Adobe Digital Index Q3 Digital Video Report

DIGITAL VIDEO BENCHMARK ADOBE DIGITAL INDEX Q3 2015

Table of contents TV Everywhere 03 Key insights

04 TVE penetration among Pay-TV viewers grows, slowly

05 Authenticated video viewing doubled YOY

06 All key genres grew QOQ

07 Authentications shifting to TV connected devices 08 Share of authentications by device type

09 Viewing platforms of choice are mobile or connected

10 Teens & Toons has the highest viewing frequency

11 Teens & Toons tends to be mobile content; Movies are big screen

Total Online Video Market 12 Mobile share of online video starts now stands at 30%

13 Mobile share of online video starts lower on TV sites

14 Viewing frequency increased on mobile devices

15 Ad starts per video decreased on all devices

Appendix 16 Methodology

17 Glossary

18 Tables

2 ADOBE DIGITAL INDEX | Digital Video Benchmark Q3 2015

Key insights •  TV Everywhere (TVE) viewing continues to shift to TV connected devices; Apple TV® and Roku® are enjoying similar growth rates

(+18% in the last quarter alone). Apple® may be cannibalizing its own devices, with Apple TV® growing at the expense of iPad® and iPhone®:

•  Consumers increased their frequency of viewing TV Everywhere (TVE), with an uptick in the most recent quarter resulting in a doubling of TVE viewing YOY. Q3 2015 is up 37% quarter-over-quarter (QOQ) following a Q2 slowdown; all key genres showed growth.

•  The number of households using TV Everywhere (TVE) continues to grow, but slowly. Number of unique households is up 8% year-over-year (YOY).

•  Teens & Toons is often consumed on mobile devices, particularly by Android® as opposed to iOS® users. Movies tend to be viewed on a bigger screen.

•  In the broader video market, the overall mobile share of online video starts continues to grow (+13% YOY), with smartphone growth offsetting tablet decline. Share of videos viewed via a smartphone is just over 18% for the quarter, up 33% YOY.


TV EVERYWHERE TVE penetration of Pay-TV viewers continues to grow slowly

4

While active viewership grew 8% on a YOY basis, penetration among pay-tv subscribers remains in the 12-14% range. With fewer than 1 in 7 subscribing households using TVE, there remains substantial headroom to acquire new customers.

ADOBE DIGITAL INDEX | Digital Video Benchmark Q3 2015

Authenticated video viewing picked up steam during the 3rd quarter resulting in a 102%

increase of TVE video streams from Sept. 2014.

TV EVERYWHERE

Authenticated video viewing doubled YOY

5

The growth continues after a Q2 dip, up 37% QOQ.

Consumer engagement and loyalty, rather than customer acquisition, fuels industry growth.


TV EVERYWHERE

All key genres contributed to viewing growth

6

All genres show healthy growth, contributing to the 37% QOQ jump. The fastest growing was Movies, more than doubling since the last benchmark report. The start of football season, the return to school and new TV shows impacted individual genres positively.


TV EVERYWHERE Authentications shifting to TV connected devices

7

Connected TV Devices’ share of TVE grew 130% YOY, now accounting for nearly 1 in 4 authentications. iOS and browser viewing both dropped 25% YOY.


TV EVERYWHERE Share of authentications by device type

8

Apple TV maintains a nearly 2:1 lead over Roku among connected devices (56% to 30% in the connected device segment and 13% to 7% overall) – both grew just under 20% in the last quarter alone.


TV EVERYWHERE Viewing platforms of choice are mobile or connected TVs

Binge viewing within TVE continues to creep up, led by a 30% increase in videos per visitor on TV connected devices. Browser-based viewing is now half as frequent as any other method.

9

Viewing frequency increasing on most access types, only browsers showed a decline.


TV EVERYWHERE Teens & Toons has the highest viewing rate

10

Teens & Toons is the most heavily viewed content, with Android devices used to view this genre at 2X the viewing frequency of iOS devices.

Android viewers of Teens & Toons watch nearly 3

videos a day.


TV EVERYWHERE Teens & Toons tends to be mobile content; movies are big screen

11

Sports is surprisingly more of a mobile story.

Device usage varies by genre: Teens & Toons content can be consumed anywhere via Mobile, while Movies benefit from the high fidelity and size of Connected Devices.


ONLINE VIDEO

Online video continues to shift toward mobile devices 3 of 10 video starts on websites now on mobile. Given that total browsing is approaching 50% mobile, the lag in video viewing suggests preference for larger screens for videos. Mobile share of overall online video grew 13% YOY to 31% this past quarter; however, a decline in tablet’s share cancelled out some of smartphone’s growth.

Share of smartphone viewing increased YOY by 33%, helping push the share of mobile viewing to 31%.

Slowing tablet sales and usage impacts the share of tablet video viewing, which was

down by 7% YOY.


ONLINE VIDEO

Mobile share of online video starts lower on TV sites

13

Mobile share of online video viewing via TV programming sites grew 62%, to just

under 24% of unauthenticated video viewing.

Even with a 62% increase in mobile share of viewing YOY on broadcast sites, consumers watch 20% fewer videos on these sites compared to total viewing (shares of 24% and 31%, respectively). TV programming’s longer form content appears more suited to other devices and larger screens.


Screen size is a predictor of online video viewing frequency. The larger the screen, the higher the frequency with 50% more viewing on desktops than smartphones.

ONLINE VIDEO

Viewing frequency increased on mobile devices

14

The viewing frequency via a smartphone grew 10% YOY to

0.49 video views per visitor.


ONLINE VIDEO

Ad start rate decreased on all devices

15

Viewers via Desktops are viewing the most ads per video view.

Tablets had the largest decrease in ad-start to video-start ratio.

While viewing frequency increased, fewer ads were started per video watched compared to last year. The decline is largest on tablets. Combining videos per visitor and ad starts per video results in smartphone users viewing about the same number of ads as last year, while tablet and desktop users are viewing fewer.

The average ad start per video start in Q3 2015 was 0.83, down

10% over Q3 2014.


ADOBE DIGITAL INDEX Methodology This report is based on consumer video viewing from July 2014 thru September 2015. It consists of the aggregated and anonymous data from sites gathered from Adobe Analytics, Adobe Primetime, and Adobe Social. Adobe does not use any personally identifiable information to generate this report. In addition, Adobe does not know the personal identity of those viewing digital videos. Sample information includes: •  134 billion total online video starts •  3.6 billion TV Everywhere authentications

•  300+ different sites and apps acting as access points for TV Everywhere

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ADOBE DIGITAL INDEX Glossary •  Ad start ratio: Total ad starts divided by total video starts •  Online video start: Any browser based unauthenticated video start •  Viewing frequency: Total video starts divided by unique viewers •  Authenticated video: Video content that requires credentials from a multichannel video

programming distributor (MVPD) •  Active monthly viewer: Viewer who authenticates at least once per month •  Monthly unique visitor: Total number of unique visitors for the month •  Access type

–  Browser includes Chrome, IE, Firefox, and Safari on both PC and mobile devices –  iOS app is an app on any Apple mobile device –  Android app is an app located on any Android mobile device –  TV Connected Devices includes data from apps on Xbox, PS4, Apple TV, Roku, and other similar devices

•  TV Everywhere video viewing frequency: Authenticated video streams per monthly unique visitor


ADOBE DIGITAL INDEX Tables

©2015 Adobe Systems Incorporated. All rights reserved. Adobe and the Adobe logo are either registered trademarks or trademarks of Adobe Systems Incorporated in the United States and/or other countries. Android is a trademark of Google Inc. Apple, Apple TV and iPhone are trademarks of Apple Inc., registered in the US and other countries. IOS is a trademark or registered trademark of Cisco in the U.S. and other countries and is used under license. Windows is either a registered trademark or a trademark of Microsoft Corporation in the United States and/or other countries. All other trademarks are the property of their respective owners.

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TV everywhere authenticated video viewing growth 9/1/13 10/1/13 11/1/13 12/1/13 1/1/14 2/1/14 3/1/14 4/1/14 5/1/14 6/1/14 7/1/14 8/1/14 9/1/14

All TV-E 42% 47% 56% 46% 56% 60% 79% 74% 71% 74% 89% 109% 100%

10/1/14 11/1/14 12/1/14 1/1/15 2/1/15 3/1/15 4/1/15 5/1/15 6/1/15 7/1/15 8/1/15 9/1/15 110% 123% 111% 140% 140% 154% 144% 130% 130% 158% 193% 202%

TV everywhere authenticated video viewing growth by genre 9/1/13 10/1/13 11/1/13 12/1/13 1/1/14 2/1/14 3/1/14 4/1/14 5/1/14 6/1/14 7/1/14 8/1/14 9/1/14

Sports 63% 68% 91% 64% 70% 54% 92% 57% 65% 61% 34% 72% 100% Movies 24% 21% 35% 35% 46% 47% 72% 65% 80% 70% 94% 112% 100% Teens & Toons 49% 37% 38% 38% 55% 50% 48% 46% 46% 71% 106% 112% 100% Broadcast & Cable 36% 40% 40% 38% 51% 61% 81% 75% 74% 77% 103% 112% 100%

10/1/14 11/1/14 12/1/14 1/1/15 2/1/15 3/1/15 4/1/15 5/1/15 6/1/15 7/1/15 8/1/15 9/1/15 129% 176% 122% 123% 94% 111% 86% 75% 85% 55% 106% 148% 91% 71% 124% 120% 117% 115% 97% 113% 119% 159% 315% 272% 145% 125% 90% 121% 129% 139% 129% 113% 120% 188% 193% 147% 106% 115% 114% 138% 143% 169% 157% 151% 147% 183% 212% 211%

Share of TV everywhere authentications by device type

Q3 2015 Q2 2015 iPad 22% 27% iPhone 19% 22% iPod 1% 1% PC 11% 9% Mac 5% 4% Android 19% 16% Apple TV 13% 11% Roku 7% 6% Gaming Console 2% 2% Amazon Fire TV 1% 1% Smart TV 0% 1% Other 0% 0%


Adobe Digital Index Q3 Digital Video Report

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