Peter Markey - Building success in the digital era
1. M&E industry in Asia Pacific
Building success in the digital era
September 2013
2. Page 2
Asia Pacific’s consumer engine is driving strong growth in ad
revenues — greatly benefitting M&E companies
1 APAC’s GDP will grow at a robust
CAGR of 7% over 2012–2017. It will
the largest region in terms of GDP by
2017.
2 Rising affluence and increasing
urbanization in APAC is expected to
fuel consumer spending on M&E.
3 APAC’s young population is driving
M&E consumption.
Asia Pacific (APAC) M&E drivers
Advertising revenues are growing in APAC
Source: Global Forecast Model: 2000-2017,‖ MAGNAGLOBAL, December 2012
$138 $144
$156
$168
$181 $196
$0
$40
$80
$120
$160
$200
2012 2013e 2014e 2015e 2016e 2017e
InUS$billion
3. Page 3
Digital holds a strong promise for APAC’s M&E industry
By 2017, digital will
account for 27% of
APAC’s total ad
revenues, up from 19% in
2012
Ad revenues in APAC, 2012 and 2017e
Source: Global Forecast Model: 2000-2017,‖ MAGNAGLOBAL, December 2012
► APAC’s digital ad revenues will grow at a CAGR of 15% during 2012–2017 to
US$53 million.
► In 2015, APAC will displace EMEA to become the second largest region by
digital ad revenues.
Digital
19%
Television
43%
Print
24%
Radio
5%
OOH
9%
Digital
27%
Television
43%
Print
17%
Radio
4%
OOH
9%
2012
Total = US$138 billion
2017e
Total = US$196 billion
4. Page 4
Greater investments in networks, proliferation of mobile devices
and growing online content is driving digital media consumption
Increasing investment in networks
► APAC accounted for 40% of the global network capex in 2012.
► Government support and subsidies are driving network expansion.
► Wireless subscribers will grow at a CAGR of 36% over 2012–2017.
Penetration of wireless broadband to reach 48% in 2017.
Proliferation of mobile devices
► Low cost and more capable mobile devices are being launched.
► Smartphone penetration will rise from 35% in 2012 to 68% in 2017.
► Tablet shipments will increase at a CAGR of 20% over 2012–2017.
Tremendous growth in online content
► Global and local M&E companies are increasingly investing in digital
content.
► Social media, online news, blogging and online TV are driving online
consumption.
5. Page 5
Challenges in monetizing digital media persist; companies are
exploring innovative methods to increase digital revenues
Key
challenges in
digital media
monetization
Proliferation of digital M&E
companies is increasing
competition for online ad
revenues
Mobile advertising yet to
gain traction as ROI
measurement remains a
challenge
Low propensity of consumers
to pay for online content such
as through subscription and
pay-per-use models
Offering premium and
customized content online,
such as international
TV shows, live sports
programs, video
windows and
HD content
Companies
providing
differentiated
value to
drive
monetization
Providing
interoperability
through access to
content across multiple
platforms and devices
Focusing on anytime
access by providing
on-demand movies,
TV shows and music
online
Driving user
engagement with
interactive programs,
share/ recommend
features and
implementing
‗freemium‘ models
Online gaming companies in China have successfully monetized their
offerings — 64% of Chinese gamers pay for online games each month
6. Page 6
Complex challenges of the digital era require M&E companies to
become more agile
An agile organization is utilizing…
The ability to ―fail forward,‖ fast
To learn from inevitable missteps,
fix them rapidly and move on
Cloud-based infrastructure
To enable lower-risk rapid deployment and
scalability, breaking organisational silos
Rapid resource or new product
deployment
To beat the competition to market in
response to new customer opportunities
Cutting-edge analytics
That identify — in real-time — new
customer-serving opportunities
Advanced social listening
Programs to keep on top of changing customer
sentiment
► M&E companies are facing a challenge to keep up with the rapidly changing
technologies, platforms and distribution models.
► To overcome these challenges, M&E companies need to be agile and shift from a
―make and sell‖ to a ―sense and respond‖ business model.
7. Page 7
For digital agility, M&E companies need to leverage technology
throughout their organizations
Digital leaders
forge the
agility vision
► 3rd-party cloud solutions allows for
rapid scale-up
► Cloud based, back office facilitates
real-time planning
Tools
► Creating a culture of innovation
is the top priority
► Centralised strategy,
complimented by local
execution
► Lack of skills is a key
obstacle to building and
maintaining cloud
► 43% of executives prioritise
―acquiring digital skills‖
8. Page 8
M&E companies are innovating their product and service bundles
to serve customers directly
► According to EY‘s survey of 522 global M&E executives, 84% of the executives
expect to have direct relationships with their customers by 2015
► Pillars of D2C: Personalized, differentiated, anytime/anywhere
64%
63%
61%
51%
Personalization
Anytime/anywhere access
Create unique content
Supplemental/premium content for a fee
How will you ensure customers pay for digital products?
Source: ―Digital Agility – NOW,‖ EY, June 2013
Percentage of respondents
9. Page 9
Digital leaders view customer engagement as a virtuous cycle
► D2C is more than engagement and distribution but about feeding customer
feedback into product and service innovation
► Data analytics, mobility, cloud and social are core enablers
GDP:APAC will account for the largest share of the world’s GDP (34%) at US$30.5 trillion by 2017, displacing the Americas (GDP of US$29.2 trillion in 2017).Rising affluence and increasing urbanization: Affluence: APAC’s GDP per capita is expected to grow from US$4,322 in 2012 to US$5141 in 2017.Increasing urbanization: By 2017, 47% of APAC’s population will be urbanized, as against 43% in 2012 (estimated by adding country-wise data).Young population: In 2015, 40% of APAC’s population (1.5 billion people) will be under 25 years (estimated by adding country-wise data).Sources: “Population data,” via Oxford Economics;“GDP data,” via Oxford Economics;“GDP per capitadata,” via Oxford Economics;“Percentage of urban population,” via Oxford Economics;“Global Forecast Model: 2000-2017,” MAGNAGLOBAL, December 2012
Share of digital ad revenues: Digital will account for 27% of APAC’s total ad revenues, up from 19% in 2012.Digital’s share in total ad revenues. The share of print and radio will decline.APAC’s digital ad revenues are expected to grow at a CAGR of 15% form US$26 million in 2012 to US$53 million in 2017. In 2015, APAC will displace EMEA to become the second largest region by digital ad revenues — North America: 38%, APAC: 29%, EMEA: 28%, Latin America: 5% (share of global digital ad revenues).Source: “Global Forecast Model: 2000-2017,” MAGNAGLOBAL, December 2012
Offering premium and customized content onlinePPLive, a peer-to-peer video broadcast site in China struck deals with over 120 broadcasters to offer live sports, self-produced interactive programs. PPLive also provides interactive elements and 24-hour broadcasts for Hunan TV’s China Super Girl reality show.Tencentrecently signed a deal with the Walt Disney Co., to stream a collection of Disney, Pixar and Marvel Studio titles on its Hollywood VIP service. Tencent has similar agreements with Universal, Miramax, Warner Bros. and Lionsgate.Bigflix,India’s on-demand movie provider, partnered with Disney Media Distribution in January 2013 to offer almost 140 Disney action and animation movies on their platform. It also offers movies in HD.Video ‘windows’: In India, Star Sports offers video ‘windows’ of Cricket matches along with live streaming. Subscribers can watch specific ‘windows’ of the match, for example, fall of wicket, an important sixer, etc. These video ‘windows’ can also be shared with other users.Malaysia-based StadiumAstro’sdigital sports initiative, Stadiumastro.com and m.stadiumastro.com (mobile platform) allow subscribers to stream live sports on mobile devices. The company augmented its offerings to provide the Stadiumastro Fantasy game and has monetized it game through micropayments.Offering anytime accessIn Singapore, the site StarHubTV.com offers on-demand or catch-up videos,offering movies such as Madagascar, Meet the Fockers, Star Trek, The Ring and Footloose, as well as series such as Supermodel Me, SpongeBob Squarepants, Love Forward and Dianna Krall – Live in RIO.YoukuToudo, the largest video website in China offers on-demand videos. It serves as a nationwide on-demand video content syndication platform with over 1,500 traditional media partners. China’s YOU on demand also offers online movie streaming services, some of the content is available for free while the rest is monetized.Bigflixin India offers on-demand movies based on the ‘freemium model’. Some movies are offered for free while the rest can be streamed for a subscription fees.Providing interoperabilityBaiduoffers search capabilities across platforms — on desktop computers, tablets as well as smartphones. Baidu’s reached 80 million mobile apps users at the end of 2012.YoukuToudo, offers online videos on different mobile devices.MediaCorpoffered “live” telecast of Singapore’s National Day Parade (NDP) 2013 on Friday across multiple platforms - Toggle, TV, radio, out-of-home and online. Refinery Media, Singapore’s media production companyis offering itsreality TV series,SupermodelMe in China across TV, the Internet and on mobile. In Singapore, the show will be aired on MediaCorp TV and over pay-TV channels, and viewers can catch “webisodes” exclusive to the online video portal.Driving user engagementIncreased user engagement (interactive programs, share/recommend features), has helped companies enhance their audience base, thereby driving ad revenues. By increasing user engagement companies have successful in implementing the ‘freemium’ model.Tencent:Tencent has released the first game targeted at its messaging app WeChat (known as Weixin in China). The game implements the ‘freemium’ model and uses micropayments to offer users in-game products.Successful monetization of online gaming in ChinaProgressive levels of ‘Free-to-play’ games are monetized after generating a large audience base. Popular games like Sony Online Entertainment’s DC Universe Online, Nexon’sMapleStory and NCsoft’sGuild Wars have been monetized through micro-transactions in China. 64% of Chinese gamers pay for online games each month.Tencent’s 2Q13 net profit rose 19% y-o-y to 3.68 billion yuan ($601 million) driven by revenue growth from online games and e-commerce. Tencent expects to benefit from promoting games on its WeChat app. One of the company's first promoted games onWeChatgained 25 million daily active users within 10 days. Tencent is also selling emoticons and other virtual products over the app.Sources: Why No One Likes Mobile Ads and How Companies Hope to Change That,” Technology review website, http://www.technologyreview.com/news/511811/lack-of-ways-to-measure-success-holds-back-mobile-ads/, accessed 19 September 2013).“How Bad Measurement is Holding the Mobile App Economy Back,” Adage website,http://adage.com/article/digital/messy-mobile-app-measurement-holds-back-ad-dollars/241960/, accessed 19 September 2013.“Stadiummastro Home,” Fantasy Stadium website, http://fantasy.stadiumastro.com/default.aspx?page=home&n=newFeatures, accessed 19 September 2013.“Digital TV content guide,” Casbaa website, http://www.casbaa.com/finddigitaltv/channel/FOXonDemand.html, accessed 19 September 2013.“China's Youku: Video On-Demand for the Masses,” Satanford Business website, http://www.gsb.stanford.edu/news/bmag/sbsm0911/feature-koo.html, accessed 19 September 2013.“Bigflix Gets Disney Content; Subscriptions vs Pay Per View,” Medianama website, http://www.medianama.com/2013/01/223-bigflix-gets-disney-content-subscriptions-vs-pay-per-view/, accessed 19 September 2013.“Baidu Reaches 80 Million Mobile Apps Users, Reveals Full 2012 Financials,” Techasia website, http://www.techinasia.com/baidu-mobile-users-2012-q4-report/, accessed 21 September 2013.“MediaCorp to telecast NDP 2013 "live" on multiple platforms,” Channel News Asia website, http://www.channelnewsasia.com/news/singapore/mediacorp-to-telecast-ndp/768728.html, accessed 21 September 2013.“Singaporean reality TV show to be available across multiple platforms in US and China,” Media Hub website, http://www.mediahubaccess.com/reality-tv-show-to-be-available-across-multiple-platforms-in-us-and-china/, accessed 21 September 2013.“The Majority Of Chinese Gamers Now Pay For Online Gaming Content Every Month,” Forbes website, http://www.forbes.com/sites/johngaudiosi/2012/04/03/the-majority-of-chinese-gamers-now-pay-for-online-gaming-content-every-month/, accessed 18 September 2013.“IFPI Digital Music Report 2013,” IFPI website, http://www.ifpi.org/content/library/dmr2013.pdf, accessed 18 September 2013.“Psy only made $32,000 USD from domestic online sales of "Gangnam Style"?,” Allkpop website, http://www.allkpop.com/article/2012/10/psy-only-made-32000-usd-from-domestic-online-sales-of-gangnam-style#axzz2ftPLIY62, accessed 18 September 2013.“Tencent Earnings: Games Help Profit Rise,” Wall Street Journal website, http://online.wsj.com/article/SB10001424127887324823804579012302809883952.html, accessed 21 September 2013.“Baidu mobile revenue to rise,” Investors.com website, http://news.investors.com/090513-670014-baidu-mobile-revenue-to-rise.htm, accessed 21 September 2013; “BAIDU REPORTS 39% RISE IN Q2 REVENUE,” CBR website, http://www.cbronline.com/news/social/baidu-reports-39-rise-in-q2-revenue-260713, accessed 21 September 2013.