frank e. dangeard media & technology : the rise of electronic content distribution journées...

Frank E. Dangeard

Media & Technology : The Rise of Electronic Content

Distribution

Journées Internationales de l’lDATE

23 Novembre 2005

Safe Harbor Statement

Certain statements in this presentation, including any discussion of management expectations for future periods, constitute "forward-looking statements" within the meaning of the "safe harbor" of the U.S. Private Securities Litigation Reform Act of 1995. Such forward-looking statements are based on management's current expectations and beliefs and are subject to a number of factors and uncertainties that could cause actual results to differ materially from the future results expressed or implied by the forward-looking statements due to changes in global economic and business conditions as well as conditions specific to Thomson’s business, and regulatory factors. More detailed information on the potential factors that could affect the financial results of Thomson is contained in Thomson's filings with the U.S. Securities and Exchange Commission.

Technology Trends in Media

Examples of ECD

Common Elements in ECD

Thomson and ECD

Agenda

Technology Trends in Media

Technology Trends

ContentDigitalization

Move TowardsHD

Next Generation Networks

New business models. New entrants. New competitive landscape.

Media, Entertainment &Communication

Industries

Linear content creation v. parallel content creation

Rapid growth, TV production is leading the transition (~75% of production) but;

Feature film production will represent ~50% in the next 3-5 years

Emergence of new players Multiplication of contributors to

content creation New content creators

Digitalization of Content

MediumCurrent Use

of Digital Technology

Estimate in 3-5 Years

News, Sport 100% 100%

Episodic Sitcoms 80% 98%

One Hour Drama 20% 50%

“A” Title Feature Films

<5% 30%

“B”/”C” Title Feature Films

20% 50%

Fragmentation of distribution channels, including « new media » groups

Towards ubiquitous HD Content Production :

Content creation is moving towards 2k and 4k (“A” title feature films) and HD (“B” titles feature film, sitcoms, TV series, etc.)

Content owners transfer their feature film libraries to HD resolution Transition to HD is now throughout the post-production workflows: Digital intermediates,

Creative services, DVD authoring

Broadcast and Networks : Live programming is mostly done in HD (news, sports ) Broadcast infrastructures are upgraded to handle HD format (switcher, servers, etc.) HD compression formats being standardized As a result

HD programming in the US doubled every year for the past 3 years In Europe Premiere, TPS, Sky, Belgacom announced launch of HD channels before 2006. PPV channels for Cable & Satellite have been launched, offering a significant HD content

Access products: Access products are becoming available in HD format (Digital STBs, …) Consumers widely adopted HD-ready TV displays HDTV viewers expected to nearly quadruple to reach 52 million viewers by 2008

New Generation Networks

Networks are evolving towards generalized use of IP technology Evolution initially driven by IT industry (data transmission) Generalization of file-based solutions in the content industry as a key enabler

TelCos are well positioned to implement this all-IP transition Build-up on legacy infrastructures Same infrastructure can deliver phone, video-telephony, TV, messaging services

Roll out of IP technology leads to emergence new opportunities, and drive 50% growth year on year in the NGN market

New services including interactivity and personalization features built around IPTV, MobileTV or VOD solutions

New players are yet to appear in a extremely scattered market

Examples of Electronic

Distribution

Electronic Content Distribution Architecture

DevicesManaged ServicesContent Distribution

Content Storage

Core Network

Video Headend

STB/PVR

PC

Mobile Handset

Portable Video Player

Content Facilitation

Content Preparation

Content Management

White Label Storefront

Authentication, Authorization, Accounting, Clearing and Reporting

Access Network

Store FrontStore Front

Retail Portal

Electronic Program Guide

Delivery Infrastructure

Content Delivery

DRM Administration

Common architecture. Multiple « go to market » models.

Content Files

Example 1: Digital CinemaDigital Services and Technologies Rollout

Broadband connectionDigital Distribution NetworkMultiple digital projectors

Installation

Content Files

Content Files

THEATRES

TransmissionInternet

Support

Network Operation Center

Uplink

Monitoring

Activity Management

Business model is agreed : roll out starting in 2006

Fiber, DSL,…

Theatre Management Systems/Server

DigitalContentCapture

Digital ContentPreparation &

Post-Production

Digital CinemaServices

Encryption/EncodingSystem Maintenance

Security/Key Management

Example 2 : VOD

Network VOD : Cable, Telcos, ISPs High quality, user-friendly experience : real-

time digital TV, sometimes HD Extensive catalog : several thousand pieces

of content available anytime

Push VOD : Satellite, Terrestrial High quality, user-friendly experience Catalog limited to PVR storage capacity :

typically 20 films or 40 shows

PPV: Satellite, Cable, Telcos High quality, not real time

Web streaming or download : Content owners, broadcasters Less user friendly : PC based, lower quality

Pod-casting Same as above for portable devices

Sold in package (Subscription VOD) or “a la carte”Today, mostly used to increase

customer stickiness through SVOD. Can cut churn by 50% in the US.

A « Teaser » to upsell premium packages and increase ARPU

Sold “a la carte” Focus on impulse purchase of

blockbusters, adult content & sports

Sold “a la carte” or free Only hit shows are monetized, the

rest is used as teasers or traffic generator or web site

Attempt to desintermediate network operators

9 M cust.1 bn streams

5 M cust.15 str../Sub/m

What role for VOD ? What Business Models ?

Uncertain Business ModelsMultiple Forms

Example 3: Mobile Video

Two mass-market worlds join

Technology:

Content

Business Models:

80% of all Europeans have a mobile Over 300 million people

Mobile Communications

96% European Households 158 million households

Television

Different framing Different length

Different advertising Different interactivity and cross-selling

Operators: support model (ARPU increase, reduced churn) Content owners: additional revenues Cross-selling (logos, ring-tones, merchandising linked to content

watched, …)

Network standards: DVB-H/ T, 3G / UMTS, WiFi / Wimax, Security standards Authentification, accounting, clearing Interactivity

Technology

Two mass-market world join

Business models

Content

Example 4: Corporate Video Networks

Frost & Sullivan Market Leadership Award in digital signage (April 2005):

« the sole tier 1 vendor in the industry »

PRN is the pioneer in digital signage at retail with a comprehensive service offering:

equipment installation and maintenance play-list & media assets preparation and

distribution content preparation ad sales

Network combines the effectiveness of narrowacasting (34,000 different viewing areas within 6,000 stores) and the power of a mass medium (200 million monthly viewers)

Historic 20%+ revenue growth level

Business model is agreed and proven : roll-out underway

Common Elements in Electronic Content

Distribution

Common ECD technologies and expertise Expertise

Content Capture Content Preparation Content Protection Content Infrastructure Management Content Access

Underlying Key Technologies Compression: MPEG-4 and beyond, scalable compression standard Storage and recording Archiving, search and retrieval Metadata coding

Providers mastering these expertises, skills and technologies help network operators and content owners

to focus on their core business, while providing a seamless user experience

Content Capture Digital cameras become more broadly

adopted Quality compares to film Lower overall production costs Increased creativity due to higher

flexibility and shooting convenience Immediate review of “rushes”

Digitally captured content feeds professional networks for faster review, color correction and editing

End to end digital workflows are widely adopted

Increasing content availability and affordability

Digitalization and HD Multiplicity of viewing devices formats and

resolutions, Increased demand for consistent high quality

experience,

From a single high-end Digital Master, hundreds of versions are prepared and packaged to fit the various electronic distribution needs:

Format : NTSC, PAL, HD, QCIF, etc. Aspect ratio : 16*9, 4*3, etc. Compression :Mpeg 1/2/4 ; VC1 ; Quicktime ; etc. Language versioning Regional cuts/constraints (government approval)

Digital asset management systems (and associated metadata) becomes strategic to ECD

Content Preparation (Post-Production)Original signal

Content preparation is at the heart of ECD

Content protection

No content protection, no business

Content protection will not come from a single technology solution but from a variety of solutions, which combined, can prevent piracy

Encryption : protection Digital Right Management : manage content rights & access Fingerprinting and watermarking : tracking and authentification of

pirated copies Camcorder-jamming : against in-theater bootlegging

Multiplicity of ECD offers and requirement for seamless experience from consumers lead to DRM interoperability requirement

Content Infrastructure Management

Complexity linked to fragmentation of channels (content preparation, versioning, ad,..) and quality of service

Significant but scalable capital investment Expertise and innovation from focused

services companies

Allow editors and operators to focus on their core business by « outsourcing » Digital Centers and Services management:

VersioningServices

GraphicsSound

servicesQC &

ComplianceAd Insertion

TX Control &Monitoring

MasterControl

Ingest

Origination is a critical link in the broadcast industry value chain

OriginationServices

Production Transmission

SchedulingContent

PreparationPlay-out TransmissionBroadcaster AudienceCommission

productionProduction/StudioPost-Production

Content Access

Broadband network operators need to differentiate their service offers to the consumer

Content Access Product (dual / triple / quadruple play) are a key differentiator for network operators

Gateway/STB/… are « network equipment » productsCisco / SA

Access Products and Home Network

Media Centre

Sat/DTT/cable STB

PDA

Bluetooth &Wi-Fi Phones Game Console

Wireless Lyra

Web Tablet

Laptop

Mobile TV

IP STB and PVR

mp3 player

IP DECT Gateway

Home Networking is key to extend the reach of operators within the home

A reduced set of standards must be agreed upon to create mass market momentum and adoption

Thomson and Electronic Content

Distribution

Mission Statement

DISTRIBUTIONDISTRIBUTION

CONTENT

CONTENT

CUSTOMERS

CUSTOMERS

Thomson is a technology company

focused on image and video,

serving the Media & Entertainment industries

Key Clients

Long-term relationships with M&E customer base

Three Divisions

End-to-end Services

Systems & Equipment Technology

Physical Media:Film Services

Electronic Content Distribution Services

Network Operations Services

Physical Media:DVD Services

Post-Production Services

Broadcast & Networks"Grass Valley"

Access Platforms& Gateways

Connectivity

Research

Licensing

Silicon Solutions

Software & TechnologySolutions

Satellite – Cable Terrestrial

Telecom

2010 Assumptions

Some consolidation in M&E in Europe; emergence of significant M&E groups and markets in Asia (particularly China and India)

M&E clients will have outsourced many of their activities

China and India will have become mainstream markets

Electronic delivery of content into the home will have emerged. Consumers will continue to buy pre-recorded content at retail, but will also be purchasing/renting content (events, etc) directly from home

In addition to film print, digital delivery of movies to cinemas will have developed

The transition to high definition (HD) will be complete

Mobile video will be pervasive

Intellectual Property will remain a key differentiator and significant source of direct and indirect revenues

Security technologies and services to combat piracy will have been implemented

China will have become a technology standards-setter

Network operators will have largely switched to IP technologies

All networks will have ‘triple play’ offerings

‘Connected products’ will be ubiquitous inside and outside the home

Home networking will have been implemented

M&E Clients

Media Technologies

Electronic Content

IP Devices and Solutions

Two-Year Plan (05-06) – Framework for Growth

Systems & Equipment

Technology

Post-Production

Network OperationsServices

Electronic Distribution

Services(Dig. Cinema & VoD)

Telcos / ISPs

Broadcast systems & equipment

Networks

Home Networking

Silicon & Software Solutions

Services

Primary"Boosters"

Secondary"Boosters"+ =

Physical MediaServices

(DVD + Film)

Set-Top Boxes (Satellite, Cable,

Digital Terrestrial)

Growth"Engines" + €1.5-2.0 bn

revenue growthby end of 06

(full year basis)

Systems & Equipments

DSL VoIP Gateways

Cable VoIP Gateway

Cable Triple Play Gateway

IP-STBs

DSL Triple-Play Gateway

Remote mgt and Gateways

ECD opportunities in S&E: mobility, HD, ProAV, NGN developments at the edge of the network

Servers

Switchers

Telecine /Dataciné

Cameras (HD,

ProAV,..)

Routers

Encoders MPEG4 HD,

DVB-H

Capture, production, network head-end

Content access

Post Production Thomson’s Creative Services include:

Numerous services: mastering, color correction, editing, visual effects, subtittling, mastering, sound mix, 3D computer animation …

Accross 3 markets : feature film, TV-Broadcast and Advertising One of the two world leader in

Visual effects Theatrical & TV broadcast post-production

Post-production represents an addressable market over $6 bn… and growing

Network Services (1/2)

A growing need for management of digital centers

Emerging Networks

Traditional Networks

Corporate / ProAV

In-store TVs / Digital

Signage

Digital Cinema

Cinema Advertising

Digital Center Management + Other Services

Network Operations / Infrastructure Management

VoD Broadcast

Originally focused on traditional broadcast operations Currently expanding to deliver end to end services from content preparation to diffusion, and to manage the full complexity

Network Services (2/2)

BTTower

Cable

DTT

DTH

Cable Head End

EMEA Households

Bi-Directional

155 Mbit/s ASIMUX

Chiswick

34 Mbit/s ASIMUX

NTL

ABC1Freeview DTT (UK)

BT Teleport (UK)

BSkyB -UK

ViaSat – UK

NTLSuper Head End

TelewestSuper Head End

Showtime - ME

Orbit - ME

Eutelsat West 1

Disney Channel Middle

East

Disney Channel Scandinavia

Disney Channel U

K, +1, T

oon,

PHD

Sirius 3

Astra 2D

Telenor – UK

DMC – UPC Amsterdam

Jetix FKU

Jetix Nordic

Astra 1G

Thor 2

Jetix

FKC

Hotbird 4

BT Madley (UK)

NTL Newman St – UK

Managing the complexity

Other ECD Services

Thomson intends to provide other ECD services as business models firm out :

DRM Packaging and Administration

Transaction Management

Transaction Reporting

Platform and Device Agnostic

Store Front Design & Maintenance

Outsourced Store Front Managed Service

Offer Management

Hosting and Storage

Asset Management

Offer Creation

Bonus material for VOD

Content aggregation

Meta Data Aggregation

ContentFacilitation

ContentPreparation

ContentManagement

White labelStore Front

DRM Administration,Authentication, Authorization,

Clearing & Reporting

These opportunities are being defined in the context of working groups with content owners and network operators

Example : Digital Cinema (1/2)

Support from 7 studios for Technicolor Digital Cinema initiative

(DreamWorks, Sony Pictures Entertainment, Universal, Warner Bros, New

Line Cinema, Twentieth Century Fox, The Weinstein Company)

At least 15,000 screens to be digitally-equipped over a 10-year period

Up to 5,000 screens to be equipped during the initial 3-4 year period

Across North America (US and Canada)

Beta Test to start early 2006

Rollout agreement enhances Thomson’s strategy to be a leading service provider in end-to-end digital content preparation and distribution

Example : Digital Cinema (2/2)

Thomson provides solutions for all aspects of the digital value chain

Rollout

Content Files

Digital Services and Technologies

Broadband connectionDigital Distribution NetworkMultiple digital projectors

Installation

Content Files

Content Files

THEATRES

TransmissionInternet

Support

Network Operation Center

Uplink

Monitoring

Activity Management

Fiber, DSL,…

Theatre Management Systems/Server

DigitalContentCapture

Digital ContentPreparation &

Post-Production

Digital CinemaServices

Encryption/EncodingSystem Maintenance

Security/Key Management

Conclusion

Digitalization is underway

Risk to traditional

businesses

New Business Models

New Appplications

New Industry Landscape

Business Model Changes

Media, Entertainment & Communication :• disruptive environment, but • new opportunities to generate incremental revenues by making content more broadly and securely available

Thomson is uniquely positioned :• to provide services to operators and content owners along the ECD value chain• to be the catalyst to facilitate this digital transition

Infrastructure being built

Opportunities for growth

Frank E. Dangeard

Media & Technology : The Rise of Electronic Content

Distribution

Journées Internationales de l’lDATE

23 Novembre 2005

frank e. dangeard media & technology : the rise of electronic content distribution journées...

Documents

media slide

linear content creation

forwardlooking statements

dangeard media technology

ecd agenda slide

new entrants

ecd thomson

business conditions