state of the industry - Entertainment Merchants Association

STATEOFTHEINDUSTRY
INDUSTRYOUTLOOK
HOMEENTERTAINMENTANDHOTTRENDS
NielsenEntertainment
July23,2013
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
AGENDA
RetailTrends
HomeEntertainment
3
RETAILTRENDS
LARGEBOXRETAILERSDRIVESTOREGROWTH
U.S.StoreCounts
38,513
40,727
Drug
31,590
33,192
Supermarkets$2MM+
MassMerch
Supercenters
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
WarehouseClubs
4,578
4,184
2,462
3,861
1,067
1,261
8,495
7,021
Electronics
Bookstores
ToyStores
67%+ofgrowthfrom
nicheformats
2,585
1,670
1,282
674
2005
2012
ExpansionfromallformatsbutMassin2012
Source:NielsenTDLinx
5
WALMART MAINTAINSLARGESTFOOTPRINT……
StoreCount
4,500
4,000
4,049
3,500
3,000
2,500
1,784
2,000
1,500
1,221
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
1,000
1,056
620
622
Sam’’s
Costco
500
Ͳ
Walmart
Target
Kmart
http://stock.walmart.com/financialͲreporting/unitͲcountsͲsquareͲfootage (5/31/13)
http://investors.target.com/phoenix.zhtml?c=65828&p=irolͲhomeprofile (5/22/13)
BestBuy2013AnnualReport(February2013)
http://searsmedia.com/kmart/kmart.htm (2/2/13)
http://edgar.secdatabase.com/157/119312513117085/filingͲmain.htm (4/11/13)
BestBuy
6
……BUTSEESNEGATIVESAMEͲSTOREͲSALESGROWTH
%ChangeinSameͲStoreͲSalesforlastsixreportedmonthsorquarters*
5
4
3
2
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
1
0
Ͳ1
Ͳ2
Walmart*
Target**
Kmart*
Ͳ3
Ͳ4
Ͳ5
Ͳ6
1st
2nd
Source:Companypressreleases(excludinggas)
3rd
4th
5th
6th
(current)
7
EͲCOMMERCEISFASTINGGROWINGCHANNEL
Channel$Share
24.1
Supermarkets
Supercenters
Drug
EͲcommerce
HomeImprovement
Conv/Gas
Club
Department
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
MassMerch
Electronics
Liquor
Dollar
Apparel
Auto
SportingGoods
Pointchangevs 2011
10.0
9.6
9.1
7.5
7.2
6.5
5.6
5.2
2.6
2.2
1.8
1.6
1.6
1.5
Source:NielsenTDLinx&NielsenAnalytics2012vs2011
Ͳ1.2
1.6
0.5
3.8
Ͳ0.9
0.1
0.5
Ͳ0.8
Ͳ2.0
Ͳ0.6
Ͳ0.3
0.2
Ͳ0.4
Ͳ0.1
0.0
8
ANDWILLCONTINUETOGROWINNEXT5YEARS
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
CAGR2012to2017
EͲCommerce
Supercenters
Pet
Dollar
Club
DiscountDept
Drug
SportingGoods
Conv/Gas
Home,Bed,Bath
Supermarkets
Auto
HardwareHomeImprovement
Liquor
Department
Apparel
Electronics
Office
Toy
Books
MassMerch
WinningShare
AverageGrowth
LosingShare
Ͳ10
Source:NielsenTDLinx&NielsenAnalytics
Ͳ5
0
5
10
15
9
MOBILEENABLINGONLINESALESGROWTH
HaveDoneMobile
Shoppingon
SmartphoneorTablet?
Whichofthefollowingactivitieshaveyoudonein
thepast30daysusingyourmobiledevice?
25%
Makingadigitalpurchase
42%
24%
Purchasingaphysicalitem
ondevice
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
No
22%
38%
23%
Usingdeviceforpayment
Yes
78%
Usingsocialmediato
commentonpurchase
Purchaseaservice
MobileShoppingActivitiesAmongAll
SmartphoneandTabletOwners
Source:MobileShoppingReport,Q32012
23%
19%
20%
15%
25%
Smartphone
Tablet
10
HOME
ENTERTAINMENT
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
DISCSALESSTABILIZING,BDSALESGROWING
Source:NielsenVideoScan;YTDgoesthroughJune2nd,2013
12
CASUALBUYERSLEAVINGTHECATEGORY
Dollar
Volume=
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
+1.8%
Ͳ5.1%
+7.3%
NumberofBuyers
AmountPurchased
(Penetration)
(BuyingRate)
BuyingRate=
NielsenHomescan,
52wksendingQ12013
+4.7%
+7.3%
NumberofPurchase
Occasions
VolumeperOccasion
(PurchaseFrequency)
(PurchaseSize)
13
MASSANDONLINEHAVEMOSTLOYALCONSUMERS
Leakage
LoyaltybyShopperGroup
ShareofWalletSpentinChannel
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
100%
58%
51%
34%
TotalUS
Mass
Online
Electronics
24%
19%
18%
Club
VideoStore
Grocery
Source:NielsenHomescanConsumerPanel
NielsenHomescan,52wksendingQ12013
14
ONLINESHOPPERSSTILLBUYATMASS,ELECTRONIC
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
CompetitiveOutletSpendAmongOnlineShoppers
100%
90%
80%
ShareofDisc
70%
SpendinBrick 60%
&Mortar
50%
ShareofDisc
40%
SpendOnline
30%
20%
10%
0%
49%
51%
OnlineShoppersDisc
Spendon/offline
NielsenHomescan,52wksendingQ12013
100%
90%
80%
70%
60%
50%
40%
30%
20%
10%
0%
26%
49%
LeakagetoOther
Channels
AllOther
Grocery
Bookstores
Club
Electronic
Mass
15
TECHͲSAVVYCONSUMERSSPENDBIGONDISC
AVGCONSUMERSPENDONDISC(INDEX)
250
204
200
144
150
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
100
100
93
87
Total
Netflix
VOD
101
50
0
Source:NielsenHomescan;52wksending3/30/13
Tablet
EST
UV
16
BUTCONSUMERSREMAINLARGELYUNAWAREOFUV
TotalHomeEntertainmentConsumers:June2013
62%
52%
45%
45%
40%
35%
37%
M35+
31%
23%
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
M<35
F<35
10%
14%
HAVEUSEDIT
F35+
7%
HEARDOFIT,BUTHAVE
NEVERUSEDIT
NEVERHEARDOFIT
Source:June2013NielsenHETrackingInternalTackͲons.Sampleisage13Ͳ54totalHEconsumers(Physical+Digital).Basesize: 4549.
17
ANDINFREQUENTUSERSOFEARLYEST
Describeyourexperiencewithbuyingdigitalmoviesonlineafewweeksbeforethe
movieisavailabletopurchaseonDVDorBluͲray?
35%
35%
Heardofit,not
interestedintryingit
25%
27%
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
Heardofit,interested
intryingit
28%
Neverheardofit
Havedoneit,interested
intryingagain
17%
7%
14%
Females
Males
TotalHomeEntertainmentConsumers:June2013
Source:June2013NielsenHETrackingInternalTackͲons.Sampleisage13Ͳ54totalHEconsumers(Physical+Digital).Basesize: 4549.
18
WHYAREPEOPLEBUYINGMORE/LESS?
ClaimedChangesinMovieBuying:Q22013
More
DVD
18%
39%
AbouttheSame
Fewer
43%
BluͲray
33%
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
0%
20%
34%
40%
33%
60%
80%
100%
Topreasonsforbuyingmoremovies
Topreasonsforbuyingfewermovies
35% Pricesarecheaper
34% ArewatchingmoreliveTV
31% ArestreamingmoreNetflix
33% BoughtBluͲrayplayerrecently
Source:NielsenHETrackingInternalTackͲons(sample:age13Ͳ54activeHEconsumers)
Q:Whichofthefollowingreasonsexplainwhyyouarebuyingfewer DVD/BDmoviesthanyoudidayearago?Pleasecheckallthatapply.
Askedofthosewhosaidtheyarebuyingfewer.
19
WHYAREPEOPLENOTBUYINGATALL?
Reasons for not buying a new DVD or Blu-ray movie in the past 6 months
June 2013
June 2012
I’m streaming more content through Netflix Watch Instantly
I’m renting more from Rental Kiosks, such as Redbox
11%
8%
I’m watching more live TV instead
I’m renting more content online instead (through Netflix,
Blockbuster.com)
8%
DVD/Blu-rays are too expensive/I can’t afford to buy them as much
anymore
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
I’m streaming more content from the Internet for free (from sites such as
Hulu.com, YouTube, ABC.com, CBS.com, etc.)
I’m watching more content on video-on-demand instead
13%
9%
I needed to cut back my discretionary spending on entertainment
because of my financial situation
I’m watching more recorded TV instead (recorded onto a DVR/Tivo)
15%
12%
6%
3%
11%
9%
7%
5%
4%
3%
3%
14%
33%
6%
ofconsumersage13Ͳ54
werenonͲbuyersinQ22013
Source:NielsenHETracking(base:nonͲbuyersofnewdiscsinpast6months)
Q.Earlieryousaidyouhavenot purchasedanynewDVDorBluͲrayDiscsinthepast6months.Fromthelistofreasonsbelow,pleaseselecttheone
reasonthathasmostimpactedthislackofnewDVDorBluͲrayDiscpurchases.
20
ESTGrows,asaddͲontoDiscbuying
DiscbuyersandEST(Downloadtoown)–– 1+Moviesinpast6months
Amonggeneralpopulation:July2013
ESTonly
BuyDVD/BD/EST=68%
Copyright©2013TheNielsenCompany.Confidentialandproprietary.
13%
both
1%
54%
BuyDVD/BD
only
32%
none
Source:NielsenHomeEntertainmentTracking(HET+NMT+screenouts).Basesize=17,505
Ayear
ago,only
6%did
both.
21
STATEOFTHEINDUSTRY
State of the VOD & Digital
Industry & Trends
Presented At The
TOD Performance
24
Executive Summary
Television Video-on-Demand 2012
Therearecurrentlymorethan53millionVideoonDemand(VOD)Ͳenabled
householdswithanaverageof2setͲtopboxes(STBs)perhousehold
Morethan43millionSTBsaccessVODcontenteachmonth
Therewere8.9billiontelevisionondemandtransactionsin2012
Consumersspendaround8.5hourspermonthwithVODcontent
FODcontentwasthekeydriverofVODgrowthlastyear,increasingitsshareofall
VODtransactionsto78%in2012
EachofthoseSTBsordermorethan17piecesofcontentpermonth
25
VOD Annual Totals
26
VOD Shares by Content Type
27
VOD - TOD Annual Totals
28
Top 100 TOD Movies - Revenue
29
Top 10 Movies on Demand
30
Digital Growth
31
Digital Distribution Growth - Internet
Internet Video On Demand (iVOD) generated
approximately $770M in consumer spending in the
US in 2012 (flat as compared to 2011)
Electronic Sell-Through (EST) generated
approximately $815M in consumer spending in the
US in 2012 (36% growth over 2011)
Internet-based Subscription Video On Demand
(sVOD) generated $2.3B in consumer spending in
2012 (46% growth over 2011)
32
Digital Distribution Growth – Q1 2013
Internet Video On Demand (iVOD) generated
approximately $293M in consumer spending in the
US in Q1 2013 (16% growth over Q1 2012)
Electronic Sell-Through (EST) generated
approximately $230M in consumer spending in the
US in Q1 2013 (50% growth over Q1 2012)
Internet-based Subscription Video On Demand
(sVOD) generated $710M in consumer spending Q1
2013 (30% growth over Q1 2012)
33
Digital Distribution Growth - Internet
TV EST – episodic purchases represented approximately
90% of all EST downloads in 2012 based on transactions
HD Transactions across all content types (iVOD, EST)
were up more than 64% year-over-year
34
Digital Transactions by Day of Week – 2012
January – June 2013
RANK
DAYOFWEEK
1
2
3
4
5
6
7
Friday
Saturday
Sunday
Tuesday
Wednesday
Monday
Thursday
Source: Rentrak (based on aggregated iVOD/EST data)
㻟㻡
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Report2012istheindustries
onlyVODResearchReportbased
onfouryearsofcomplete
censusͲbasedcableandtelco
industrydata,Rentrak'sStateof
VODReportdrawsonTV
viewinginsightsfrommore
than102milliontelevisionsand
everymajoroperatortoprovide
StudiosandContentOwners
withthemostinͲdepthlookat
highͲlevelvideoondemand
trends.20%Discountforall
EMALAESAttendees!
Exclusive
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https://www.rentrak.com/section/our_services/analytics/svod/
to all EMA
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SVP Sales, OnDemand Everywhere
503-331-2850
cer@rentrak.com
STATE OF THE INDUSTRY
MichaelCai
SVPofResearch
40
KeyClients
Theatrical/DVD/TV
VideoGames
Advertising/Media
Planning
41
GameByte™™Overview
Physical
Media
iPad and
Tablet
Download
Portable
Games
SmartPhone
Apps
Connected
Consoles
Gamer
Virtual
Worlds
OnlineCasual
Gaming
DownloadPC
Games
(Steam,etc.)
Free2Play
MMO
SubͲbased
MMO
Social
Network
Gaming
StrongMomentumandDiversifiedRevenueModels
DigitalGamers6Ͳ65:
UK
FR
DE
US
113.7
26.9
24.4
Breakdownof6ͲMonth
DigitalRevenues
(MillionsofUSD):
(F2P |MOBILE |DIGITAL
CONSOLE/OTHER*)
Mobileinparticular
representshuge
opportunitiesforstudios
27.6
1,998
6333
SixͲMonthDigital
GamingRevenues
(MillionsofUSD):
905
539
522
1318
2,597
1091
1265
644
419
172
188
267
148
154
286
150
185
833
UK
FR
DE
US
*ͲPCfulldownload,PCDLC,socialnetworkPC,casualPCgames,subscriptionMMOPC,internetcafé43
F2PandTabletGamingStrongGrowthDrivers
TabletGamers
F2PPCGamers
21.0
21.3
23.1
15.1
3.8 5.0
3.8 5.5
UK FR
2012(Wave1)
5.0 6.2
DE US
2.2
4.4
2.3 3.4
UK FR
1.7 2.8
DE US
2013(Wave2)
44
GamingAccountsforOneQuarterofEnt.Time
AmongWeeklyGamers
StudiosandCE
manufacturers
MUSTintegrate
gamingintheir
strategy.
49.1
49.1
40.8
36.1
3%
3%
4%
3%
16%
18%
15%
19%
Attendingentertainmentor
sportingevents
12%
11%
11%
10%
Internetactivitiesnotrelatedto
socialnetworks
16%
17%
20%
15%
SocialͲnetworkrelated
activitiesontheInternet
Listeningtomusic
28%
26%
25%
28%
WatchingTVshowsormovies
Playingvideogames
25%
25%
24%
25%
US
UK
DE
FR
Base:1,749
1,753
1,696
1,603
G5.Inadditiontothe...hoursaweekthatyouspendplayingvideogames,howmanyhoursaweekdoyouspendengagedineachofthe
followingactivities?
45
ConnectedConsolesRepresentStrongEnt.Channels
AmongAllInternetUsers
US
UK
DE
FR
25%
21%
19%
16%
16%
13%
17%
15%
13%
10%
8% 8%
Xbox360
8%
PS3
14%14%
14%
InternetSetͲ
topBox
11%
9%
15%
12%
10%
9%
SmartTV
9%
8%
AndroidTablet
iPad
46
MultimediaTrojanHorses
USXboxLIVEFeatures
USPSNFeatures
N=389
N=229
Playedmultiplayergames
online
46%
StreamedmoviesorTVshows
usingNetflixWatchInstantly
WatchedliveTVshows
Usedsocialnetworkingfeature
suchasFacebookandTwitter
31%
23%
19%
StreamedmoviesorTVshows
usingAmazonInstantVideo
13%
StreamedmoviesorTVshows
usingHulu Plus
13%
Watchedasportingevent
usingESPNonXbox 12%
RentedorboughtmoviesorTV
showsfromtheXboxVideo 10%
Store
Playmultiplayergames
online
38%
StreamedmoviesorTV
showsusingNetflixWatch
Instantly
Usesocialnetworking
featuresuchasFacebook
andTwitter
StreamedmoviesorTV
showsusingHulu Plus
StreamedmoviesorTV
showsusingAmazon
InstantVideo
Rentorboughtmoviesor
TVshowsfromthe
PlayStationStore
Rentedorboughtmovies
usingtheVudu service
WatchedsportsviaMLB.tv,
NFLSundayTicket,orNHL
C2c1.WhichoftheseXboxLIVEfeaturesdoyouuseonaweeklybasis?
GameCenterLIVE
C2c2.WhichofthefollowingPlayStationNetworkfeaturesdoyouuseonaweeklybasis?
26%
23%
17%
11%
11%
10%
9%
47
RobustInterestinNextͲGen
AmongAllGamers;N=2,000PerTerritory
PurchaseInterest
(VeryorSomewhatInterested)
50%
40%
UK
30%
FR
DE
20%
US
10%
0%
PS4
XboxOne
Ouya
SteamBox
GreenThrottle
NvidiaShield
G4a.Haveyouheardofeachofthefollowingupcominggamingdevices?Foreachdevice,pleaserateyourawareness.
G4b.Howinterestedareyouinbuyingeachofthefollowingconsoles?
48
KidGamers’’TopͲofͲMindDevices#
AmongTotalRespondents;N=400PerTerritory
Xbox360
Computer
Tablet
PS3
Wii
Tablet
Xbox360
Computer
Wii
PS3
23%
14%
13%
12%
11%
Computer
Wii
PS3
DS/DSi
3DS
17%
16%
15%
13%
23%
19%
12%
10%
9%
11%
Wii
Computer
DS/DSi
3DS
Tablet
20%
16%
15%
13%
10%
#Allpercentagesareoutof100%Ͳ respondentswereshownafulllistofconsoles,PC,mobile,andhandheldgamingdevices
G1a.Whenyouthinkaboutplayingvideogames,whatgamingdevicefirstcomestomind?
49
KidsWantSmartToys
AmongAllKids6Ͳ12
41%
36%
32%
19%
%AwareofSkylanders
20%
%OwnSkylanders Toys
11%
UK
Mean#ofSkylanders
ToysOwned
(Amongowners)
19%
19%
FR
8.6
DE
8.3
7.2
G10s1.Doyouown anySkylanders toys(notthegame,buttheactualtoys)?
G10s1a.HowmanySkylanders toysdoyouown?
US
7.6
50
KeyTakeaways
™ Thedemocratizationofgamingisopeningupnewopportunitiesforstudiosand
CEcompanies
™ F2PandTablet/Smartphonesrepresentstronggrowthpotential
™ Consolesareakeypartoftheentertainmentecosystem,evenmoresofornextͲ
gen
™ Payspecialattentionto““play””behavioroftoday’’skids
™ CallusaboutGameByte!
51
Yuanzhe (Michael)Cai
VPofResearch,GamesandTechnology
michael.cai@interpretllc.com
P: 310.255.0590x343
GVoice:214Ͳ9379866
F: 310.255.0591
www.interpretllc.com
Twitter:@mycai |@InterpretLLC
|@InterpretData
52
STATE OF THE INDUSTRY
The future of home
entertainment
Los Angeles Entertainment Summit
June 23, 2013
Tom Adams
Research Director, US Media
IHS Electronics and Media
October 3, 2012
Round one of the digital bout went to DVD
sales, but physical has now taken some hits
Copyright © 2013 IHS Inc.
2
Packaged media has advantages in size and
reach, but can it still 䇾float like a butterfly, and
sting like a bee?䇿㻌
Disc-Player
Penetration
82%
Physical Share of
Home
Entertainment
Spending
73%
Copyright © 2013 IHS Inc.
3
Digital distribution has advantages for both
consumers and studios over physical
RETAIL
New Release Purchase Price
RENTAL
Studio Revenue Per Rental
Digital Physical
SD
Digital Physical
$15
$16-20
SD
HD $20
$20-36
HD $3.50
Copyright © 2013 IHS Inc.
$2.80
$0.35$1.50
4
The precedents from other media are not
encouraging for legacy business models
$bn
!"#$%&%"'()*+"',$-./(0"+".1"(
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Copyright © 2013 IHS Inc.
$!!'"
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Source: Newspaper Association of America
5
Putting the brakes on home entertainment’s
seven-year slide?
&#$!!!"
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Copyright © 2013 IHS Inc.
-./01234"567314"
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Copyright © 2013 IHS Inc.
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subscriptions
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Copyright © 2013 IHS Inc.
,-./0"-12"3-4"35.3"
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Rope-a-dope and “Ali boma ye”: even a
boxing match is a marketing battle
Copyright © 2013 IHS Inc.
9
Time for studios and retailers to take off the
gloves
Copyright © 2013 IHS Inc.
10
History shows retailers often drive tech
adoption and win rounds against networks
Years to 60% Household Penetration
Copyright © 2013 IHS Inc.
11
No media platform penetrated US homes as
fast as DVD, but Blu-ray is coming close
30
25
20
15
40%
60%
10
5
-
Copyright © 2013 IHS Inc.
12
Physical rentals have long towered over
electronic rentals
Copyright © 2013 IHS Inc.
13
Even after years of decline, disc sales dwarf
electronic sell-through
Copyright © 2013 IHS Inc.
14
But now, both pay TV networks and the
Internet are battling back
Copyright © 2013 IHS Inc.
15
Here’s the main network threat: that crafty old
heavyweight, pay TV
Copyright © 2013 IHS Inc.
16
The next game changer:
The connected living room
0
0
0
Devices (m)
0
0
0
0
0
0
2005
2006
direct TV connect
Copyright © 2013 IHS Inc.
2007
2008
games consoles
2009
2010
2011
standalone STBs
2012
BD players
2013
2014
pay TV STBs
2015
2016
Tablets
TV Everywhere iPad apps could strengthen
the digital network hand
Copyright © 2013 IHS Inc.
18
But until networks speeds make streaming
ubiquitous: portability = purchase
Today
streaming 2 HD
movies over a
cell network
could cost $50$100
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19
Physical’s “almost ready for primetime”
portability counterpunch: UltraViolet Blu-ray
Copyright © 2013 IHS Inc.
20
What it’s going to take for UltraViolet on Bluray to emerge a winner
Common File Format
Service Compatibility
Retail Support
Copyright © 2013 IHS Inc.
21
Putting the brakes on home entertainment’s
slide, our current view
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But what if…..
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Learning from the master: Even a boxing
match is a marketing battle
Copyright © 2013 IHS Inc.
24
STATEOFTHEINDUSTRY