Video Beyond PC: Opportunity in Mobile and Beyond

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72% of China’s netizens own a smartphone And they spend 2.34 hours on their phone using the internet

Data Source: IMMS 2014 China Netizen Internet Behavior

42% of China watch online videos every week

Data Source: CNRS 2013

In the past 3 years, Mobile Online TV coverage has almost tripled

Data Source: iUserTracker, June, 2014

2012 2013 2014

70 million

116 million

200 million

15 mins

25 mins

46 mins

Mobile Online TV viewers have caught up daily time spent on video

41 mins

42 mins

46 mins

2012 2013 2014

Data Source: iUserTracker, June, 2014

PC

Mobile

2012 2013 2014YTDMobile WAP 65,396 184,683 198,331Mobile APP 1,474,077 4,969,966 14,088,152PC 28,409,611 27,736,602 28,301,310

95% 84% 66%

5% 15%

33%

MONTHLY TRAFFIC TO ONLINE VIDEO SITES (PAGEVIEWS, MILLION)

Mobile traffic to video sites has also grown significantly; meanwhile PC traffic has stagnated

Data Source: iUserTracker, June, 2014

Already, 31% of YouKu’s monthly audience comes from mobile. Not only that, the mobile OTV audience contribute to 54% of YouKu’s page views.

Data Source: iUserTracker & mUserTracker, June, 2014

This trend is being reflected on other sites

Top 10 Online Video Websites

Video Site Total Monthly

Users (mil) PC %

APP %

Page Views Total (mil)

PC %

APP %

YOUKU 354 69% 31% 9,748 45% 54%

IQIYI 345 77% 23% 5,990 52% 48%

LETV 263 89% 11% 2,696 74% 25%

TUDOU 176 89% 11% 1,844 76% 23%

PPTV 162 73% 27% 2,505 80% 20%

56 157 98% 2% n/a

FUNSHION 157 89% 11% n/a

XULEI KANKAN 157 97% 3% 1,429 98% 2%

PPS 141 54% 46% 3,039 12% 88%

KU6 135 100% 0% n/a

Data Source: iUserTracker & mUserTracker, June, 2014

Growth has accelerated amongst older, higher income audiences

Under 24 57 84 25-30 46 67 31-35 26 41 36-40 19 32

Above 40 13 24

No Income 18 28 Below RMB1,000 7 10 RMB 1,000-2,000 16 20 RMB 2,000-3000 33 47 RMB 3,000-5,000 41 62

Male 94 146 Female 67 101

Dec 2013 June 2014

+55% +51%

+47% +46% +58% +68% +85%

+56% +47% +46% +58% +68%

Data Source: mUserTracker, June, 2014

Mobile Online TV Monthly Population (Million)

Mobile OTV viewers skew higher income 13

%

12%

21%

23%

16%

15%

11%

4% 8%

19%

25%

32%

NO INCOME BELOW RMB1,000 RMB 1,000-2,000 RMB 2,000-3000 RMB 3,000-5,000 ABOVE RMB 5,000

MONTHLY PERSONAL INCOME

OTV MONTHLY COVERAGE % BY PC & MOBILE

OTV-PCMonthly Coverage%

OTV-MobileMonthly Coverage%

Yet, advertising still lags behind audience growth

91%

66%

98%

84%

100%

95%

9%

33%

2%

15%

5%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

2014 YTD Spends

2014 YTD Traffic

2013 Spends

2013 Traffic

2012 Spends

2012 Traffic

ONLINE VIDEO SPENDS VS. TRAFFIC

Data Source: iAdTracker, iUserTracker, June, 2014

P&G UNILEVER MARUBI 37WAN LOREAL MARS CHINAMOBILE COLGATE UNI-PRESIDENT MENGNIU

APP 11 4 67 0 2 3 1 2 0 3PC 178 105 39 88 85 72 73 45 40 35

94%

97%

37%

100% 97% 96% 99%

96% 99% 93%

6%

3%

63%

[VALUE]% 3% 4% 1%

4% 1% 7%

TOP 10 ADVERTISERS' AD SPEND 2014 YTD (MILLION RMB; %)

Lack of accountability hinders spending from the big players

Data Source: iAdTracker June, 2014

THE FUTURE

Mobile OTV ad spend will only start matching PC OTV spends when tracking becomes common place There is headway, tracking agencies have just launched SDK cookies and mobile OTV spends have risen in the past year.

THE FUTURE

Video viewership will continue to fragment as more smart TVs enter the market Smart TV penetration amongst higher income households will only grow and video viewership will follow—when the Chinese government provides more regulatory flexibility for Smart TV content.

THE FUTURE

The challenge will be in measuring, planning and integrating across all online screens As Online TV fragments across multiple screens the need for a single source of data for online video will be paramount for holistic planning.

Summary • In the past 3 years, Mobile Online TV coverage has grown significantly. Mobile Online

TV viewers now match PC viewers in terms of time spent.

• Most of this growth has come from older, higher income earners, 32% of Mobile OTV viewers earn more than RMB 5,000 a month vs. 15% of PC online viewers.

• Advertising lags behind the audience growth—share of spend is only at 9% vs. 33% of traffic.

• Mobile OTV ad spend will only start matching PC OTV spends when tracking becomes common place.

• Video viewership will also continue to fragment as more smart TVs enter the market. The challenge for marketers and agencies will be in measuring, planning and integrating video across all online screens.

Thank You For any enquiries contact Bhasker Jaiswal, Managing Partner - Business Intelligence Bhasker.Jaiswal@omd.com

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