Gudorf MediaNavi

Good afternoon, everybody. Good afternoon. I got to tell you, anyone who's worked with me knows one thing very quickly. I hate surprises. Normally for me, surprises are, well, the PO hasn't come in yet, the shipment didn't make it, the code doesn't work, a server's down, Surprises throughout my career I've learned to hate. However, 2011, technicolor, I'm starting to change my mind. I've been coming to CES since 1974. Look pretty good for an old guy, huh? Actually, some of the PR folks were talking at the booth, you know, when's your first one, when's, how many CESs you've been to? And I said 1974, and season, Without missing a beat, said, "That was a year before I was born." Anyways, back to surprises. This CES and what Technicolor accomplished, the presentation that we made, and more importantly, the reactions from your customers to what we were talking about was a huge surprise. I think I might have to change my mind about surprises. Surprise number 1 in a big way. Surprise number 2, Some may think this isn't a surprise necessarily, but my wife, who— been married since 1979, the same woman, 1979— she decided to drive from LA to Vegas to surprise me over the weekend. Is that faith or what? You know, anyways, we had a wonderfully nice dinner. The only surprise for her was I was dead asleep by 9:30 last night. Anyways, two surprises in a row, both around a Technicolor CES. I may have to change my mind about how much I hate surprises. But that's really not what I'm here to talk about. I'm here to talk about Media Navi and what the Media Navi team put together for you. We're gonna talk about a couple of things here. This is the agenda for today on Media Navi. We're just gonna give you a taste of what Media Navi's about. And then tomorrow in the breakout sessions, we've got a much more deeper dive planned for you. Uh, we'll concentrate tomorrow around showing you the user interface in action, and we'll concentrate on answering questions about Media Navi for you. Uh, but when you think about Media Navi and you think about storytelling, as we were talking before, you gotta ask yourself, what problems are we trying to solve? Well, people often talk about two sides of a coin. I'm gonna talk about a three-sided coin today. On the one side of the coin, we're trying to solve the problem the consumer has. When they sit down and they wanna watch a movie, all they wanna do is watch a movie. In today's technological environment, they pick up a cable remote, they press a button for the DVR list, look to see if they've recorded a movie. They don't find it, they press a button for their guide, they look through their guide, maybe HBO or Showtime, something, nah, nothing there. Then they press a third button, video on demand. That's always the last one because they know it's going to cost them extra. But they press that video on demand button. They don't find it. They set down the cable remote, pick up the TV remote, switch inputs, pick up a Netflix remote or a LoveFilm remote now. By the way, the LoveFilm launch that Technicolor did with PS3 in late November has been through the roof. The PRISMA VOD service that Technicolor supports for LoveFilm has delivered 1.9 million hours of VOD content in a little over 2 years. And it was very small, and then boom, a hockey stick of growth with the PS3 launch. But anyways, back to the consumer. They've got this problem. All they wanted to do was watch a movie, and they can't find it. The second side of the coin is the operator side of the problem. If you're an operator, whenever a consumer goes outside outside of your system. When they set down that cable remote or that telco remote, they're stepping outside your system. What's wrong with that? The operator makes money by monetizing eyeballs, right? When the eyeballs are outside of their system, the operator can't make any money on it. So Media Navvy is paying attention to that problem and working to solve that problem. The third problem Media Navvy is trying to solve and address is a problem from the studio owner's perspective. They spend all of this money creating all this fantastic content, all the branding and collateral support, and then it comes to a cable operator or satellite operator and it shows up as a line item in a grid EPG. How uncool is that from the content owner's perspective? So the third problem that Media Navvy is trying to solve is to enable the content owners to have— to deliver an experience to their consumer around interactive capabilities that's as good and as strong and as cool as the content itself. So there's our three-sided coin. We're gonna talk about all three of those problems with Media Navvy. We'll look at it first from the operator's perspective. Here's the catch. The operators are losing eyeballs. Uh, $7.99 versus $75 a month. Average video bill of Netflix versus average video bill of a cable customer. Number 3, Netflix is the third largest content provider in the US behind Comcast and DirecTV. That's pretty amazing. But what's even more amazing about them being number 3, Fred mentioned what a rocket they've been on, is that SAC number. Does everybody know what SAC means in this case? Subscriber Acquisition Cost. Okay? For DirecTV to go out and get one new customer, they spend $805 in marketing and box subsidy costs. $805 in marketing and box subsidy costs. Netflix gets a new customer for $20. This is a changing business model without a doubt. And as they grow, they siphon people away, eyeballs away from the operator. We already know that almost 60% of people tend to do something else while they're watching TV anyways. Many times it's in support of the TV, but it's on a laptop. Here's some more issues that are causing these problems. Increase in smartphone marketplaces, devices everywhere, tablets. Tablets showing up everywhere. 60 million internet-connected TVs to be shipped by 2014. All of these things, again, drive eyeballs away from an operator's play. At the same time, consumers want more. 20% of folks say they actually want better search and recommendation help. They're tired of the lousy search options they have in today's guides on cable, satellite, and telco boxes. 60% or better said they're willing to pay extra for social networking. That's how important social networking is to them. If you— if you aren't a big social network, take a look at what's happening in younger demographics. Look at an 18 to 24-year-old, how they connect to that social network. It's a whole different world. The result, operators today are losing eyeballs. This is US alone. US subs in Q2, 216,000 subs lost. That was the first time in a quarter that they actually lost subs. The cable multichannel market in the US has been on a freight train that's been chugging along nicely. Now they're starting to lose a little steam. Q3, they lost another 119,000 subs. This is the result of all these different choices out there. As if the news weren't tough enough, it's no longer an operator-to-operator battle. It used to be cable versus satellite, back and forth, trade the customers back and forth. But now there's a third option in the mix. I can be a cable customer or a satellite customer, or I can be just an OTT customer, or some combination thereof. It's now a differing battle. And a lot of customers, again, go to that younger demographic, actually substitute Netflix for their $7.99 a month. They substitute Netflix for buying pay-TV television. We need to help our operator customers as we help ourselves. So welcome to Media Navi. That's the way that Technicolor is going to help them. One word on this. I'm gonna stop for just a minute, a small little exercise. I'm gonna ask for your help in a minute. My name's Greg Gudorf. Some people call me Greg. My mother, when I'm in trouble, it was always Gregory David. I never wanted to hear that part of my name, right? The Gregory David part, I always knew I was in trouble. If I'm at Technicolor, some folks call me GG, you know, the Gregory Gudorf part. If I'm in a room with Gary Gutnick— Gary, are you here today? If I'm in a room with Gary Gutnick, he's GG1, I'm GG2. The point is I get called by a lot of different names. Media Navi is only going to be one name though. We're hearing folks say Navi, Navy, Navi. It's Navi. So let's work it together now. Repetition is the best form of instruction. Navi, Navi, Navi. Come on. Media Navi. Come on. Media Navi. Thank you. It's Media Navi. So let's take a look at what Media Navi is all about. We'll remember the name now. It's a content platform, as Basil said in the video, that's meant to simplify and enhance media consumption experiences. Simple, seamless, and social are the watchwords we use. Simple. What do we mean by simple? A quick story on simple. Media Navi has a concept of My Channel. And My Channel is a collection of programs that what we know about you as a user— and we support multiple users in a household— but what we know about you as a user and based on the day and time, we make a recommendation as what we think you are gonna watch right now. Simple example of how this works. If I happen to turn the TV set on in the morning during the week— forget weekends— on the— during the week, Between 6 and 7 AM, I'm always going to CNBC HD. It's just what we do. And guess what? We really are creatures of habit in so many areas of our media consumption life. In my case, weekday morning, CNBC HD. My Time Warner service in LA, 13 keystrokes from the time I hit the first power button until I'm watching CNBC HD. 13 keystrokes, 6:15 AM, On a Tuesday, not a good idea, right? Some systems move to simplify it. Media Navi would just say, "Hey," I don't know if it'll say, "Sir Greg," but, "Hey Greg Gudorf, good morning, the first slot there, CNBC HD." One touch, my box powers up, tunes to CNBC HD. That's a way to make things simple. Seamless. You know, even in the iTunes world, or I'm sorry, in the Apple TV world, and everyone's heard what a cool science project that's turned out to be, right? Do you know that if you wanna watch an iTunes movie, you do one search, and if you wanna watch a Netflix movie on the same blasted piece of product, you have to do a totally different search? Uncool. Media Navvy's seamless approach says you do one search, we look across your DVR, your guide, your operator's VOD system, your personal home network and the over-the-top services that are provided. So a search box and an offer— set of offer boxes for a progressive operator implementing Media Navvy might be something like this. Hey, you can get Iron Man 2 on Xfinity for $1.99. You can buy it at Amazon. You can add it to your Netflix queue. The point is Media Navvy draws those together in a seamless fashion to allow the user to have the convenience they want and help keep the customer in the system for the operator. Thirdly, Media Navvy is social. You gotta be able to do this. Now Media Navvy's focus for social is to let you share with your Facebook and Twitter friends what it is you're watching, what it is you're doing at that time. But the real goal is to draw recommendations to you from your social network. So Media Navvy is about social. Lastly, Media Navvy is about stimulating. There was a lot of conversation around which exact word would describe what we mean here. We ended up with stimulating because we really want to find ways— and this goes to that third part of the coin, solving for the content owner— really want to find ways to help enhance, stimulate the mind, stimulate the consumption experience with better applications and better capabilities, rich, deep information. In support of what the consumer is watching. And you're gonna see this in the demonstrations and the conversations that we have tomorrow. So Media Navvy— simple, seamless, social, and stimulating. From a business perspective, the absolute right balance between the open world of Google TV and the totally closed world of Apple TV. How many have tried a Google TV product? Show of hands. Just a few? You owe it to yourself to figure out how to see one in action because you're gonna be hearing more and more about it. Knowing it firsthand is key. I bought one of the units when it first came out. By the way, I subsequently sold it on eBay right before Christmas. I only lost $20 on the whole deal, but I gained all this knowledge about Google TV. Fired it up, set it up to my system, no problem at all. I thought, "OK, that was easy." I— now I'm sitting back with the Google TV remote. And by the way, what does the Google TV remote look like? Yeah, it's a friggin' PC keyboard. 88-key keyboard, right? So I got the keyboard on my two thighs, and I've got big thighs, but it's a big keyboard. I'm checking it out, seeing what there is to see on Google TV, and I see an HD relaxation video. Oh, okay. I'm kind of into photography anyways. I start this video playing, and up on my big screen TV is this beautiful— and I mean for a streaming service, it was a beautiful HD picture. About 90 seconds into the experience, up pops a text banner ad for hypnosis services in nearby Burbank, California. That's what Google TV is all about— using content to sell advertising. That's what they're after. Apple TV, on the other hand, totally different deal. Apple TV is a closed ecosystem. What they want to do is price the content as low as they can, so that you as a consumer want to buy more and more Apple devices to have that. Neither one of those are very good for our customers in this business, let alone not really good for us. Media Navvy is trying to shoot the gap down the center, solve for the consumer first. If we get it right for the consumer, we'll deliver a great experience for the operator. 3 points on Media Navvy when it comes to that operator business: keep the customers within the systems, provide a personalized dimension, and integrate over-the-top services along with the operator content and the like. The more you can keep customers in the system, the more you can monetize the eyeball. One of the big goals of Media Navvy when it comes to the operator. Putting a personalized dimension to it. My channel's the easiest way to think about that, but including your home network content, also a very important part of being personal. Secondly, we put it on a tablet device. Now you'll notice that these cards, and we call them cards, like this live guide here is a card. Imagine I was holding a smartphone up here. That looks about the same as a smartphone screen. Watch for us to move this beyond tablets in the future as part of our roadmap, but right now it's available on a tablet. It runs on Apple iPad iOS. I can show you that if you want to come up to me and I'm holding my iPad, I'll be glad to show it to you. You can see it tomorrow during the breakout sessions. It runs on Android tablets. Our own MediaTouch tablet is, uh, underway, as well as the Samsung Galaxy tabs. Uh, we also run on Win 7 tablets, which— there are quite a few of those introduced here at the show. So we're running on tablets in this personalized, uh, experience for the consumer. And thirdly, as I've said, we integrate selectively, even YouTube, over-the-top content. A little story about this. We were having a customer on one of the first days of the show, and as customers sometimes do at times, they say, "Well, it looks pretty cool, but, you know, it's probably canned." And I said, "No, this is real-life code." He said, "Fine, I want to see something." I said, "Okay, what would you like to see?" "Search for Steve Ballmer on YouTube. That's what I want to see." Now, the first rule of doing demos is never do something unless you've tried it out ahead of time, right? So I took a deep breath. I knew how we had wired the system. It should work. Pulled up the search box, typed in Steve Ballmer, sent off the search request to Media Navvy, and lo and behold, what comes back is Steve Ballmer clips from YouTube. The customer was amazed, and those of you who were there with him know the customer was really shocked. I then shocked myself because I pressed the play button on the video, and the damn video played too. Just like it was supposed to. But integrating those things in with the operator's offering, that's what Media Navvy is about as well. Just a last slide here, and Chuck, I'm working it hard to be as quick as I can on your time schedule. I want the break too. Uh, on schedule-wise, we're running on hardware now, as I said, MediaTouch, Galaxy, iPad, Win 7. We're talking to set-top boxes because while it's an experience, user interface, and we all think of it like that. That's the first thing you see and feel. It's really about how you work with the hardware. One of the key things in Media Navvy, we will work with new set-top boxes, of course, and all of us will be glad to talk about a brand new set-top box custom designed to work with Media Navvy if that's what the customer wants. But one of the things that caught the most attention here at CES was was the fact that Media Navvy has a way to work with legacy set-top boxes in many cases. A ton of DIRECTV boxes that Technicolor built and shipped to DIRECTV are in the field with an API that Media Navvy can talk to. And in the case of that API, we don't even need DIRECTV to do anything. We can just instantly have Media Navvy running on a tablet and talk to that set-top box, should we choose to do that. In the US cable world, there's a technology in OCAP called eBIF. We can talk to eBIF-equipped boxes, and there's only something like 30 million of them out there. We can talk to eBIF-equipped boxes and have the Media Navvy application running on that tablet control that set-top box. More details on that tomorrow. IPTV boxes. IPTV boxes generally have that same level of openness. We may need to put a small little app on that set-top box, but Media Navvy can talk to IPTV boxes in the field as well. That legacy connection was an important part. I'll leave you with schedule. Launched in CES 2011, check that puppy off. Trials this spring, we announced TalkTalk in the UK is our first trial customer. Chuck, we have a major problem right now because of the interest from customers at the show. We've got to sort through who's next. We have far more than I can actually handle from a team perspective. That's what they call a high-class problem. It is. We'll tackle it. We're looking for deployments late summer or fall 2011. So media— Navi. Navi. Simple, seamless, and social. Surprise me. Thanks, boss. Thank you.