New Patterns of Consumption, New Patterns of Use?

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1 New Patterns of Consumption, New Patterns of Use? Paul Gray, Principal Analyst April 2017

2 2 Contents Quick roundup of television UHD: beyond the television screen Intelligence: at the edge of the network? Trust

3 Area (millions m²) Shipment (millions) 3 TV shipments mature; area growing rapidly Display area in TV (million m 2 ) by region Middle East and Africa Latin America Asia Pacific China Eastern Europe Western Europe North America Japan Shipments 0 Source: IHS IHS

4 $750 $1,250 $1,750 $2,250 $2,750 $3,250 $3,750 $4,250 $4,750 $5,500 $6,500 $7,500 $8,500 $9,500 $50,000 Premium large screen display trends: TV Bigger, more pixels, better pixels cheaper Bigger: size growth by 1 per year Higher resolution: 4K and now 8K appearing Brighter (for high dynamic range): from 300cd/m 2 (standard) to 1000cd/m 2 peak Deeper colours: DCI-P3 gamut, towards Rec % 25% 20% 15% 10% 5% 0% 55"+ TV prices, by size and technology Prices: still falling. LCD TV UHD 55 LCD TV UHD 58 LCD TV UHD 60 LCD TV UHD 65 LCD TV UHD 70 LCD TV UHD 75 OLED TV UHD 55 OLED TV UHD 65

5 5 OLED: attractive alternative to sheer size? Significant number of European consumers choose OLED over a larger LCD Most brands now using OLED as a premium offering Pricing positioned at comparable 10 larger LCD Many premium consumers choosing OLED over LCD especially in Europe 65 OLED out-shipping 75 LCD Endgame on screen sizes? TV share: 55" OLED, 65" LCD, 65" OLED, 75"LCD 90% 80% 70% 60% 50% 40% 55" OLED 65" LCD 65" OLED 75" LCD 30% 20% 10% 0% Japan North America Western Europe Source: IHS 2017 IHS

6 Weight (kg) Volume (litres / 000cc) 6 Flat panel TVs don t scale well beyond 65 Cannot rely on size alone to support the market Flat panel TVs do not scale well beyond 65 : Extra metalwork for rigidity LCD TV packed weight and box volume v size Very much larger box for protection: corner drop. Increasingly difficult to transport Weight / kg Volume / l Shipping costs grow exponentially Reference data: Samsung Q8C series, excluding Source: IHS Screen size (inches) 2017 IHS

7 7 UHD: beyond the television screen

8 8 UHD Content reinforces new consumption patterns Why was Reed Hastings at MWC? Streaming services first to launch UHD content > Marketing strategy to support premium content positioning. Equally encouraging mobile usage. UHD featuring like Dolby Vision now on phones: LG G6 (pictured) Blurring boundaries between TV and mobile viewing: it s all long-form video! Source: LGE

9 UHD movie title availability best from OTT streamers UHD title availability by service and delivery method 250 Physical Both EST & VoD EST Only SVOD VoD Amazon DirecTV M-Go Netflix Ultraflix Vudu

10 Film most suitable for UHD, but SVoD giants UHD TV content critical to their businesses UHD Title availability Amazon v. Netflix, by Genre Documentary Events Film Sports TV series Film 60 TV series 40 Events Documentary Sports 20 0 Amazon Netflix

11 11 Intelligence: at the edge of the network?

12 12 5G Low latency and low power most interesting You cannot buffer perception! Fast, ultra-reliable networks allow mobile technologies to address critical systems. Ability to use far-flung computing and hardware resources > Amazon Web Services an early example Productivity growth moves away from simple access to investable capital?

13 13 A new era of interactivity Buttons and sliders Pointing devices Touch and Gesture Network-based intelligence

14 14 Alexa, what is the forecast? Smartness transitioning from the device to the network. Alexa, Bixby, Cortana, Google Assistant, Siri starting new era of interactivity. > Power of the network reinforces the device. New gatekeepers emerging, network effect heavily rewarded Rewards to scale: better learning gives better performance. > Strategic for Google: will make all its services smarter, not just its phones. Opening of AI to developers triggers wave of new integrations: > Cars, white goods, other CE devices. Source: Samsung

15 Shipment (millions) 15 Smart Speakers lead the charge Prices will drop rapidly plenty of scope for subsidy model. Alexa has lead from perfect timing, competition will intensify from other platforms and devices. Google will accelerate as developers gain momentum Device makers largely agnostic, support for multiple platforms likely. Smart speaker forecast by platform 30 Other / Proprietary 25 Apple Siri Google Assistant Amazon Alexa 20 Sonos Smart speaker installed base over 59 million units in 2020, from 6 million in Source: IHS 2017 IHS

16 16

17 17 Where does privacy fit in a hierarchy of company needs? Privacy Brand Sustainable business model Profitable Product doesn t harm customers

18 18 Where does privacy fit in a hierarchy of company needs? Or is it here? Privacy Brand Sustainable business model Profitable Product doesn t harm customers

19 19 Thank you! Questions? Paul Gray,

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