7 predictions about the future of media

7 PREDICTIONS ABOUT THE FUTURE OF MEDIA BI Intelligence Providing in-depth insight, data, and analysis of everything digital DIGITAL WILL INHERIT THE EARTH DIGITAL MEDIA CONSUMPTION IS GROWING, EVERYTHING ELSE IS SHRINKING US Consumer Media Consumption Share 2011 2012 2013 2014 2015 43.2% 40.9% Mobile 35.2% 30.0% Desktop/laptop 14.0% 12.0% 6.6% TV Radio 2.9% Print 5.8% 3.3% Other Digital Source: eMarketer And averages not tell the whole story… THE SHIFT IS GENERATIONAL Top Media Mentions Among All Adults, 2013 Aged 75+ Aged 65-74 Aged 55-64 Aged 45-54 Aged 35-44 Aged 25-34 Aged 16-24 Total Watch TV Read newspapers/ magazines Listen to the radio Go online on a computer/ laptop/netbook/tablet Use a smartphone 20 40 60 80 100 Source: Ofcom GENERATIONS HAVE A PREDICTABLE LIFE CYCLE… Source: Goldman Sachs MILLENNIALS AND GEN Z •  First digital native generation(s) •  Already 45% of population and largest share of earners •  Profoundly different media habits 18-24 TV VIEWING DOWN ~30% IN YEARS Traditional TV* Viewing Trends Among 18-24 Year-Olds Weekly time spent in hours, based on total 18-24 population 30 Hours spent 25 26 20 15 16 10 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2011 2011 2011 2011 2012 2012 2012 2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 *Traditional TV refers to all live + DVR/time-shifted TV viewing during the quarter Source: Nielsen Meanwhile… DIGITAL MEDIA CONSUMPTION GROWING EVERY YEAR, ESPECIALLY MOBILE Total minutes (MM) Growth In US Digital Media Time Spent Desktop Mobile App Mobile Browser 118,299 97,440 77,081 409,847 778,954 621,410 476,553 480,967 550,522 Jan-13 Jan-14 Jan-15 MOBILE TIME SPENT Source: comScore Media Metrix Multi-Platform & Mobile Metrix; US, Total Audience Traditional TV networks will go through ~decades of pain Why? Money follows eyeballs WHEN EYEBALLS LEFT PRINT THIS HAPPENED Newspaper Ad Revenue (Print vs Online) $60,000 Print Online In Millions $50,000 $40,000 $30,000 $20,000 $10,000 $- 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015* Source: Newspaper Association Of America, *Estimate THERE ARE TOO MANY NETWORKS Channels Receivable And Watched Per TV Household US Average TV Channels Received 151.4 136.4 129.3 17.3 2008 17.7 2009 17.8 2010 Average TV Channels Watched 189.1 179.1 168.5 17.5 2011 17.8 2012 17.5 2013 Source: Nielsen THERE ARE TOO MANY (MEDIOCRE) SHOWS Average original TV series each year vs survival rate Source: Liam Boluk, MEDIA REDEF So get ready for years of consolidation and pain FORTUNATELY, TV IS AWASH IN MONEY Revenues, U.S., 2015E, USD Billions Pay TV SubscripZons $103.1 Paid Downloads $2.0 TV AdverZsing $67.0 Ad Supported $7.7 $185.3 B Total SubscripZon $5.5 Source: BIA/Kelsey, Digital TV Research, eMarketer, Google, Hulu, Netflix, PwC, SNL Kagan, Statista, Digital Market Outlook, TDG, Activate So they’ll suffer in style POWER AND WEALTH WILL BE MORE CONCENTRATED THAN EVER DIGITAL MEDIA IS THE NEW “BIG MEDIA” 2014 Revenue Select Media Companies 10.3% YoY $66.0 8.4% YoY (Billions) $48.8 -8.2% YoY $27.4 -9.7% YoY -3.7% YoY 58.4% YoY $13.8 $13.3 $12.5 Google Disney Time Warner CBS 25.8% YoY -1.3% YoY -4.6% YoY 8.7% YoY 0.8% YoY Yahoo Ganneb AOL New York Times $5.5 $4.6 $3.2 $2.5 $1.6 Viacom Facebook Neilix Source: Company Filings, BI Intelligence estimates And “big media” companies are now distinctly medium-sized THIS IS THE NEW “BIG” 2014 Revenue Select Media Companies 27.9% YoY Billions $233.7 Apple 2.9% YoY 5.4% YoY $132.4 $127.1 AT&T Verizon 6.4% YoY 10.3% YoY $68.8 $66.0 Comcast Google Source: Company Filings, BI Intelligence estimates THANK YOU! Sign up for BI Intelligence to get more content like this Subscribe to Business Insider’s research service to get rich analysis and key insights on today’s most relevant topics in the digital landscape: http://read.bi/intelligence [...]... here’s a glimpse at the past, present, and future of media THE PAST (~2000): 3% DIGITAL 100% 90% 80% 70 % 60% 50% 40% 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom THE PRESENT (~2015): 40% DIGITAL 100% 90% 80% 70 % 60% 50% 40% 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom THE FUTURE (~2030): 80%+ DIGITAL 100% 90% 80% 70 % 60% 50% 40% 30%...MILLENNIALS CHECK THEIR PHONES EVERY 10 MINUTES Source: Kana Software My smartphone never leaves my side, night or day 87. 0% THEY KEEP THEM IN REACH 24 HOURS A DAY 12.0% 2.0% Agree Disagree Not sure Source: Zogby Analytics, cited by KPCB (Mary Meeker – LinkedIn slideshare) When I wake up, the first thing I do is reach for my smartphone 80.0% THEY CHECK THEM FIRST THING IN THE MORNING 18.0% 2.0%... US 16.5 18 .7 20.6 14.0 Billions 11.4 8 .7 2014E 2015E 2016E 2017E 2018E 2019E Source: BI Intelligence estimates based on historical data from the RIAA EVEN “PRINT” SUBS ARE CLIMBING FAST New York Times Digital Revenue $120 Global $80 SubscripZons $60 Millions $100 $40 AdverZsing Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 $20 Q2 14 Q3 14 $- Q4 14 Source: The New York Times The new pundit story is that there’s one... — subs or ads The truth is that both work, as do a la carte sales Most media companies have dual revenue streams “FREEMIUM” IS OFTEN THE BEST APPROACH Paid Digital Subscribers As % Of Total Digital Users 30% 25% 25% 22% 21% 20% 15% 10% 5% 5% 5% 3% 2% NYT LinkedIn 0% SpoZfy Hulu WhatsApp Pandora Match Group Source: BI Intelligence estimates 3 (NATIVE) DIGITAL ADVERTISING WILL CONTINUE TO THRIVE The best... Source: BI Intelligence estimates 3 (NATIVE) DIGITAL ADVERTISING WILL CONTINUE TO THRIVE The best definition of “native ads”… “NATIVE ADS” Ads that fit the way content and stories in the medium are consumed In digital, “search” and “scroll” are the dominant ways content is consumed BEHOLD THE POWER OF NATIVE DIGITAL ADS Digital Advertising Revenues Global $25 Twiber Billions $20 Yahoo $15 AOL Facebook... GAAP revenue Source: Company Filings, BI Intelligence estimates “Read, watch, and listen” are also digital formats But the experience is different than in legacy media Native digital brand ads will increasingly take advantage of the digital difference 4 THE EXISTENTIAL CRISIS OF AD BLOCKING WILL RESOLVE ITSELF — BUT CAREFUL WHAT YOU WISH FOR ... 30% 20% 10% 0% Smartphone Computer/laptop/tablet Radio Print TV Source: Ofcom 2 SUBSCRIPTIONS FOR THE WIN! Remember when pundits said digital content had to be free because no one would ever pay? Oops STREAMING VIDEO SUBS CLIMBING FAST Streaming Video Subscription Revenue US 11.5 9.2 4.0 2014 4.8 2015E Billions USD 7. 3 5.8 2016E 2017E 2018E 2019E Note: Includes video services that stream long-form TV