1. 20 July 2009 An assessment of the television landscape to 2014 Commissioned by the National Association of Broadcasters

2. Outline of presentation Introduction Free to air television Subscription television –DTH –Subscription DTT –IPTV –Mobile television New technologies and changing viewer habits –PVR –Web TV –HD TV

3. Introduction There are currently 9 027 million households in South Africa segmented as follows We project growth to 10 – 11 million households by 2014.

4. Free to air television

5. FTA projections by 2014 Digital migration to be launched commercially by mid-2010 Analogue switch-off likely in late 2013 or 2014 Approximately 7.5 - 8 million households across the two terrestrial platforms Two providers (SABC and e.TV) until analogue switch-off, and potentially more thereafter. Between 13 and18 television channels. Small, urban audiences on DTT in the early years of digital migration.

6. ICASA proposed allocation of DTT channels Mux 1 22Mbps 9 SABC video streams 1 Community TV Mux 2 22Mbps 6 e.TV video streams Rest reserved for new players Mux 3 22Mbps 5 M-Net video streams Rest reserved for new players

7. FTA impact on audience measurement The conversion to DTT will lead to a rise in the number of channels –Results in fragmentation in viewership and reduced audience sizes (particularly in the early stages of migration and on new DTT channels) –Might necessitate an augmented sample. DTT migration may lead to a reduction in television viewers as some households are cut off. FTA television viewing households split across two broadcast platforms (analogue terrestrial and digital terrestrial) during the dual illumination period. Phased implementation of DTT may impact on the demographics of the sample.

8. Pay television

9. DTH projections to 2014 Three broadcasters: Multichoice/M-Net, ODM and Walking on Water. Telkom Media may enter. New entrants to launch. ODM expected to have 500 000 viewers by 2014, Walking on Water likely to be a niche offering. Telkom Media is uncertain. At least 3 million subscriber households altogether. Over 150 channels available on DTH –ODM with 40-50 channels –WoW with 4-10 The bulk of subscribers on DTH platform. DTH figures subject to change dependent on potential subscription terrestrial and IPTV offerings.

10. DTH impact on audience measurement Large increase in the number of channels that need to be monitored. –This will result in fragmentation of viewership across channels –This will lead to small audience sizes. The number of bouquets offered is likely to rise, –This will segment viewership. –As channels offered across broadcasters are likely to have limited overlap, this will decrease the number of viewers watching each channel further. The size of pay television viewership overall is likely to rise, particularly in the middle class market.

11. Projections on subscription DTT M-Net is only broadcaster during dual illumination. –At analogue switch-off there may be new entrants such as ODM. At least 4 channels on DTT during dual illumination and 9 thereafter. Subscription terrestrial viewership currently low (under 130 000) –May rise dependent on offering. –Is likely to compete with mid-tier pay television. Rise in channels will lead to fragmentation of viewership. If migration is a “hard switch” there will not be fragmentation across analogue and digital platforms. Subscription viewers will not be cut off as a result of digital migration.

12. IPTV IPTV offering unlikely –there are currently no clear plans to offer IPTV –should Telkom provide IPTV services on a wholesale basis this may change. If offered it is unlikely that IPTV will take a large share of the subscription television audience. –Audiences of between 160 000 and 250 000 by 2014. Potential IPTV viewers likely to be a subset of current DTH households. While audience measurement tools should be able to measure the IPTV service, it is unlikely to be a large part of the television audience.

13. Mobile television Spread of mobile television may be limited in South Africa in the next few years. –Take-up of 3G streaming is limited thus far –Regulatory issues may delay the launch of DVB-H. Usage spread will be dependent on the price of handsets. Given SA demographics it will only take-off once prices fall. In terms of audience measurement –Mobile television is device-based, therefore a return path is possible. –As mobile phones are used by unique individuals, monitoring usage on an individual basis and accessing their specific demographics is possible (subject to privacy issues).

14. Conclusions on audience measurement issues for FTA and subscription broadcasting A large increase in the number of channels available will lead to fragmentation and result in small sample sizes –ODM enters with 40-50 channels, WoW enters with 4-10 on DTH and Telkom Media enters, –New channels are introduced on DTT and DVB-H when launched Segmentation of viewership across platforms (including mobile) and bouquets will decrease audience size further. –As channels offered across broadcasters, bouquets and platforms may have limited overlap this could decrease the sample size of viewers watching each channel further. Size of audience for same show across platforms needs to be measured –Where the same channels are shown across platforms, audience measurement tools need to account for it

15. New technologies and changing viewer habits

16. PVR Increased penetration of PVRs in the pay television sector, –could see penetration levels of between 28% and 75% based on international trends. –the rollout of DTT set top boxes creates an opportunity for PVR to be offered to free to air television audiences. PVR will change viewing habits, allowing for greater time shifted viewing primarily in the pay television segment of the market as well as increased overall consumption. Most time-shifted viewing is watched within a period of a few days. Project between 700 000 and 2 million PVRs in subscription households and potentially in some FTA households.

17. Web TV Web TV or Internet TV refers to the provision of video content over the public Internet. Web and Internet television services will rise as –broadband speeds rise, –caps on broadband accounts are increased or removed –online content rises. Measuring Web TV audiences could become important –For channels that are streamed live, a large portion of the audience is online- needs to be measured to avoid underestimating audience numbers. –Other types of Web TV content such as VOD also need to be measured as different advertising concepts may be used.

18. Video-on-Demand Video-on-Demand technologies allow users to select and either watch or listen to video or audio content on demand –VOD is likely to come in two forms, web-based VOD and television based VOD –Growth is dependent on the increase in PVR usage, the new DTT decoders as well as the increase in Web TV usage. VOD usage likely to be predominantly in the pay television sector. VOD could reach 38% (or about 1 million) of subscription households The measurement of VOD is important particularly with respect to content provided on other platforms. –For example, where particular programming that is shown on television is also shown on demand by the broadcaster it becomes relevant to measure viewership.

19. HD television High definition television is a high resolution form of digital television broadcasting HD channels will rise to as many as five by 2014 (provision led by Multichoice) HD is unlikely to account for a substantial proportion of channels by 2014. The introduction of HD channels is unlikely to have much of an impact on audience measurement. –However, it may result in a contraction in the number of channels, or slowed channel growth due to the increased bandwidth or satellite capacity required for HD.

20. Conclusion on impact of new technologies and viewer habits on audience measurement Viewer habits are likely to change as improvements in technology provide viewers with a greater number of options on how, when and on what platform to watch television: PVR, VOD and Web TV allow for time shifted viewing. –If this is not accounted for audience estimates will be biased downwards –Estimates may be skewed against those genre that are likely to be time shifted. Web TV provides an additional platform for viewing live channels as some channels are streamed live over the Internet. –These viewers also need to be accounted for.

21. Conclusion

22. General challenges to audience measurement going forward Fragmentation of viewership across channels. The introduction of time-shifted or non-linear viewing. The introduction of new platforms and new technologies that change viewing behaviour. Evolution in the size and nature of audiences across platforms.