Devoncroft Partners - 2016 NAB Show - Observations and Analysis of Media Technology Industry

Observations and Analysis of
the Media Technology Industry

April 2016
Joe Zaller Joshua Stinehour

Founder and President Principal Analyst
Prepared for cangit@yahoo.com

Reminder: Media Technology Business Summit at 2016 NAB Show
All-Access Event: Open to all Registered NAB Show Attendees
Link to Full Details on NAB Show Website
Las Vegas Convention Center N249
Sunday April 17th | 1:00pm – 5:00pm
Alex Dunlap Joe Zaller Ramki Sankaranarayanan

Chris Walters
GM Cloud Front President CEO CEO
Michelle Munson John Honeycutt Ulf Ewaldsson Avi Cohen

CEO CTO SVP and Group CTO CEO
Louis Hernandez, Jr. Renu Thomas Richard Friedel Larry Kaplan

President and CEO EVP Media Operations, EVP and GM CEO
Engineering and IT
Michael Koons Sam Blackman Charlie Vogt Dan Castles

Vice President
CEO and Co-founder CEO CEO
Josh Stinehour Tom Burns Al Kovalick Håvard Myklebust

Principal Analyst CTO, Media & Entertainment Media Systems Consulting CTO

Copyright @ 2009 – 2016 Devoncroft Partners LLC
Slide 2
Any use without Express Written Consent is Prohibited
Reminder: IABM Breakfast (Monday)
Monday April 18th, 8.00am - 10.00am
Las Vegas Convention Center, Room N235/N237
Schedule:
• A light breakfast will be available from 7.30am
• IABM CEO, Peter White will share results from the latest IABM International Industry Index and
the IABM NAB Show End User Survey. Peter will then reflect on the shifts in the market that have
become apparent in the latest IABM DC Global Market Valuation and Strategy Report
• IABM CTO Stan Moote will interview Del Parks, Senior Vice President/CTO, Sinclair Broadcast
Group to get an end-user perspective.
• John Ive, IABM Director of Technology & Strategic Insight, will chair the main debate with
panelists drawn from both traditional and 'new wave' operators in the media technology space
Click Here to Register
Panelists:
Open to all NAB Show • Tony Emerson, Worldwide Managing Director, Media and Cable, Microsoft Corporation
Attendees • George Hoover, CTO NEP
• Macro Lopez, President Grass Valley
Breakfast will be provided
• David Stubenvoll, CEO and Co-founder Wowza

Slide 3
Contents
• Market Developments
• Pause in Spending? Change in Spending? Follow the Money.
• Media Technology Market Performance
• Review of Technology Trends
• Impact of US Spectrum Auction and ATSC 3.0
• Final Thoughts
• Research Background
Agree? Disagree? Take the Big Broadcast Survey Prepared for cangit@yahoo.com
Copyright @ 2009 – 2016 Devoncroft Partners LLC Any use without Express Written Consent is Prohibited
Slide 4
Media Consumption Has Changed
Visual Networking Index Digital Video Index State of the Internet
Video
Consumer Labs Global Video Index Monetization Report
State of the User

Video Discovery Trends Mobile Analytics
Experience
- Captain Obvious (hotels.com)
But What Matters is the implications to the Media Industry

Commercial impact of multi-platform extends far beyond the
And obvious. Huge upstream impact on value chain
Slide 5
Consolidation across the Entire Value Chain
Pay TV Operators Broadcast Stations Programmers
Technology
Customers
Rental Houses System Integrators Outside Broadcast Playout Operators Post-Production
Service
Providers
Technology
Suppliers
Slide 6
Media Companies Still Exceptionally Profitable
Media Company Margins
EBITDA Margins; *Relevant divisions (Source: Company Filings, Trailing Twelve Months)
46% 45% 44% 38% 38% 37%

*
34% 34% 33% 33% 33% 33%
31% 31% 31% 30% 28% 24%
23% 22% 20% 19% 18% 17%

Slide 7
OTT Generated Additional Revenue for Media Companies…
2003 2010 2013 2015 2015

?
2007 2011 2014 2015 2015
?
2008 2012 2014 2015 2015
?
2008 2012 2014 2015 2016
?
?
Slide 8
…But Also Led to Cord-Cutting…
“ESPN lost 3.2 million subscribers in a little over a year, according to

Nielsen data, as people have “cut the cord” by dropping their cable-
TV subscriptions or downgraded to cheap slimmed-down TV packages
devoid of expensive sports channels like ESPN.
At the same time, the prices ESPN pays for the rights to show games
are ballooning.”
Source: Wall Street Journal, July 9, 2015
Slide 9
Digital Revenues Insufficient to Replace Linear
“We have almost 100 million unique visitors a month on our digital platforms. We’re
approaching $500 million in digital revenue.” John Skipper
President
Source: Wall Street Journal, January 16, 2016
Digital Revenue in Context
Value of Linear Subscriber

Stark
Implication 12x +
more valuable than digital
subscriber
ESPN Annual Portion Attributed Linear Subscription
Revenue* to Digital Revenue Lost Since 2013* TODAY
* Estimates based on review of Disney SEC Filings
Slide 10
The Internet Can’t Replace Linear Television
“To stay in perspective, internet technology
still needs to catch up with the scale of TV.
“We are a long time away from 110+
million viewers watching the Super Bowl
online instead of on television.
“The most we’ve ever done is 2 million
concurrent streams…that’s two major CDNs
really chugging, with no back-up…”
“To do 10 million streams in the US. No
one has done it. No one is even close.
Source: Re/code Media 2016 Bob Bowman, CEO MLBAM
Slide 11
Ever-Evolving Digital Monetization Challenges
First This:
Unable to
Serve Ads
Now This: “Adblock Plus reported that 15 million

Americans had downloaded its
Blocked software in November, and last
summer, Adobe and the Dublin-based
from company PageFair predicted that
Serving publishers were set to lose nearly $22
Ads billion in 2015 because of ad blocking,
a 41% jump from 2014.”
Slide 12
Advertisers Don’t Like Ad Blockers…
“Adblock Plus is an old-fashioned extortion

racket, gussied up in the flowery but false
language of contemporary consumerism.”
“They are engaged in an intellectually false
and morally corrupt exercise.
“Ad blocking companies are little piss ants.
They are run by a handful of people with silly
titles and funny walks who are individually
Randall Rothenberg irrelevant.”
President & CEO
Interactive Advertising Bureau Source: iab website, January 25, 2016
Slide 13
Online Advertising Fraud is Widespread…
The Association of National Advertisers said online

advertising is rife with fraud. $7 billion was spent
in 2015 on online ads that people did not see.
Display and video ads bought using automated
systems had a significantly higher level of
fraud compared to ads that were purchased via
human sales forces.
Video ads, one of the fast-growing parts of the
online ad business, preformed far worse than
display ads bought “programmatically.”
Source: Wall Street Journal, Jan. 19, 2016

Public Market Investors are Concerned
“For years, investors loved the media industry for its stability and reliability.
Cable channel would sign long-term deals with pay-TV operators that guaranteed
annual rate increases, and Wall Street could calculate with some conviction how
profits were trending. But as the recent media selloff indicated, investors are
starting to doubt their basic assumptions about the media industry.”
- Wall Street Journal August 17, 2015
“The market is now valuing U.S. ad-supported TV businesses as structurally

- Todd Juenger
impaired assets.” Media Analyst, Sanford C. Bernstein
"What seems to have really shaken the market is the fact that we are finally
seeing the fraying of the television ecosystem in affiliate fees – which is just
tough, as subscription revenue is supposed to be the most stable.” - Marci Ryvicker,
Media Analyst, Wells Fargo Securities
Slide 15
Driving Business Model Changes at Media Companies
“You’ve heard the cliché over and

over again, people are tired of
paying for things they don’t want
to watch. That’s finally going to
change.”
Leslie Moonves Source: Deutsche Bank Media Conference, March 2016
Chief Executive Officer
CBS Corporation
Slide 16
Digital Business Models Still Evolving
“We have all been enamored with

all these devices. And we have sold
our content for a lot of these devices
and to [platforms], and created
business models that don’t work.”
- David Zaslav
Source: CNBC interview: October 13, 2015
Slide 17
Impact of Cord-Cutting…
“A Digital Subscriber is worth much less to us

than a Linear Subscriber on a Pay TV Bundle”
Source: 2015 Devoncroft Partners Interview
Relative Value of a Subscriber… …the Implication to Spend
Improvements needed
in understanding digital
“We are not going to buy boxes
audience and serving anymore. The big spend in the
most appropriate
advertisements future is ad tech, big data, and
knowing our customers.”
Linear - Senior Broadcast Executive
Digital
Source: 2015 Devoncroft Partners Interview
Subscriber Subscriber
Slide 18
Media Companies Building Data Driven Ad Platforms
“NBCUniversal says that this negotiating season, it will begin to guarantee

that advertising clients using its Audience Targeting Platform will reach
their desired consumers. And if they don’t, NBCUniversal will provide those
clients with make goods.”
Source: Wall Street Journal, April 14, 2016
Turner Broadcasting is the latest traditional TV company looking to extol the

virtues of big data. The cable channel company is planning to introduce what
it is calling the Turner Data Cloud at its upfront event, [where] Turner is also
looking to show off some of its own advertising technology chops.
Source: Wall Street Journal, May 13, 2015
Slide 19
Media Revenue Models Must Change
Traditional Revenue Models Future Revenue Models
Distinct, Well-Understood Overlapping, Evolving
Advertising Subscription
Subscription
Advertising
Other
Content
Public Licensing
Public Funding Funding
Slide 20
Change is Painful… and has Implications for Entire Value Chain
Taking $785 million charge

CBC to lose up to Cutting 1,500 jobs, around as part of strategic
Cutting 400 jobs, close to
additional 1,500 jobs 10% of employees realignment
10% of workforce
during five year plan
- Jun. 2014 - Oct. 2014 - Nov. 2014 - Apr 2015
Cuts more than 1,000 jobs Layoffs affecting ~300 Cutting 500 jobs, about
employees as part of Reducing staff overhead
in restructuring 10% of workforce
organizational changes by $250 million for 2017
- Jul. 2015 - Oct. 2015 - Feb. 2016 - Mar. 2016
Slide 21
Contents
• Final Thoughts
Slide 22
Many Suppliers Have Talked About Spending Pause
“Challenging market conditions were further compounded by a global video technology

spending pause ahead of the key technology transitions we targeted for growth.”
Patrick Harshman, CEO Harmonic
Source: Harmonic Q4 2014 Earning Call
“It's now clear that our Broadcast customers will defer capital spending on traditional
infrastructure equipment as they navigate through a number of important industry
transitions. Their needs for infrastructure, the kinds of things we provide, like cameras
and like switchers and routers those course of things… they are postponing those
investments for some time.” John Stroup, CEO Belden
Source: Belden Q2 2015 Earning Call
“We've talked in earlier calls about the elongated sales cycle as we've been increasingly
experiencing in the Tier 1 market, and this is largely as we've engaged in more strategic and
sophisticated discussions with our largest customers” Louis Hernandez, Jr., CEO Avid Technology
Source: Avid Q4 2015 Earning Call
Slide 23
Pause in Spending, or Change in Spending?
Representative US Media Companies: Fiscal Year Capital Expenditures*
2012 2013 2014 2015

$101M $103M $85M $115M
2012-2015
$215M $132M $125M $161M
CAGR:
$255M $263M $260M $198M
$59M $215M $264M $264M
$155M $191M $221M $183M 3.1%
$35M $38M $79M $75M
$294M $255M $231M $225M
* Only includes Capex of broadcast, cable operations Source: Company filings
Slide 24
“Our technology spend has been

pretty much the same every year.
“As always, we are being very
selective about who we spend with
and that it’s the right investment for
the long-term.”
Source: Devoncroft Partners interview
Renu Thomas
EVP Media Operations, Engineering and IT
Disney | ABC Television Group
Slide 25
“We’re spending more on technology than

at any time in the history of the company.
“Building a greenfield facility let us think
differently about what will drive future
success for the business.
“We realized we needed to build an OTT
factory, with legacy support for broadcast.
“It’s a whole new ballgame.”
Håvard Myklebust
Chief Technology Officer, TV2 Norway Source: Devoncroft Partners interview
Slide 26
Impact on Technology… Pause in Spending, or Change in Spending?
In 2-3 Years do you expect to spend more or less with each of the following?
Traditional
Broadcast Vendors
Spend
Outsourced More
Service Providers
Spend IT Vendors
Less
Cloud Service
Providers
Source: Devoncroft 2015 Big Broadcast Survey
Slide 27
Follow the Money: Escalating Cost of Sports Rights
“The National Basketball Association and its television “English Premier League clubs are celebrating another
partners say their new $24 billion media-rights deal is huge windfall after competition between BT and Sky
evidence of the growing value of sports programming in a drove the overall value of the live TV rights to more than
fragmented media landscape. ” £5.14bn over three seasons.”
Source: Wall Street Journal, October 6, 2014 Source: theguardian, February 10, 2015
% Increase Over Cost of TV rights per % Increase Over Cost of TV rights per
Year Year
Previous Deal Year Previous Deal Year
2016 280% $2.6 billion 2016 70% £1.7 billion
2008 21% $930 million 2013 71% £1.0 billion
2003 24% $765 million 2010 5% £585 million
Slide 28
Follow the Money: Escalating Cost of Sports Rights
Turner, CBS and the NCAA Reach Long-Term
“The new pact is a big bet that sports
Multimedia Rights Extension for NCAA Division I
Men’s Basketball Championship will continue to hold value at a time
- April 12, 2016 when changing viewing patterns and
emerging platforms are straining the
traditional television networks and
pay-TV businesses.”
Source: Wall Street Journal, April 12 2016
% Increase Over Cost of TV rights per
Year
Previous Deal Year
2024 42% $1.1 billion “It’s really pretty comforting to do a

deal where you know for 16 years
2011 41% $770 million
you will be making a profit.”
Les Moonves, CEO CBS
2000 122% $546 million
Source: Wall Street Journal, April 12 2016
Slide 29
Follow the Money: Increased Duration of Rights
Selected Examples – Duration of Current TV Rights
“Sports come with a built in audience.
2021 2026 It allows us to advertise all our other
content to a dedicated audience. ”
- US Broadcast Executive
2021 2032 Source: Devoncroft Interview
2022 2032
“With eight years left on their deal to
broadcast the NCAA tournament, CBS
2022 2032 and Turner are tacking on another
eight.”
Source: ESPN.com, April 12, 2016
2025 2042
Slide 30
Follow the Money: It’s Not Just Sports Rights
Netflix “Netflix is forcing the hands of its subscription

Raises The video on-demand (SVOD) rivals these days
Ante for with cold, hard cash.
Hollywood
“In 2016 alone, Netflix will spend $5 billion
on programming, an amount almost
unthinkable by recent standards.
“Amazon will come in at $1.7 billion and Hulu
$1.5 billion”
Source: Broadcasting & Cable, March 28, 2016
Slide 31
Follow the Money: It’s Not Just Sports Rights
“There is simply too much television…My

sense is that 2015 or 2016 will represent
peak TV in America and that we’ll begin to
see decline coming the year after that and
beyond.”
John Landgraf
Source: 2015 FX Summer TCA, Chief Executive Officer
retrieved LA times FX Networks
Source: FX Networks Research
Slide 32
Follow the Money: Inorganic Investment
“This investment will help us develop a deeper understanding of

programmatic advertising, and play our part in shaping the
market as it progresses. Combining Sky’s knowledge, experience
and innovation in advertising with DataXu’s programmatic
marketing expertise will provide exciting opportunities for both
businesses, and most importantly, for Sky’s advertising
partners.”
- Jamie West, Deputy MD at Sky Media
Source: Sky Press Release, January 25, 2016
“Turner will leverage iStreamPlanet’s technology to deliver its

OTT programming, shift its core technology infrastructure to
the cloud and develop new products and services for existing
and new businesses.”
Source: Turner Press Release, August 14, 2015
Slide 33
Follow the Money: Organic Investment
“Research and development costs related “the new investment will be focused on three key
to ONE Media's work on the Next Gen areas: Web video, mobile and global expansion.
broadcast platform of $1 million in fourth CNN plans to hire more than 200 new staffers”
quarter, for the year ONE Media's $20 Million Into
- Andrew Morse, GM CNN Digital Worldwide
expenses were $12 million.” Digital Expansion Source: Wall Street Journal, March 16, 2016
- Christopher Ripley, CFO Source: Sinclair Q4 2015 earnings call
“Turner will gain access to “As TV tries to act more like digital, and digital tries
Mashable’s Velocity technology—an to act more like TV, they are starting to meet in the
analytics tool that Mashable uses to middle. And we think media companies that have a
Leads $15 Million $100 Million in
help identify which content is likely TV presence have a competitive advantage
Investment in to resonate in social media.” because of our ability to cross-promote—and our
Source: Wall Street Journal, March 31, 2016
premium content.” - David Levy, President Turner
Source: Wall Street Journal, March 24, 2016
“NBCUniversal says it will also “Since 2010, Comcast has hired more than 650
be offering advertising on its software engineers to create a transformed video
linear TV and cable networks experience, and those efforts led to the X1
via its programmatic platform, Internet-connected set-top box and guide…The
NBCUx” company now employs more than 1,000 software
engineers” Source: Wall Street Journal, February 3, 2016
Source: Broadcasting and Cable, February 26, 2016
Slide 34
Contents
• Final Thoughts
Slide 35
IABM DC Global Market Valuation Report (GMVR)
The Definitive Media Technology Market Sizing Report
IABM DC is a joint
venture of the IABM
IABM DC Global Market Valuation Report and Devoncroft
Addition information on the report initiative is Partners
available at www.iabmdc.com
~$49 Billion ~3,000 Companies
1 2 3 4 5 6 7 8 9
Acquisition Post Content & Audio Storage System Playout & Test, Quality Services
& Production Communications Automation Delivery Control &
Production Infrastructure & Control Monitoring
Platforms
150+ Product, Service Categories

Slide 36
Media Technology Market Performance
Media Technology Industry Revenue

Source: IABM DC Global Market Valuation Report
2009 – 2015 IABM DC is a joint

CAGR venture of the IABM
and Devoncroft
Partners
Total Market: 1.7%
Slide 37


and Devoncroft
Partners
Total Market: 4.6%
Slide 38

2009 – 2012 2012 – 2015 IABM DC is a joint

CAGR CAGR venture of the IABM
and Devoncroft
Partners
Total Market: 4.6% Total Market: -1.0%
Slide 39


and Devoncroft
Partners
Product: 4.6%
Service: 3.6%
Total Market: 5.4%
Service
Revenue
Product
Revenue
Slide 40

2009 – 2012 2012 – 2015 IABM DC is a joint

CAGR CAGR venture of the IABM
and Devoncroft
Partners
Product: 4.6% Product: -2.4%
Service: 3.6% Service: 0.1%
Service
Revenue
Product
Revenue
Slide 41
Change Accelerated in 2015
2015: Media Technology Products and Services
Total Market Products Services
- 4.3% - 4.4% - 4.2%

$49.3 $22.0 $27.3
Billion Billion Billion
For more information on 2016 IABM DC Global Market Valuation Report http://dcft.co/GMVR2016
“The commercial models of many broadcasters and media companies have changed
dramatically over the past few years. The combination of new digital and on-line delivery
Joe Zaller platforms, the shift to file-based workflows, the increasing drive for digital monetization,
Founder and President and the promise of COTS IT hardware managed by software defined networks have all
been catalysts for an industry-wide rethinking of both what technology is required to
support future business goals, and whether it will be purchased or outsourced. We
believe these factors will continue to alter the structure of the industry through the end of
our forecast period, 2019.”
Slide 42
The Market Has Changed
2009 – 2012 2012 – 2015

CAGR CAGR
Structural
Products: 3.6% Shift Products: -2.4%
Services: 5.4% Services: 0.1%
IABM DC is a joint venture of the

IABM and Devoncroft Partners
Slide 43
End-Users Telegraphed Intentions Several Years Ago
“We’ve largely completed our HD transition… We’re not going to build a dedicated 4K
infrastructure.” – Clyde Smith, SVP New Technology Fox NE&O
Source: Devoncroft 2013 NAB Strategy Conference, Keynote
“We are going to virtualize everything because we can. We will no longer deploy big iron
systems at our television stations” – Vince Roberts, CTO Disney
Source: Devoncroft NAB Show 2014 Strategy Event, Keynote
“When we buy a TV station, the first thing we do is ship them VMWare in a Rack.”
– Del Parks, CTO Sinclair Broadcast
Source: Devoncroft CCW 2014 CTO Panel
“One of the key questions we will be asking our traditional vendors is, ‘how are you
preparing your products for the cloud future.’” – Richard Friedel, EVP and GM Fox NE&0
Source: Broadcasting & Cable, September 2015
“We can’t replace every router in the building in any one fiscal year, but we can start on a path,
and it really sharpened our minds towards thinking we’ve bought our last baseband router.”
- Todd Donovan, SVP Engineering Disney | ABC Television Group
Source: Devoncroft CCW 2015 CTO Panel
Slide 44
Year-on-Year Technology Supplier Top-Line Performance
2015 Year-Over-Year Revenue Growth / Decline * Denotes relevant division
Source: Company Filings. Most recent 12 month reporting period Calculated in reporting currency
*
7% 8% 10% 6%
* *
24% 7% 6% 7%
10% 15% 13% 7%
*
11% 36% 11% 8%
*
4% 13% * 12% 10%
5% 2% 11% 22%
*
3% 4% 1% 7%
*
28% 5% 69% 11%
Slide 46
Much of Nominal Growth Attributed to Currency, M&A
2015 Nominal % Attributable to,

Growth M&A1 Currency Gain2 Further evidence of
impact of structural shift
13% 23% 53% on vendor performance
69% 73% -
7% 100+% -
1 the percentage of revenue
growth attributed to revenues
*
8% - 71% from newly acquired businesses
2 the percentage of revenue

*
11% 75% 33% growth attributed to positive
foreign exchange impact
Source: Company Filings. Most recent 12 month reporting period * Denotes relevant division
Calculated in reporting currency
Slide 47
Year-on-Year Technology Supplier Profitability
2015 Year-Over-Year EBITDA Growth1 / Decline2 / Negative3 * Denotes relevant division
Source: Company Filings. Most recent 12 month reporting period Calculated in reporting currency
NEG 30% NEG NEG

22% 4% NEG 3%
NEG 3% 54% NEG
26% 5% 13% 35%
*
2% 26% NEG *
4%
*
NEG 11% 10% 1Percentage Growth in year-over-
year EBITDA
43% 55% 5% 2Percentage decline in year-over-
year EBITDA
3% 39% 5% 3 Negative EBITDA in 2015
Slide 48
Technology Suppliers Restructuring
Reducing workforce by Reducing staffing levels by Restructuring plan to $39.1 million incurred for
10%, around 800 10% or approximately 925 delivery $68 million in 2015 restructuring
employees positions annual cost savings charges
- Feb. 2016 - Feb. 2016 - Feb. 2016 - Feb. 2016
Continued restructuring 20% reduction in 26% reduction in $11 million restructuring

costs amount to ~ £10 employees since headcount in completed from 10%
million Mar. 2015 communications division headcount reduction
- Feb. 2016 - Mar. 2016 - Mar. 2016 - Apr. 2016
Slide 49
Simultaneous Change of End-User and Supplier Business Models
“There’ve been downturns in the past where capital

spending was off 10%. But we are seeing more than that
recently. This is a dramatic shift.
“Customer business models are changing at the same time
we’re beginning to see this huge technological shift on the
production and playout side. This is clearly a challenge.
“There are also issues on the supplier side. You might
sometimes see companies’ revenues decline 8% - 10%. But
we’ve seen companies with revenue declines significantly
greater recently… that means radical change to stay alive.
Tim Thorsteinson
“10% you can handle, but much more is very tricky.” Chief Executive Officer
SAM
Source: TVB Europe, April 15, 2016
Slide 45
Technology Suppliers Focusing on Cost and Efficiencies
“Our performance in 2015 was better than
forecasted… After a period of high cautiousness,
we observed at the end of the year some of our
customers releasing budgets that were put on
hold during the first part of the year.
“We have done a lot to position the company
for the future. In 2015, we had a strong focus on
cost management and set up a more efficient
organization. In 2016, we will keep a strong focus
Muriel De Lathouwer on cost management, while investing in the
Managing Director &
CEO
future to consolidate our leadership and develop
EVS new growth opportunities.”
Source: EVS Q4 and FY 2015 Results Press Release – February 18, 2016
Slide 50
Technology Suppliers Realigning Operations
“It's been a challenging project to position Avid
for long-term sustainable growth.
“The organization was completely realigned. We
launched a series of new products. We
rationalized facilities. We looked at the indirect
cost. We reevaluated products, many of which
were shuttered.
It took a really deep commitment by the team…
And now we're just sprinting to end to this last
Louis Hernandez, Jr.
phase to complete this transformation.”
Source: Avid Technology Q4 2015 Earnings Call
Avid Technology
Slide 51
Contents
• Final Thoughts
Slide 52
Devoncroft Big Broadcast Survey (BBS)
Most Comprehensive Study of Broadcast and Media Technology Industry Brands Included
Annual Survey – 8th Year  Only global demand-side

market study
10,000+ Survey Participants
 Opinions on industry trends and
100+ Countries vendor brands
 Demand-side information on
10 Languages
purchase intent
Definitive Reference on Technology Developments

Detailed End-User End-User End-User
… …
Tracking Adoption Perspectives Estimates
Product Upgrade Outsourcing Next-Generation
HD
Cycles Compressions … Lots …
Global Budgets UHD / 4K Remote Production … More …
IP Networking,
End-User Format Delivery … …
Usage File-Based Cloud-Computing
… … … … … …
> > > > > > Click here to register to take Big Broadcast Survey < < < < < <
Slide 53
Big Broadcast Survey Global Trend Index
Measures commercial Importance to end-user business over next 2-3 years
Source: Devoncroft Big Broadcast Survey 2016 Preliminary Results
2016 Big Broadcast Survey Global Trend Index
Slide 54
Multi-Platform Content Delivery
2016 Big Broadcast Survey

Technology Trend Index*
Previous Global
Trend Ranking
1 Multi-platform content delivery
2 IP networking 2015 1 Multi-Platform Content
3 4K / UHD Delivery has been the
4 File-based / tapeless workflows
2014 1 consistent number one
technology trend cited by
5 Cloud services / virtualization
2013 1
6
Improvements in video media organizations in the Big
compression
7 Video on Demand
2012 1 Broadcast Survey since 2010
8 Move to automated workflows 2011 1
9 Transition to HDTV
10 Targeted advertising 2010 1
Source: Devoncroft Partners Big Broadcast Survey 2010 - 2016
* Preliminary Results
Slide 55
Redefinition of “Broadcast”
“Our business is not just a linear

broadcast channel.
We’ve changed what we call our
group from ‘broadcast operations’
to ‘media operations’ to reflect the
shift in our overall business.
“If a vendor is only looking at what
we need to do for broadcast, they'll
miss a huge part of our business.” Renu Thomas
EVP Media Operations, Engineering, & IT
Source: Devoncroft Partners interview Disney | ABC Television Group
Slide 56
IP Networking, Content Delivery

Previous Global
Trend Ranking
2 IP networking 2015 2 IP Networking, Content
3 4K / UHD
2014 2 Delivery has been an
increasingly important trend
Improvements in video
2013 3 for end-users over the past
6
compression four years
7 Video on Demand
2012 4
8 Move to automated workflows 2011 4
10 Targeted advertising 2010 4
Slide 57
Not Moving to IP Infrastructure for Fun
“…We’re not doing this just for fun. The move to IP is

about improving the agility of our broadcast operation.
How do we get there? By moving to a virtualized facility.
And how do we get to a virtualized facility? Using COTS
hardware equipment and IP. It’s all part of a strategy to
improve the agility of the broadcast plant.
…Hopefully, we won’t have the situation that happened
with networked audio, with 10 different audio formats.
It delayed widespread implementation by over ten
years, because you’d buy one device from one vendor, Thomas Edwards
VP of Engineering and Development
and it wouldn’t work with another device from another Fox Network Engineering and
Operations
vendor.”
Source: TV Technology, October 27, 2015
Slide 58
Moving to IP to Better Align with Future Business Needs
“More than anything else, IP completely

erodes the distinction between an
organization's back-office and front office.
If you want to have the benefits, those two things
have to be completely aligned and integrated….
And of course, IP completely erodes the
distinction between you domestic and your
international activities.”
Source: IBC Show 2015 Roadmap Session – CTO Panel Matthew Postgate
Chief Technology Officer
BBC
Slide 59
Concerns Remain About Reliability of IP Infrastructure
“How many times have has HD-SDI

infected by a virus? How many times has
HD-SDI been hacked? How many times
has HD-SDI had a broadcast storm? Zero.
IP is definitely coming, it’s definitely

important, but in terms of reliability, it’s a
lot more fragile than we’d like to admit.
Source: 2016 HPA Tech Retreat Broadcaster’s Panel

Bob Siedel
VP Engineering & Advanced Technology
CBS and CW TV Networks
Slide 60
But IP is On the Air Today at High-Profile Events
“We’re making use of IP systems for live

content.
“If you watch the NFL, Major League
Baseball, or Nascar on Fox Sports, it’s
running through IP routing systems, and
some IP processing equipment. Today.
“And there will be more and more.”
Source: 2016 HPA Tech Retreat Broadcaster’s Panel
Richard Friedel
EVP and GM
FOX NE&O
Slide 61
Many Other Obstacles Remain for IP Infrastructure Adoption
Obstacle for IP
Adoption Cited by
End-Users
Which Vendor do you

think is best positioned to
help your organization
with the transition to IP?
Number One
Response:
I Don’t Know
Source: 2015 Devoncroft Big Broadcast Survey
Slide 62
Shift to IP and Software Requires New Thinking on Both Sides
“…It will require vendors to think differently
and have a lot better software development.
“Salespeople are used to giving away
software, and they aren’t used to always
including maintenance and service
agreements. So there is a learning curve…
“And, on the other side, broadcasters are
used to paying a lot for the hardware. This
means moving from a cap-ex to op-ex
environment, and some of them would
John Stroup
prefer to still make a capital investment.”
President & CEO
Source: Sports Video Group April 5, 2016
Belden
Slide 63
Harmonizing Vendor Initiatives
“At IBC 2013, Imagine provided insights relative to the transformational trends that
would define the Network of the Future, including IP, SDN, cloud, and virtualization.
We also challenged our peers to embrace this change, and to
embrace an ecosystem of suppliers and customers aligned with
the standards required to accelerate the transition to IP. As a founding member of
AIMS, that alliance has now been established and has quickly grown to 30 companies.”
Source: Devoncroft Partners Interview
Charlie Vogt - CEO Imagine Communications
“The world is definitely going to be bigger than strictly Evertz. In terms of

encapsulation formats, we're going to show that we're supporting
from SMPTE 2022, ASPEN of course, TR-03 a, and even [NewTek] NDI.
Evertz will support any standard or format that will allow our customers to
execute and compete in the ever changing world.” Source: TV Technology, April 12, 2016
Romolo Magarelli CEO Evertz
Copyright @ 2009 – 2016 Devoncroft Partners LLC Any use without Express Written Consent is
Slide 64
Prohibited
4K / UHD

Technology Trend Index
Previous Global
Trend Ranking
4K / UHD was added to the
2 IP networking 2015 3 index in 2014 and has been
3 4K / UHD
2014 3 ranked as the number three
most important technology
trend each of the last three
6
compression Added to trend index years
7 Video on Demand in 2014 based on
8 Move to automated workflows end-user feedback
10 Targeted advertising
Slide 65
Demand for 4K / UHD?
“It’s another large camera complement this
year, with 51 total cameras deployed: 26
working the primary game, eight for
TeamStream coverage, and 17 for two studio
sets positioned behind each student section.
………
What is not present is a 4K camera of any
kind. According to Sahara, Turner’s replay
style centers more on stopping motion and
giving the moment time to sink in with
viewers. “We find that the higher-frame-rate
cameras, at least in our opinion, tend to do a
better job of that than the 4K,” he says.
“Rather than spending on 4K, we have
added more higher-frame-rate cameras.
Viewers will see more of that.”
Source: Sport Video Group, April 2, 2016
Slide 66
Demand for 4K / UHD? More Pixels, Better Pixels?
“We’re doing NASA TV right now in 4K, but beyond that we’re not seeing extraordinary demand for 4K from
our existing client base to push 4K very rapidly… it’s not a request we’re getting with great frequency”
Chris Walters, CEO Encompass Digital
“We’re doing a little bit of 4K, mainly at our

studios… we do make 4K products specifically for
Netflix and Amazon… but we’re taking a more
cautious approach when it comes to the linear
television network”
Todd Donovan, SVP, Broadcast Ops & Eng.
Disney | ABC Television Network
“We’re in the better pixels camp. People can’t really tell the difference .. We think HDR is very interesting…
and it will be nice to see people get those standards together because it’s a very expensive proposition. We
think there is absolutely opportunity there”
Diane Tryneski, EVP Media & Production Operations HBO
“Better pixels – 1080p, HDR, wide color gamut, 10-bit… on a 55 inch TV you’ll never see the difference”
Del Parks, SVP and CTO Sinclair Broadcast Group
Source: Devoncroft Moderated CCW 2015 Panel – Key Trends Driving Media Investments
Slide 67
Cloud and Virtualization

Previous Global
Trend Ranking
2 IP networking 2015 5 Cloud services / virtualization
3 4K / UHD
2014 5 was added to the index in
2012 based on end-user
2013 5 feedback. Cloud has been a
6
compression top five trend since 2013.
7 Video on Demand
2012 7
8 Move to automated workflows
10 Targeted advertising
Slide 68
True Cloud Native Applications Needed
“The question for vendors is are they building

truly cloud-native applications…
“Or are they trying to adapt their existing
products to sort-of work in the cloud….If that’s
what they are doing we’re not interested.
“We want suppliers that are re-envisioning their
applications with microservices, hyperscale, pre-
assembly of assets, and a modern supply chain
in mind… not simply just taking their existing
John Honeycutt
Chief Technology Officer
software and hosting it in the cloud.”
Discovery Communications Source: Devoncroft Partners interview
Slide 69
True Cloud Native Applications Needed
“Everyone wants to paint a great story about how their

products work in a virtualized cloud environment…
“…but who is actually building cloud
native applications?
“It’s not enough to sell a software license
that needs a dongle to make it work.
“How do I plug a dongle into the cloud?”

- Senior Broadcast Executive
Slide 70
End-Users Pulling Vendors to the Cloud Future
“We want to transition to a pay-as-you-go model.”

“We have a very capital-intensive infrastructure. We
spend tens of millions of dollars every year to build
and maintain these on-premise systems.”
“We’re trying to drag vendors towards this cloud
future. They are going to have to start re-thinking
their licensing model … start thinking about a pay-
as-you-go model… start thinking about abstraction
from hardware and running in these cloud instances… Chris Blandy
EVP Technology Solutions
I have a feeling everyone in my shoes is asking the Fox Network Engineering and
Operations
same thing of these vendors.” Source: AWS re:Invent 2015
Slide 71
End-Users Pulling Vendors to the Cloud Future
“Anybody is happy to sell you the big iron to put in

your plant but to virtualize that and use a pay-as-
you go model is really what we’re looking for.
“We don’t want any hardware at all…
“If you go to vendors and say you want to
virtualize something they don’t know what to say
to you because their business is making products
and selling them to you… They don’t even know
Michael Harabin how to charge you if they could do it….”
VP Technology, Engineering &
Media Management
PAC-12 Network Source: 2016 HPA Tech Retreat Remote Live Production Panel
Slide 72
Infrastructure No Longer a Differentiator
“AWS is all about ‘undifferentiated heavy lifting’

With this type of model is that I can evolve my
infrastructure by simply deleting it and spinning up
new software, which is a big difference to having to
do a cash outlay for 5-7 years….
If I have to build out all of this infrastructure and it’s
not providing extra value by differentiating me from
any competition, I can spend a long time doing this
with zero net return.” Konstantin Wilms
Solutions Architecture
Source: 2015 SMPTE Technology Conference Amazon Web Services
Slide 73
Media Services Being Deployed on Undifferentiated Infrastructure
“We’re going to be building on the core

service from AWS with our platform
as a service on top of it.
User services, analytics, and content
management are already there. We’re
working on the next generation: media
pipeline, transcode, & media delivery.
This is what we are layering on top of the
Joe Inzerillo core services of AWS to make a compelling
EVP and CTO value proposition to our customers.”
MLBAM
Source: AWS re:Invent keynote, October 2015
Slide 74
Not All Vendor Products are Ready
“Everyone on the team was surprised by

the big differences between the marketing
and the reality of the products…
“We walked around NAB and IBC and saw
that what’s being called IP products is
really just SDI products with different
connectors.
“That approach does not give us the
advantages of standardized IT”
Håvard Myklebust
Source: Devoncroft Partners interview Chief Technology Officer
TV2 Norway
Slide 75
Not All Vendor Business Models are Ready
“In many cases, moving existing

applications to a cloud-based platform
isn’t enough.
“Vendors need to rethink and virtualize
their hardware into software solutions
that best optimize that environment.
That can sometimes mean fundamentally
changing your business model.” Renu Thomas
EVP Media Operations, Engineering and IT
Disney | ABC Television Group
Slide 76
Virtual Reality: Fad or Future?
2016 Big Broadcast Survey FOX Sports, NextVR Sign Multi-year Deal To Develop
Technology Trend Index* Virtual Reality Offerings
Source: Fox Press Release, February 17, 2016
“We’re trying to be a modern and progressive
2 IP networking
burger company,” said Jeff Jackett, marketing
3 4K / UHD director of McDonald’s in Sweden. “It’s not a joke.”
4 File-based / tapeless workflows Source: Wall Street Journal, March 1, 2016

“But watch someone try Cardboard for the first time,
6
compression
and you will usually see a grin quickly appear beneath
the plain brown goggles.”
7 Video on Demand Source: MIT Technology Review November 3, 2015
… …
The Oculus Rift VR system is “going to be gaming for the
… … beginning, that’s the initial market,” Zuckerberg said. “But
13 Virtual Reality overall, the reason why we’re interested in this is because we
think this is going to be a new way for people to interact.”
Source: Variety, January 27, 2016
Slide 77
Contents
• Final Thoughts
Slide 78
US Spectrum Auction: Huge Implications
“I think it is safe to say that you are

going to see a spectrum
extravaganza…
This is not bureaucrats divvying
things up. The marketplace deciding
what is the highest and best use of
spectrum.”
Tom Wheeler
Chairman
Federal Communications Commission (FCC)
Source: CES 2016 Supersession Interview
Slide 79
US Spectrum Auction: Huge Economics
$60 - $80 $1.75

Billion Billion
of
Allocated to help
Spectrum Being broadcasters transition
Auctioned
Source: US Federal Communication Commission
Slide 80
Positioned as an Opportunity for Broadcasters
There is great interest [from broadcasters] in this reverse auction -- and I mean the name
brand folks, the big networks, the big groups.
This is beachfront spectrum… this is the last time that we sell the sand on the beach. I think
that at first a lot of broadcasters thought this was some kind of threat…
[But if I am a broadcaster] I can keep my their existing business model, I’m still reaching as
many subscribers, I’ve still got must-carry on the cable system, and oh by the way I can
pocket several hundred million dollars that I can use to expand into new businesses… FCC Chairman Tom Wheeler
“This is opportunity, opportunity, opportunity for the broadcasters.” interviewed by Gary Shapiro
CTA President
CES 2016
Slide 81
Industry Holds its Collective Breath Waiting for Auction
FCC Timeline “To participate in the auction, accepted applicants will have to
commit to a relinquishment option at the opening price for
Application that option by 6 p.m. ET March 29. The three relinquishment
Dec. 5, 2015
Start Date options include going off the air, voluntarily moving from a UHF
Auction to a VHF channel assignment, or moving from a high VHF to a
Mar. 29, 2016
Starts low VHF. Each option incorporates a percentage of the opening
price: full price for going off the air; 40 percent for going high
Quiet VHF and 75 percent for going low VHF.”
Period Source: TV Technology: March 28, 2016
Auction
~Q3 2016
Ends “…The PBS station in San Bernardino, Calif. drew an opening bid of
(Earliest ) $628 million, which would cover its annual budget for nearly 90
years. The station, KVCR, owned by the San Bernardino Community
College District, said its options include going off the air, but it
declined to comment on its plans, citing FCC rules.”
39 month allotment to Source: Wall Street Journal: February 26, 2016
re-pack broadcaster
spectrum
Slide 82
Considerable Value from Spectrum for Owners
“we are in place to participate and optimize our
spectrum portfolio versus our future ATSC 3.0 data
opportunities.”
“We think the analysis that we did last quarter

that indicated approximately $2 billion of
proceeds with a 3% or less Broadcast Cash Flow
hit is a reasonable estimate based on publicly
available information. Since that time we've hired
advisers; we have full nationwide simulation up “In more than a dozen deals since 2011, a company
controlled by Mr. Dell’s investment fund has spent
and running. We have an auction team running
about $80 million on independent TV stations,
24/7 right now talking to multiple parties on according to government records.
channel shares so we can optimize our outcome.” ………
Those stations collectively broadcast over airwaves
Christopher Ripley
that could be valued at as much as $4.2 billion,
Chief Financial Officer
based on prices recently set by the Federal
Sinclair Broadcast Group
Source: Q3 2015 earnings call 11/4/2015 Communications Commission.”
Slide 83
ATSC President: Standard Will ‘Make Broadcast TV Great Again’
“As we do some of these advances, we’re

going to move from thinking about it as
broadcast television, to thinking about it
as advanced, wireless, digital television
services.
“What’s really critical is it’s the first
broadcast standard based on IP. ATSC 3.0
converts broadcast from an island of a
system to making it part of the Internet.”
Source: Broadcasting & Cable: March 7, 2016 Mark Richter, President, ATSC
Slide 84
Broader Opportunities for ATSC 3.0
“Suddenly you have the ability across

multiple local broadcasters to offer
national, regional, or local services.
“There is an exponential opportunity
for local broadcasters who wish to exist
not as an island but as part of a national
service … and ATSC 3.0 positions them
well to do the kinds of things that today
only a network can offer in terms of
national services.” Source: 2016 HPA Tech Retreat Broadcaster’s Panel
Mark Aitken - VP Advanced Technology,
Sinclair Broadcast Group
Slide 85
Contents
• Impact of US Spectrum Auction
• Final Thoughts
Slide 86
This is Structural Shift: Not Like Past Transitions…
Previous Transitions: Forklift Upgrades… Format War…
Black & White Analog Std. Definition Standards
Camera Formats
Tape Formats
Codecs
Wrappers
Color Digital High Definition etc
Slide 87
Previous Transitions: Forklift Upgrades…
Black & White Analog Std. Definition On Premise,

Specialized Hardware
COTS IT Infrastructure,
High Definition Virtualization, Data
Color Digital Center Architectures
…Current Transition: Not About Replacing Old Boxes with New Boxes
Requires Simultaneous Transformation of …

Business Model Operations Culture Technology
Slide 88
Implications for Vendors and Service Providers
Acquisition &
Post Production Infrastructure
Production
2016 NAB Show

Floor still
resembles the Storage Playout & Distribution
following … Audio
System Automation Test & Service Providers

Measurement
Slide 89
Implications for Vendors and Service Providers
Hall 1: Cameras, Hall 2: Services Hall 3: Control

Camera Accessories Surfaces, Microphone,
The future show Displays
floor … QC Asset Transcoding
Management
2020?..... Graphics Editing Subtitling
2025?..... Playout Resource Encoding

Management
… … … …
2030?....... All Specialized Components
Hall 4: IT Infrastructure,
Cloud Services, Media
Services, Orchestration
Slide 90
This is Going to Be Really Hard
Requires Simultaneous Transformation of …

Business Model Operations Culture Technology
… for Both Buyers and Suppliers of Technology
Slide 91
Specialized Specialized
… Applications
Equipment
…
The Media
Aware Layer
“Enterprise Bus”
The General
Purpose Layer
… …
IT Equipment IT Technologies
Slide 92
Technology Vendors are Opening Up Solutions
“I would challenge you or anybody

else to show me anyone who is
more open and more extensible
across the entire workflow than Avid
will be at NAB Show 2016”
Louis Hernandez, Jr.

Avid Technology
Slide 93
And Creating Products for all Environments
“Our goal is to develop technology and

IP that we can target to anything,
whether it be running on a blade server,
dedicated hardware in a virtualized
environment and not.
At NAB [we] will show both on- and
off- premise virtualized services that
run on blade servers and as ‘on
demand’ instantiated hardware.” Romolo Magarelli
CEO
Evertz
Source: TV Technology – April 12, 2016
Slide 94
Consolidation is Creating Fewer, Larger Technology Buyers
US Broadcast Station Group Example
Source: NexStar Investor Presentation “I spend probably a quarter of
my time looking at acquisition
opportunities, broadcast and
digital, and so more of that time
will be spent on digital than
broadcast, depending on how
much cap space we clear in the
auction process.”
Perry Sook
CEO
Nexstar
Source: Broadcasting & Cable, April 11, 2016
Slide 95
Consolidation of Technology Vendors, Service Providers
Number of M&A Transactions in Media Technology Sector by Year
128
112
80
56 62
44
2010 2011 2012 2013 2014 2015
Slide 96
Where are we in the Technology Transition ?
Vendor Estimates of Transition to Virtualization “Transitioning products

(Source: Devoncroft Big Broadcast Survey 2015) from hardware to software
is challenging. Transitioning
from software to true multi-
tenancy, hyper-scale cloud
deployments is much more
challenging.”
Products
Shawn Carnahan
Operating in Chief Technical Officer
Virtualized
Environment
Slide 97
Where are we in the Business Model Transition ?
“The different technology

architectures are
challenging, the different
business models are even
more challenging.”
Larry Kaplan
Founder and CEO
Slide 98
The Pace of Technology Change is Accelerating
“SMPTE is experiencing substantial growth in all areas of the Society, with a notable increase in
engagement within our Standards Community. This reflects an expanded interest from organizations
across the entire media ecosystem.”
Barbara H. Lange
Executive Director
Published SMPTE Standards
Slide 99
Disruption is an Understatement
“Everything about the industry

will change.
If you’re going to be a survivor,
you have to figure out where
you add value in the future.”
Charlie Vogt
Imagine Communications
Slide 100
Hear More at the 2016 Media Technology Business Summit
Link to Full Details on NAB Show Website
Sunday April 17th 1:00pm – 5:00pm Las Vegas Convention Center N249
1:05pm – Strategic Industry Analysis: Valuations, M&A, and 2:50pm – The Broadcaster C-Suite: Trends Driving Investment Decisions
Equity Finance • John Honeycutt, CTO Discovery Communication
• Joshua Stinehour, Principal Analyst Devoncroft Partners • Renu Thomas, EVP, Media Operations, Engineering & IT Disney/ABC
• Richard Friedel, EVP and GM Fox NE&O
1:25pm – Follow the Money: Trends Driving Media Investment • Håvard Myklebust, CTO TV 2 AS
• Joe Zaller, President Devoncroft Partners 3:30pm – Leveraging Hyperscale IT Infrastructure for Media Workflows
• Michelle Munson, CEO & Co-Founder Aspera, an IBM Company
• Michael Koons, VP, WW Systems Engineering Cisco Systems
1:50pm – Change is the new normal: Transforming for
business success in the new Media landscape • Tom Burns, CTO, M&E EMC / Isilon
• Ulf Ewaldsson, SVP and Group CTO Ericsson • Ulf Ewaldsson, SVP and Group CTO Ericsson
4:00pm – The Service Provider Perspective on Industry Trends
2:10pm – The Vendor C-Suite: Strategies for an Evolving Market • Chris Walters, CEO Encompass Digital Media
• Louis Hernandez, Jr., CEO Avid Technology • Avi Cohen, CEO RR Media
• Charlie Vogt, CEO Imagine Communications • Ramki Sankaranarayanan, Founder & CEO Prime Focus Technologies
• Larry Kaplan, CEO SDVI
4:30pm – AWS Keynote – “All In”: Cloud Transformation of the Media Industry
• Dan Castles, CEO Telestream
• Alex Dunlap, GM AWS Cloud Front
• Sam Blackman, CEO and Co-Founder Elemental Technologies
Slide 101
Contents
• Impact on Market Performance
• Final Thoughts
Slide 102
Please Take the 2016 Big Broadcast Survey
If you haven’t already, there is still time to participate in the 2016 Big Broadcast Survey, the largest and most
comprehensive study of the broadcast and media technology industry
>>> Click Here to Register <<<

to take 2016 Big Broadcast Survey
Why Your Feedback is Important Why You should Participate

Your feedback and ratings will help technology An 100-page summary of Devoncroft’s most recent global
providers drive improvement in products and study of the market
services A 100+ page summary of the 2016 survey results, as soon
Your responses on market trends will inform as it is available
several articles in a wide variety of industry
One or more entries into a prize drawing (click here for
publications
terms and conditions)
Slide 103
IABM DC Global Market Valuation Report (GMVR)
IABM DC is a joint
venture of the IABM
IABM DC Global Market Valuation Report and Devoncroft
Addition information on the report initiative is Partners
available at www.iabmdc.com
~$49 Billion ~3,000 Companies
1 2 3 4 5 6 7 8 9
Acquisition Post Content & Audio Storage System Playout & Test, Quality Services
& Production Communications Automation Delivery Control &
Production Infrastructure & Control Monitoring
Platforms
150+ Product, Service Categories

Slide 104
Questions? Comments?
For more information on the following or to schedule a meeting at the NAB Show
with Devoncroft team members, please email info@devoncroft.com
Joe Zaller Josh Stinehour

Founder and President Principal Analyst
Slide 105
About IABM DC
About IABM DC
IABM DC is a joint venture between the broadcast and digital media trade association The IABM and Broadcast &
Digital Media Market Research, Strategic Consulting, & Analysis specialists Devoncroft Partners. The joint venture
will develop and deliver a series of market intelligence products and services for broadcast and digital media clients.

Slide 106
About Devoncroft Partners
About Devoncroft Partners

Devoncroft Partners provides market research and strategic consulting services to a wide range of digital media
clients. The company publishes a variety of syndicated market research reports and has been retained for
numerous custom engagements by leading players in the broadcast, cable/satellite/IPTV, digital media, Pro-AV,
private equity, and finance industries.
Devoncroft Partners was founded in 2009 by Joe Zaller, a 20-year veteran of the digital media industry.
Additional research and consulting from Devoncroft Partners

Devoncroft Partners publishes a variety of syndicated market research reports, including the annual Big
Broadcast Survey, the largest and most comprehensive study of the professional video markets.
In partnership with IABM, Devoncroft produces and publishes the IABM DC Global Market Valuation Report,
widely considered to be the most respected report of its type in the broadcast industry.
Devoncroft also provides bespoke consulting services to a clients to a variety clients. Typical projects include
market custom research, strategy consulting, strategic planning, market entry, product planning & introduction,
marketing & market positioning strategies, and due diligence related to M&A activities.

Slide 107

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Observations and Analysis of

the Media Technology Industry

Joe Zaller Joshua Stinehour

Prepared for cangit@yahoo.com

Alex Dunlap Joe Zaller Ramki Sankaranarayanan

Michelle Munson John Honeycutt Ulf Ewaldsson Avi Cohen

Louis Hernandez, Jr. Renu Thomas Richard Friedel Larry Kaplan

Michael Koons Sam Blackman Charlie Vogt Dan Castles

Josh Stinehour Tom Burns Al Kovalick Håvard Myklebust

Prepared for cangit@yahoo.com

Prepared for cangit@yahoo.com

Visual Networking Index Digital Video Index State of the Internet

State of the User

- Captain Obvious (hotels.com)

But What Matters is the implications to the Media Industry

Rental Houses System Integrators Outside Broadcast Playout Operators Post-Production

46% 45% 44% 38% 38% 37%

31% 31% 31% 30% 28% 24%

23% 22% 20% 19% 18% 17%

2003 2010 2013 2015 2015

“ESPN lost 3.2 million subscribers in a little over a year, according to

Digital Revenue in Context

Value of Linear Subscriber

Now This: “Adblock Plus reported that 15 million

“Adblock Plus is an old-fashioned extortion

The Association of National Advertisers said online

Prepared for cangit@yahoo.com

“The market is now valuing U.S. ad-supported TV businesses as structurally

“You’ve heard the cliché over and

“We have all been enamored with

Source: CNBC interview: October 13, 2015

“A Digital Subscriber is worth much less to us

Relative Value of a Subscriber… …the Implication to Spend

“NBCUniversal says that this negotiating season, it will begin to guarantee

Turner Broadcasting is the latest traditional TV company looking to extol the

Distinct, Well-Understood Overlapping, Evolving

Taking $785 million charge

- Jul. 2015 - Oct. 2015 - Feb. 2016 - Mar. 2016

“Challenging market conditions were further compounded by a global video technology

2012 2013 2014 2015

“Our technology spend has been

“We’re spending more on technology than

2016 280% $2.6 billion 2016 70% £1.7 billion

2008 21% $930 million 2013 71% £1.0 billion

2003 24% $765 million 2010 5% £585 million

2024 42% $1.1 billion “It’s really pretty comforting to do a

Netflix “Netflix is forcing the hands of its subscription

“There is simply too much television…My

“This investment will help us develop a deeper understanding of

“Turner will leverage iStreamPlanet’s technology to deliver its

~$49 Billion ~3,000 Companies

150+ Product, Service Categories

Prepared for cangit@yahoo.com

Media Technology Industry Revenue

2009 – 2015 IABM DC is a joint

Total Market: 1.7%

Media Technology Industry Revenue

2009 – 2012 IABM DC is a joint

Total Market: 4.6%