Deezer Insights - Nordic Telco Summit presentation September 23rd 2014
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Transcript of Deezer Insights - Nordic Telco Summit presentation September 23rd 2014
Hi! I’m Alex
DEEZER PRESENTATIONAlex Esser
18th Annual Nordic & Baltic Telecoms Executive Forum
September 2014
2
Contents
1/ Deezer Introduction
2/ Market Overview
3/ Product & Content Strategy
4/ Growth Strategy with B2B Partners: Telecom Carriers & Manufacturers
Introduction
Soft
bundle
Global Streaming Service
Award winning
recommendation engine
Deezer in two sentences
5
Deezer Product
6
Deezer Users Show Strong Engagement and Satisfaction
Hear this: Algorithms + Human Recommendation
7
Deezer Product
Soft
bundle
countries
182subs
6.5M
tracks
35M+monthly active users
16M
Deezer in figures
Fund-
raising (1)
Corporate
Geography
Product
9
Deezer Timeline: Key Milestones
2007 2008 2009 2010 20142011 2012 2013
Free service
on web
Pay
services
launched
Bundled offers
launched
France market
launch
Free service
on mobile
“Flow” launched
2006
Ad sales
launchedintegration
2015
US
launch
$[7]m $[12]m $93m(1)
UK
launch
Belgium
launch
Ger.
launch
Rest of
Europe
launch
Brazil
launch
Rest of
world
launch
Targeted market
growthGlobal expansion
Build business
model
Develop main features and
grow catalogue
Sign key
partnerships
Daniel Marhely
founds Deezer
Christopher
Coonen
(COO) joinsSimon
Baldeyrou joins
as CPO & CFO
Axel Dauchez
appointed new
CEO
New organisation
for global
expansion:
opening of 15
offices)
Axel Dauchez
leaves the
company
Didier Bench
appointed
Chairman of
the Board
Tyler Goldman
(US CEO)
joins
(1)of which $30m were used to pay non-recouped MGs of the 2013-2014 period
• Limited web streaming
• Mobile streaming in radio formats
• Advertising
• No offline access
• Recommendations and curation
• 128 kbps sound quality
10
Deezer Product Offering: A “Freemium” Model
Standard Offerings
Discovery Premium +
Free £/€/$ 9.99 per month
• Unlimited web and mobile streaming
• No advertising
• Offline access
• Recommendations and curation
• Up to 320 kbps sound quality
New Offerings
[Elite]Mid-Tier
Offering
• Premium + features
• On-demand music
concierge
• 24/7 customer service
• Flac 16 bits sound
quality (CD quality)
£/€/$ 19.99
per month
£/€/$ 4.99
per month
• Features TBD
Launched Sept
2014
Family Offer
£/€/$ 9.99 - 19.99
per month
Market Overview
12
The Deezer Ecosystem: Creating a Service Around Music Content
Record labels
& publishers
Talent
Independents
(International &
Local)
Majors
Music
Publishers
Collecting
Societies
Artists
Composers
Songwriters
Telco Partners
(Indirect)End users
Other Partners
(Direct)
13
Deezer Has a Truly Global Presence
Service available
Deezer in-market presence
Deezer local editors
Deezer footprint
USJapanOpening
2014 Opening 2015
182 countries
27.languages
30 payment methods
17 offices
300+ employees
50 local editors
14
Streaming is Becoming the Consumption Channel of Choice for Music
Recorded Music Revenue by Format ($bn)
Source: PWC, ABI, RIAA
(1) ABI Research; includes paying subscriber revenues only; excludes ad-based revenues and radio format-only services like Pandora
(1)
15
Market Potential: Scandinavia Leading The Way... RoW To Follow
Paying Subscriber Penetration (%)
26%
24%
3%3%
2% 2%1% 1%
0%
8%
15%
23%
30%
Norway Sweden France UK Spain US Germany Italy
SE & NO still growing!!!
Source: ABI, EMI Insight
8x – 20x upside to reach Norway & Sweden levels
Huge growth still ahead in DK & FI
16
Streaming is Already Replacing Downloads in More Mature Markets
(1)
2.58 2.63
2.85 2.82
2.45
0.210.36
0.57
0.85
1.20
2010 2011 2012 2013 2014E
Digital Music Downloading Digital Music Streaming
U.S. Digital Music Revenues by Type ($bn)
Source: PwC, Nielsen, RIAA; Streaming figures represent subscription and ad-based on-demand music streaming evenues, and excludes radio formats like Pandora
(1)Annualized figures based on H1 2014 digital units sold and tracks streamed growth rates
• Digital downloads down -
13% in H1 2014
• Streaming up +42% in H1
2014
17
Market Potential: Scandinavia Leading The Way... RoW To Follow
DEEZER is a credible alternative to Spotify in the Nordics
Source: ABI, EMI Insight
18
Market Potential: Scandinavia Leading The Way... RoW To Follow
Paying Subscriber Penetration Sweden + Denmark 2014
100%
302%
750%
100%127%
192%
0%
200%
400%
600%
800%
Sweden Q1 Sweden Q2 Sweden Q3 Denmark Q1 Denmark Q2 Denmark Q3
Source: ABI, EMI Insight
Product Content & Strategy
20
Deezer Users Show Strong Engagement and Satisfaction
Source: Deezer, June 2014.
Note: Only streams lasting more than 30 seconds are accounted as streams
(1) Active users are people who listened to at least one stream (more than 30 seconds). DAU = daily active user, MAU = monthly active user.
Streams per
direct Premium+
subscriber
per month
510Deezer NPS
score among
users
47DAUs / MAUs(1)
per direct
Premium+
subscriber
54%share of streams
on mobile devices
for Premium+
subscribers
>70%
21
Deezer Users Show Strong Engagement and Satisfaction
Hear this: Algorithms + Human Recommendation
22
Deezer Users Show Strong Engagement and Satisfaction
Flow: a New Way to Discover Music
Deezer Users Show Strong Engagement and Satisfaction
Flow: a New Way to Discover Music Flow a Step Up in User Satisfaction
Share of Tracks Not Skipped When Listening Through
Various Radio Formats
84% 83%
74%
Playlist radio Flow Radio
(non-discovery) (discovery) (discovery)
Flow now accounts for 8% of global
streams on Deezer
24
Deezer Has the Largest Catalogue Among Streaming Services
• Deezer develops extensive depth and breadth in all genres and all countries in order to:
• Satisfy all local tastes
• Satisfy all music genre communities
• Give emerging artists an opportunity to be heard everywhere
• Virtuous cycle where content providers want to work with
us due to the global exposure we can provide
30m
25m
20m
15m
The Deezer Catalogue Ranks No. 1Deezer Catalogue Strategy
35m
1m
India Brazil
AfricaThailand
Deezer Local Content
Country
South Korea
Japan
Brazil
Italy
Sweden
France
Denmark
Netherlands
Germany
%
100%
100%
90%
90%
95%
80%
80%
80%
70%
Deezer Local Labels Examples% of Top 10 Albums by
Local Artists
25
Bragging rights: Deezer Has a State-of-the-Art Product
“Deezer is willing to take a risk when it comes to discovery”
“As for now, I have been more impressed with Deezer’s integration
into 3rd party apps – eDJing, Soundrop, Seevl, and others”
“I was convinced to switch to Deezer and I’ll be wrapping up my Spotify
account”
Deezer vs. Spotify : a side-by-side comparisonRude Baguette. December 2, 2013
“We like Deezer's light, clear and simple
design across both the web/desktop versions of the
service and the mobile/tablet versions, and think it's
easier to navigate than the dark, quite complex
interface of Spotify”
“Deezer has a cool feature called Hear This (…), a
music feed that's personalised for you (…) We prefer
Here This to Spotify's 'Discover' feature”
Deezer vs Spotify comparison: what is the best music streaming
service?Tech Advisor. June 09, 2014
“Deezer arguably has the strongest editorial personality of any of these services”
“Deezer often includes a little comment from the Deezer staff member who is making these recommendations, and includes
their name, job title, and picture, giving it a strong human
touch”
Best Streaming service: which one to download? Trusted reviews, August 14, 2014
“The big difference between the two (Deezer and Spotify) is the team Deezer has, they know about music”
Melomanos a la Obra El Universal (Mexico’s largest newspaper). August 14, 2014
“The Swedish population is clearly enjoying the unique
recommendation engine and Deezer’s approach to ensuring content is
localised”
“Deezer proudly topped the podium with nine out of ten points. Natives
Spotify took second place while Norwegian Wimp came in third position”
Deezer beats spotifyM3 sveriges prylsajt. July 7, 2014
Innovative Partner Approach
27
Deezer Has An Adaptable and Scalable Platform…
Adapted to each userAdapted to each country Adapted to each partner
• Customizable technical integration
for a turnkey solution
• Joint development of UX and co-
branding
• Ability to launch 90 days after
signing
• 4 years of experience in the making
• Local user interface: language,
currency, payment methods
• Local content: tracks, genres,
editorial recommendations,
marketing offers
• Groundwork laid over past
3 years for populations now
beginning to stream
• World-class, in-house developed
recommendation algorithm
• Flow: personalized one-click radio
playback
• TO COME: seamless active and
passive experience
• TO COME: super-serve selected
customer segments
The adaptability of our platform allows us to be nimble and scalable
28
Deezer Has An Adaptable and Scalable Platform…
Adapted to each partner
Music Branding?
Social Media engagement?
Decrease churn?
ARPU upsell?
Reach new customer segments?
The adaptability of our platform allows us to be nimble and scalable
29
Deezer Tre
30
Deezer Tre
31
Deezer Tre
Fly your customer to Paris to see Pharrell Williams live
32
Deezer Global Subscriber Acquisition Strategy
Partners /
Vendors
Bundled
• Partners promote Deezer
through targeted channels
• Customer benefit s from a
promotional periodDefinition
Direct (subscribers billed by Deezer)
StandaloneB2B2C
partnerships
Paid traffic
acquisition
• Users coming at zero
cost
• Long-term result of all
other initiatives
including brand
awareness
Indirect(subscribers billed by telco operators)
Organic
• Deezer is included in the
customer mobile
contract
• No price transparency
• Carriers promote Deezer
unbundled to their
installed base
• Customer benefits from a
promotional period
A
B C D
• Acquisition through
traditional networks and
affiliation tools
NA
33
Deezer Tre
34
Western Europe
Country Telco Partner
36 Indirect Carrier Deals Globally….and more to come soon!
Type
Latin America
Country Telco Partner Type
Other
Country Telco Partner Type
A
Note: HB: Hardbundle; SA: Standalone; As at June 2014.
Others
Quickly reach mass market in any country
Marketing support
Long-term revenue visibility (hard-bundle)
Lower churn due to carrier billing (standalone)
Partners guarantee minimum volumes
Brand image improvement
• Music positioning
• Artist marketing activities & endorsement
Customer acquisition
• Unlimited music proposal
• Exclusive partnerships
Customer retention
• Churn and migration drop thanks to Deezer stickiness
ARPU enhancement
• Upgrades: higher tariff plans
• Upsell: data add-ons or revenue share on standalone
offers
35
60%
10%
75% 17%as much as
70%
>€500k media spend
+ sales incentives, in-store mktg
Benefits to Deezer Benefits to carriers
Churn
Reduction:
ARPU Uplift:
A Win-Win Proposition for Both Deezer and CarriersA
Churn
Reduction:
Marketing Spend
Commitments:
Zoom on Orange partnership [2010; 2018 renewal]
Hard
bundle
in churn and migration
Deezer active users
vs. non active users*
- 60%
Orange countries
Offering Deezer bundled with
their plans
7
Deezer with Orange NPS*
(vs. 50 for Deezer direct)
51
Deezer is bundled in selected Orange plans for the whole time of the contract at no additional cost for the customer
2010
2011
2012
2013
Orange France V1 (Incl.
investment from Orange &
WorMee acquisition)
Orange UK (EE)
Orange Poland
Orange Romania
Orange France V2(Deal renewal, extension of
Deezer bundle to all plans)
2014 Orange France V3
Orange Spain
Orange North Africa
Orange Senegal
Orange Ivory Coast
Orange Mauritius
Source: Orange France figures *Deezer survey on Orange France customers
A
T-Mobile partnership overview [2010; 2016 renewal]
in churn and migration
Deezer active users
vs. non active users
- 75%
T-Mobile countries
Offering Deezer bundled
with their plans
62012
2013
2014
T-Mobile Austria
T-Mobile Netherlands
T-Mobile Croatia [T-Hrvatski Telekom]
T-Mobile Czech Republic
T-Mobile Albania [AMC]
T-Mobile Slovakia
ARPU
Deezer active users
vs. non active users
+10%
Source: T-Mobile Netherland 2013 figures
Hard
bundle
Deezer is bundled in selected T mobile plans for the whole time of the contract at no additional cost for the customer
A
Tigo partnership overview [2013; 2014 renewal]
Hard
bundle
Tigo countries
Offering Deezer bundled
with their plans
6
Deezer is bundled in customer’s potpaid plans and prepaid daily, weekly or monthly offers
2013
2014
Tigo Bolivia
Tigo Colombia
Tigo Guatemala
Tigo Honduras
Tigo Paraguay
Tigo Salvador
First tests on prepaid
offers
Tigo Prepaid offers
launched in all Tigo
countries
Acquisition impact
% of Tigo-Deezer users declaring
Deezer as the main reason for
choosing this Tigo plan
43%Anti-churn impact
% of Tigo-Deezer users who would
leave Tigo if the Deezer bundle was
over
17%
Source: 2014 Deezer survey on Tigo-Deezer Colombia customers
A
39
Direct B2B2C PartnershipsB
Large-scale Partnerships Launched from Early 2014 Opportunity to Expand into Other Partnership Models
400+
Cars
Banks
Travel
Food
Ticketing
Media
Loyalty
programs
brands
We have partnered with
12 countriesEstimated >1m units to be sold in 12 months with
Deezer promotional offer
More than 100 countriesEstimated >10m units to be sold in 12 months with
Deezer promotional offer
22 countries>30,000 new subscribers in 4 months
A
B
C
Many of which
are
partnerships
that can be
replicated on a
larger scale
Soft
bundle
Global Streaming Service
Award winning
recommendation engine
Deezer in two sentences
Soft
bundle
Everyone is unique
Adapt the service to:
Every user
Every partner
Every country
Market Philosophy: