Scott Dyer - Mobile Apps in the Canadian Broadcast Ecosystem

Scott Dyer, CTO at Corus Entertainment, will discuss the impact of mobile on the broadcast business. Corus Entertainment is a integrated media company, operating 24 specialty broadcast channels (including YTV, Wnetwork, and Treehouse), 37 radio stations across Canada, and producing kids content through its Nelvana division.

The talk will look at Corus' history in the mobile space, in terms of second screen, game apps, and video distribution, and what we've learned along the way. Mobile is at the center of rapid change in the television industry, and each player in the ecosystem (content producer, broadcaster, and distributor) is evolving their business model to capture mindshare with consumers. Mobile threatens to upend traditional models and financing structures, which is particularly challenging in the regulated Canadian broadcast system. Mobile also ignores most geographic boundaries, further pressuring the traditional models.

Our experiments, both good and bad, customer data, usage statistics, learnings about iOS and Android, and the feedback we get from consumers will be part of this talk.

1. Mobile  Apps,     Android,       and  a   A  Canadian  Broadcaster           October  17,  2013  
2. WHY AM I HERE? Corus  Entertainment  is  a  Canadian  media  company   •  Very  successful  –  focused  on  specialty  broadcast   •  Valuable  audiences  –  Women  &  Kids   •  Canadian  ecosystem  is  protected  and  profitable   But  …  we  are  in  a  period  of  unprecedented  change   •  Technology   •  Consumer  consump=on  pa>erns   •  Deluge  of  content   New  broadcast  models  (for  example  NeFlix)  threaten  to  upend  and   destroy  the  old  model  before  the  ecosystem  can  react  and  change     Content  consumpHon  anywhere,  anyHme  has  become  a  consumer   requirement                  How  do  broadcasters  react?         2  
3. A  few  facts  about   CORUS  ENTERTAINMENT   3  
4. WHO IS CORUS ENTERTAINMENT? Our Vision: To be globally recognized as Canada’s most influential entertainment company Accountability We do what we say we’ll do – no excuses Teamwork We believe the greatest value is realized when we work together Knowledge We believe in continuous learning and the sharing of our insights and ideas Innovation We are committed to creative thinking that leads to breakthrough ideas and superior results We are driven by our Core Values! 4   Initiative We empower employees to make great things happen
5. WHERE IS CORUS ENTERTAINMENT? 5  
6. WHAT ARE OUR BRANDS? Television Radio Women/Family and Pay TV Radio Children Radio portfolio comprised of 28 FM and 9 AM stations operating in Canada’s largest markets across two geographic regions – Western Canada and Ontario. 77% of Revenues (2012) EBITDA $262.1 million Fiscal Year Ended August 31, 2012 2012 Revenue: $842.3 million 2012 EBITDA: $290.0 million 23% of Revenues (2012) EBITDA $57.4 million Plus 3 Conventional TV Stations and Toon Boom Animation Inc. 6  
7. WHO IS OUR AUDIENCE? Leading  Specialty  and  Pay  TV  broadcaster  with  24  channels,  including:     •  W  Network,  Canada’s  #1  specialty  channel  for  women  in  6.5  million  homes   •  OWN  Canada,  distributed  to  6  million  homes   •  YTV,  a  leading  children’s  channel  in  over  11  million  homes   •  Interna=onal  channel  partnership  with  NBCU  -­‐  KidsCo   Kids   Movies  and  More   Interna=onal   Content   Women/Family   Other   (50%)* (50%)* (49%) (54%) (50.5%) Canadian-Italian and Spanish (80%) Country Music / Lifestyle * soon to be 100% pending regulatory approval (50%)* 7  
8. WHAT IS OUR CONTENT? Most  broadcast  content  is  licensed  from  Canadian  or  internaHonal   producers,  limiHng  our  ability  to  exploit  beyond  our  television  services…   but  Corus  owns  Nelvana  Limited,  an  integrated  kids  entertainment   company   •  40+  year  history  as  a  producer  of  animated  content  for  kids   •  Content  library  of  4,000+  half-­‐hour  episodes   •  Merchandising  success  with  brands  like  Beyblade  and  Bakugan   •  Content  is  sold  in  100+  countries  in  dozens  of  languages   8  
9. TradiHonal  Television   Audiences   9  
10. The  Canadian  Broadcast  &   ProducHon  Ecosystem   10  
11. THE CANADIAN ADVANTAGE BroadcasHng  in  Canada,  both  radio  and  television,  is                                                                highly   highly  regulated   •  Canadian  Radio-­‐Television  Telecommunica=ons                                          Commission   (CRTC)   •  Recently  in  the  news  with  hearings  (and  decision)  on  Bell’s  acquisi=on  of   Astral   Among  other  things,  CRTC  regulaHons  focus  on  the  creaHon  and  broadcast  of   Canadian  content   •  Rules  define  what  is  Canadian  –  creators,  funding,  producers   •  Most  broadcasters  have  both  significant  spend  and  exhibi=on  obliga=ons   Canadian  Content  (Cancon)  enjoys  significant  benefits   •  Access  to  higher  tax  credits   •  Access  to  CMF  (Canadian  Media  Fund)  and  other  funding   •  Be>er  broadcast  placement   11  
12. THE CANADIAN DISADVANTAGE 12   ✘  Complex  and  occasionally  arcane  rules;  compliance  essenHal  to  achieving   Canadian  advantages   ✘  Canadian  Content  regulaHons  protect  small  producers;  negoHated  Terms   of  Trade  are  difficult  for  producers  and  broadcasters  alike   ✘  Canada  is  a  small  market   •  Good  content  of  any  form  is  difficult  to  exploit/profit  (Canada  =  10%  of   U.S)   •  Regula=ons  prevent  entry  of  some  US  content;  Terms  of  Trade  make  it   difficult  to  export  content  south   ✘  CRTC  regulates  spectrum  –  important  for  OTA  TV,  Radio,  phone  service   but  meaningless  to  the  internet   •  Canadians  compete  on  a  level  playing  field  against  global  en==es  far   larger  than  domes=c  players   •  Nedlix  commands  significant  viewership  but  is  NOT  regulated  in   Canada    
13. Corus  Entertainment     and   New  Media   13  
14. CORUS & NEW MEDIA New  Media  is  where  the  acHon  is  ….   •  Fastest  growing  “consumer”  segment  (=me  spent,  impact,  reach,  analyst   coverage)   •  Adver=sing  dollars  are  moving  to  Digital  …  more  than  TV  in  2012   •  The  change  is  even  more  pronounced  amongst  younger  audiences     …  but  Corus  is  a  small  player  in  New  Media   •  Total  revenues  less  than  5%;  total  profit  less  than  1%   •  Mixed  bag  of  assets  –  websites,  limited  apps,  social  media,  streaming   •  Category  grouping  (ie  kids,  family,  women)  to  create  scale  and  relevance     New  Media  strategy  aaempts  to  serve  mulHple  interests   •  Are  we  driving  viewers/listeners  to  tradi=onal  media  OR  driving  revenue?   •  Do  we  want  a  consumer  rela=onship  OR  a  rela=onship  via  tradi=onal   partners  (i.e.  distributors  such  as  Bell  and  Rogers)?                  !  We  want  everything.   14  
15. NEW MEDIA SEGMENTS   ENGAGEMENT   DISTRIBUTION   PRODUCTS   Treehouse app Radio app BDU VOD Video Games BDU Broadband Website Video Streaming Network Websites Facebook Nelvana Apps eBooks Show apps for TV Networks Nelvana streaming Twitter Radio Websites •  Revenue  is   strongest  in   Products  and   Distribu4on   •  Content  is  needed   to  “mone4ze”   Engagement   •  Distribu4on  apps   (Treehouse,  Radio)   sit  at  the   confluence  of  all   three  segments   15  
16. Corus  Entertainment   and   Kids  Digital   16  
17. CORUS & NEW MEDIA Content  comes  first  for  kids   •  Kids  want  compelling  content  –  video,  games,  digital  toys  –  and  don’t  care   about  devices   •  For  Corus,  the  mobile  priority  has  been  on  video  distribuHon  and  games     Video:  Delivering  kids’  favorite  shows   •  In  Canada,  our  ability  to  distribute  video  is  limited  by  the  current   broadcast  ecosystem   •  Canada  is  catching  up  to  US  and  UK  models  where  broadcasters  manage   channel  apps  and  users  can  authen=cate  into  their  MSO     •  During  2014,  mul=ple  BDU  authen=ca=on  will  likely  be  available,  resul=ng   in  the  growth  of  video  apps  in  Canada.   Ø US  examples:  Nickelodeon  and  Cartoon  Network  apps   17  
18. CORUS & NEW MEDIA Games:  Fun  &  Games     •  Web  games  are  used  to  drive  audience  engagement;  typically  delivered  to   broadcasters  for  websites  like  Nick,  Cartoon  Network,  &  Disney  around  the   world   •  Websites  feature  flash  (and  Unity)  gaming  –  ytv.com  is  a  top  site  for  kids  in   Canada  (but  not  mobile  enabled,  yet)   •  Apps  drive  incremental  revenue  and  have  mone=za=on  strategies  since   launching  in  2011     AnalyHcs  drives  the  content  strategy   •  The  content  offering  and  available  pladorms  change  based  on  how  kids   watch  or  play  the  games   •  It  has  required  changing  our  team  culture  from  manufacturing  to  servicing,   from  product  publishing  to  product  itera=on     18  
19. GROWING A STRONG MOBILE PORTFOLIO Corus  (via  Nelvana)  has  successfully  launched  18  applicaHons  (apps)  for   mobile  and  tablet   •  Modest  revenue  but  growing  steadily;  96%  growth  in  revenue  YoY   •  Over  1,500,000  app  downloads  to  date     We  have  been  “Hot  housing”  and  tesHng  product  and  markeHng  strategies  in   Canada  before  launching  internaHonally  with  key  partners   •  2013  launch  of  Franklin,  Max  &  Ruby,  Sidekick,  and  Scaredy  Squirrel   apps  in  the  US  with  on-­‐air  promo=on,  integra=on  with  the  Fingerprint   pladorm,  and  other  marke=ng  partners   •  Trial  freemium  model  for  kids  app  with  Max  &  Ruby  and  Sidekick   Robust  porFolio  in  development  with  12  new  apps  slated  for  launch  in   Q42013  and  2014   19  
20. HOW DOES DIGITAL SERVE CORUS KIDS? Revenue Generating Marketing Library Brands New Brands EST SVOD EST SVOD You Tube Video Apps Game Apps Web -sites Web Games Game Apps 20  
21. WHO ARE THE KEY CUSTOMERS FOR CORUS KIDS DIGITAL PRODUCTS? Broadcasters   • Websites   • Web  Games   • Video  Shorts   &  Clips   Retail  Partners   • Web  assets   • Web  Games   • Video  Shorts   &  Clips   YouTube   • Full-­‐length   Episodes   • Shorts   • Promo  clips   App  Stores   • Video  Apps   • Game  Apps   PRODUCTS CLIENTS 21  
22. APPLE STILL LEADS (FOR MONETIZATION) 22   §  The  consensus  around   the  industry  is  that   Google  dominates  the   mobile  market  followed   by  Apple  with  Microsoq   in  third  place   §  Over  the  last  year,  Apple   paid  out  $5b  to   developers  while  Google   only  paid  $900m     §  Developers  make  more   on  Apple  apps  than  other   pladorms     Source  :  Tristan  Louis,  Forbes  Magazine,  2013  
23. CASUAL GAMING & APPS CREATES NEW OPPORTUNITIES 23   Corus/Nelvana  has  shined  from  licensed  partnerships  for  console  games   to  mobile  apps   •  Licensing  focuses  on  mobile  partnerships  rather  than  products   Ø  E.g.  Cupcake  Digital  doing  8  apps  for  our  brands   •  One  challenge  is  there  are  more  app  developers  with  less   established  distribu=on  and  marke=ng  channels  to  forecast   success  of  a  product     Nelvana/Corus  is  tesHng  brands  with  digital/toy  first  rather  than   invesHng  in  a  TV  series   •  Advantage  of  using  shorts  and  a  strong  digital  campaign  to  test   audience  interest  in  a  brand  before  developing  a  TV  series   Ø  E.g.  Pinkie  Cooper        
24. PRODUCTION PROCESS IS ADAPTING 24   ProducHon  Framework     §  Mul=pladorm-­‐first  approach   •  Mobile  partners  now  deliver  on  both  iOS  and  Android  devices   (Amazon  Kindle  Fire  is  priority)   •  Internal  app  produc=on  has  recently  changed  from  na=ve  iOS   to  Unity   •  Web  games  are  TBD;  likely  Unity  for  3D;  Flash  or  HTML5  for  2D  
25. HTML5, IOS, ANDROID 25   HTML5  vs  NaHve  apps   •  Likely  need  both  for  most  experiences   •  HTML5:  Familiar  programming,  Na=ve  to  the  browser,  can  be   wri>en  once  and  used  on  any  device  and  OS,  with  much  lower   costs,  no  approval  and  no  downloads.   •  Mobile  Apps:  More  professional,  more  reliable,  no  need  for  an   Internet  connec=on,  faster  and  be>er  device  integra=on.     DistribuHon   •  Go  direct  to  Google  Play  and  Amazon  Kindle   •  Link  to  a  device  (such  as  Samsung)   •  Link  to  a  distributor  (such  as  Spoiled  Milk)      
26. Corus  Entertainment   and   Android   26  
27. WE LOVE/HATE ANDROID 27   Why  we  want  apps  on  Android   •  Significant  device  distribu=on  globally     •  Boom  in  kid  tablet  op=ons     Why  we’re  not  puong  games  on  Android   •  Highly  fragmented  (therefore  costly  to  produce)   •  Android  users  spend  less  than  iOS  users  
28. KIDS ANDROID TABLETS •  Amazon’s  Kindle  Fire  (Free  Time   Unlimited)   •  Nook   •  Fuhu’s  Nabi     •  Vtech’s  InnoTab   •  Kurio   •  MEEP!   •  Arnova’s  ChildPad   •  Toys’R’Us  Tabeo   28  
29. Many  parents  buy  iPads  for  themselves  then  let  children  use  them,  but  a  growing   number  of  parents  are  buying  a  separate  tablet  for  their  kids  –  and  onen  that's  a   more-­‐affordable  Android  device.   2013  was  a  good  year  for  Android  Kids  app  releases  which  made  these  tablets  a   viable  opHon  for  parents  that  are  looking  to  entertain  their  kids   But  while  there  are  more  players,  content  owners  are  realizing  that  there  are  fewer   plaForms  that  deliver  incremental  revenue.     •  Apple,  Amazon,  Google  Play  are  the  top  3  stores,  with  Apple  con=nuing  to  out-­‐ perform  all  others  by  significant  amount   ANDROID & KIDS 29  
30. ADDITIONAL THOUGHTS Mobile  “lightweight”  entertainment  market  is  showing  signs  of  maturing   •  Top  grossing  charts  are  se>ling  in  and  there  isn’t  much  change   Ø  Power  of  being  the  chart  itself;  re-­‐elec=ng  incumbents   Ø  only  2%  of  the  top  250  publishers  in  Apple’s  store  are  “newcomers”   •  Difficult  =me  for  product  to  be  discovered  and  move  up  the  chart   •  Top  publishers  spend  a  lot  of  money  to  stay  in  the  top  charts   •  Difference  makers  aren’t  the  product  but  the  marke=ng  spend   Ø  Typical  50%  drop  off  below  the  fold  when  user  is  scrolling  in  an  app  store   Ø  With  mobile  this  is  more  significant  because  the  screens  are  smaller   The  good  news  is  there  is  a  level  of  creaHvity  in  the  indie  sphere  that  hasn’t  been   seen  since  the  80s  in  gaming  and  mobile  and  has  much  lower  barriers  to  entry.  Even   though  it’s  harder  than  it  was  3  years  ago,  it  is  sHll  possible  for  new  studios  to  make   a  break-­‐out  hit   30  
31. Corus  Entertainment   and   The  Mobile  Ad  Economy   31  
32. THE MOBILE AD ECONOMY: NOT SO GREAT (YET) AdverHsing  Agencies  are  looking  for  scale  and  impact     RTB  and  automaHon  are  driving  down  CPM  on  display  ads;  in  turn  this  drives   more  mobile  spending  and  opportuniHes     There  is  an  assumpHon  from  agencies  that  all  major  TV  publishers  have  (or   should  have)  an  App  experience  that  contains  bulk  video  –  although   consumpHon  of  video  online  and  mobile  varies  by  content  type     The  main  barrier  to  growth  in  Mobile  (apps)  is  cost  and  a  lack  of  pre-­‐ established  offerings;   •  Agencies  don’t  want  to  spend  on  produc=on  costs   •  Typically  nonworking  money  can  only  be  10-­‐20%  of  the  budget             !  Challenging  for  Android   32  
33. Conclusion   &     QuesHons/Answers   33  
34. CONCLUSION 34   Everything  is  Mobile     Follow  the  audience  –  don’t  expect  them  to  come  to  you     Android  will  command  the  media  space  when  …   •  The  revenue  opportunity  is  real,  both  in  subscrip=on  &  adver=sing   •  Developers  are  willing  to  share  the  risk  with  content  owners  and   broadcasters   •  Content  discovery  is  seamless,  logical  and  orderly   •  OS  fragmenta=on  slows,  to  allow  a  single  development  stream,   and  the  mul=pladorm  issues  between  Android  and  iOS  are  solved     The  world  is  changing  and  will  conHnue  to  do  so