1. 1 © 2012 Cisco and/or its affiliates. All rights reserved. February, 2012

2. © 2012 Cisco and/or its affiliates. All rights reserved. 2 Service Provider Multi-screen offering becoming table stakes Partnerships & Vertical Integration Rising churn and Subscriber acquisition cost Broadcasters and Media New distribution platform & interactive content – Sky Sport TV on iPad / RTL on iPhone & iPad Hybrid Broadcast Broadband TV: HbbTV New business models – Hulu 2009 revenue: $100M 1 st half 2010 revenue: $100M Consumer Behavior Netflix = 20% of US downstream internet traffic in peak times Online Video Snacking 11.4 Hour /month Video = 91% of consumer IP traffic by 2014 20%

3. © 2012 Cisco and/or its affiliates. All rights reserved. 3 3 3 Consumer Experience Content Fragmentation Broadcast, Premium, UGC Device &Device & Screen Fragmentation TV, PC, Mobile, Gaming,TV, PC, Mobile, Gaming, PDA Interactivity Fragmentation Lean back, Lean forward, Social Business Models Subscription Fragmentation Broadband, TV, Mobile, Movie rentals, OTT Free vs. Paid Ad Dollars Fragmentation Transition from linear TV to online © 2012 Cisco Systems, Inc. All rights reserved.

4. © 2012 Cisco and/or its affiliates. All rights reserved. 4 4 Age 2+ Age 12-17 Age 18-34 Age 35-54 Age 55-64 Age 65+ 30.2% 39.5% 32.7% 30.8% 33.8% 24.8% Source : Nielsen Convergence Summit

5. © 2012 Cisco and/or its affiliates. All rights reserved. 5 5 20 Total18-34 Age 35-54 Age55+ Age Missed episodes of shows I watch on TV Episodes of TV shows I do NOT watch on TV Episodes of TV shows I have ALREADY watched on TV Episodes ofEpisodes of past shows that are not on TV now None of these Source : CBS Entertainment Panel Survey, July 2009 88% 27% 16% 39% 4% 89% 36% 21% 44% 2% 88% 26% 16% 40% 4% 86% 20% 11% 31% 7%

6. © 2012 Cisco and/or its affiliates. All rights reserved. 6 Reasons for Watching Computer Video When at Home Base: Watch Video on the Computer at Home Consumers Watch Video on Their Computers To Time-Shift and Multi-Task  75% of respondents watch video on computers  Each week, they watch about 1 hour, 45 minutes of video on computer  They watch at home 63% of time  93% of 18- to 24-year-olds watch video on a computer, averaging 2 hours, 45 minutes per session  40% of respondents watch video using portable devices  Each week, they watch about 54 minutes of video on portable devices  39% of this time, they are at home Source: Cisco IBSG Connected Life Market Watch, 2012 Device Shifting

7. © 2012 Cisco and/or its affiliates. All rights reserved. 7 Multi-screen TV experience Online Content on TV /STB Intuitive Unified Navigation for All Content Web 2.0 Experiences on TV/STB

8. © 2012 Cisco and/or its affiliates. All rights reserved. 8 About half of the Netflix users watch it on a console (XBOX 360, Wii or Playstation 3) 89% of the HULU users watch it directly from their PCs (compared to 42% of the Netflix users) About 20% of the Netflix users watch it on SmartTV 37% of the iPhone users watch video on their phone (6x as likely as the typical subscriber) Vital question: is your content and distribution network ready to be delivered to all these devices – consoles, PC, mobile devices, SmartTVs? Source: GamePolitics.com, Market Watch, Nielsen.com

9. © 2012 Cisco and/or its affiliates. All rights reserved. 9 More Visual More Social John

10. © 2012 Cisco and/or its affiliates. All rights reserved. 10 More Visual More Mobile

11. © 2012 Cisco and/or its affiliates. All rights reserved. 11 On the content quality and quantity – more and better On the delivery network: delivery on managed and unmanaged networks On the consumer device: delivery to any device 1 1 2 2 3 3 The weakest (technology) point will ruin the experience Σ Σ

12. © 2012 Cisco and/or its affiliates. All rights reserved. 12 © 2012 Cisco and/or its affiliates. All rights reserved. 12 ARPU per Bit (Revenue) Data Traffic (Cost) ComingProfitabilityGap Increase Revenue Multiple options for monetizing services enabled by Videoscape Enable partnerships Ad revenue Partnered content Cloud Client Network Reduce Costs Manage “over the top” video traffic CapEx: Make better use of resources OpEx: Manage video bandwidth during peak usage Improve Experience Three-screen experience and session shifting Quality of video experience

13. © 2012 Cisco and/or its affiliates. All rights reserved. 13 Model 1 – Subscription / Transaction  Monthly fee or per transaction purchases (Download to own, Rental)  Could also be a combination of both.  More appropriate for data SP’s who want to expand service offering into video space. (Good first step) Model 2 – Bundle Uplift / Reduce Churn  TV Everywhere offered to higher end service tiers at no additional fee  Revenue is indirect through encouraging greater stickiness in higher service tiers.  Further revenue lifts via pull through business. “You’d like video – you might want to move up to the higher data service tier” Model 3 – Advertising Based  This is typically an OTT solution, which don’t have to be affiliated with Consumer SP’s  Revenue is via advertising, typically as “price per mili”, “price per click”, and inserted ads in programming

14. © 2012 Cisco and/or its affiliates. All rights reserved. 14 © 2012 Cisco and/or its affiliates. All rights reserved. 14 $ Time Network Termination B2C Business to Consumer Peering Points $ Service Providers $ Rising Costs: Increased SAC and Churn Increased bandwidth usage Bigger bundle of products Flattening Revenues: Saturated markets – few new subscribers Increased use of flat-rate tariffs Regulatory & Competitive price pressure Today Broadcasters

15. © 2012 Cisco and/or its affiliates. All rights reserved. 15 © 2012 Cisco and/or its affiliates. All rights reserved. 15 B2B2C Business to Business to Consumer $ $ $ $ Service Providers $ $ $$$ $ $ $ SP Platform Leverage Network and Data Assets Tomorrow Broadcasters Government Advertisers OTT/Content Aggregator Application Developer Utilities

16. © 2012 Cisco and/or its affiliates. All rights reserved. 16 Streaming was limited to the customers of Verizon only, for PC and mobile platforms, based on Silverlight Time lag was between 15 sec and 45 sec. 2.1m users watched the game online (from total 111.3m), average 39 min/view. Source: Streamingmedia.com, nfl.com Vital question: is your distribution network ready to take a load of 2% of your viewers, going on-line? Would you compromise the quality of your top content because of lack of preparation?