Establishing the Next Generation of Video - INVESTOR DAY 2015, 17 June 2015 - SES
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Establishing the Next Generation of Video Ferdinand Kayser, Chief Commercial Officer INVESTOR DAY 2015, 17 June 2015
Positive long-term outlook for SES’s Video business
Video is a significant part of SES’s business
HD and Ultra HD expansion driving solid growth in developed markets
Rapid development of TV households in emerging markets; demanding more choice and
quality
Value chain evolving to include IP-based/non-linear solutions to complement linear offerings
SES is well placed to deliver growth in the Next Generation Video environment
1
Linear TV remains the principal viewing platform
Average daily viewing time per individual(1) Linear vs. non-linear consumption 2014(2)
Minutes Minutes
300 300 293
250 244
232 226 221
250
200
200 150
100
150
50
26 19 18
5 7
100 0
2003 2005 2007 2009 2011 2013 U.S.A. U.K. France Germany Spain
Worldwide Europe North America Linear Non-linear
1) Source: Mediametrie/Eurodata TV 2
2) Source: Eurodata TV, IHS
Consumers demanding higher quality displays
Global Pay TV subscriptions(1)
Millions of subscribers
1,000 +13% CAGR
800
51%
33%
600
-3% CAGR
400
67%
49%
200
0
2013 2014 2015 2016 2017 2018
SD HD
3
1) Source: IHS Trax
Increasing attraction of Ultra HD to consumers
Price progression of HD and Ultra HD TV sets(1) Global Ultra HD TV sales(2)
USD Millions of TV sets
7,000 250
6,000
200
5,000
150
4,000
3,000 100
2,000
50
1,000
0 0
Yr 0 Yr 1 Yr 2 Yr 3 Yr 4 Yr 5 Yr 6 Yr 7 2013 2014 2015 2016 2017 2018
Full HD (55"-64") Ultra HD (55"-64")
Four times the screen resolution as current HD TV delivering substantially enhanced picture quality
More detailed, more immersive, and larger depth of field providing improved viewing experience
1) Source: IHS 4
2) Source: Euroconsult, Cisco VNI
Content compression enables HD & UHD growth
Resolution Number of channels per transponder(1)
pixels MPEG-2 MPEG-4 HEVC
SD 720 x 576 ~10 ~20 ~40
1920 x 1080 ~2 ~4 ~8
(4K) 3840 x 2160 n/a n/a ~2
Each new compression format approximately doubles the number of possible channels per transponder
Improved affordability for broadcasters to deliver greater quality and choice for the consumer
Capacity required for one HD channel equivalent to five SD channels
Ultra HD requires around four times the capacity of an HD channel
5
1) One 36 MHz transponder delivers approximately 40 Mbit/sVirtuous circle driving growth in emerging markets
Virtuous circle of video growth
Free-to-Air (FTA) Pay TV
FTA reach and channel
neighbourhoods also a More
More
basis for Pay TV growth
Subscribers
Households
Better Higher
Quality Revenues
Larger
More
Advertising
Channels
Base More
Channels
6Rapid TV household growth across emerging markets
TV household growth 2013-2018(1)
Western Europe Central & Eastern Europe
North America
+5m +6m
+3%
+4%
+7m
+5%
Africa & Middle East Asia-Pacific
Central & Latin America
+16m +94m
+11%
+8m +14%
+8%
Worldwide TV households expected to grow by 10% to 1.5 billion (2013-2018)
7
1) Source: IHS Television Intelligence TraxEmerging markets driving global channel growth
Average growth in DTH channels 2014-2024(1)
Annual growth in total number of DTH channels
8%
+5.9% +6.0% +6.1%
6%
+5.1%
+4.5%
4% Worldwide growth: +4.0% CAGR
+2.0%
2%
~15,500 ~3,650 ~3,800 ~7,500 ~5,150 ~2,850
channels channels channels channels channels channels
by 2024 by 2024 by 2024 by 2024 by 2024 by 2024
0%
North Western Central & Asia-Pacific Central & Africa &
America Europe Latin America Eastern Europe Middle East
Worldwide DTH channels expected to grow by 47% to ~38,500 channels in 2024
8
1) Source: NSRConsumers buying higher quality TV sets
Penetration of HD TV sets(1)
% of total
100%
87%
80%
68%
60%
40%
20%
9%
2%
0%
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Developed markets Emerging markets
9
1) Source: IHS TraxValue chain historically linear in nature
Video value chain in the past
Content Backend Infrastructure Experience
Consumption
Production Provider Provider Provider
B2B B2C
Content / Terrestrial
Studios Pay TV / FTV
Operators
Satellite DTH Home Customer
Broadcast Premise
Platform Access Equipment
Satellite DTC-
Contribution Broadcast TV
Channels
Advertising
IP Contribution
Historically, linear TV viewing experience has been complemented by DVD/Blu-Ray
10OTT replaces DVD/Blu-Ray as complement to Linear
Global home video revenue(1)
USD billion
40
35
30
25
20
15
10
5
0
2013 2014 2015 2016 2017 2018
Physical Electronic
11
1) Source: PWCValue chain expansion gives SES new opportunities
Video value chain of today
Content Backend Infrastructure Experience
Consumption
Production Provider Provider Provider
B2B B2C
Terrestrial
DVB video business
Home Pay TV / FTV
Content / Satellite DTH Operators
Access
Studios Broadcast
Platform Satellite DTC-
Contribution Broadcast TV Customer
Channels Premise
IP Contribution Equipment
Advertising
IP video business
Mobile Towers
Media Mgmt. OTT / Devices &
Platform Aggregators Handsets
User Backbone Broadband
Generated Access
Content Ancillary Social
Services Content Delivery Networks
Network
12Positive outlook across the media ecosystem
Infrastructure Provider Backend Provider Experience Provider
Satellite capacity revenue Playout & Media Asset FTA & Pay TV revenue
USD billion Management revenue USD billion
15 USD billion 500
7.5
400
10
5.0 300
200
5
2.5
100
0 0.0 0
2014 2018 2014 2018 2014 2018
13
1) Source: IHSSES addressing the growth potential with media
Infrastructure Provider Backend Provider Experience Provider
SES Core SES further expansion
Satellite capacity Playout & Media Asset Management FTA & Pay TV
In developed markets with
TPEs supply growth
existing customers
HD acceleration and In emerging markets with
push for Ultra HD new customers
In developed markets
Other platform projects in emerging markets
Online Video Platform and
Ancillary Services
SES also addresses
IP convergence Innovative products for
In emerging markets satellite reception
14SES significantly improving technical reach
Infrastructure Provider Backend Provider Experience Provider
SES’s significant and growing technical reach 2014 vs. 2013(1)
Millions of TV households
Europe
North America
154m
84m +3m
+9m
Africa
Asia-Pacific
7m
+6m
44m
Latin America +2m
24m
+1m
Technical reach increased to 312 million TV households; represents 1.1 billion people
15
1) Source: SES, Satellite Monitor YE14, B2B surveys among cable head-ends in North and Latin America, PayTV operators` figures. Includes subscribers reached via Ciel-2’s spot beamsSES delivering higher quality via HD TV growth
Infrastructure Provider Backend Provider Experience Provider
SES’s growing channel count(1)
Number of TV channels broadcast over SES’s fleet
7,500
6,526
5,000
2,500 1,910
0
Q1 2012 Q1 2013 Q1 2014 Q1 2015
Total TV Channels HD TV Channels
SES satellites broadcast 25% of the world’s satellite HD TV channels
16
1) Source: Lyngsat, SES analysisSES’s new satellites focused on key growth markets
Infrastructure Provider Backend Provider Experience Provider
Asia-Pacific Central & Latin America North America
SES-10 SES-14
SES-12 SES-9
SES-15 SES-11
23% increase in available capacity 15% increase in available capacity SES-11 (Q4 2016) at 105° West
replacing AMC-15/-18
SES-9 (Q3 2015) at 108.2° East SES-10 (Q4 2016) at 67° West
SES-15 (Q2 2017) at 129° West,
SES-12 (Q4 2017) at 95° East SES-14 (Q4 2017) at 47.5/48° West
16 incremental transponders
61 (net) incremental transponders 35 (net) incremental transponders
17SES a leading facilitator of Ultra HD’s introduction
Infrastructure Provider Backend Provider Experience Provider
Winter Olympics and World 19.2° East test broadcast of
Cup broadcast in Ultra HD Champions League Final
Ultra HD showcase
Second Ultra HD demo
transmission in MPEG-4
channel at 28.2° East
2013 2014 2015
Europe’s first commercial
Europe’s first Ultra HD First Ultra HD demo Ultra HD channel
demo broadcast in HEVC channel at 19.2° East
Europe’s first live concert
broadcast in Ultra HD
Working with customers to test Ultra HD production, encoding and transmission chain
Contributing to standardisation of Ultra HD in its various phases:
• Phase One: more pixels (now available); Phase Two: better pixels (from 2017/18)
18SES expanding services to serve emerging markets
Infrastructure Provider Backend Provider Experience Provider
services
Part of SES Platform Services’ existing suite of services
Supporting customers in emerging markets seeking cost-efficient backend solutions
Decentralised managed TV playout service allows customers to control their services remotely
‘In-house’ software platform providing flexible solutions by modules and customisation
Currently supporting around 120 channels over satellite, cable, IPTV and others
19HD+ continuing to improve consumer experience
Infrastructure Provider Backend Provider Experience Provider
2015 2016 2017
Better
Ultra HD+ promo channel Ultra HD full programme
Quality
High Server+ iOS App
Convenience IP Client Box
Social TV features
More
Reach Integrated Digital TVs
Over 3 million total households(1) currently using HD+ in Germany
Comprises 50 HD channels, including 20 HD channels as part of the private subscription service
Facilitated more private free TV stations in HD in Germany
20
1) Including 1.4 million users within the six months free introductory periodSES developing cost-effective, end-to-end solution
Infrastructure Provider Backend Provider Experience Provider
SES’s Media Toolbox solution – a ‘one-stop-shop’ approach for DTH and OTT distribution
Set-top Box
Direct to Home TV
Multi-screen
Wireless
Router
TV stick IP Box PC/Laptop
Online Video Platform
(via third party) Smart TV Smartphone Tablet
Providing all of the technical elements to transmit content end-to-end to the consumer
Current deployment with HD+ in Germany; replicating the model in emerging markets
21Making satellite services available on more devices
Infrastructure Provider Backend Provider Experience Provider
is a communications protocol for
satellite reception on devices on IP networks
Increasing reach and improving convenience for
satellite reception
Adopted and supported by over 40 manufacturers
Industry alliance framework established with
HISPASAT, Panasonic, NAGRA, ALi Corporation
and MaxLinear
Recently showcased the SelfSat>IP antenna
22Achieving significantly high customer satisfaction
Net Promoter Score (NPS) 2012 vs. 2014(1)
59
54
+9 48 49 47
+10
40 +13
+29 +7
North Europe Asia Latin Africa SES
America America (total)
NPS improved by 18% since 2012 to 47; compares to score of 17 for the benchmark(2)
99% of customers rate delivery of SES’s core service as Excellent/Good
97% of customers rate SES’s collaboration with customers as Excellent/Good
97% of customers agree that SES’s operates as a truly global company
1) Source: Circle Research. NPS based on customer responses to how likely they are to recommend the company as a provider of satellite services 23
2) Source: Circle Research. B2B industry benchmark across 28 other B2B brandsConclusion
Video is a significant part of SES’s business
HD and Ultra HD expansion driving solid growth in
developed markets
Rapid development of TV households in emerging
Video Fixed Data markets; demanding more choice and quality
Value chain evolving to include IP-based/non-linear
solutions to complement linear offerings
SES is well placed to deliver growth in the Next
Generation Video environment
Mobility Government
24Disclaimer This presentation does not, in any jurisdiction, including without limitation in the U.S., constitute or form part of, and should not be construed as, any offer for sale of, or solicitation of any offer to buy, or any investment advice in connection with, any securities of SES, nor should it or any part of it form the basis of, or be relied on in connection with, any contract or commitment whatsoever. No representation or warranty, express or implied, is or will be made by SES, its directors, officers or advisors, or any other person, as to the accuracy, completeness or fairness of the information or opinions contained in this presentation, and any reliance you place on them will be at your sole risk. Without prejudice to the foregoing, none of SES, or its directors, officers or advisors accept any liability whatsoever for any loss however arising, directly or indirectly, from use of this presentation or its contents or otherwise arising in connection therewith. This presentation includes “forward-looking statements”. All statements other than statements of historical fact included in this presentation, including without limitation those regarding SES’s financial position, business strategy, plans and objectives of management for future operations (including development plans and objectives relating to SES products and services), are forward- looking statements. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause the actual results, performance or achievements of SES to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding SES and its subsidiaries and affiliates, present and future business strategies, and the environment in which SES will operate in the future, and such assumptions may or may not prove to be correct. These forward-looking statements speak only as at the date of this presentation. Forward-looking statements contained in this presentation regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. SES, and its directors, officers and advisors do not undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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