoc practice viewers engage in today
. How can the players in this space provide this type
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of platform to connect TV content to existing web and social activity to TV? Seems time and device
synchronized metadata for TV content available as a web service is key...is this what LG envisions? (
33
)



Why would I buy a large TV so that you can cover a % of the screen with Ads? (
36
)



Is TV2.0 a Digital Democracy Enabler? (
37
)



Do TV manufacturers really think they can be successful operating services? They are box shifters (
39
)



Who will the iPhone
-
like d
isruptor in the TV space? (
41
)



What is the median period between TV purchases? How does that lifecycle time affect rollout of TV++
(
42
)




Agree that discovery is key in a 200MM channel universe... will we begin to see multiple distribution
outlets for chann
els? DO we need "boutique" content discovery mechanisms in addition to "big box
stores" to find the content we want? (
46
)



Do we leave old 1.0
-
TVs behind, or buy special devices to adapt them (how could you build a TV2.0
adaptor that would cost less than a
new TV?) (
48
)



Why do TV makers want to be in software business (app platform, etc). Software is ongoing concern
(upates, new features, fixes, etc) and not fixed with a TV sale. Will TV makers support edits, updates,
new features to give life to a TV and su
pport to an app ecosystem? (
49
)



Who ultimately owns the customer experience on a connected TV? LG? Google? The content provider?
Someone else? (
50
)



At what point does a big computer like the 27" iMac become a Connected TV and how small will a
Connected TV
be before it is a computer? (
51
)



The weather is beautiful here


why do so many Californians watch TV so much? (
52
)



What are the implications of Apple licensing Airplay to OEM vendors? (
53
)



Isn't TV just a big screen? when does it cease to be a TV anymore,

and just a big piece of glass that
shows me the same things I get on my tablet, my mobile, etc. (
54
)



It is really hard to scale / price targeted advertising. Micro segmentation could actually reduce the overall
value of the ecosystem. Does this mean that
content providers should just give up margin and revenue?
(
57
)



It doesn't seem that there is a clear path for content providers (outside of standard TV producers) to get
onto a connected TV for consumers. What's the platform (outside of Youtube) for smalle
r players to
produce content in a place where consumers can discover it? (
58
)



Not much discussion on using tablet/smartphone as a remote, EPG, or second screen. What of it? (
60
)



Why exactly is web and TV together so great? Is it just more content or are th
ere points of convergence?
(
61
)




How come nobody has mentioned digital broadcast on cell phones? (
7
)



Smart television can't happen without inexpensive broadband packaged with devices. What are the
panelists' companies doing to encourage the availability of

broadband? (
40
)



Why would a user not just use a tablet (or smartphone or laptop or notebook or netbook) for all
interactivity; why would they use the TV? (
15
)



There's a HUGE elephant in the room. What is Facebook's Social TV play? "10 of your friends like
d this
show"... "John shared a TV program on your wall", "Sarah invited you to the event 'Watch the match'" etc
(
66
)





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Voting

Ad
-
based Monetisation Models



On a scale of 1
-
5, how will the following ad
-
based monetisation models evolve over the next 3 years
?


1 = Big declining share; 2 = Declining share; 3 = Stagnant; 4 = Growth; 5 = Big growth




Average
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Connected TV


Winners and Losers



On a scale of 1
-
5, who will be the winners and losers from connected TVs


1 = Big loser; 2 = Loser; 3 = Neutral; 4 = Winner;
5 = Big winner






Average
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Session Four
:
Lessons from Apple: How to
foster vibrant content ecosystems

Session Details

Apple and Google have proved themselves masters of developing new digital ‘ecosystems’ that stimulate
and build innovative, flourishing, and valuable new markets. What can be learned from their and others’
successes, and what strategies should telcos, digi
tal entertainment market players, and others in the digital
economy use to foster valuable new ecosystems?

Hypotheses



There are significant further opportunities to create new digital ecosystems.



Key design strategies include aligning the interests of num
erous players, a degree of openness, and
retaining key strategic control points.



Telcos and others can foster and participate in these new ecosystems, but only if they successfully
embrace the key strategic principles rather than try to produce copies of t
he leading ecosystems.

Key questions to debate



What are the key lessons from Apple, Google, and other successful ecosystem builders?



In what areas are there opportunities to build new ecosystems that add value to the Digital
Economy?



How can telcos and th
e wider industry foster these alternative ecosystems?

Presenters and Panellists:



Omar Javaid, VP Converged Media,
Motorola



Keith McMahon, Senior Analyst,
STL Partners



Shawn Price, President,
Zuora




Omar Khan, Chief Strategy Office, SVP of Products & Servic
es,
Samsung Mobile



David Merkoski, Executive Creative Director,
Frog Design




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V
erbatim Input


What to do to grow the digital economy?

Q What do we need to do to either create alternative ecosystems to Apple and Android or to improve them,
to stimulate th
e growth of the digital economy?



Don't build yet another ecosystem (
3
)



Creative commons, open innovation, power of the crowds (
4
)



Stop looking at the content and start looking at the device..... follow their approach to grabbing the market
and then
diversifying (
5
)



Create and expose API's and to enable 3rd parties to leverage the depth of features available within our
networks (
6
)



Stop trying to consider how to out
-
Apple Apple and start looking for unique value vectors (
7
)



Hire Steve jobs into your s
tartup (
8
)



Improve personalization; make the app store a more personal experience (
9
)



Focus on creating fantastic customer experiences and the design of those. If you create that the
ecosystem will follow. (
10
)



Rather than look to take a piece of the pie


figure out how to grow it


add the icing or whipped cream, if
you will... (
11
)



Where is msft in this discussion? (
12
)



At the end of the day, we don't really have an ecosystem, because there isn't a willingness to share the
customer among the supposed
ecosystem members. Until there is an openness to share the customer
relationship, there really won't be an ecosystem; just a bunch of closed networks that are vying for the
same pie (
13
)



Unconvinced that 'ecosystems' are as important as they're hyped to be
. Just create a decent phone with
a decent browser & some OK apps (HTML5 will do). This whole thing about zillions of apps is lacking in
style, taste and class. It's like bolting on loads of plastic bodykit bits & fluffy dice on a Ferrari. People will
get
bored and focus on a few really good, well
-
refined add
-
ons for their devices, get the occasional extra
one, rather than fiddling about with a ton of rubbishy icons. It's like the early web, when you thought you
had to visit every site. (
31
)



Create new ecos
ystems, looking beyond mobile/online, be customer
-
centric (
14
)



Scale matters


be big or get big. if you can't be big, be smart on top of an established ecosystem (
15
)



Create standards (e.g. html5 / GSM) (
16
)



Design, design, design... (
17
)



Do we need to cr
eate alternate ecosystem cor consumer apps, why not grow the digital economy in other
areas such as verticals, retailers, SME, enterprise, etc. (
18
)



Lock down 3 things: discovery, User Experience, Billing (
19
)



Is the whole ecosystem concept overblown? Are
we really trying to replace Apple/Android? Or just create
new growth? (
20
)



Great design matters. So does collaboration with the broader ecosystem (
21
)



Innovate a better quality of user experience (
22
)



Build apps that allow your android phone to do stuff on

your Samsung smart tv (
23
)



Understand an opportunity space, align foundational players around it, and make it open and extensible,
and go (
24
)



Not to endorse this, but it's interesting to observe the governments that force standardization: China with
TD
-
S
CDMA and their WiFi security, S Korea with WIPI mobile app platform. Sometimes it works (
25
)



Create an ecosystem based around individuality and creativity. Apple used to be this, but is descending
into mass market blandness & anonymity. It's become like BM
W


outsourcing your individuality &
Digital Entertainment 2.0 Brainstorm, 5
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personality to some "designer". There needs to be a way to create products and software which engage
& inspire (
26
)



Start with the customer in mind. (
27
)



Offer more relevant choice in a multi
-
player ecosystem (
28
)



Build
ing ecosystems for the have nots (
29
)



Why does design matter? Facebook is horribly designed but it's a huge success. (
30
)



Agree with 29


focus on different (bigger) customer segments than Apple and Android. Different needs,
different willingness to Pay,
different ecosystem. (
32
)



Focus on the points at which the ecosystem integrates with outside elements. for example, apple doesn't
necessarily work well with content marketplaces. They do okay in music, but in video or print, they're
nowhere near the market

leaders. Similarly, in advertising they don't do as well as third parties, even on
their own platforms. (
33
)



Have not continued


means products that are self repairable, self powered (e.g. solar , kinetic),
extremely rugged and reliable. (
34
)



Android end
s up having the same relevance as ARM


almost ubiquitous but unloved and ignored, just a
bit of underlying plumbing rather than an ecosystem. It will be like saying the "electricity ecosystem" (
35
)



Have not continued


reached the bottom 2 billion that Ap
ple doesn't target.. (
36
)



Buy Apple and Google (
37
)



Focus not just on the have
-
nots.... but the 4bn or so prepay users or others who buy unsubsidised
handsets and don't have regular monthly contracts. RIM gets this, and so do some Android licencees like
Hu
awei (
38
)



The developer ecosystem can only support so many OS platforms without receiving financial incentive to
develop on an alternative. To support another strong ecosystem will require apps to be abstracted from
OS (browser) or be an OS that has compet
itive or larger MSS from the beginning. (
39
)



Hmm...STL says that Apple's fixed 30/70 split is not flexible enough for films of different quality, but Frog
stressed on how "one size will fit all" dictatorship offers simplicity benefits that outweigh the lac
k of
flexibility. (
40
)



Agree with frog about ecosystem based around data. Content
-
oriented ecosystems (iTunes), and app
-
oriented ecosystems (Android) are old & dull. Next gen will be about context, interaction with the real
world etc (
41
)




Digital Entertainment 2.0 Brainstorm, 5
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Forthcoming Ev
ents

Using STL’s unique mindshare interactive format, the Digital Entertainment 2.0
Americas

and
EMEA

Executive Brainstorms are part of larger
New Digital Economics

events. They are run in parallel with the
Telco 2.0, Mobile Apps 2.0, and Personal Data 2.0 brainstorms and followed by the

AppCircus

showcase
of cutting
-
edge international Apps. This interactive executive brainstorm is for those at the cutting edge of
managing the challenges of an IP
-
based world for telecoms operators. The next events in this series are:



New Digital Economics Executive Brainstorm & Developer Forum

11
-
13 May 2011, Guoman Tower Hotel, London

Co
-
located with Mobile Apps 2.0, Personal Data 2.0 and Digital Entertainment 2.0


The Telco 2.0™ Ini
tiative

Telco 2.0™

is a collection of research, brainstorming and consulting services designed to catalyse change in
the Telecoms
-
Media
-
Technology sector.



Telco 2.0™ Research & Analys
is



Telco 2.0™ Executive Brainstorms



Telco 2.0™ Consulting

The Initiative stimulates new ways of thinking about
Business Models
, Service Portfolios and Technical
Architectures.

Created by boutique analyst and consulting company, STL Partners, the Telco 2.0™ Initiative was launched
i
n May 2006 and is supported by the GSM Association, among other organisations around the world.

Since we launched the concept of the '
Two
-
Sided Telecoms Business Model
', the approac
h has been finding
increasing resonance at senior levels in both mature and fast growth markets.

Why does it exist?

Key challenges for strategists who work in or with the telecoms industry are:



Overall Strategy
: How is the digital economy evolving, what ar
e the best strategic responses and the
most profitable market opportunities?



Voice and Messaging
: How best to innovate core service offerings to add value and grow revenues?



Data and Broadband
: How to ensure incentives and rewards are better aligned across

the [digital
content] value chain?



New Communications Services
: How can latent telecoms capabilities be better exploited to address
new market opportunities?

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Conventional Answers are Unsatisfactory

Leading strategists now agree that today's predominant '
one
-
sided' telecoms business model does not
provide sufficient answers to these questions, for telcos or for other players in the digital economy.
Something new is needed.

Challenges to the Telecoms Industry

IP has changed the game and many growth markets
are maturing rapidly. The lines between industries are
blurring and everyone is after the same consumers. This is causing disruption in the telco industry, for
operators and their partners. Greater levels of creativity are needed to address the following i
ssues
.



The vertically integrated Telecoms business model is under attack from all sides: tougher regulation,
new technology (most notably VoIP and open spectrum), disintermediatory new entrants, and advancing
customer expectations.



P/E ratios suggest lit
tle investor belief in this improving. They have low confidence in 'converged' or
triple/quadruple
-
play bundles providing high returns.



Operators are making investment decisions in Network & IT, Products & Services, and Mergers &
Acquisitions without a cl
ear view of the future.



92% of respondents to an STL online survey replied that
're
-
thinking the strategic role of the operator'

is
a key priority.



85% of senior execs said the current telco business model will no longer deliver sufficient growth. (Telco
2.0 Survey, November 2008)



There is an urgent need for all players in the telecoms value chain to review and renew their
business
models
.

The Opportunity

Fortunately tel
ecoms companies possess a whole host of assets that could be exploited much more to
support new, sustainable market growth. The key is for telcos to create open platforms that help other
service providers (enterprises, SMEs and government) interact with en
d
-
users in more efficient ways than
they can today.

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Telco 2.0™ 'two
-
sided' telecoms business model


We call this the 'two
-
sided' telecoms business model, delivering value to and generating revenue from 3rd
party service providers as well as end
-
users. The 'two
-
sided' business model has consequences for the
design of existing services such as conventional

voice, messaging and data/broadband products (e.g. see
Voice & Messaging 2.0

"What to learn from
-

and how to compete with
-

Internet Communications Services")
and also creates op
portunities to create new revenues and B2B Platform Services.

Our analysis shows that in 10 years time this new business model could deliver up to 30% growth in annual
revenues to operators and dramatically enhance the value of the industry to the wider 'd
igital economy'
(Please see:
Future Broadband Business Models

"Beyond bundling: winning the new $250Bn delivery game"
and
The 2
-
Sided Telecoms Market Opportunity

"Sizing the new $125Bn platform services opportunity")

To realise this ambition we need to re
-
think not only our organisational and technology structures, but also
how we collaborate across

a wider ecosystem.

How to get involved?



To start to explore the opportunities in more depth see our
reports

or attend one of our Executive
Brainstorm
events



To access our searchable knowledge base of information, case studies and learning, please see our
Executive Briefing Subscription Service
here



To engage and act with the industry we invite

Telcos to join the Telco 2.0™ Operators Club and Vendors
join the Telco 2.0™ Partners Programme

(email:
contact@telco2.net
)



To explore the strategies appropriate to your organisation arising from these development
s use our
consulting

services



We also use our insights, contacts and experience to help clients evaluate and implement innovative
strategies and applications, and to create new business opportunitie
s
-

email
contact@telco2.net



To keep up to date with the latest news please see our widely read
blog

or sign up to our
newsletter

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For more detail, please see the full
Telco 2.0™ Manifesto

Who to contact?

Enquiries to:
contact@stlpartners.com