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GLOBALVIDEOINDEXQ4 2015

2 OOYALA GLOBAL VIDEO INDEX Q4 2015

POINT OF VIEW ···········································································4

EXECUTIVE SUMMARY···························································· 6

TABLET AND SMARTPHONE VIDEO TRENDS ·················8

ENGAGEMENT PATTERNS BY DEVICE ····························· 12

SPOTLIGHT ON ASIA PACIFIC AND JAPAN····················· 16

PROGRAMMATIC TRADING UPDATE ································20

ABOUT OOYALA’S GLOBAL VIDEO INDEX ····················22

TABLE OF CONTENTS

OOYALA GLOBAL VIDEO INDEX Q4 2015 3

In the not-too-distant future, when you tap your (likely) wearable mobile device and send a streaming video of the newest hit from CBS, NCIS: Lunar City, to your Corning glass wall-sized interactive screen — or better yet, when you step into the hologram with Mark Harmon — think back to your first iPhone — and the start of the digital revolution.

You were there. You were part of it.

And, just as Richie Havens, Joan Baez, Canned Heat, Jimi Hendrix et al. defined that long-gone Age of Aquarius, your iPhone, that first Netflix stream you watched on it, and the ensuing iterations of iPhones, iPads, Android smartphones and tablets (sorry, Surface) helped cement the new mobile digital age.

STILL, IT’S A MILLENNIAL THING

I’m a Baby Boomer, and it pains me to pass the torch to another generation (I’m really not ready to be done yet), but the reality is that the Millennials are behind all of this. They’re the cord nevers, the mobile-first generation and the former pirates (I’ll tell you why in a second) driving this global phenomenon.

They’re also universal. Millennials in Los Angeles, in Berlin, In São Paulo, Bangkok, Singapore and Moscow are, essentially, the same — at least when it comes to mobile devices and the video they watch on them. Millennials are a distinctly global generation, sharing more similarities than generations before them, and they’re driving us to a digital homogeneity that is distinctly mobile.

In this quarter’s Global Video Index we look at video consumption in 15 countries in the APAC region. You’ll remember that last quarter we looked at Europe. What we’ve found in APAC is, well, the same as what’s happening in Europe, in North America and in the rest of the world (ROW): Mobile slowly but steadily is becoming the dominant form of video consumption.

As in the ROW, mobile video in APAC makes up nearly 50% of all video plays. As in other regions, mobile devices are popular for consuming all kinds of video content, both long and short. And smartphones are the most dominant device.

TABLETS, TABLETS EVERYWHERE

There is, however, a bit of a difference. Tablets are more popular for content consumption in APAC than in the rest of the world. Where the ROW uses smartphones more than 6X as often as tablets to watch video, in APAC it’s less than 4X.

At the moment, you can blame it on early adopters; but I suspect we’ll see future tablet share continue to grow as the generation following Gen Edge (Gen Soontobe?) kicks video viewing on tablets into high gear. Why? They’re the most tablet-penetrated generation ever, many having been given tablets on their first day of school. That’s a tough habit to break (and a great topic for a future Video Index).

Globally, tablet ownership is surprisingly homogeneous by region. In North America, 53% of respondents to a recent GlobalWebIndex survey said they owned a tablet, followed by

POINT OF VIEWJIM O’NEILL, PRINCIPAL ANALYST & VIDEOMIND EDITOR


consumers in Latin America (50%), Middle East and Africa (48%), Asia Pacific (45%), and Europe (42%).

Nearly half of global Internet users 16- to 64-years-old own tablets (47% of males and 46% of females), with — surprise! — Millennials more likely to own a tablet than Gen Xers or Boomers.

An aside: More than 60% of Singaporeans own a tablet.

A PIRATE’S LIFE FOR ME? MEH

As to pirating content, why bother?

Millennials who grew up in the Wild West of early streaming (read: there’s NO content available to legally stream that I want to watch), have begun to discover that it’s a lot easier to pay a fair price for content from a reliable source, and that when you go that route, you get a higher quality version that’s also — ta da! — virus free. What a deal! Really. Case in point: Video piracy in Australia — a hotbed of illegal downloading — dropped 29% six months after Netflix launched in Oz.

Content owners, meanwhile, have begun to discover that making content available at a reasonable cost also has other benefits: You create a revenue line where you had none before and, if your content is good enough, you create a reliable, sticky fan base. Not a bad trade.

Stay tuned.


EXECUTIVE SUMMARYHighlights from Ooyala’s latest report include:

TABLET AND SMARTPHONE VIDEO TRENDS

♦ Nearly half (46%) of all video plays in Q4 were on tablets and smartphones.

♦ Tablet and smartphone plays grew 35% in the past year and 170% since 2013.

♦ Tablets made up 14% of mobile plays, up from 12% in Q2 and Q3. This is only the second time tablet video plays have registered a relative uptick since 2013.

ENGAGEMENT PATTERNS BY DEVICE AND LONG-FORM VIDEO

♦ For the second quarter in a row, 69% of all videos watched on smartphones were under 10 minutes long. On the flip side, that means that nearly one third of smartphone videos watched were longer than 10 minutes — Millennials are at it again.

♦ Larger screens continue to get the lion’s share of video views for content over 10 minutes long, with that format making up 74% of all video watched on connected TVs (CTV) in the fourth quarter.

♦ Tablet use for content 10–30 minutes in length grew for the third consecutive quarter to 21%, the most of any device for content of that length, indicating that the devices remain a favorite of users watching episodic television.

SPOTLIGHT ON ASIA PACIFIC

In many respects, APAC countries are nearly identical to the ROW when it comes to using mobile devices to watch video.

Singapore has the highest percentage of video plays on mobile devices, nearly 55%, followed closely by Australia at 53%.

Tablets play a bigger role in APAC than in, for example, the United States. While tablets made up 22% of all overall mobile video views in Q4 in the region, edging the ROW by 3%, in the Philippines they made up a whopping 32% of all mobile video plays, in Australia they made up 29% and in New Zealand, 31%.

Device penetration likely plays a major role in how video is watched. The APAC region collectively has one of the highest smartphone penetration rates in the world. The reason? Mobile infrastructure is far easier to deploy across the remote — and often inhospitable — geographies of the region.

PROGRAMMATIC TRADING UPDATE

Key indicators demonstrate the continued growth in programmatic advertising that we’ve seen consistently quarter over quarter for the past year. As programmatic becomes an integral part of daily operations for premium publishers and broadcasters, we look at growth factors including increases in Deal ID transactions, active programmatic marketplaces, and the resulting CPMs.


Few things have been as constant in the past four years of the digital video revolution as the rise of mobile video consumption around the world. The fourth quarter of 2015 was no different.

Mobile video plays increased 35% in the quarter to nearly 46% of all plays, up from 34% a year ago; over the past two years, plays on mobile phones and tablets are up 170% from 17% in 2013.

Need a bigger number? How about this: Since 2011, mobile video plays (smartphones and tablets combined) have a compound annual growth rate (CAGR) of more than 116%. That pushes the share of mobile video plays up a stunning 2,084% over the past five years.

Of course, the biggest driver of mobile video consumption has been the smartphone, which is routinely used more often than tablets. In Q4, video was played on smartphones more than 6X as often as on tablets.

A year ago, smartphone plays outnumbered tablet plays nearly 5X.

Cisco, in its latest Visual Networking Index, forecast a further 8X increase of mobile traffic by 2020, saying it expected video to comprise 75% of all Internet traffic by then.

A couple of years ago, it seemed in vogue to question whether (name the big TV event) would generate enough traffic to “break the Internet.” An Olympics, a World Cup and a Super Bowl later, it’s obvious the technology that makes the Internet happen is more than able to adapt to increased demand. Now, of course, the “new” concern is “how will mobile networks survive?”

Interestingly, before 4G LTE networks have even become ubiquitous, a number of operators already are ramping up trials of 5G networks, which have a reported 10X to 100X the capacity of the existing 4G networks.

Cisco also said it expects global mobile network speeds to more than triple to 6.5 Mbps by 2020.



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SHARE OF PHONE VIDEO PLAYSSHARE OF TABLET VIDEO PLAYS

SUM OF PHONE + TABLET VIDEO PLAYS

THE RISE OF MOBILE VIDEOQ4 2015

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THE BOTTOM LINE

Recent research says Millennials are twice as likely to be focused on video they watch on their mobile devices as they are on video consumed on a TV.

That’s a message brands need to recognize and embrace: You may be able to reach your audience of today — Gen Xers and Baby Boomers — via traditional media, but to reach your future customers, the buyers who will build your business, you need a mobile-first strategy that can be executed at scale.

Some 50% of all video views were mobile in Q4 and — although its growth may be slowing — it will continue for years.

For content owners, the reality is that your audience is slowly moving away from you, evolving into one that demands your best content anywhere, on any device and at any time. Your best bet? Make that viewing experience as simple, hassle-free and flexible as you can.



There’s a common cliché in our industry that says the bigger the screen, the better. Well, it may be cliché, but it’s also true.

The biggest screens, connected televisions, have seen their share of time watched for content longer than 10 minutes increase steadily over the past year. From Q1’s 43%, to Q2’s 53%, Q3’s 71% and Q4’s 74%, a growth of more than 72% over 12 months.

On tablets, meanwhile, the share of time watched for the same content has declined slightly to 54% in Q4 from 55% in Q3 and 59% in Q1. Computers had a share of time watched of 38% for content longer than 10 minutes, essentially flat for the quarter; the share has been vacillating between 35% and 40% for the entire year. And mobile phones rang up a share of time watched of 31%, the same as in Q3.

Computers’ share of time watched for 0 to 3 minutes was 43%, followed by mobile phones (40%), tablets (24%) and CTVs (20%), reinforcing viewing trends that have been in place for several quarters. Small screens and computers remain the screens of choice for video vignettes, movie trailers and content like music videos.

But mobile phones remained the device of choice for watching short video content under 10 minutes. For the second quarter in a row, 69% of all videos watched on smartphones were under 10 minutes long, a slight increase since the beginning of 2015.

Tablet share of time watched for content 10-30 minutes in length grew for the third consecutive quarter to 21%, the most of any device for that length of content.

Computers also increased their share of time watched for longer content over 30 minutes. It was the third consecutive quarter of growth for computers.

ENGAGEMENT PATTERNS BY DEVICE


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SHARE OF TIME WATCHEDBY DEVICE AND VIDEO LENGTHQ4 2015

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LONG-FORM VIDEO: SHARE OF TIME WATCHED BY DEVICE AND VIDEO LENGTHQ4 2015

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THE BOTTOM LINE

Content continues to flow online and to all devices. Increasingly, much of it is long-form premium content that, at the demand of consumers, is being delivered over the top. Everything from episodic TV to longer dramas, movies, news and sports has become regular fare online.

Still, a vast amount of short-form content is being consumed on mobile devices, an almost made-to-order delivery system that better matches up with modern lifestyles.

The price of data is coming down, and operators increasingly are designing new ways to deliver more content without eating up subscribers’ data. U.S. operators AT&T and Verizon, for example, are experimenting with sponsored content, where content owners pay to offset a user’s data consumption, and SVOD companies like Netflix continue to develop bandwidth-saving codecs to better compress content, again being sensitive to viewers’ pocketbooks.

As more quality content comes online from broadcasters, via operator initiatives and from content owners going direct to consumers, competition for eyeballs will ramp up and “easy” engagement will disappear.

Now, more than ever, data and predictive analytics will be crucial to measuring viewer engagement and minimizing churn.

ENGAGEMENTPATTERNSBY DEVICE


LONG-FORM VIDEO: SHARE OF TIME WATCHED BY DEVICE AND VIDEO LENGTHQ4 2015

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SPOTLIGHT ON ASIA PACIFIC AND JAPANIn the fourth quarter, we took a look at the viewing habits of consumers in 15 countries in the Asia Pacific region, where Ooyala sees high traffic across our footprint. Here’s what we found.

MOBILE VIEWING

In many respects, APAC countries are nearly identical to the ROW when it comes to using mobile devices to watch video.

Overall, mobile video makes up 43% of all video views in the APAC region, just slightly behind a world average of 46% in Q4.

But five APAC nations — Singapore (55%), Australia (53%), Japan (50%), Indonesia (49%) and South Korea (47%) — are above the world and regional average. Thailand, at 44%, is slightly above the rest of the APAC region’s mobile video views.

There are several reasons that explain the significant mobile usage in the APAC region.

At the end of 2015, more than 1 billion people were using smartphones in the region, reports eMarketer. That number is expected to swell to nearly 1.5 billion by 2019.

Singapore has the highest smartphone penetration in the world, with 89% of its population owning mobile phones, according to ZenithOptima, a number that’s expected to rise to 97% by 2018.

In some emerging markets — Indonesia, for example — mobile networks are more developed and are easier to expand than fixed broadband networks. Fixed broadband networks remain underdeveloped, with penetration under 2% at the end of 2015, according to researcher BuddeComm. But there has been rapid growth of 4G and LTE mobile networks in the country, which has helped to expand the Internet infrastructure in the country over the past several years.

Australia, too, has struggled with geography in deploying high-speed broadband across its expansive territory, finding mobile networks easier to establish and bring up to speed.

Those robust mobile networks have helped create a thriving smartphone market.

TABLETS PLAY A BIGGER ROLE IN APAC

Tablets, meanwhile, make a substantially larger portion of mobile views in APAC than in the rest of the world, with smartphones being used to view mobile video 3.7X more than tablets, far below the 6.3X seen in the numbers for the ROW.

In all, tablets had one third or more of the views compared to smartphones in nearly half (46%) of the 15 countries studied in the APAC region. In the Philippines, there was one view on a tablet for every two views on a smartphone. New Zealand and Australia had similar ratios.

In the ROW, video views on tablets made up just 14% of all mobile video views. It’s no surprise that ZenithOptima contends the region has the highest tablet penetration in the world. Hong Kong is the world’s leader, ZenithOptima said, with tablet penetration rates at 77% and rising to an expected 91% by 2018. Singapore is at 64% with growth expected to reach 82% by 2018.


http://www.zenithoptimedia.com/two-thirds-people-living-top-digital-markets-will-smartphone-2018/

http://www.zenithoptimedia.com/two-thirds-people-living-top-digital-markets-will-smartphone-2018/

http://www.budde.com.au/Research/Indonesia-Telecoms-Mobile-Broadband-and-Digital-Media-Statistics-and-Analyses.html

http://www.budde.com.au/Research/Indonesia-Telecoms-Mobile-Broadband-and-Digital-Media-Statistics-and-Analyses.html

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ENGAGEMENT BY DEVICE FORCOUNTRIES WITH THE MOST VIDEO VIEWS, APACQ4 2015

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AUSTRALIA JAPAN MALAYSIA SINGAPORE INDIA PHILIPPINES VIETNAM NEW ZEALAND INDONESIA SOUTH KOREA


LONG-FORM VIDEO: SHARE OF TIME WATCHED BY DEVICE AND VIDEO LENGTH, APAC Q4 2015

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ENGAGEMENT PATTERNS BY DEVICE TYPE

Because of the abundance and popularity of mobile devices in the region — and the general absence of robust fixed broadband networks — it’s not terribly surprising that tablets and smartphones are used extensively for viewing all content.

Smartphones’ share of time watched for video longer than 10 minutes topped 55% in Q4; for tablets, the share of time watched was nearly 65%. Desktops trailed at just 43%.

For content shorter than 6 minutes, desktops were a clear leader, at more than 54%.

Still, as in the ROW, the size of the screen does appear to matter as content gets longer, especially for the longest content segment of 60 minutes and up. Connected TVs (CTV) score a 45% share of time watched, compared to just 19% for tablets and 13% for smartphones. For content between 30 and 60 minutes, CTVs again are the leader at 44%, but tablets (34%) and smartphones (31%) also play well at that length.

THE BOTTOM LINE

With more and more people turning first to smartphones and tablets for their entertainment, and with device ownership becoming nearly universal in several APAC countries by the end of the decade, establishing a strong brand becomes even more critical for broadcasters and content owners.

For brands, meanwhile, focusing on a mobile-first approach will help them reach the largest number of potential customers.

SPOTLIGHT ON ASIA PACIFIC AND JAPAN


LONG-FORM VIDEO: SHARE OF TIME WATCHED BY DEVICE AND VIDEO LENGTH, APAC Q4 2015

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During 2015, programmatic gained huge traction industry-wide. In fact, nearly two thirds (66%) of marketers plan to increase their programmatic ad spend in 2016, more than twice the number that had similar plans a year ago. Overall, 2015 was a big year for programmatic advertisingwith eMarketer saying U.S. programmatic digital video ad spending topped $2.91 billion, about 39% of the digital video ad spend in the U.S. last year. In 2016, that number is expected to increase nearly 85% to $5.37 billion, and to $7.43 billion in 2017. Mobile video programmatic spend is expected to grow to $3.79 billion in 2017 from $1.14 billion in 2015.

It’s not just in the United States.

According to researcher MediaMath:

♦ In EMEA, the programmatic share of digital video ad spend is forecast to grow more than 24% in 2016;

♦ In APAC, 79% of ad professionals said they now use programmatic ad tech for video, and a whopping 90% say they now use it for mobile; and,

♦ In LatAm, specifically Brazil, the region’s biggest economy, nearly 40% of marketers say they plan to increase their spending on data-driven marketing this year, up from 22% a year ago.

PROGRAMMATIC TRADING UPDATE


http://www.ooyala.com/videomind/blog/report-programmatic-ads-spend-intent-doubles-2015



http://www.emarketer.com/Article/Mobile-Video-Advertisers-Demand-More-Inventory/1013575

http://www.emarketer.com/Article/Mobile-Video-Advertisers-Demand-More-Inventory/1013575

http://www.mediamath.com

Across Ooyala’s video advertising footprint, key indicators during the fourth quarter further demonstrate the continued growth in programmatic trading, as both buyers and sellers gain confidence and premium inventories made available through programmatic platforms increase. Here are a few examples of data aggregated from a broad set of Ooyala customers using Pulse SSP, our programmatic sell-side platform:

Paid ad impressions from Deal ID transactions — in other words, prearranged transactions traded programmatically — more than doubled during the quarter, increasing 160%. This is a continuation of the trend we’ve seen since Q2, with Deal ID transactions growing at more than 150% each quarter. These consistent increases indicate that publishers are making more inventory available at fixed prices via programmatic advertising and are demonstrating increased confidence overall as this way of trading becomes a norm across the industry.

Active programmatic marketplaces increased 21%, from 94 in Q3 to 114 in Q4. With publishers giving inventory access to more buyers, we also saw increased competition for that inventory, driving average CPMs up 26% quarter over quarter.

Online video advertising is especially crucial for publishers, with click-through rates (CTR) on in-stream video ads estimated to be nearly 9X higher than display ads and 3X more frequent than mobile ads, according to a DoubleClick report. Business Insider, meanwhile, forecasts that video ad revenue will have a compound annual growth rate (CAGR) of 19.5% through the end of this year, picking up the decline from traditional TV advertising.


PROGRAMMATIC MARKETPLACES

176% in Q2

150% in Q3

160% in Q4

21% in Q4

26% in Q4

DEAL ID TRANSACTIONS

AVERAGE CPMS

http://www.businessinsider.com/digital-video-advertising-performance-and-growth-trends-2014-8



This report reflects the anonymized online video metrics of the vast majority of Ooyala’s 500+ customers, whose collective audience of hundreds of millions of viewers spans nearly every country in the world. This report does not document the online video consumption patterns of the Internet as a whole. But the size of the Ooyala video and advertising footprint, along with the variety of our customers, means this report offers a representative view of the overall state of online video.

ESPN, Univision, Sky Sports, Foxtel, NBCUniversal, RTL (Germany), M6 (France), TV4 (Sweden), Mediaset (Spain), STV (UK) and Singapore’s Mediacorp: these are just a few of the hundreds of broadcasters and media companies who choose Ooyala.

Ooyala is a subsidiary of Telstra, the largest telecommunications company in Australia, providing fixed and mobile services to millions of consumers, as well as advanced network applications and services to enterprise clients in Australia and overseas.

Headquartered in Silicon Valley, Ooyala has offices in New York, London, Stockholm, Sydney, Tokyo, Singapore, Cologne and Guadalajara, and sales operations in dozens of other countries across the globe.

For more information, visit www.ooyala.com.

ABOUT OOYALA’S GLOBAL VIDEO INDEX


http://www.ooyala.com

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