1. Dr. Seth Geiger President SmithGeiger, LLC Digital Media Trends and the Future of Television

2. 2 The Current Landscape TV Still Matters! ● Viewership remains high ● Strongest and most effective promotional platform ● Significant driver of web consumption The Fundamental Disconnect ● TV Viewers have never been happier ● The industry has never been more challenged What’s Next ● What are the emerging trends in the TV marketplace? ● How can we assert leadership and build the next generation of TV around these shifts? The Future of TV is Now

3. 3 5 New Truths Online video has become ubiquitous, digital media consumption has become the norm. – Media consumers are dictating the pace of change. – Digital media are now playing a fundamental role in the TV experience. – The maturation of the web from a signpost to an entertainment experience is being driven by branded television content. – Viewers are heavily engaged with digital media – less so with linear television. – Television still matters, but it can no longer succeed as a stand alone platform. The Future of TV is Now

4. 4 5 New Truths ● Online video consumption has become ubiquitous – 82% are watching online video, 30% watch daily (49% of 16 to 34 males). ● Adoption rates for online video viewing of full episodes of television programs represent the fastest take rate in history of any form of media distribution. ■ Half of 16 to 54 year olds are now watching full episodes of TV programs online, 28% weekly (VCR, 7 years; Color TV, 12 years; Web, 11years) ■ Aggregate weekly viewing of online video has grown to 5.3 hours a week among online video users, an increase of 51% in the past year. ■ Share of linear TV as a percentage of all rich media consumed has shrunk from 59% to 54% in the past 12 months. 1. Consumers are Dictating the Pace of Change

5. 5 Hours Spent Watching TV or Video - Weekly TV and Rich Media Viewers Average Weekly Hours Spent Watching TV or Rich Media in the Following Ways M 16-24 W 16-24 M 25-34 W 25-34 M 35-44 W 35-44 M 45-54 W 45-54

6. 6 5 New Truths ● Web usage is now intrinsically woven into the TV viewing experience as a utility to help plan viewing, an enhancement, and a social experience. ● The majority of TV viewers are now turning to the web to find out more about their favorite TV shows ● Three-in-ten are online to see what other fans are saying about TV programs ● One-in-four are actively using social networking sites to comment on TV shows ● Digital convenience has changed the way viewers approach linear television in a hierarchy of needs: ■ Shows I watch as soon as they are available (live) ■ Shows I am willing to wait for and time shift ■ Social experience  Nearly one-third are weekly viewers of online videos sent via email 2. Digital Media is Fundamental to the TV Experience

7. 7 Agree With Statements Online Video User Agree With Internet and Online Video Usage Statements Younger demos are much more likely to use the web as a TV enhancement. Older women are more likely than older men. Based on 82% of Respondents Who watch video online M 16-24 W 16-24 M 25-34 W 25-34 M 35-44 W 35-44 M 45-54 W 45-54

8. 8 5 New Truths ● For the vast majority of viewers, the web is enhancing their TV experience, not supplanting it ● Fans of shows are watching online if they missed the original airing ● Incremental viewing is a significant part of the landscape – one-in-four are watching scenes of the entire show again ● The web is an effective acquisition tool, allowing new viewers to become familiar with a show and/or catch up on earlier episodes ● The heaviest consumers of online video are the most frequent viewers of TV overall. ● Between 4% and 6% of viewers of a specific program have replaced on-air with online 2. Digital Media is Fundamental to the TV Experience

9. 9 Frequency of Doing Activity Online Video User Do Each Online Activity Weekly Weekly viewership of episodes that have already aired reaches 37%, driven by younger women. 10% do all video activities weekly Based on 82% of Respondents Who Watch Video Online M 16-24 W 16-24 M 25-34 W 25-34 M 35-44 W 35-44 M 45-54 W 45-54 Online TV Original Media Source Top 2 Demos

10. 10 5 New Truths ● Linear TV’s domain is now compartmentalized, even as TV content drives the web. ■ TV captures broad entertainment and social companionship. ■ News is migrating to a digital environment. ● The gap between the web as an information resource and an entertainment destination is closing, driven by the availability of full TV episodes and clips. ● The Web is now the preferred choice for laughter and humor, for the latest trends, and for learning new and interesting things. ● Supporting a multi-platform position and maintaining the flow between web and TV is critical to survival. ■ There is an emerging core replacing TV with web (driven by younger males). 3. TV drives the web

11. 11 Media Trends & Behavior Media Most Likely to Turn to ● Web video captures the highest levels of interest for core information items: ■ Learning new and interesting things ■ Feel more connected to the world around you ■ Stay up-to-date on the latest trends Media Most Likely to Turn When Looking to do the Following (1 of 2) - Surfing the internet w/out watching video - Listening to music None - Watching videos or DVDs

12. 12 - Surfing the internet w/out watching video - Watching TV programs at their scheduled times on TV Media Trends & Behavior Media Most Likely to Turn to Media Most Likely to Turn When Looking to do the Following (2 of 2) ● TV is still seen as the primary source for entertainment and to keep you company. ● TV, Web, and DVD are comparable on laughter, Gaming is the most fun activity. - Listening to music - Playing video games

13. 13 5 New Truths ● TV still matters, capturing 57% of total screen time. ● Younger demos are migrating fastest to the digital arena – less than half of all rich media consumed among 16 to 34 year olds is spent with live TV (just 38% among 16 to 24 year old males) ● Weekly viewers of full episodes are the heaviest consumers of TV across all platforms (45.1 hours) ● Social networking is a force among younger demos but is rapidly expanding across all age groups. ■ Four-in-five (ages 14 to 29) have a personal web page on at least one social networking site ■ 22% of all web time is spent on a social networking site (ages 14 to 29). ■ 80% of 18-to-21 year olds are weekly visitors ■ 25% of daytime TV viewers ages 25 to 54 have a personal web page ■ 20% of all web users are watching full episodes at social networking sites 4. The Audience Is Engaged – But Not With Linear TV

14. 14 - Watching TV programs at their scheduled times on TV TV Viewing Trends & Behavior Preferred Way of Watching Types of Programs Media Most Likely to Turn When Looking to do the Following ● Watching programs at their regularly schedules times live on television is still the preferred method to watch all types of shows. Slightly more viewers are watching current episodes of cable comedies online than other types of shows. Other options: VOD, DVR, DVD, iPod

15. 15 5 New Truths ● Branded TV sites have a competitive advantage today over aggregators for branded content, but the gap is closing. ● TV is perceived as primarily a medium for entertainment and laughter, secondarily as a source for news and information ■ Two thirds have TV shows they “almost never miss” ■ Half use TV as a social currency to discuss with friends ■ Nearly half say TV is their primary source of entertainment ■ Four-in-ten say TV is their primary source of information ● Linear TV (and front door web traffic) are being replaced with a broad distribution model. 5. TV Still Matters, Reinforced by Online Allegiances

16. 16 The Current Landscape Addressing the fundamental disconnect: Embrace the viewer as an active participant ● Linear TV  Community of TV viewers ● Access to content delivers reach (by definition) and reinforces on-air and online platforms The TV show is the catalyst but not the endgame ● Packaged content  Web applications to share, comment, and enhance content ● Convenience + Engagement = Loyalty 3.The easy stuff is over ● Mass sales  targeted long tail ● Consumer interest opens the door to consumer-focused selling The Future of TV is Now

17. Dr. Seth Geiger President SmithGeiger, LLC Digital Media Trends and the Future of Television