The Future of Streaming Video

1
The Future of Streaming Video
Announcing MSN Video

• Scott Moore
• President
• MSNBC.com

2
Broadband Reaches A Tipping Point

• Home Use is Growing Fast
• 21.4M Homes in 2003 (30 of all US HHs)
• 37M Homes by 2006
• At Work Use is Already There
• 60M At Work BB Users
• 70 of At Work Users have BB
• Bandwidth costs down 66 since July 02
• Consumers with BB demand video
• 50M Americans used online audio/video in past
  month, 30M in past week
  
• 4x more likely to download video, 3.6x more
  likely to stream video than narrowband users

Arbitron Inc. Edison Media Research 9/2003,
Odyssey 2003
3
Broadband Reaches A Tipping Point
Number of US BB Households (Millions)
10.4 15.7 21.4 26.7 32.0 36.8 40.7
4
MSNBCs Iraq War Coverage

• Streaming media spiked to 87M streams 12M users
  during 4 weeks
  
• CNN ABC News charged for all video
• Results
• MSNBC beat CNN by 22 ABCNews by 76 during
  April
  
• Free video clips were a big ratings factor
• Key Learning Managed Costs Effectively

5
MSN Technology Vision

• MSN 9 designed to be a BB service
• Windows Media 9 is BB optimized
• Higher quality audio and video codecs
• Web-based 5.1-channel surround sound
  full-spectrum, full-resolution audio
  
• Decreased buffering delays
• Leverage Microsoft technology MSN streaming
  expertise
  
• Deliver TV Programming over IP
• Multiple playback devices emerging
• Media Center PC, Pocket PC, Mobile
• Longhorn will enable rich media scenarios

6
MSN Content Vision

• News/Current Events content is the top attraction
  for streamers (50 of usage)
  
• MSNBC Exclusive source for NBC News, rated
  number one in TV news
  
• News with Tom Brokaw
• The Today Show
• Dateline NBC
• Meet The Press
• CNBC Business news
• Adding Sports Entertainment

Odyssey 2003, Nielsen TV ratings
7
Paid vs Free

• Economics favor ad supported business, free to
  consumers
  
• Media models from TV, Radio
• Video subscriptions to date are unimpressive
• 50 million people streaming, 1 million Real
  subscribers
  
• BB consumers look for rich content independent of
  their access
  
• Streaming video ad inventory is scarce
• No aggregation by a big player

8
Consumer Trends

• TV viewing has disaggregated
• Fragmented audiences
• Networks are losing viewers while raising rates
• PVRs destroy TV programming models

165
79
62
39
27
14
1975-
1981-
1986-
1991-
1996-
2001-
1980
1985
1990
1995
2000
2005
TV Fragmentation1975 to 2005
9
Consumer Trends

• Viewers want to control, condense combine
  media
  
• Content is consumed in shorter segments,
  according to viewer passions
  
• Online music consumption shows the way
• Advertising is a well accepted part of the video
  experience
  
• Traditional TV ad model is under pressure due to
  changing consumer behavior
  

10
MRI divides consumers into quintiles based on
their exposure to television
Advertising Problem
35 Hours
20-34 Hours
11-20 Hours
5-10 Hours
11
Heavy TV viewers see the ads most often while
light viewers have low exposure
Advertising Problem
Heaviest Ad Exposure
Lightest Ad Exposure
Light Ad Exposure
Heavy Ad Exposure
Medium Ad Exposure
Ad Freq. Highest
Ad Freq. High
Ad Freq. Medium
Ad Freq. Low
Ad Freq. Lowest
12
So how do you reach the lighter viewers?
Advertising Problem
If theyre not watching TV they have to be
reached elsewhere.
Print, Radio
Lightest Ad Exposure
Online
Ad Freq. Lowest
13
Reaching Consumers

• Light TV Viewers are Heavy BB Users
• Prime advertiser target - New Enthusiasts
• Wealthiest and most well-educated. Tend to live
  in family settings.
  
• Media consumption
• Index low for most prime-time broadcast TV
• Over index home broadband and streaming
• The best way to target this highly desirable
  market segment is to go where they are -- Online

Source Odyssey Homefront Study
14
Reaching Consumers

• In comparison with TV, streaming
• Provides fresh reach
• Actualizes commercial delivery
• Operates on net reach equation
• Caps frequency can provide frequency
  distribution.
  
• Capitalizes on reverse prime to TV
• Reaches low quintile TV viewers

15
Introducing MSN Video
16
Advertising Elements

• Advertiser owns the player while ads play
• 15 second TV spot fires
• Immersive Flash unit expands
• TV Spots ends, Flash retracts to persistent
  banner, present during two content pieces
  
• Delivers the emotional impact of TV and the
  instant interactivity and response potential of
  the Web

17
Partner on-boarding technology

• Media on Demand (MOD) automates partner
  interaction
  
• Ingests partner content
• Embeds action tags and URLs
• Synchs meta data panel links
• Calls up branding logos
• Creates tags for content tracking
• Allows MSN to distribute partner content
  automatically

18
In Closing

• MSN Video launches in beta tomorrow (10/15)
• MSNBC will begin using MSN Video player in early
  November
  
• MSN 9 will announce many more Broadband features
  partners this winter
  
• Broadband streaming is amass market media
  opportunity today

19
Thank You!

• Scott Moore
• scottmo_at_microsoft.com