The new gatekeepers in the living room: Democratisation of the entertainment industry
Kastelein, Richard
How will the current TV value chain, underpinned by brand spot advertising based on archaic, legacy audience measurement systems stay relevant with new gatekeepers, smarter devices and software, and new consumer behaviour such as media stacking?
 Good evening, everybody. Thanks for coming out tonight. It's a pleasure to be here in Berlin. I'm a Canadian. I'm from Vancouver originally. I currently live in Holland for the past ten years. I'm going to talk a little bit today about television, of course. That's what I came for, and also what is listed in the guide. But I'm also going to talk a little bit about some of my earlier days as a hacktivist about ten years ago and share some of my experiences in... Future. Okay. So, into the wild. Let's go sailing. I pulled out this cover here from 2006, from Time. It was an interesting year. Time nominated us, you. We are the media. For me, it had some impact. That was the year that I really started getting involved in working in the progressive news media as an individual publisher, helping disseminate new ideas amongst the public. I'll talk a little bit about Atlantic Free Press. In 2003, I started publishing with a fellow writer named Chris Floyd who worked with the Moscow Times at that time, 2002, 2003. He was one of the only writers actually, post 9-11, that was writing quite hard, heavy-hitting rhetoric about what was going on in America. And it's declined into a state of... with a Patriot Act and so on that was getting quite critical. Now Chris and I decided to team up at that point and started Atlantic Free Press. Atlantic Free Press started off with no money. We never really made any money actually, but we ended up having about 300 writers. About 20% of those were PhDs. Chris and I didn't know how to code actually. We didn't know how to run servers. We didn't really know much about publishing online. But we did know about open source. And open source is what led us to be able to do this project called Atlantic Free Press. And these are some of the writers that we worked with. So when I say we are the media, I mean we are the media, I can't code. I'm not a coder. I'm not really a great IT guy either. But still at that point, Chris and I were able to put together a small group of people and get a server in Holland and publish. And publish a lot of really, what we considered important stuff. We didn't make a lot of money. Actually we made no money. It cost us money, in fact. My wife will attest to that. These were tough times for us. But at that point the Bush administration was full on and we were full on in defiance. I just checked the stats today. We've had now between all the sites that we still host, over 12 million unique visitors and still counting. And this is a project that I've kind of retired of six years ago from, more or less, other than just hosting. And I'll go into that a little bit more as I go on here. And I'll describe some of the projects in detail. So we are the media, Photoshop's. I had a little bit of fun and a little bit of creative ability to accompany stories with pictures. And you can see here during the Bush administration it was quite interesting. We did use visuals quite intensely to accommodate, accompany the stories in a unique way to grab attention. There are some of them are maybe a little offensive to some people, but they certainly did get attention. Sometimes images just need a little bit of text to make an impact. So democracy will come to you. If you don't come to democracy, I'm still free. How about you? At those times, of course, America was going through the Patriot Act and the world changed. We all had to suddenly had new rules at the airport and our lives changed at that point. Homeland security, fighting terrorism since 1492. Resonates, very simple. Pictures in a few words. Do you? Awesome. Feel free to pipe up anytime, please. I made a bunch of those t-shirts and I was selling them online at cost. And sometimes images just speak for themselves. As you can see here, well, she's a little uncomfortable, I would say. And George always, you know, he was a great target actually. He was very easy to write about and make fun of and present very simply as a rather kind of offensive guy naturally. So you know, all these were, we pushed these images with text and I just wanted to show you some of these because we did have fun with it. At the same time, we were seriously presenting ideas from a lot of writers. At the end of the day, at Atlantic Free Press, I published 13,000 articles in six years, while Chris and I did. So you know, that was a lot of work. And I'm talking about this for the first time actually because I do talk about television a lot. I'm not more or less my area of expertise now, but I rarely talk about what I did in the past and what led me to television. And this is part of the process actually, as a publisher in television these days. So how many people here know what the Streisand effect is? Oh, great, excellent. Well for those who don't know, Barbara Streisand, she was the first example of this kind of effect. What happened is a photographer had taken a picture of her house from the air and I think four people downloaded it or six people downloaded it, but she got all offended about it. She wanted to take it off the web. So she put her lawyers onto the case. The end result was, is that picture was viewed about 400,000 times. So it really didn't work out very well for her. And that Streisand effect has continued today. We still see that today. And I've been involved in a couple of areas where we've actually used the Streisand effect to turn things around on the powers that be. And I will explain that. Craig Murray, I don't know if you know who Craig Murray is. He's the former ambassador to the United Kingdom, sorry, from the United Kingdom to Uzbekistan. Craig was a very interesting guy, a Scottish intellect, very smart fellow. He was the ambassador. He had all access to the MI5 files, MI6, everything. From Uzbekistan at that time. But also while he was the ambassador in Uzbekistan, he protested against the fact that the Americans and the Brits were flying people in, essentially, and torturing them there. At that point, the leader of Uzbekistan was named Uzmanov, and they called him Uzmanov the boiler for a reason. Not a very nice reason, by the way. So Craig had a history with Uzbekistan. Uzmanov was an interesting character. He's one of those Russian billionaires with more money than anything. At that point, he was trying to buy Liverpool. And well, it just so happened that Craig knew a lot about Uzmanov. He knew a lot. He'd seen all the files. He knew all the intel. And he wrote a piece on Uzmanov, exposing that he had been actually jailed for rape and was involved in the heroin trade. And he was kind of set free by, he said all his charges were null by Gorbachev, but that wasn't true. It was Uzmanov that sort of wiped out all the criminal history. So he went after Craig Murray. Craig was writing for me at that time for Atlantic Free Press. Now what happened was, is Craig, sorry, Uzmanov hired a company called Shillings, which is like PR damage to the max in the UK. These are really mean, ugly lawyers that go after people with all full forces, about 12 or 14 of them. So they went after the original hosting company in the UK and shut them down. The hosting company got so freaked out, they just turned off all those servers. And Craig was basically left without a home. At that point I stepped in because Craig was one of my writers and he told me what was going on and I said, well, you know what, I'll host you in Holland. I don't care. I don't own a car. I live in Holland, remember? We use bikes. I don't own a house yet. Well, that's changing. I did it that time. And I talked to the Dutch freedom of speech authorities and said, what can happen to me? I mean, what are they going to do? Take my kids' bikes? I mean, what's the worst thing that can happen? And they said they would help me out and they would defend me. So I moved Craig over. I reopened his website and I got some cease and desist letters, which I just tore up, threw away. At that point I had my own rack, so I really was the last stop in terms of making that decision. So what happened was originally when Craig got shut down, there was a huge surge. A surge of support, not only from Atlantic Free Press, but all these guys. Every single one of these websites reposted the article that Usmanoff wanted taken down. It was all over the Internet. It made an absolute fool out of shillings. The PR experts could do nothing. And it ended the case. He simply walked away from it at that point. Craig still writes today critically about the UK government and about the West. He's a very interesting writer. Craig Murray.org.uk. You should check him out. So that was our own case of this dry sand effect. They couldn't sue all of us. They couldn't go after me while they tried, but I just ripped up the notes and threw them away. It didn't matter anymore. And I still hold Craig to this day. This was another project. This is like this whole NSA thing is now kind of a second story for me in a way, because in 2005, 2006, we were already, we were writing a lot about this in Atlantic Free Press, about the NSA's major grab from the telco companies in the US on records, phone records. But there was one company that stood up, actually. They were called Quest. There were other reasons why they stood up, but they basically said, no, we're not giving you the records of our clients. Forget it. We got all the telcos in the United States. So we started up this website. Chris and I, in a night, put our WordPress site, 2005, 2006, put it up, started going through different websites and getting attention. The next thing we knew, CNN was calling. The New York Times interviewed us twice. Denver Post, USA Today, the end of SMDC, Salt Lake Tribune, we went all over the media about this. And all we did was help focus more on the attention on the problem. And it took us literally five or six hours. We are the media. Chris and I don't know how to code. We don't really know how to run IT companies or anything. We knew how to basically put up a WordPress page, but that's not too difficult. I think a lot of the people in this room probably could. One project was, you know, Atlantic Free Press was a website where we had kind of a circle of different people publishing around the world. Who were mates, I guess. You know, we were all trying to do the same thing, which was provide progressive opinion in a post-911 world without getting killed. And interestingly enough, there was another website called Drudge Report, as opposed to Drudge Report, who got basically sued by the Associated Press for doing what they were legally allowed to do, which under fair use rights, copyright law, they were allowed to use three paragraphs and then provide a link to the Associated Press story. Associated Press was really decided to pull out their guns against the bloggers at that point, and they chose our friends at Drudge Report to basically go after. So we did the same thing again. Chris and I said, well, you know, we did that with the questing. Let's do another. Let's just go at it again. We started another specialized website called Boycott Unassociated Press. We made banners, which you can't see here, but we made special banners that people could embed on their blogs, and we helped viralize what was going on. I can't say for sure that we pushed ourselves, of course, pushed AP back, but they did back. And that was another case of more or less a group of us online getting together. In unison and fighting against what we didn't believe was right. So that's a little bit of my past. I wanted to share that with you because I thought this is Republican. This is the first time I've talked about this. I left the progressive publishing world in about 2008, and I've been publishing in tech since then. I have my wife and three daughters here. It was really tough being a progressive publisher and a progressive writer. There wasn't a lot of money in that world at that time. There still isn't, I don't think, which is unfortunate because those voices are getting crushed as far as I'm concerned. They're not getting out as much as they should be. But fortunately, I see here at an event like the Republic, there's a lot of really powerful young people here carrying on the banner, I suppose. So to give a little bit about my background, after I left political publishing, I decided to start something called appmarket.tv. And the reason why I started it was because, well, I woke up one morning as a journalist and something that was like 200 million bloggers out there. And my whole industry was disrupted by the Internet. The Internet kind of collided with the print journalism world in a very significant way. Which was tough on all of us. I then entered the music industry for a while and I went through this whole process again and watching the Internet come into my world and disrupt things the way they normally went. The value chain was quite mixed up. And things changed. There was a lot of disruption. There was a lot of democratization, in fact, depending on how you look at it. So I figured TV was next. I said TV, the last bastard in the living room, the biggest of them all, cannot survive the Internet. YouTube was coming. The pipes were getting fatter. We knew the change was going to come. So I focused on tech and I focused on television at that time. And publishing about the future of television, I started getting a lot of startups coming to me and saying, hey, we want to hack, we're building cool stuff. And suddenly I started seeing APIs and SDKs in this world. Samsung had a software developer skit for people to build on. I saw production companies starting to get interested in applications for television. I saw the likes of Netflix and other companies coming up to the rise in the industry and affecting the industry in a big way. And somebody said to me, well, what do you run a hackathon on TV? Why don't we hack television? So that's what we did. In 2012 and 2013, we did it in London and San Francisco. And we hacked TV, which was great for me because it felt like I was kind of going back into my roots again, back to my publishing days where, you know, we're just a bunch of guys, guys and girls getting together and getting tooled up and trying to affect change in a significant way. This was in a short-term period, usually a weekend or whatever, for the TV hack fest. But that's part of the journey for me of my shift from the political world to television has been the hack fest. And the hack fest has led on now to some other areas such as health. I'm doing a health hack fest in Brussels. We're doing green hack fest now. We're hacking everything we can get our hands on. And we're hacking more important things than how to make people's television better, which isn't really that important. So in a way that's fulfilling this loop for me and coming back to that world again. So this is the TV that we've all kind of grown up with. A lot of us here that are over 40 or 50, I mean, well, maybe 60 or 70. But this is what we typically see is the television experience. And this is the way a lot of these executives think in that world. They're still locked into this 50s black and white world. I see it. I see it all the time. They don't understand what's coming. They don't understand how to deal with it. And they really honestly believe that the gravy train is going to keep going, but it's not. And I'll explain more about why. Part of that is because this is the way we watch TV now, more or less. There's a device. Every kid has a device there. My kids are on their devices right now. So this is what's changing. I'm going to talk about second screen because I think it's quite an interesting phenomena in how it's affecting television because you know what? When most of these people are actually using these devices, guess when they're using them during the commercials? Guess how TV is funded by commercials? How is TV going to maintain that value chain if people are off doing other things, thinking about other things? And now we can prove it because we have statistics from Twitter showing that, you know, during prime time in the United States, Twitter spikes five times or six times because people are just going to Twitter. They don't want to watch that 30-second package propaganda that doesn't mean anything to them. The idea that they can just push content that we don't really want to watch at us is not sustainable anymore. Those days are over. I tell this to broadcasting executives all the time, except for live, except for sports, except for news. You can always put something in the World Cup and I'll wait, you know, until the game comes on again. You'll wait. We'll wait. But are we going to wait for drama? I mean, we don't have to go to that source anymore for our favorite series. Our favorite series are coming, they're being piped all over the Internet in all kinds of places. Our TVs are becoming connected to the Internet now. The television is, in fact, just a big monitor in essence. The world is multi-screen. You can see the fancy hockey stick here. Most TVs now are connected. Probably about 80% they're shipping. I mean, the TV companies, the manufacturing companies are smart. Because TVs haven't gone up in price in what, 10 years? 15 years? I mean, the TV costs, what, 300, 400 euro, 500 euro, 600 euro, 800 euro? They're not going up in price. The margins are thinning for these guys. So companies like Samsung and LG and other companies are looking for new ways to make money. And how are they going to make money? They're going to make money with content. So that's the strategy for them, is to become part of that ecosystem. Well, they're maybe not producing content, but they're, in fact, the new gatekeepers in the living room. It's not the broadcasters anymore. It's not the RTLs in the world, in essence. It's the hardware manufacturers that really control. So internet technology disrupted every facet of the print media. News and print discovery consumption has rapidly shifted from print to newspapers and magazines to the internet, especially social media. Traditional publishers have tried to adopt pay structure to the internet with limited success. A growing population creating content via blogs and social media is competing with the traditional value chain. Traditional print publishers are trying to diversify the revenue away from print, moving to video, and multi-platform to compete with TV. The Guardian is a perfect example of this. You can't get hired now if you're a young journalist. If you can't shoot, that's basically the bottom line. Do you want to work for The Guardian? Do you want to work for The New York Times? Do you want to work for the London Times or whoever? As a young reporter, they want you to be able to shoot, basically. So this idea of the newspapers are seeing the moving images as being an important part of their strategy and how they're moving forward. And The Guardian is an excellent example of this. Internet technology disrupted every facet of the music business. Now, I want you to think about it because there's parallels here. Music discovery is rapidly shifting from MTV radio to the internet, iTunes, especially social media. Artists are adopting the direct-to-fan models and cutting out the middleman. Why does Rihanna need a company like Ticketmaster when she has, in fact, what, 80 million followers? If she wants to have a concert, she just needs to go, I'm having a concert. Buy your tickets for me. This whole value chain of all these people that existed between the person who creates the content and the person who consumes it is being sucked away by the internet, by this direct contact that these artists now have. It's very, very evident in the music industry in particular. And in a way, that's fantastic because I think young artists can actually connect with their fans better. I think this is a great opportunity for, maybe they're not going to be the superstar, MTV, making 50 or 100 million a year and selling millions and hundreds of millions of albums, but they'll build a sustainable following and existence because they have a direct relationship with their fans. As record sales decline, ticket sales have been growing. Live and merchandising are the new oil in the industry. I don't know. You see concert in Crownigan where I lived in the northern Netherlands recently, it's like they're wheeling out these guys from the 70s and 80s in their gray hair and there's a baldy, grayed audience going, yeah, you know what? They're not making money selling records anymore. The royalties are gone. They have to go back on the road. A lot of these guys and girls and artists. So it's interesting because that's where they're starting to make their money. It used to be the other way around. I mean, they were going on tour to support their album. Now they make albums to support their tours. So the internet, again, has affected this industry greatly. Labels are trying to diversify the revenue from recorded music and promoters and managers are expanding it to label-like models. So you see all these, you know, as this value chain is being affected by the internet, there's people like kind of creeping into each other's territories and you're seeing companies that normally didn't do this kind of stuff. It's making a mess out of the whole way the music industry used to operate. By the way, Spotify and Pandora are now saving the music industry in a way as it used to be. The labels are now starting to make money and revenue over the last four or five years from these new collective music sites. So do you think the TV industry will not be disrupted? Or as I say, democratized, of course it will. The stakes are huge. This is half a trillion a year industry globally. This is the big one. This is what all the agencies and brands are, you know, this is where they sink most of their ad dollars go into this moving picture medium. It's all about to change in the next five to 10 years and technology is going to drive that change. Consumers want more. We want more. We want to watch TV that we want to watch when we want to watch it, where we want to watch it, whatever device we want to watch it on, and preferably without being interrupted, I think that we can all agree about that. That's the great TV experience. We can argue about whether Second Screen is going to work because that's debatable still. You know, I'll go into this a little bit in some further slides, but like in music and print, scarcity will die. That's an important concept actually. Scarcity will die. Once you take out scarcity, like what happened with music, suddenly music became available everywhere. Scarcity was gone. I mean scarcity, it was scarce. Music was scarce at one point. Then it became, it was everywhere. It was ubiquitous almost. So this is what's happening in television in a sense too. When we look at companies like Netflix and other companies that are similar, video on demand going over the top, coming through internet pipes onto your big screen in the living room, that's what's happening. And you can watch your favorite programs from probably multiple suppliers. It doesn't have to be your favorite channel that tells you what you want to watch. It basically tells you what time you have to watch something. That's the whole concept of the electronic program guide. It creates scarcity in fact. I believe firmly that my daughters here will think it's quite funny in ten years that they had to come home at a certain time to watch a certain program. I mean that's kind of ludicrous, isn't it? When it's all there, why can't they just watch it when they want to watch it? Of course, that's what we want. And that's what's coming. So problems are really severe in the USA. Lehman Research Group found that broadcast ratings in the key 18 to 49 demographic tumbled. 70% in one year. That's huge. NBCU can't even get 5 million people to watch a show these days. Five years ago, 5 million people would barely push through a pilot. Those were okay numbers, but maybe not enough to push through a pilot. Things are really being hit hard in the United States and there's a reason why. Has anybody heard of machinima here? Okay, machinima is an interesting example. This is probably where a lot of those, that key demographic is disappearing to you, maybe not a lot, but some of them certainly. It's serving more than 2 billion monthly video views and reaching 175 million uniques each month. There's 1.8 million network videos, 40 billion network video views, 215 million subscribers. These numbers kind of make television look like a little bit small. And you know what's really weird about machinima? If you don't know what machinima is, machinima, essentially 80% of it, there's some creative ideas, machinima as well, but 80% of it is young people filming their experiences in their gaming worlds and then creating narrative and storytelling and then sharing those videos with other people who are like the same games that they like. So this whole subculture, in fact, of machinima, which is having a huge impact that nobody knows about. It's quite strange actually, the people in the TV business have never heard of it. Having said that, I believe that Warner Pictures is probably going to buy it in the next few weeks. So I like this headline actually because I've always been a proponent of open source, I mean I've been an evangelist for open source systems, I've been a proponent of, from the internet perspective on television and what we're bringing to the table, what we can bring to the table. And this is the half trillion market that I was talking about. And we can see that pretty clearly what's happening when you look at companies like YouTube who are investing significantly in content. You look at companies like Microsoft, Xbox is now investing in content. You look at companies like, I'm pretty sure Apple might soon start investing in content. And really a lot of the control around television has to do with live rights with sports, in fact. This is kind of the big, this is what Rupert Murdoch has built his empire upon with Sky, trying to do in Germany. Basically take stuff that we used to have for free and charge us for it, to watch it. Sports. Sports rights are huge, they're worth a lot of money, but you know what? Murdoch and all these guys like British Telecom and Deutsche Telecom and whoever's in these bidding wars currently for these sports rights, when the next round comes up in the next four to six years, if someone like Apple walks in or Google, they aren't going to be able to compete. They can outbid anybody in the room. Microsoft, Apple, Google, Facebook. Who knows who's going to go into that space? Because that's power. You own the rights to the World Cup? That's power. Google owns the rights to cricket in India. Most people don't even know that. They own the digital rights to cricket, which is a huge sport for a billion people, and they deliver it for free on YouTube in India. So watch out for the internet companies, because they will be there, and they're coming. Niche is the new norm. Talks a little bit about machinima, definitely which is a collective of Niche in essence. But in reality, Niche is the new norm. We used to, that old black and white picture that we had there, I remember those days. I'm almost 50 now. I remember those days when you turn the TV off and it went down to a little dot and it kind of sunk away. And there were four channels, and we had to get up and walk to the TV to change them. We didn't have a lot of selection. We basically were fed whatever, what we got. Look at today. If you have a basic cable package, you've got a thousand channels. By the time, whatever it is, hundreds of channels. You go from one end to the other, and by the time you get to the end of it, you've missed half the show that maybe you were going to watch in the beginning. It's getting very complicated. There's a lot of new Niche. It's the same thing in music. A lot of different styles of music. I checked out electronic dance music in Wikipedia the other day. There's like a 188 genre now. There's like dub dub, under dub, super dub. I mean, it's just, we're just like splitting off into these, you know, fractioning out into these different tastes and different communities that are able to support themselves and keep the interest in those spaces. And that's interesting because, you know, I went to MIPTV earlier, which is a big, huge television show in Cannes where all the big guys come and they trade their shows, and it's like everybody's there, End of Mall, Fremantle, Disney. The big guys all in Cannes and the Sun in October. And you know, I got to the building and I looked up and there was like an 80-foot sign of Duck Dynasty. And I was like, is this what we've devolved to in terms of mass entertainment and what we need to, you know, what people are interested in? Surely not. And in essence, we still have that mass market, but that mass market is shrinking. As I told you, NBCU can't even get 5 million people now. What do they do when they go and meet up with all the ad agencies in New York? Which they do once a year and they trade for about $20 billion. They're like, well, our numbers are down this year. Well, the brands are telling their agencies, well, if the numbers aren't there, if you don't have that reach anymore, we can't pay you that kind of money. So they get involved in this vicious circle and broadcast executives are always telling me, they're saying, who's going to pay for this, Richard? You know, how's this going to pay for this, you know, this utopian vision of you having the internet coming together with television and a happy marriage? And I'm like, well, it's not going to be a happy marriage, actually. It's going to fragment. And you know, there's very little to stop it, in a sense. Interestingly enough, I also saw, and mid TV, I saw Red Bull. Red Bull, there's a brand. You know, a drinks brand. Actually, I call them a media company that sells drinks. They have over a thousand episodes of their own content, which they're selling to broadcasters. If anybody's bucking the system in terms of the traditional value chain, it's like, what is a brand doing here? What are they doing? Well, because they're actually a media company who have built up a lifestyle around their brand itself. I mean, there's a drink that doesn't taste very good, to be honest. It's not very good for you, and it's kind of expensive. You know, it's there. They can spend 30 million sending a guy up in this, you know, jump from space. But television, where are we going? To the niche. Right now, what's great, for all the Duck Dynasties of the world and all the crap reality that we're seeing come out, there's also a lot of really good television being made. Actually, we're in a golden age of television. You know, if you watch television today, and you know, there's like Danish cremies, and there's, you know, there's some really great stuff going on. The dialogue is great. The storylines are great. The story arcs are great. The plots are great. There's some really wonderfully well-written television at the same time. And it's just going into niche. Now I'm going to talk a little bit about second screen, because this is kind of my area of expertise in television. And this is the ecosystem with which is what I work with within. It's incredibly complex. There's a lot of players, and there was a lot of hopes built up. And I'll explain this why. What happened was basically the iPad came out in what, 2005, 2006, whatever it was, 2008, 2007. And all of a sudden, you know, at the trade shows for television, some of the forward-thinking innovators were taking iPads and doing really cool things with them, like being able to change channels. And, wow, you know, you're watching a show, and suddenly you have like contextual information about the show. So who's in the show? And who's starring in it? And there became this snowball effect, and everybody said, wow, plus we had all these statistics from Nielsen saying, hey, you know, 50% of all tablet owners are using them every day while they're watching TV. This, like, people got this really strong idea that tablets were going to really ultimately, hugely change the industry. Because in essence, it's not really the second screen. A lot of people think it's the first screen. But the problem was with that, and why it didn't really take off as it should have, or maybe it could have, a couple of good reasons why. One is a lot of shows aren't written with the second screen in mind. That's a big problem. That's only starting to happen now. Production companies are saying, end them all, and the free mantas of the world are saying, hey, you know what, if we write the second screen into the show, we can own that. We don't have to give that to the broadcasters, or we can leverage them and get a better deal on it if we can make money out of it. So only now they're starting to write that stuff in. But that's been one of the main problems, is they haven't written the second screen into the shows. It's been kind of a gimmicky thing. I think the second grade problem with second screen is the fact that, you know, I think it works for a certain genre, like sports. I think, yeah, you know what I mean? You want to see extra stats. You want to have a different camera angle on the goal or something. You can do cool things with the second screen. And I think with game shows, it can work. We have a show called Million Pound Drop in the UK. 100,000 people play along with it live every Friday night. It's a lot. And I think maybe with news documentaries, you can get contextual stuff that works. But try watching a really complex drama and having a synchronous experience. It doesn't work. You can't, you know, you don't really want to be getting away from the dialogue too much or the storyline or the story arc itself. You want to be involved in that. And I think that's one of the things that they're really now starting to discover with second screen in terms of drama in particular, is that it works as an asynchronous experience, better than it works as a synchronous experience. So how many of you have heard of the word transmedia here? A few? Okay. For those who don't know, transmedia is an awful word, but I believe it's an Emmy award now in the United States, so we're kind of stuck with it. But it's a word that kind of describes, from the writer's perspective, this intersection of the internet and television. It's their world. It's the writer's world, basically. So for them, it's about taking the narrative into different directions using different platforms and different technologies and different devices, let's say, different ways to bring the story into another dimension. That can be through games. That can be through ARGs. That can be through second screen asynchronous or synchronous experiences, if you like. That can be through, some people are using augmented reality. That can be through gamification. There's lots of different ways to do it. It's a very interesting field. And it's something that's getting much more interesting. And this comes back to the production company saying, okay, how are we going to write second screen or how can we write the experience and continue the journey other than just putting it on for 60 minutes and saying, okay, it's over. I'll wait until next week. So that's part of what transmedia is about. That's definitely part of this ecosystem as well. The storm is coming. A lot of TV executives are always like, yeah, right, come on, we're couch potatoes, humans, we don't want anything to change. We just want to escape through television. And there is some merit in that fact, in a way. But I use stuff like this to try and convince them that they should be aware that change can happen and can happen a little bit quicker than they expect. Took 38 years to reach 50 million radio listeners. Took 13 years to reach 50 million TV listeners. The Internet took four years to reach that many. The iPod took three years to reach that many. Facebook added 100 million users in less than nine months. And iPhone applications hit a billion in nine months. How long before 100 million tablets and smartphones appear in front of 100 million smart TVs? It's not 2014. Probably next year. Especially with China and India. So the next five years of television, these are my predictions based on my work at App Market TV. So I've written about 1,500 articles there the past four years. Got a lot of great guest writers there. And this is why I think it's going. It's really my own opinion. If you have any rebuttals, please raise your hand and let me know. I think cloud services will make TV everywhere a reality. Let me give you an example of cloud services in TV everywhere. TV everywhere is kind of a concept of, imagine this. You're taking the train home from your, let's say from the airport to your house. You're on the train for two hours. You're watching a movie on your tablet. You stop the movie because you're there. You have to get on your bike. I have to get on my bike. Drive home. Get to my house. In a TV everywhere world where it's cloud based, I would simply turn on my television and pick up exactly where I left off. Continue my movie in front of the big screen this time. That's the TV everywhere concept in a nutshell. You'll be able to access your content on any device you own, essentially. Electronic program guide, content discovery, content dissemination will move to the second screen. I honestly wonder if the electronic program guide will be here in five to ten years. As we're flooded with more and more content, we're going to need systems to help us find what we want. But we're also in a bit of a danger of becoming locked in a niche in a way. Where's the I feel lucky button? You're going to be forever stuck in some algorithm that decides that you like sexy reality shows and that's all you're going to get. I think that's what public broadcasting serves in essence. That's what it really provides, the ultimate service, is allowing us that flexibility for a show like Wonders of the Universe in the UK to get five billion people watching it on a Saturday night. That's fantastic. That's what happens in the BBC. If you're locked in some kind of niche without that kind of major broadcaster involved in your television consumption, how's that going to work? Second screen, sorry, linear TV will not die. I think it will always be there, linear TV as in how TV is delivered, become social, participative, and curated, and like the music industry, will focus on live and event-driven revenue. Second screen engagement will drive curated interactive models and new monetization models. So connected world with TV everywhere, new content gatekeepers in the living room. Here's a little bit of a mosaic of some of the companies that are fighting for that position in your living room. The technology company, let's say the hardware company is more or less. So what does it mean for broadcasters, big cable and pay TV? Well, disruption. Their business model is breaking. The commercial business model is under severe stress, the way it operates. As I pointed out in some of the other slides, their role as the gatekeeper in the living room is seriously under threat. What does this mean for content producers? Well, actually it's democratization. Interesting enough. Do you know there's a company called All Three Media in the UK? I don't know if you know how the TV business works, but let me explain. If you're content companies, most people don't know who content producers are. Who knows who All Three Media, or who knows who FreeMantle and Endemol are? Anyone? FreeMantle and Endemol probably create 40% of what you watch on TV, maybe. Or a lot of, maybe mass television audience. The people who don't know who they are. They basically sell their content to broadcasters who work with the brands and agencies, so they're outside of that value chain in a sense. A company like All Three Media in the UK suddenly said, you know what? We're looking at the music industry. They have this kind of direct thing happening with their fans. We create the content. Why shouldn't we give it to the fans who enjoy it? So they created their own application in the US called the best of British television. And they're selling that on connected televisions in the US. I think it's like a $3.99 a month subscription rate for people who like funky British television. It's kind of another, you know, it's the content producers seeing their industry become more wide open and democratizing the sense that they can, now, because of technology, they can reach their consumers in a way that they could never do before because broadcasters were the gatekeepers. What does this mean for brands and agencies? Well, if you look at a brand like Red Bull, they've completely turned everything upside down, interestingly enough. Obviously other brands are going like, wow, how did you do that? Why can't we have a lifestyle brand like that? Mercedes is trying. There's other companies that are doing pretty well. But nobody's done it like Red Bull. I kind of think agencies are going to have a really difficult challenge in the future because not only are they having to fight for the money, and they're in the middle of this great battle in a sense, because they're the creative arm of the brands in a sense. They have been traditionally dealing with the broadcasters and figuring out things, also creating commercials that currently fuel the industry. So for them, it's a bit of democratization and a bit of disruption. So for the brands, they're now free to make their own content. They're like, content used to be really difficult stuff to make, but there's 14-year-old kids in their basements using Final Cut. Those cameras that shoot like 1,080, they cost under a 500 euro. The technology is empowering us to create our own content. We are the media. And they're not stupid. The brands, they realize the value that the agencies provide in a sense, but they're also seeing the market contract, contract, get smaller. The numbers aren't there anymore. They don't want to give out so much money. They're looking at other ways to reach their audience and build their brands. So they're free to do that, but their model is being disrupted as well in the sense that business is not the way it used to go. They're really being challenged. The agencies are being challenged to like, well, how are we going to deal with the second screen? What kind of creative thing? We don't know what transmedia is. That's what the writers are doing. So they're all trying to figure out the brands and the agencies at this point are in a very tenuous position in the UK and the US in terms of how this is moving forward, but they are the backbone. They are what funds this industry, the commercial industry. What does this mean for national regulatory bodies? This is off-com here, and that's the big guys. It's funny, I often speak to German regulators. I've been here a few times in Cologne and talking to German regulars about it, and it's quite interesting because they're in a state of flux in a sense. Because the big problem with regulatory issues and television is you have two choices. You can deregulate broadcast to create a level playing field, because you're going to have Netflix in Germany, by the way, probably in October. RTL and the other companies aren't going to be happy about that because Netflix doesn't have any rules. And RTL and everybody else operates under this strict regime of broadcasting regulation. And they're saying, lower this regulation because we can't compete with these guys unless we are free to do more business. The other option is, and a German MEP actually tried to push through some legislation in Brussels recently, is to start regulating connected television, or in essence, start regulating the internet, because that's what it is. The TV is just a big monitor. If you think about it, if it's a connected TV, it's a monitor. All TVs, connected TVs as of 2011, come with Internet browsers. You can go to Pirate Bay on your TV if you want. So this is the great challenge for the regulators in the future, definitely. So Telco is also in the picture. They're the companies like Deutsche Telekom, British Telekom, Vodafone and the rest. For them, they failed to do what they should have done, which was the Netflix model. And IPTV never really worked for them. They're still trying, but I'm not sure it's going to work still, because the big problem is, like a lot of the major broadcasters, is they're just too big. The companies are too big. They can't move. Quick enough to adapt. They're not flexible. Third-party developers migrating from the web, for us, it's great. It's a whole new money pot. We can also create new money, though. We're not just taking money. We're also creating new value. So there's a lot of excitement within the development community, especially when we're doing TV hack and cons. So currently, what's happening, the new value chain is emerging in television. We'll share much in common with a retail value chain. Creators, retailers, devices. It's currently a market being played out. So you have the creators. They're trying to maintain traditional economics. They're exploring new incremental revenue streams, direct relationships with brands, creating content, brands and producers exploring to grow direct to consumer. Retailers. Broadcasters are being turned into retailers. Broadcasters' traditional revenue streams are threatened, but live is still strong, and news, and sports. Retailing is becoming an open market, a lot of Netflix in Germany. Video on demand will be differentiated on price and brand. $4.99 a month, not bad. There's a lot of good content in Netflix. The CE devices, IPTV, OTT, hybrid, smart and connected TVs, these are also having a huge impact, and they're the new gatekeepers of the living room, or they will be. More and more. So I'm going to throw a few stats. In the US, 77% use TV and internet simultaneously. This is from Nielsen. 50% do it every day. 62% of TV viewers pick up their smartphones or tablets as soon as TV advertising breaks. 50% of Canadians have a second screen device at hand most of the time while watching TV, from the CRTC. Video viewing on mobile devices tripled in 2012. 300% for smartphones, 360% for tablets. People are not only watching TV on the televisions, they're watching on the devices. So the introduction of the iPad and tablets into the market has fundamentally changed the way we watch TV in the future. And they're quickly becoming ubiquitous in our world. So I'm going to talk a little bit about, this is kind of coming full circle again, because we had some elections in Holland this year, last year actually, which were fantastic. If only four, our debates for our leaders were televised, like they do in many countries around the world. But RTL Netherlands decided, actually it wasn't the tech guys, it was the news department who pushed this, but they said, we want to use the second screen to allow people watching the debates to vote for who's winning during the debates themselves. They could use, it was all in HTML5 for the coders here, so they could use their PCs, they could use their laptops, they could use their smartphones, they could use their tablets, and they could kind of, like this one is winning. And they actually used that audience vote, that real time audience vote, to declare who would get the last word in that presidential debate or that debate that was happening. So now we're seeing actually the second screen become a form of participatory politics in a way, it's not direct democracy yet, but it is having an impact, or starting to have an impact in more than just entertainment. So three big debates were powered by the second screen. Next day polls, swings followed the second screen. Huge increase in visibility for the second screen, everybody was like, wow, this is really neat, we can get involved. A mix of excitement and fear amongst the establishment, I think RTL Netherlands took a big risk, and it was a very big payoff for them, and better predictions than the official polls. So I'm running a health hack fest next month in Brussels, anybody wants to come, just letting you guys know. And my name is Richard Castellin, my name online is ExPathos, my hacker name, thank you very much. Any questions? Hi, thank you for that fantastic presentation. I have a question regarding your thesis with the cloud computing or accessing the web, the UTV through the cloud. That was one of your five theses the first you threw up there. And now I try to be very connected, and nonetheless I would never trust things to be available on the cloud, that's because the internet connection is simply not good enough, even in a city like Berlin, even though I'm using 4G, even though I'm spending a hell of a lot of money just to have perfect internet connection almost everywhere, it just takes way too long to download. And I would just take issue with your statement there, because I don't see in with all this debate about net neutrality, I don't see bandwidths going up as fast to guarantee me having just this freedom, I need to actually download content to have it available and to be able to watch it, even in a city like Berlin. That's not talking about me going off to my little retreat in Brandenburg or even to the Alps or something. So maybe you could comment on that, thanks. Well, we call that the last mile issue in the VOD world, and it is certainly an issue, because if I'm watching Netflix in my house and my kids are watching Netflix upstairs and my neighbors are watching Netflix, nobody's watching Netflix. So this is an issue, definitely. Unfortunately it's an issue that's creating now issues with net neutrality in the United States or the loss of net neutrality in the United States, because these companies are saying we need to have the highway and kick everybody off so we can get our goods to our consumers better. So it's a difficult issue. I think technology will solve a lot of these issues in a way in the upcoming years. We've come from IPTV and being only kind of a fiber geeky thing 10 years ago to becoming a mass proposition in the United States and Canada and every other country that Netflix and video on demand is working. So I live in the Netherlands, I'm fortunate. We have good pipes. So I often don't deal with these kinds of problems at this point in terms of getting content over the internet pipes. And you've got to understand also that a lot of countries in the third world are going to skip, right, just like they didn't get the laptop. They went straight from desktops to tablets, more or less. There's going to be a jump to LTE and other methods of wireless dissemination that could have higher bandwidth. I know that the satellite guys are working on some lower-bottom technology which could change the ball game. And new kind of antennas that basically will give you 20 down and four up with a box like that big anywhere in the world. Anywhere in the world. So we're not there yet. In a sense there are limitations from technology, but we all went through the, well not all of us, but a lot of us went through the 90s. Sort of the slow JPEG file and waiting to load. We all dealt with those kinds of trials and tribulations. And certainly it's going to affect the dissemination of the technology in the short term. But I think in the long term or medium term, these will be overcome through technology. So any more questions? Oh, yeah. How is the content different in the Netherlands, for example, with Netflix compared to the US? So the question is time-wise how long do we still need to use VPNs to be able to see the content we want to see in the language we want to watch? The release windows, you mean? They vary actually between country and country. It depends on the deals that are done with the studios. It's one of the advantages that Netflix has. Is there an American company? Probably their head offices in LA or one of their big offices. So they're sitting there with all the deal makers. But you know, I can't answer that question on the granular level. What's available now or how long the windows are differentiated between what's released in the US and what's not. But I think there won't be a reason to have a VPN once you have it, if you're piping it like a lot of people do. I think there's something like 200,000 people in Australia that get Netflix, even though it's not in the country yet. So I'm sure people are doing that in Europe as well or in Germany. How close it is to America? I'm not sure. Probably not that much difference. Okay, one more. Oh, yeah. My name is David. Do you think that one of the big fives like Amazon, Apple, Microsoft will build their own Netflix or will buy Netflix or some kind of video on demand platform? And if yes, which will be the first? They're all going full blast. Okay. AT&T just signed a deal with the chain and group last week. They're sinking a half, what is it, half a billion into content? Everybody wants to create content, which is great for young content producers. There's enough niches around too now that you don't have to lock into their mold so much. I mean, you can be a little bit more free to, as a creative in the television industry or the film industry, to find new resources for creating content. Other than just sort of, typically in Europe, a lot of documentary filmmakers that I know, people in television, they're from smaller countries, they're looking towards the EU and government bodies and trying to go from one trough to the next to find money. And it's always tough. So it's nice to see that there's perhaps some more commercial resources available for young filmmakers and television producers in the future. So Richard, thank you very much. I think that's it. Thank you. Cheers. Thank you. Thank you.
 Good evening, everybody.  Thanks for coming out tonight.  It's a pleasure to be here in Berlin.  I'm a Canadian.  I'm from Vancouver originally.  I currently live in Holland for the past ten years.  I'm going to talk a little bit today about television, of course.  That's what I came for, and also what is listed in the guide.  But I'm also going to talk a little bit about some of my earlier days as a hacktivist about  ten years ago and share some of my experiences in...  Future.  Okay.  So, into the wild.  Let's go sailing.  I pulled out this cover here from 2006, from Time.  It was an interesting year.  Time nominated us, you.  We are the media.  For me, it had some impact.  That was the year that I really started getting involved in working in the progressive news  media as an individual publisher, helping disseminate new ideas amongst the public.  I'll talk a little bit about Atlantic Free Press.  In 2003, I started publishing with a fellow writer named Chris Floyd who worked with the  Moscow Times at that time, 2002, 2003.  He was one of the only writers actually, post 9-11, that was writing quite hard, heavy-hitting  rhetoric about what was going on in America.  And it's declined into a state of... with a Patriot Act and so on that was getting quite  critical.  Now Chris and I decided to team up at that point and started Atlantic Free Press.  Atlantic Free Press started off with no money.  We never really made any money actually, but we ended up having about 300 writers.  About 20% of those were PhDs.  Chris and I didn't know how to code actually.  We didn't know how to run servers.  We didn't really know much about publishing online.  But we did know about open source.  And open source is what led us to be able to do this project called Atlantic Free Press.  And these are some of the writers that we worked with.  So when I say we are the media, I mean we are the media, I can't code.  I'm not a coder.  I'm not really a great IT guy either.  But still at that point, Chris and I were able to put together a small group of people  and get a server in Holland and publish.  And publish a lot of really, what we considered important stuff.  We didn't make a lot of money.  Actually we made no money.  It cost us money, in fact.  My wife will attest to that.  These were tough times for us.  But at that point the Bush administration was full on and we were full on in defiance.  I just checked the stats today.  We've had now between all the sites that we still host, over 12 million unique visitors  and still counting.  And this is a project that I've kind of retired of six years ago from, more or less, other  than just hosting.  And I'll go into that a little bit more as I go on here.  And I'll describe some of the projects in detail.  So we are the media, Photoshop's.  I had a little bit of fun and a little bit of creative ability to accompany stories with  pictures.  And you can see here during the Bush administration it was quite interesting.  We did use visuals quite intensely to accommodate, accompany the stories in a unique way to grab  attention.  There are some of them are maybe a little offensive to some people, but they certainly  did get attention.  Sometimes images just need a little bit of text to make an impact.  So democracy will come to you.  If you don't come to democracy, I'm still free.  How about you?  At those times, of course, America was going through the Patriot Act and the world changed.  We all had to suddenly had new rules at the airport and our lives changed at that point.  Homeland security, fighting terrorism since 1492.  Resonates, very simple.  Pictures in a few words.  Do you?  Awesome.  Feel free to pipe up anytime, please.  I made a bunch of those t-shirts and I was selling them online at cost.  And sometimes images just speak for themselves.  As you can see here, well, she's a little uncomfortable, I would say.  And George always, you know, he was a great target actually.  He was very easy to write about and make fun of and present very simply as a rather kind  of offensive guy naturally.  So you know, all these were, we pushed these images with text and I just wanted to show  you some of these because we did have fun with it.  At the same time, we were seriously presenting ideas from a lot of writers.  At the end of the day, at Atlantic Free Press, I published 13,000 articles in six years,  while Chris and I did.  So you know, that was a lot of work.  And I'm talking about this for the first time actually because I do talk about television  a lot.  I'm not more or less my area of expertise now, but I rarely talk about what I did in  the past and what led me to television.  And this is part of the process actually, as a publisher in television these days.  So how many people here know what the Streisand effect is?  Oh, great, excellent.  Well for those who don't know, Barbara Streisand, she was the first example of this kind of  effect.  What happened is a photographer had taken a picture of her house from the air and I think  four people downloaded it or six people downloaded it, but she got all offended about it.  She wanted to take it off the web.  So she put her lawyers onto the case.  The end result was, is that picture was viewed about 400,000 times.  So it really didn't work out very well for her.  And that Streisand effect has continued today.  We still see that today.  And I've been involved in a couple of areas where we've actually used the Streisand effect  to turn things around on the powers that be.  And I will explain that.  Craig Murray, I don't know if you know who Craig Murray is.  He's the former ambassador to the United Kingdom, sorry, from the United Kingdom to  Uzbekistan.  Craig was a very interesting guy, a Scottish intellect, very smart fellow.  He was the ambassador.  He had all access to the MI5 files, MI6, everything.  From Uzbekistan at that time.  But also while he was the ambassador in Uzbekistan, he protested against the fact that  the Americans and the Brits were flying people in, essentially, and torturing them there.  At that point, the leader of Uzbekistan was named Uzmanov, and they called him Uzmanov  the boiler for a reason.  Not a very nice reason, by the way.  So Craig had a history with Uzbekistan.  Uzmanov was an interesting character.  He's one of those Russian billionaires with more money than anything.  At that point, he was trying to buy Liverpool.  And well, it just so happened that Craig knew a lot about Uzmanov.  He knew a lot.  He'd seen all the files.  He knew all the intel.  And he wrote a piece on Uzmanov, exposing that he had been actually jailed for rape  and was involved in the heroin trade.  And he was kind of set free by, he said all his charges were null by Gorbachev, but that  wasn't true.  It was Uzmanov that sort of wiped out all the criminal history.  So he went after Craig Murray.  Craig was writing for me at that time for Atlantic Free Press.  Now what happened was, is Craig, sorry, Uzmanov hired a company called Shillings, which is  like PR damage to the max in the UK.  These are really mean, ugly lawyers that go after people with all full forces, about  12 or 14 of them.  So they went after the original hosting company in the UK and shut them down.  The hosting company got so freaked out, they just turned off all those servers.  And Craig was basically left without a home.  At that point I stepped in because Craig was one of my writers and he told me what was  going on and I said, well, you know what, I'll host you in Holland.  I don't care.  I don't own a car.  I live in Holland, remember?  We use bikes.  I don't own a house yet.  Well, that's changing.  I did it that time.  And I talked to the Dutch freedom of speech authorities and said, what can happen to me?  I mean, what are they going to do?  Take my kids' bikes?  I mean, what's the worst thing that can happen?  And they said they would help me out and they would defend me.  So I moved Craig over.  I reopened his website and I got some cease and desist letters, which I just tore up,  threw away.  At that point I had my own rack, so I really was the last stop in terms of making that  decision.  So what happened was originally when Craig got shut down, there was a huge surge.  A surge of support, not only from Atlantic Free Press, but all these guys.  Every single one of these websites reposted the article that Usmanoff wanted taken down.  It was all over the Internet.  It made an absolute fool out of shillings.  The PR experts could do nothing.  And it ended the case.  He simply walked away from it at that point.  Craig still writes today critically about the UK government and about the West.  He's a very interesting writer.  Craig Murray.org.uk.  You should check him out.  So that was our own case of this dry sand effect.  They couldn't sue all of us.  They couldn't go after me while they tried, but I just ripped up the notes and threw them  away.  It didn't matter anymore.  And I still hold Craig to this day.  This was another project.  This is like this whole NSA thing is now kind of a second story for me in a way, because  in 2005, 2006, we were already, we were writing a lot about this in Atlantic Free Press, about  the NSA's major grab from the telco companies in the US on records, phone records.  But there was one company that stood up, actually.  They were called Quest.  There were other reasons why they stood up, but they basically said, no, we're not giving  you the records of our clients.  Forget it.  We got all the telcos in the United States.  So we started up this website.  Chris and I, in a night, put our WordPress site, 2005, 2006, put it up, started going  through different websites and getting attention.  The next thing we knew, CNN was calling.  The New York Times interviewed us twice.  Denver Post, USA Today, the end of SMDC, Salt Lake Tribune, we went all over the media  about this.  And all we did was help focus more on the attention on the problem.  And it took us literally five or six hours.  We are the media.  Chris and I don't know how to code.  We don't really know how to run IT companies or anything.  We knew how to basically put up a WordPress page, but that's not too difficult.  I think a lot of the people in this room probably could.  One project was, you know, Atlantic Free Press was a website where we had kind of a circle  of different people publishing around the world.  Who were mates, I guess.  You know, we were all trying to do the same thing, which was provide progressive opinion  in a post-911 world without getting killed.  And interestingly enough, there was another website called Drudge Report, as opposed to  Drudge Report, who got basically sued by the Associated Press for doing what they were  legally allowed to do, which under fair use rights, copyright law, they were allowed to  use three paragraphs and then provide a link to the Associated Press story.  Associated Press was really decided to pull out their guns against the bloggers at that  point, and they chose our friends at Drudge Report to basically go after.  So we did the same thing again.  Chris and I said, well, you know, we did that with the questing.  Let's do another.  Let's just go at it again.  We started another specialized website called Boycott Unassociated Press.  We made banners, which you can't see here, but we made special banners that people could  embed on their blogs, and we helped viralize what was going on.  I can't say for sure that we pushed ourselves, of course, pushed AP back, but they did back.  And that was another case of more or less a group of us online getting together.  In unison and fighting against what we didn't believe was right.  So that's a little bit of my past.  I wanted to share that with you because I thought this is Republican.  This is the first time I've talked about this.  I left the progressive publishing world in about 2008, and I've been publishing in tech  since then.  I have my wife and three daughters here.  It was really tough being a progressive publisher and a progressive writer.  There wasn't a lot of money in that world at that time.  There still isn't, I don't think, which is unfortunate because those voices are getting  crushed as far as I'm concerned.  They're not getting out as much as they should be.  But fortunately, I see here at an event like the Republic, there's a lot of really powerful  young people here carrying on the banner, I suppose.  So to give a little bit about my background, after I left political publishing, I decided  to start something called appmarket.tv.  And the reason why I started it was because, well, I woke up one morning as a journalist  and something that was like 200 million bloggers out there.  And my whole industry was disrupted by the Internet.  The Internet kind of collided with the print journalism world in a very significant way.  Which was tough on all of us.  I then entered the music industry for a while and I went through this whole process again  and watching the Internet come into my world and disrupt things the way they normally went.  The value chain was quite mixed up.  And things changed.  There was a lot of disruption.  There was a lot of democratization, in fact, depending on how you look at it.  So I figured TV was next.  I said TV, the last bastard in the living room, the biggest of them all, cannot survive  the Internet.  YouTube was coming.  The pipes were getting fatter.  We knew the change was going to come.  So I focused on tech and I focused on television at that time.  And publishing about the future of television, I started getting a lot of startups coming  to me and saying, hey, we want to hack, we're building cool stuff.  And suddenly I started seeing APIs and SDKs in this world.  Samsung had a software developer skit for people to build on.  I saw production companies starting to get interested in applications for television.  I saw the likes of Netflix and other companies coming up to the rise in the industry and  affecting the industry in a big way.  And somebody said to me, well, what do you run a hackathon on TV?  Why don't we hack television?  So that's what we did.  In 2012 and 2013, we did it in London and San Francisco.  And we hacked TV, which was great for me because it felt like I was kind of going back into  my roots again, back to my publishing days where, you know, we're just a bunch of guys,  guys and girls getting together and getting tooled up and trying to affect change in a  significant way.  This was in a short-term period, usually a weekend or whatever, for the TV hack fest.  But that's part of the journey for me of my shift from the political world to television  has been the hack fest.  And the hack fest has led on now to some other areas such as health.  I'm doing a health hack fest in Brussels.  We're doing green hack fest now.  We're hacking everything we can get our hands on.  And we're hacking more important things than how to make people's television better, which  isn't really that important.  So in a way that's fulfilling this loop for me and coming back to that world again.  So this is the TV that we've all kind of grown up with.  A lot of us here that are over 40 or 50, I mean, well, maybe 60 or 70.  But this is what we typically see is the television experience.  And this is the way a lot of these executives think in that world.  They're still locked into this 50s black and white world.  I see it.  I see it all the time.  They don't understand what's coming.  They don't understand how to deal with it.  And they really honestly believe that the gravy train is going to keep going, but it's  not.  And I'll explain more about why.  Part of that is because this is the way we watch TV now, more or less.  There's a device.  Every kid has a device there.  My kids are on their devices right now.  So this is what's changing.  I'm going to talk about second screen because I think it's quite an interesting phenomena  in how it's affecting television because you know what?  When most of these people are actually using these devices, guess when they're using them  during the commercials?  Guess how TV is funded by commercials?  How is TV going to maintain that value chain if people are off doing other things, thinking  about other things?  And now we can prove it because we have statistics from Twitter showing that, you know, during  prime time in the United States, Twitter spikes five times or six times because people are  just going to Twitter.  They don't want to watch that 30-second package propaganda that doesn't mean anything to them.  The idea that they can just push content that we don't really want to watch at us is not  sustainable anymore.  Those days are over.  I tell this to broadcasting executives all the time, except for live, except for sports,  except for news.  You can always put something in the World Cup and I'll wait, you know, until the game  comes on again.  You'll wait.  We'll wait.  But are we going to wait for drama?  I mean, we don't have to go to that source anymore for our favorite series.  Our favorite series are coming, they're being piped all over the Internet in all kinds of  places.  Our TVs are becoming connected to the Internet now.  The television is, in fact, just a big monitor in essence.  The world is multi-screen.  You can see the fancy hockey stick here.  Most TVs now are connected.  Probably about 80% they're shipping.  I mean, the TV companies, the manufacturing companies are smart.  Because TVs haven't gone up in price in what, 10 years?  15 years?  I mean, the TV costs, what, 300, 400 euro, 500 euro, 600 euro, 800 euro?  They're not going up in price.  The margins are thinning for these guys.  So companies like Samsung and LG and other companies are looking for new ways to make  money.  And how are they going to make money?  They're going to make money with content.  So that's the strategy for them, is to become part of that ecosystem.  Well, they're maybe not producing content, but they're, in fact, the new gatekeepers  in the living room.  It's not the broadcasters anymore.  It's not the RTLs in the world, in essence.  It's the hardware manufacturers that really control.  So internet technology disrupted every facet of the print media.  News and print discovery consumption has rapidly shifted from print to newspapers and magazines  to the internet, especially social media.  Traditional publishers have tried to adopt pay structure to the internet with limited  success.  A growing population creating content via blogs and social media is competing with the traditional  value chain.  Traditional print publishers are trying to diversify the revenue away from print, moving  to video, and multi-platform to compete with TV.  The Guardian is a perfect example of this.  You can't get hired now if you're a young journalist.  If you can't shoot, that's basically the bottom line.  Do you want to work for The Guardian?  Do you want to work for The New York Times?  Do you want to work for the London Times or whoever?  As a young reporter, they want you to be able to shoot, basically.  So this idea of the newspapers are seeing the moving images as being an important part  of their strategy and how they're moving forward.  And The Guardian is an excellent example of this.  Internet technology disrupted every facet of the music business.  Now, I want you to think about it because there's parallels here.  Music discovery is rapidly shifting from MTV radio to the internet, iTunes, especially  social media.  Artists are adopting the direct-to-fan models and cutting out the middleman.  Why does Rihanna need a company like Ticketmaster when she has, in fact, what, 80 million followers?  If she wants to have a concert, she just needs to go, I'm having a concert.  Buy your tickets for me.  This whole value chain of all these people that existed between the person who creates  the content and the person who consumes it is being sucked away by the internet, by this  direct contact that these artists now have.  It's very, very evident in the music industry in particular.  And in a way, that's fantastic because I think young artists can actually connect with their  fans better.  I think this is a great opportunity for, maybe they're not going to be the superstar,  MTV, making 50 or 100 million a year and selling millions and hundreds of millions of albums,  but they'll build a sustainable following and existence because they have a direct relationship  with their fans.  As record sales decline, ticket sales have been growing.  Live and merchandising are the new oil in the industry.  I don't know.  You see concert in Crownigan where I lived in the northern Netherlands recently, it's  like they're wheeling out these guys from the 70s and 80s in their gray hair and there's  a baldy, grayed audience going, yeah, you know what?  They're not making money selling records anymore.  The royalties are gone.  They have to go back on the road.  A lot of these guys and girls and artists.  So it's interesting because that's where they're starting to make their money.  It used to be the other way around.  I mean, they were going on tour to support their album.  Now they make albums to support their tours.  So the internet, again, has affected this industry greatly.  Labels are trying to diversify the revenue from recorded music and promoters and managers  are expanding it to label-like models.  So you see all these, you know, as this value chain is being affected by the internet, there's  people like kind of creeping into each other's territories and you're seeing companies that  normally didn't do this kind of stuff.  It's making a mess out of the whole way the music industry used to operate.  By the way, Spotify and Pandora are now saving the music industry in a way as it used to  be.  The labels are now starting to make money and revenue over the last four or five years  from these new collective music sites.  So do you think the TV industry will not be disrupted?  Or as I say, democratized, of course it will.  The stakes are huge.  This is half a trillion a year industry globally.  This is the big one.  This is what all the agencies and brands are, you know, this is where they sink most of  their ad dollars go into this moving picture medium.  It's all about to change in the next five to 10 years and technology is going to drive  that change.  Consumers want more.  We want more.  We want to watch TV that we want to watch when we want to watch it, where we want to  watch it, whatever device we want to watch it on, and preferably without being interrupted,  I think that we can all agree about that.  That's the great TV experience.  We can argue about whether Second Screen is going to work because that's debatable still.  You know, I'll go into this a little bit in some further slides, but like in music and  print, scarcity will die.  That's an important concept actually.  Scarcity will die.  Once you take out scarcity, like what happened with music, suddenly music became available  everywhere.  Scarcity was gone.  I mean scarcity, it was scarce.  Music was scarce at one point.  Then it became, it was everywhere.  It was ubiquitous almost.  So this is what's happening in television in a sense too.  When we look at companies like Netflix and other companies that are similar, video on  demand going over the top, coming through internet pipes onto your big screen in the  living room, that's what's happening.  And you can watch your favorite programs from probably multiple suppliers.  It doesn't have to be your favorite channel that tells you what you want to watch.  It basically tells you what time you have to watch something.  That's the whole concept of the electronic program guide.  It creates scarcity in fact.  I believe firmly that my daughters here will think it's quite funny in ten years that they  had to come home at a certain time to watch a certain program.  I mean that's kind of ludicrous, isn't it?  When it's all there, why can't they just watch it when they want to watch it?  Of course, that's what we want.  And that's what's coming.  So problems are really severe in the USA.  Lehman Research Group found that broadcast ratings in the key 18 to 49 demographic tumbled.  70% in one year.  That's huge.  NBCU can't even get 5 million people to watch a show these days.  Five years ago, 5 million people would barely push through a pilot.  Those were okay numbers, but maybe not enough to push through a pilot.  Things are really being hit hard in the United States and there's a reason why.  Has anybody heard of machinima here?  Okay, machinima is an interesting example.  This is probably where a lot of those, that key demographic is disappearing to you, maybe  not a lot, but some of them certainly.  It's serving more than 2 billion monthly video views and reaching 175 million uniques each  month.  There's 1.8 million network videos, 40 billion network video views, 215 million subscribers.  These numbers kind of make television look like a little bit small.  And you know what's really weird about machinima?  If you don't know what machinima is, machinima, essentially 80% of it, there's some creative  ideas, machinima as well, but 80% of it is young people filming their experiences in  their gaming worlds and then creating narrative and storytelling and then sharing those videos  with other people who are like the same games that they like.  So this whole subculture, in fact, of machinima, which is having a huge impact that nobody  knows about.  It's quite strange actually, the people in the TV business have never heard of it.  Having said that, I believe that Warner Pictures is probably going to buy it in the next few  weeks.  So I like this headline actually because I've always been a proponent of open source, I  mean I've been an evangelist for open source systems, I've been a proponent of, from the  internet perspective on television and what we're bringing to the table, what we can  bring to the table.  And this is the half trillion market that I was talking about.  And we can see that pretty clearly what's happening when you look at companies like  YouTube who are investing significantly in content.  You look at companies like Microsoft, Xbox is now investing in content.  You look at companies like, I'm pretty sure Apple might soon start investing in content.  And really a lot of the control around television has to do with live rights with sports, in  fact.  This is kind of the big, this is what Rupert Murdoch has built his empire upon with Sky,  trying to do in Germany.  Basically take stuff that we used to have for free and charge us for it, to watch it.  Sports.  Sports rights are huge, they're worth a lot of money, but you know what?  Murdoch and all these guys like British Telecom and Deutsche Telecom and whoever's in these  bidding wars currently for these sports rights, when the next round comes up in the next four  to six years, if someone like Apple walks in or Google, they aren't going to be able  to compete.  They can outbid anybody in the room.  Microsoft, Apple, Google, Facebook.  Who knows who's going to go into that space?  Because that's power.  You own the rights to the World Cup?  That's power.  Google owns the rights to cricket in India.  Most people don't even know that.  They own the digital rights to cricket, which is a huge sport for a billion people, and  they deliver it for free on YouTube in India.  So watch out for the internet companies, because they will be there, and they're coming.  Niche is the new norm.  Talks a little bit about machinima, definitely which is a collective of Niche in essence.  But in reality, Niche is the new norm.  We used to, that old black and white picture that we had there, I remember those days.  I'm almost 50 now.  I remember those days when you turn the TV off and it went down to a little dot and it  kind of sunk away.  And there were four channels, and we had to get up and walk to the TV to change them.  We didn't have a lot of selection.  We basically were fed whatever, what we got.  Look at today.  If you have a basic cable package, you've got a thousand channels.  By the time, whatever it is, hundreds of channels.  You go from one end to the other, and by the time you get to the end of it, you've missed  half the show that maybe you were going to watch in the beginning.  It's getting very complicated.  There's a lot of new Niche.  It's the same thing in music.  A lot of different styles of music.  I checked out electronic dance music in Wikipedia the other day.  There's like a 188 genre now.  There's like dub dub, under dub, super dub.  I mean, it's just, we're just like splitting off into these, you know, fractioning out  into these different tastes and different communities that are able to support themselves  and keep the interest in those spaces.  And that's interesting because, you know, I went to MIPTV earlier, which is a big, huge  television show in Cannes where all the big guys come and they trade their shows, and  it's like everybody's there, End of Mall, Fremantle, Disney.  The big guys all in Cannes and the Sun in October.  And you know, I got to the building and I looked up and there was like an 80-foot sign  of Duck Dynasty.  And I was like, is this what we've devolved to in terms of mass entertainment and what  we need to, you know, what people are interested in?  Surely not.  And in essence, we still have that mass market, but that mass market is shrinking.  As I told you, NBCU can't even get 5 million people now.  What do they do when they go and meet up with all the ad agencies in New York?  Which they do once a year and they trade for about $20 billion.  They're like, well, our numbers are down this year.  Well, the brands are telling their agencies, well, if the numbers aren't there, if you  don't have that reach anymore, we can't pay you that kind of money.  So they get involved in this vicious circle and broadcast executives are always telling  me, they're saying, who's going to pay for this, Richard?  You know, how's this going to pay for this, you know, this utopian vision of you having  the internet coming together with television and a happy marriage?  And I'm like, well, it's not going to be a happy marriage, actually.  It's going to fragment.  And you know, there's very little to stop it, in a sense.  Interestingly enough, I also saw, and mid TV, I saw Red Bull.  Red Bull, there's a brand.  You know, a drinks brand.  Actually, I call them a media company that sells drinks.  They have over a thousand episodes of their own content, which they're selling to broadcasters.  If anybody's bucking the system in terms of the traditional value chain, it's like, what  is a brand doing here?  What are they doing?  Well, because they're actually a media company who have built up a lifestyle around their  brand itself.  I mean, there's a drink that doesn't taste very good, to be honest.  It's not very good for you, and it's kind of expensive.  You know, it's there.  They can spend 30 million sending a guy up in this, you know, jump from space.  But television, where are we going?  To the niche.  Right now, what's great, for all the Duck Dynasties of the world and all the crap reality  that we're seeing come out, there's also a lot of really good television being made.  Actually, we're in a golden age of television.  You know, if you watch television today, and you know, there's like Danish cremies, and  there's, you know, there's some really great stuff going on.  The dialogue is great.  The storylines are great.  The story arcs are great.  The plots are great.  There's some really wonderfully well-written television at the same time.  And it's just going into niche.  Now I'm going to talk a little bit about second screen, because this is kind of my area of  expertise in television.  And this is the ecosystem with which is what I work with within.  It's incredibly complex.  There's a lot of players, and there was a lot of hopes built up.  And I'll explain this why.  What happened was basically the iPad came out in what, 2005, 2006, whatever it was,  2008, 2007.  And all of a sudden, you know, at the trade shows for television, some of the forward-thinking  innovators were taking iPads and doing really cool things with them, like being able to  change channels.  And, wow, you know, you're watching a show, and suddenly you have like contextual information  about the show.  So who's in the show?  And who's starring in it?  And there became this snowball effect, and everybody said, wow, plus we had all these  statistics from Nielsen saying, hey, you know, 50% of all tablet owners are using them every  day while they're watching TV.  This, like, people got this really strong idea that tablets were going to really ultimately,  hugely change the industry.  Because in essence, it's not really the second screen.  A lot of people think it's the first screen.  But the problem was with that, and why it didn't really take off as it should have, or maybe  it could have, a couple of good reasons why.  One is a lot of shows aren't written with the second screen in mind.  That's a big problem.  That's only starting to happen now.  Production companies are saying, end them all, and the free mantas of the world are saying,  hey, you know what, if we write the second screen into the show, we can own that.  We don't have to give that to the broadcasters, or we can leverage them and get a better deal  on it if we can make money out of it.  So only now they're starting to write that stuff in.  But that's been one of the main problems, is they haven't written the second screen  into the shows.  It's been kind of a gimmicky thing.  I think the second grade problem with second screen is the fact that, you know, I think  it works for a certain genre, like sports.  I think, yeah, you know what I mean?  You want to see extra stats.  You want to have a different camera angle on the goal or something.  You can do cool things with the second screen.  And I think with game shows, it can work.  We have a show called Million Pound Drop in the UK.  100,000 people play along with it live every Friday night.  It's a lot.  And I think maybe with news documentaries, you can get contextual stuff that works.  But try watching a really complex drama and having a synchronous experience.  It doesn't work.  You can't, you know, you don't really want to be getting away from the dialogue too  much or the storyline or the story arc itself.  You want to be involved in that.  And I think that's one of the things that they're really now starting to discover with  second screen in terms of drama in particular, is that it works as an asynchronous experience,  better than it works as a synchronous experience.  So how many of you have heard of the word transmedia here?  A few?  Okay.  For those who don't know, transmedia is an awful word, but I believe it's an Emmy award  now in the United States, so we're kind of stuck with it.  But it's a word that kind of describes, from the writer's perspective, this intersection  of the internet and television.  It's their world.  It's the writer's world, basically.  So for them, it's about taking the narrative into different directions using different  platforms and different technologies and different devices, let's say, different ways to bring  the story into another dimension.  That can be through games.  That can be through ARGs.  That can be through second screen asynchronous or synchronous experiences, if you like.  That can be through, some people are using augmented reality.  That can be through gamification.  There's lots of different ways to do it.  It's a very interesting field.  And it's something that's getting much more interesting.  And this comes back to the production company saying, okay, how are we going to write second  screen or how can we write the experience and continue the journey other than just putting  it on for 60 minutes and saying, okay, it's over.  I'll wait until next week.  So that's part of what transmedia is about.  That's definitely part of this ecosystem as well.  The storm is coming.  A lot of TV executives are always like, yeah, right, come on, we're couch potatoes, humans,  we don't want anything to change.  We just want to escape through television.  And there is some merit in that fact, in a way.  But I use stuff like this to try and convince them that they should be aware that change  can happen and can happen a little bit quicker than they expect.  Took 38 years to reach 50 million radio listeners.  Took 13 years to reach 50 million TV listeners.  The Internet took four years to reach that many.  The iPod took three years to reach that many.  Facebook added 100 million users in less than nine months.  And iPhone applications hit a billion in nine months.  How long before 100 million tablets and smartphones appear in front of 100 million smart TVs?  It's not 2014.  Probably next year.  Especially with China and India.  So the next five years of television, these are my predictions based on my work at App  Market TV.  So I've written about 1,500 articles there the past four years.  Got a lot of great guest writers there.  And this is why I think it's going.  It's really my own opinion.  If you have any rebuttals, please raise your hand and let me know.  I think cloud services will make TV everywhere a reality.  Let me give you an example of cloud services in TV everywhere.  TV everywhere is kind of a concept of, imagine this.  You're taking the train home from your, let's say from the airport to your house.  You're on the train for two hours.  You're watching a movie on your tablet.  You stop the movie because you're there.  You have to get on your bike.  I have to get on my bike.  Drive home.  Get to my house.  In a TV everywhere world where it's cloud based, I would simply turn on my television  and pick up exactly where I left off.  Continue my movie in front of the big screen this time.  That's the TV everywhere concept in a nutshell.  You'll be able to access your content on any device you own, essentially.  Electronic program guide, content discovery, content dissemination will move to the second  screen.  I honestly wonder if the electronic program guide will be here in five to ten years.  As we're flooded with more and more content, we're going to need systems to help us find  what we want.  But we're also in a bit of a danger of becoming locked in a niche in a way.  Where's the I feel lucky button?  You're going to be forever stuck in some algorithm that decides that you like sexy reality shows  and that's all you're going to get.  I think that's what public broadcasting serves in essence.  That's what it really provides, the ultimate service, is allowing us that flexibility for  a show like Wonders of the Universe in the UK to get five billion people watching it  on a Saturday night.  That's fantastic.  That's what happens in the BBC.  If you're locked in some kind of niche without that kind of major broadcaster involved in  your television consumption, how's that going to work?  Second screen, sorry, linear TV will not die.  I think it will always be there, linear TV as in how TV is delivered, become social,  participative, and curated, and like the music industry, will focus on live and event-driven  revenue.  Second screen engagement will drive curated interactive models and new monetization models.  So connected world with TV everywhere, new content gatekeepers in the living room.  Here's a little bit of a mosaic of some of the companies that are fighting for that position  in your living room.  The technology company, let's say the hardware company is more or less.  So what does it mean for broadcasters, big cable and pay TV?  Well, disruption.  Their business model is breaking.  The commercial business model is under severe stress, the way it operates.  As I pointed out in some of the other slides, their role as the gatekeeper in the living  room is seriously under threat.  What does this mean for content producers?  Well, actually it's democratization.  Interesting enough.  Do you know there's a company called All Three Media in the UK?  I don't know if you know how the TV business works, but let me explain.  If you're content companies, most people don't know who content producers are.  Who knows who All Three Media, or who knows who FreeMantle and Endemol are?  Anyone?  FreeMantle and Endemol probably create 40% of what you watch on TV, maybe.  Or a lot of, maybe mass television audience.  The people who don't know who they are.  They basically sell their content to broadcasters who work with the brands and agencies, so they're  outside of that value chain in a sense.  A company like All Three Media in the UK suddenly said, you know what?  We're looking at the music industry.  They have this kind of direct thing happening with their fans.  We create the content.  Why shouldn't we give it to the fans who enjoy it?  So they created their own application in the US called the best of British television.  And they're selling that on connected televisions in the US.  I think it's like a $3.99 a month subscription rate for people who like funky British television.  It's kind of another, you know, it's the content producers seeing their industry become more  wide open and democratizing the sense that they can, now, because of technology, they  can reach their consumers in a way that they could never do before because broadcasters  were the gatekeepers.  What does this mean for brands and agencies?  Well, if you look at a brand like Red Bull, they've completely turned everything upside  down, interestingly enough.  Obviously other brands are going like, wow, how did you do that?  Why can't we have a lifestyle brand like that?  Mercedes is trying.  There's other companies that are doing pretty well.  But nobody's done it like Red Bull.  I kind of think agencies are going to have a really difficult challenge in the future  because not only are they having to fight for the money, and they're in the middle of this  great battle in a sense, because they're the creative arm of the brands in a sense.  They have been traditionally dealing with the broadcasters and figuring out things, also  creating commercials that currently fuel the industry.  So for them, it's a bit of democratization and a bit of disruption.  So for the brands, they're now free to make their own content.  They're like, content used to be really difficult stuff to make, but there's 14-year-old kids  in their basements using Final Cut.  Those cameras that shoot like 1,080, they cost under a 500 euro.  The technology is empowering us to create our own content.  We are the media.  And they're not stupid.  The brands, they realize the value that the agencies provide in a sense, but they're also  seeing the market contract, contract, get smaller.  The numbers aren't there anymore.  They don't want to give out so much money.  They're looking at other ways to reach their audience and build their brands.  So they're free to do that, but their model is being disrupted as well in the sense that  business is not the way it used to go.  They're really being challenged.  The agencies are being challenged to like, well, how are we going to deal with the second  screen?  What kind of creative thing?  We don't know what transmedia is.  That's what the writers are doing.  So they're all trying to figure out the brands and the agencies at this point are in a very  tenuous position in the UK and the US in terms of how this is moving forward, but they are  the backbone.  They are what funds this industry, the commercial industry.  What does this mean for national regulatory bodies?  This is off-com here, and that's the big guys.  It's funny, I often speak to German regulators.  I've been here a few times in Cologne and talking to German regulars about it, and it's  quite interesting because they're in a state of flux in a sense.  Because the big problem with regulatory issues and television is you have two choices.  You can deregulate broadcast to create a level playing field, because you're going to have  Netflix in Germany, by the way, probably in October.  RTL and the other companies aren't going to be happy about that because Netflix doesn't  have any rules.  And RTL and everybody else operates under this strict regime of broadcasting regulation.  And they're saying, lower this regulation because we can't compete with these guys unless  we are free to do more business.  The other option is, and a German MEP actually tried to push through some legislation in  Brussels recently, is to start regulating connected television, or in essence, start  regulating the internet, because that's what it is.  The TV is just a big monitor.  If you think about it, if it's a connected TV, it's a monitor.  All TVs, connected TVs as of 2011, come with Internet browsers.  You can go to Pirate Bay on your TV if you want.  So this is the great challenge for the regulators in the future, definitely.  So Telco is also in the picture.  They're the companies like Deutsche Telekom, British Telekom, Vodafone and the rest.  For them, they failed to do what they should have done, which was the Netflix model.  And IPTV never really worked for them.  They're still trying, but I'm not sure it's going to work still, because the big problem  is, like a lot of the major broadcasters, is they're just too big.  The companies are too big.  They can't move.  Quick enough to adapt.  They're not flexible.  Third-party developers migrating from the web, for us, it's great.  It's a whole new money pot.  We can also create new money, though.  We're not just taking money.  We're also creating new value.  So there's a lot of excitement within the development community, especially when we're  doing TV hack and cons.  So currently, what's happening, the new value chain is emerging in television.  We'll share much in common with a retail value chain.  Creators, retailers, devices.  It's currently a market being played out.  So you have the creators.  They're trying to maintain traditional economics.  They're exploring new incremental revenue streams, direct relationships with brands,  creating content, brands and producers exploring to grow direct to consumer.  Retailers.  Broadcasters are being turned into retailers.  Broadcasters' traditional revenue streams are threatened, but live is still strong,  and news, and sports.  Retailing is becoming an open market, a lot of Netflix in Germany.  Video on demand will be differentiated on price and brand.  $4.99 a month, not bad.  There's a lot of good content in Netflix.  The CE devices, IPTV, OTT, hybrid, smart and connected TVs, these are also having a huge  impact, and they're the new gatekeepers of the living room, or they will be.  More and more.  So I'm going to throw a few stats.  In the US, 77% use TV and internet simultaneously.  This is from Nielsen.  50% do it every day.  62% of TV viewers pick up their smartphones or tablets as soon as TV advertising breaks.  50% of Canadians have a second screen device at hand most of the time while watching TV,  from the CRTC.  Video viewing on mobile devices tripled in 2012.  300% for smartphones, 360% for tablets.  People are not only watching TV on the televisions, they're watching on the devices.  So the introduction of the iPad and tablets into the market has fundamentally changed  the way we watch TV in the future.  And they're quickly becoming ubiquitous in our world.  So I'm going to talk a little bit about, this is kind of coming full circle again, because  we had some elections in Holland this year, last year actually, which were fantastic.  If only four, our debates for our leaders were televised, like they do in many countries  around the world.  But RTL Netherlands decided, actually it wasn't the tech guys, it was the news department  who pushed this, but they said, we want to use the second screen to allow people watching  the debates to vote for who's winning during the debates themselves.  They could use, it was all in HTML5 for the coders here, so they could use their PCs,  they could use their laptops, they could use their smartphones, they could use their tablets,  and they could kind of, like this one is winning.  And they actually used that audience vote, that real time audience vote, to declare who  would get the last word in that presidential debate or that debate that was happening.  So now we're seeing actually the second screen become a form of participatory politics in  a way, it's not direct democracy yet, but it is having an impact, or starting to have  an impact in more than just entertainment.  So three big debates were powered by the second screen.  Next day polls, swings followed the second screen.  Huge increase in visibility for the second screen, everybody was like, wow, this is really  neat, we can get involved.  A mix of excitement and fear amongst the establishment, I think RTL Netherlands took a big risk,  and it was a very big payoff for them, and better predictions than the official polls.  So I'm running a health hack fest next month in Brussels, anybody wants to come, just letting  you guys know.  And my name is Richard Castellin, my name online is ExPathos, my hacker name, thank you very  much.  Any questions?  Hi, thank you for that fantastic presentation.  I have a question regarding your thesis with the cloud computing or accessing the web,  the UTV through the cloud.  That was one of your five theses the first you threw up there.  And now I try to be very connected, and nonetheless I would never trust things to be available  on the cloud, that's because the internet connection is simply not good enough, even  in a city like Berlin, even though I'm using 4G, even though I'm spending a hell of a lot  of money just to have perfect internet connection almost everywhere, it just takes way too long  to download.  And I would just take issue with your statement there, because I don't see in with all this  debate about net neutrality, I don't see bandwidths going up as fast to guarantee me having just  this freedom, I need to actually download content to have it available and to be able  to watch it, even in a city like Berlin.  That's not talking about me going off to my little retreat in Brandenburg or even to the  Alps or something.  So maybe you could comment on that, thanks.  Well, we call that the last mile issue in the VOD world, and it is certainly an issue,  because if I'm watching Netflix in my house and my kids are watching Netflix upstairs  and my neighbors are watching Netflix, nobody's watching Netflix.  So this is an issue, definitely.  Unfortunately it's an issue that's creating now issues with net neutrality in the United  States or the loss of net neutrality in the United States, because these companies are  saying we need to have the highway and kick everybody off so we can get our goods to our  consumers better.  So it's a difficult issue.  I think technology will solve a lot of these issues in a way in the upcoming years.  We've come from IPTV and being only kind of a fiber geeky thing 10 years ago to becoming  a mass proposition in the United States and Canada and every other country that Netflix  and video on demand is working.  So I live in the Netherlands, I'm fortunate.  We have good pipes.  So I often don't deal with these kinds of problems at this point in terms of getting content  over the internet pipes.  And you've got to understand also that a lot of countries in the third world are going  to skip, right, just like they didn't get the laptop.  They went straight from desktops to tablets, more or less.  There's going to be a jump to LTE and other methods of wireless dissemination that could  have higher bandwidth.  I know that the satellite guys are working on some lower-bottom technology which could  change the ball game.  And new kind of antennas that basically will give you 20 down and four up with a box like  that big anywhere in the world.  Anywhere in the world.  So we're not there yet.  In a sense there are limitations from technology, but we all went through the, well not all  of us, but a lot of us went through the 90s.  Sort of the slow JPEG file and waiting to load.  We all dealt with those kinds of trials and tribulations.  And certainly it's going to affect the dissemination of the technology in the short term.  But I think in the long term or medium term, these will be overcome through technology.  So any more questions?  Oh, yeah.  How is the content different in the Netherlands, for example, with Netflix compared to the  US?  So the question is time-wise how long do we still need to use VPNs to be able to see  the content we want to see in the language we want to watch?  The release windows, you mean?  They vary actually between country and country.  It depends on the deals that are done with the studios.  It's one of the advantages that Netflix has.  Is there an American company?  Probably their head offices in LA or one of their big offices.  So they're sitting there with all the deal makers.  But you know, I can't answer that question on the granular level.  What's available now or how long the windows are differentiated between what's released  in the US and what's not.  But I think there won't be a reason to have a VPN once you have it, if you're piping it  like a lot of people do.  I think there's something like 200,000 people in Australia that get Netflix, even though  it's not in the country yet.  So I'm sure people are doing that in Europe as well or in Germany.  How close it is to America?  I'm not sure.  Probably not that much difference.  Okay, one more.  Oh, yeah.  My name is David.  Do you think that one of the big fives like Amazon, Apple, Microsoft will build their  own Netflix or will buy Netflix or some kind of video on demand platform?  And if yes, which will be the first?  They're all going full blast.  Okay.  AT&T just signed a deal with the chain and group last week.  They're sinking a half, what is it, half a billion into content?  Everybody wants to create content, which is great for young content producers.  There's enough niches around too now that you don't have to lock into their mold so  much.  I mean, you can be a little bit more free to, as a creative in the television industry  or the film industry, to find new resources for creating content.  Other than just sort of, typically in Europe, a lot of documentary filmmakers that I know,  people in television, they're from smaller countries, they're looking towards the EU  and government bodies and trying to go from one trough to the next to find money.  And it's always tough.  So it's nice to see that there's perhaps some more commercial resources available for young  filmmakers and television producers in the future.  So Richard, thank you very much.  I think that's it.  Thank you.  Cheers.  Thank you.  Thank you.
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Good evening, everybody. Thanks for coming out tonight. It's a pleasure to be here in Berlin. I'm a Canadian. I'm from Vancouver originally. I currently live in Holland for the past ten years. I'm going to talk a little bit today about television, of course. That's what I came for, and also what is listed in the guide. But I'm also going to talk a little bit about some of my earlier days as a hacktivist about ten years ago and share some of my experiences in... Future. Okay. So, into the wild. Let's go sailing. I pulled out this cover here from 2006, from Time. It was an interesting year. Time nominated us, you. We are the media. For me, it had some impact. That was the year that I really started getting involved in working in the progressive news media as an individual publisher, helping disseminate new ideas amongst the public. I'll talk a little bit about Atlantic Free Press. In 2003, I started publishing with a fellow writer named Chris Floyd who worked with the Moscow Times at that time, 2002, 2003. He was one of the only writers actually, post 9-11, that was writing quite hard, heavy-hitting rhetoric about what was going on in America. And it's declined into a state of... with a Patriot Act and so on that was getting quite critical. Now Chris and I decided to team up at that point and started Atlantic Free Press. Atlantic Free Press started off with no money. We never really made any money actually, but we ended up having about 300 writers. About 20% of those were PhDs. Chris and I didn't know how to code actually. We didn't know how to run servers. We didn't really know much about publishing online. But we did know about open source. And open source is what led us to be able to do this project called Atlantic Free Press. And these are some of the writers that we worked with. So when I say we are the media, I mean we are the media, I can't code. I'm not a coder. I'm not really a great IT guy either. But still at that point, Chris and I were able to put together a small group of people and get a server in Holland and publish. And publish a lot of really, what we considered important stuff. We didn't make a lot of money. Actually we made no money. It cost us money, in fact. My wife will attest to that. These were tough times for us. But at that point the Bush administration was full on and we were full on in defiance. I just checked the stats today. We've had now between all the sites that we still host, over 12 million unique visitors and still counting. And this is a project that I've kind of retired of six years ago from, more or less, other than just hosting. And I'll go into that a little bit more as I go on here. And I'll describe some of the projects in detail. So we are the media, Photoshop's. I had a little bit of fun and a little bit of creative ability to accompany stories with pictures. And you can see here during the Bush administration it was quite interesting. We did use visuals quite intensely to accommodate, accompany the stories in a unique way to grab attention. There are some of them are maybe a little offensive to some people, but they certainly did get attention. Sometimes images just need a little bit of text to make an impact. So democracy will come to you. If you don't come to democracy, I'm still free. How about you? At those times, of course, America was going through the Patriot Act and the world changed. We all had to suddenly had new rules at the airport and our lives changed at that point. Homeland security, fighting terrorism since 1492. Resonates, very simple. Pictures in a few words. Do you? Awesome. Feel free to pipe up anytime, please. I made a bunch of those t-shirts and I was selling them online at cost. And sometimes images just speak for themselves. As you can see here, well, she's a little uncomfortable, I would say. And George always, you know, he was a great target actually. He was very easy to write about and make fun of and present very simply as a rather kind of offensive guy naturally. So you know, all these were, we pushed these images with text and I just wanted to show you some of these because we did have fun with it. At the same time, we were seriously presenting ideas from a lot of writers. At the end of the day, at Atlantic Free Press, I published 13,000 articles in six years, while Chris and I did. So you know, that was a lot of work. And I'm talking about this for the first time actually because I do talk about television a lot. I'm not more or less my area of expertise now, but I rarely talk about what I did in the past and what led me to television. And this is part of the process actually, as a publisher in television these days. So how many people here know what the Streisand effect is? Oh, great, excellent. Well for those who don't know, Barbara Streisand, she was the first example of this kind of effect. What happened is a photographer had taken a picture of her house from the air and I think four people downloaded it or six people downloaded it, but she got all offended about it. She wanted to take it off the web. So she put her lawyers onto the case. The end result was, is that picture was viewed about 400,000 times. So it really didn't work out very well for her. And that Streisand effect has continued today. We still see that today. And I've been involved in a couple of areas where we've actually used the Streisand effect to turn things around on the powers that be. And I will explain that. Craig Murray, I don't know if you know who Craig Murray is. He's the former ambassador to the United Kingdom, sorry, from the United Kingdom to Uzbekistan. Craig was a very interesting guy, a Scottish intellect, very smart fellow. He was the ambassador. He had all access to the MI5 files, MI6, everything. From Uzbekistan at that time. But also while he was the ambassador in Uzbekistan, he protested against the fact that the Americans and the Brits were flying people in, essentially, and torturing them there. At that point, the leader of Uzbekistan was named Uzmanov, and they called him Uzmanov the boiler for a reason. Not a very nice reason, by the way. So Craig had a history with Uzbekistan. Uzmanov was an interesting character. He's one of those Russian billionaires with more money than anything. At that point, he was trying to buy Liverpool. And well, it just so happened that Craig knew a lot about Uzmanov. He knew a lot. He'd seen all the files. He knew all the intel. And he wrote a piece on Uzmanov, exposing that he had been actually jailed for rape and was involved in the heroin trade. And he was kind of set free by, he said all his charges were null by Gorbachev, but that wasn't true. It was Uzmanov that sort of wiped out all the criminal history. So he went after Craig Murray. Craig was writing for me at that time for Atlantic Free Press. Now what happened was, is Craig, sorry, Uzmanov hired a company called Shillings, which is like PR damage to the max in the UK. These are really mean, ugly lawyers that go after people with all full forces, about 12 or 14 of them. So they went after the original hosting company in the UK and shut them down. The hosting company got so freaked out, they just turned off all those servers. And Craig was basically left without a home. At that point I stepped in because Craig was one of my writers and he told me what was going on and I said, well, you know what, I'll host you in Holland. I don't care. I don't own a car. I live in Holland, remember? We use bikes. I don't own a house yet. Well, that's changing. I did it that time. And I talked to the Dutch freedom of speech authorities and said, what can happen to me? I mean, what are they going to do? Take my kids' bikes? I mean, what's the worst thing that can happen? And they said they would help me out and they would defend me. So I moved Craig over. I reopened his website and I got some cease and desist letters, which I just tore up, threw away. At that point I had my own rack, so I really was the last stop in terms of making that decision. So what happened was originally when Craig got shut down, there was a huge surge. A surge of support, not only from Atlantic Free Press, but all these guys. Every single one of these websites reposted the article that Usmanoff wanted taken down. It was all over the Internet. It made an absolute fool out of shillings. The PR experts could do nothing. And it ended the case. He simply walked away from it at that point. Craig still writes today critically about the UK government and about the West. He's a very interesting writer. Craig Murray.org.uk. You should check him out. So that was our own case of this dry sand effect. They couldn't sue all of us. They couldn't go after me while they tried, but I just ripped up the notes and threw them away. It didn't matter anymore. And I still hold Craig to this day. This was another project. This is like this whole NSA thing is now kind of a second story for me in a way, because in 2005, 2006, we were already, we were writing a lot about this in Atlantic Free Press, about the NSA's major grab from the telco companies in the US on records, phone records. But there was one company that stood up, actually. They were called Quest. There were other reasons why they stood up, but they basically said, no, we're not giving you the records of our clients. Forget it. We got all the telcos in the United States. So we started up this website. Chris and I, in a night, put our WordPress site, 2005, 2006, put it up, started going through different websites and getting attention. The next thing we knew, CNN was calling. The New York Times interviewed us twice. Denver Post, USA Today, the end of SMDC, Salt Lake Tribune, we went all over the media about this. And all we did was help focus more on the attention on the problem. And it took us literally five or six hours. We are the media. Chris and I don't know how to code. We don't really know how to run IT companies or anything. We knew how to basically put up a WordPress page, but that's not too difficult. I think a lot of the people in this room probably could. One project was, you know, Atlantic Free Press was a website where we had kind of a circle of different people publishing around the world. Who were mates, I guess. You know, we were all trying to do the same thing, which was provide progressive opinion in a post-911 world without getting killed. And interestingly enough, there was another website called Drudge Report, as opposed to Drudge Report, who got basically sued by the Associated Press for doing what they were legally allowed to do, which under fair use rights, copyright law, they were allowed to use three paragraphs and then provide a link to the Associated Press story. Associated Press was really decided to pull out their guns against the bloggers at that point, and they chose our friends at Drudge Report to basically go after. So we did the same thing again. Chris and I said, well, you know, we did that with the questing. Let's do another. Let's just go at it again. We started another specialized website called Boycott Unassociated Press. We made banners, which you can't see here, but we made special banners that people could embed on their blogs, and we helped viralize what was going on. I can't say for sure that we pushed ourselves, of course, pushed AP back, but they did back. And that was another case of more or less a group of us online getting together. In unison and fighting against what we didn't believe was right. So that's a little bit of my past. I wanted to share that with you because I thought this is Republican. This is the first time I've talked about this. I left the progressive publishing world in about 2008, and I've been publishing in tech since then. I have my wife and three daughters here. It was really tough being a progressive publisher and a progressive writer. There wasn't a lot of money in that world at that time. There still isn't, I don't think, which is unfortunate because those voices are getting crushed as far as I'm concerned. They're not getting out as much as they should be. But fortunately, I see here at an event like the Republic, there's a lot of really powerful young people here carrying on the banner, I suppose. So to give a little bit about my background, after I left political publishing, I decided to start something called appmarket.tv. And the reason why I started it was because, well, I woke up one morning as a journalist and something that was like 200 million bloggers out there. And my whole industry was disrupted by the Internet. The Internet kind of collided with the print journalism world in a very significant way. Which was tough on all of us. I then entered the music industry for a while and I went through this whole process again and watching the Internet come into my world and disrupt things the way they normally went. The value chain was quite mixed up. And things changed. There was a lot of disruption. There was a lot of democratization, in fact, depending on how you look at it. So I figured TV was next. I said TV, the last bastard in the living room, the biggest of them all, cannot survive the Internet. YouTube was coming. The pipes were getting fatter. We knew the change was going to come. So I focused on tech and I focused on television at that time. And publishing about the future of television, I started getting a lot of startups coming to me and saying, hey, we want to hack, we're building cool stuff. And suddenly I started seeing APIs and SDKs in this world. Samsung had a software developer skit for people to build on. I saw production companies starting to get interested in applications for television. I saw the likes of Netflix and other companies coming up to the rise in the industry and affecting the industry in a big way. And somebody said to me, well, what do you run a hackathon on TV? Why don't we hack television? So that's what we did. In 2012 and 2013, we did it in London and San Francisco. And we hacked TV, which was great for me because it felt like I was kind of going back into my roots again, back to my publishing days where, you know, we're just a bunch of guys, guys and girls getting together and getting tooled up and trying to affect change in a significant way. This was in a short-term period, usually a weekend or whatever, for the TV hack fest. But that's part of the journey for me of my shift from the political world to television has been the hack fest. And the hack fest has led on now to some other areas such as health. I'm doing a health hack fest in Brussels. We're doing green hack fest now. We're hacking everything we can get our hands on. And we're hacking more important things than how to make people's television better, which isn't really that important. So in a way that's fulfilling this loop for me and coming back to that world again. So this is the TV that we've all kind of grown up with. A lot of us here that are over 40 or 50, I mean, well, maybe 60 or 70. But this is what we typically see is the television experience. And this is the way a lot of these executives think in that world. They're still locked into this 50s black and white world. I see it. I see it all the time. They don't understand what's coming. They don't understand how to deal with it. And they really honestly believe that the gravy train is going to keep going, but it's not. And I'll explain more about why. Part of that is because this is the way we watch TV now, more or less. There's a device. Every kid has a device there. My kids are on their devices right now. So this is what's changing. I'm going to talk about second screen because I think it's quite an interesting phenomena in how it's affecting television because you know what? When most of these people are actually using these devices, guess when they're using them during the commercials? Guess how TV is funded by commercials? How is TV going to maintain that value chain if people are off doing other things, thinking about other things? And now we can prove it because we have statistics from Twitter showing that, you know, during prime time in the United States, Twitter spikes five times or six times because people are just going to Twitter. They don't want to watch that 30-second package propaganda that doesn't mean anything to them. The idea that they can just push content that we don't really want to watch at us is not sustainable anymore. Those days are over. I tell this to broadcasting executives all the time, except for live, except for sports, except for news. You can always put something in the World Cup and I'll wait, you know, until the game comes on again. You'll wait. We'll wait. But are we going to wait for drama? I mean, we don't have to go to that source anymore for our favorite series. Our favorite series are coming, they're being piped all over the Internet in all kinds of places. Our TVs are becoming connected to the Internet now. The television is, in fact, just a big monitor in essence. The world is multi-screen. You can see the fancy hockey stick here. Most TVs now are connected. Probably about 80% they're shipping. I mean, the TV companies, the manufacturing companies are smart. Because TVs haven't gone up in price in what, 10 years? 15 years? I mean, the TV costs, what, 300, 400 euro, 500 euro, 600 euro, 800 euro? They're not going up in price. The margins are thinning for these guys. So companies like Samsung and LG and other companies are looking for new ways to make money. And how are they going to make money? They're going to make money with content. So that's the strategy for them, is to become part of that ecosystem. Well, they're maybe not producing content, but they're, in fact, the new gatekeepers in the living room. It's not the broadcasters anymore. It's not the RTLs in the world, in essence. It's the hardware manufacturers that really control. So internet technology disrupted every facet of the print media. News and print discovery consumption has rapidly shifted from print to newspapers and magazines to the internet, especially social media. Traditional publishers have tried to adopt pay structure to the internet with limited success. A growing population creating content via blogs and social media is competing with the traditional value chain. Traditional print publishers are trying to diversify the revenue away from print, moving to video, and multi-platform to compete with TV. The Guardian is a perfect example of this. You can't get hired now if you're a young journalist. If you can't shoot, that's basically the bottom line. Do you want to work for The Guardian? Do you want to work for The New York Times? Do you want to work for the London Times or whoever? As a young reporter, they want you to be able to shoot, basically. So this idea of the newspapers are seeing the moving images as being an important part of their strategy and how they're moving forward. And The Guardian is an excellent example of this. Internet technology disrupted every facet of the music business. Now, I want you to think about it because there's parallels here. Music discovery is rapidly shifting from MTV radio to the internet, iTunes, especially social media. Artists are adopting the direct-to-fan models and cutting out the middleman. Why does Rihanna need a company like Ticketmaster when she has, in fact, what, 80 million followers? If she wants to have a concert, she just needs to go, I'm having a concert. Buy your tickets for me. This whole value chain of all these people that existed between the person who creates the content and the person who consumes it is being sucked away by the internet, by this direct contact that these artists now have. It's very, very evident in the music industry in particular. And in a way, that's fantastic because I think young artists can actually connect with their fans better. I think this is a great opportunity for, maybe they're not going to be the superstar, MTV, making 50 or 100 million a year and selling millions and hundreds of millions of albums, but they'll build a sustainable following and existence because they have a direct relationship with their fans. As record sales decline, ticket sales have been growing. Live and merchandising are the new oil in the industry. I don't know. You see concert in Crownigan where I lived in the northern Netherlands recently, it's like they're wheeling out these guys from the 70s and 80s in their gray hair and there's a baldy, grayed audience going, yeah, you know what? They're not making money selling records anymore. The royalties are gone. They have to go back on the road. A lot of these guys and girls and artists. So it's interesting because that's where they're starting to make their money. It used to be the other way around. I mean, they were going on tour to support their album. Now they make albums to support their tours. So the internet, again, has affected this industry greatly. Labels are trying to diversify the revenue from recorded music and promoters and managers are expanding it to label-like models. So you see all these, you know, as this value chain is being affected by the internet, there's people like kind of creeping into each other's territories and you're seeing companies that normally didn't do this kind of stuff. It's making a mess out of the whole way the music industry used to operate. By the way, Spotify and Pandora are now saving the music industry in a way as it used to be. The labels are now starting to make money and revenue over the last four or five years from these new collective music sites. So do you think the TV industry will not be disrupted? Or as I say, democratized, of course it will. The stakes are huge. This is half a trillion a year industry globally. This is the big one. This is what all the agencies and brands are, you know, this is where they sink most of their ad dollars go into this moving picture medium. It's all about to change in the next five to 10 years and technology is going to drive that change. Consumers want more. We want more. We want to watch TV that we want to watch when we want to watch it, where we want to watch it, whatever device we want to watch it on, and preferably without being interrupted, I think that we can all agree about that. That's the great TV experience. We can argue about whether Second Screen is going to work because that's debatable still. You know, I'll go into this a little bit in some further slides, but like in music and print, scarcity will die. That's an important concept actually. Scarcity will die. Once you take out scarcity, like what happened with music, suddenly music became available everywhere. Scarcity was gone. I mean scarcity, it was scarce. Music was scarce at one point. Then it became, it was everywhere. It was ubiquitous almost. So this is what's happening in television in a sense too. When we look at companies like Netflix and other companies that are similar, video on demand going over the top, coming through internet pipes onto your big screen in the living room, that's what's happening. And you can watch your favorite programs from probably multiple suppliers. It doesn't have to be your favorite channel that tells you what you want to watch. It basically tells you what time you have to watch something. That's the whole concept of the electronic program guide. It creates scarcity in fact. I believe firmly that my daughters here will think it's quite funny in ten years that they had to come home at a certain time to watch a certain program. I mean that's kind of ludicrous, isn't it? When it's all there, why can't they just watch it when they want to watch it? Of course, that's what we want. And that's what's coming. So problems are really severe in the USA. Lehman Research Group found that broadcast ratings in the key 18 to 49 demographic tumbled. 70% in one year. That's huge. NBCU can't even get 5 million people to watch a show these days. Five years ago, 5 million people would barely push through a pilot. Those were okay numbers, but maybe not enough to push through a pilot. Things are really being hit hard in the United States and there's a reason why. Has anybody heard of machinima here? Okay, machinima is an interesting example. This is probably where a lot of those, that key demographic is disappearing to you, maybe not a lot, but some of them certainly. It's serving more than 2 billion monthly video views and reaching 175 million uniques each month. There's 1.8 million network videos, 40 billion network video views, 215 million subscribers. These numbers kind of make television look like a little bit small. And you know what's really weird about machinima? If you don't know what machinima is, machinima, essentially 80% of it, there's some creative ideas, machinima as well, but 80% of it is young people filming their experiences in their gaming worlds and then creating narrative and storytelling and then sharing those videos with other people who are like the same games that they like. So this whole subculture, in fact, of machinima, which is having a huge impact that nobody knows about. It's quite strange actually, the people in the TV business have never heard of it. Having said that, I believe that Warner Pictures is probably going to buy it in the next few weeks. So I like this headline actually because I've always been a proponent of open source, I mean I've been an evangelist for open source systems, I've been a proponent of, from the internet perspective on television and what we're bringing to the table, what we can bring to the table. And this is the half trillion market that I was talking about. And we can see that pretty clearly what's happening when you look at companies like YouTube who are investing significantly in content. You look at companies like Microsoft, Xbox is now investing in content. You look at companies like, I'm pretty sure Apple might soon start investing in content. And really a lot of the control around television has to do with live rights with sports, in fact. This is kind of the big, this is what Rupert Murdoch has built his empire upon with Sky, trying to do in Germany. Basically take stuff that we used to have for free and charge us for it, to watch it. Sports. Sports rights are huge, they're worth a lot of money, but you know what? Murdoch and all these guys like British Telecom and Deutsche Telecom and whoever's in these bidding wars currently for these sports rights, when the next round comes up in the next four to six years, if someone like Apple walks in or Google, they aren't going to be able to compete. They can outbid anybody in the room. Microsoft, Apple, Google, Facebook. Who knows who's going to go into that space? Because that's power. You own the rights to the World Cup? That's power. Google owns the rights to cricket in India. Most people don't even know that. They own the digital rights to cricket, which is a huge sport for a billion people, and they deliver it for free on YouTube in India. So watch out for the internet companies, because they will be there, and they're coming. Niche is the new norm. Talks a little bit about machinima, definitely which is a collective of Niche in essence. But in reality, Niche is the new norm. We used to, that old black and white picture that we had there, I remember those days. I'm almost 50 now. I remember those days when you turn the TV off and it went down to a little dot and it kind of sunk away. And there were four channels, and we had to get up and walk to the TV to change them. We didn't have a lot of selection. We basically were fed whatever, what we got. Look at today. If you have a basic cable package, you've got a thousand channels. By the time, whatever it is, hundreds of channels. You go from one end to the other, and by the time you get to the end of it, you've missed half the show that maybe you were going to watch in the beginning. It's getting very complicated. There's a lot of new Niche. It's the same thing in music. A lot of different styles of music. I checked out electronic dance music in Wikipedia the other day. There's like a 188 genre now. There's like dub dub, under dub, super dub. I mean, it's just, we're just like splitting off into these, you know, fractioning out into these different tastes and different communities that are able to support themselves and keep the interest in those spaces. And that's interesting because, you know, I went to MIPTV earlier, which is a big, huge television show in Cannes where all the big guys come and they trade their shows, and it's like everybody's there, End of Mall, Fremantle, Disney. The big guys all in Cannes and the Sun in October. And you know, I got to the building and I looked up and there was like an 80-foot sign of Duck Dynasty. And I was like, is this what we've devolved to in terms of mass entertainment and what we need to, you know, what people are interested in? Surely not. And in essence, we still have that mass market, but that mass market is shrinking. As I told you, NBCU can't even get 5 million people now. What do they do when they go and meet up with all the ad agencies in New York? Which they do once a year and they trade for about $20 billion. They're like, well, our numbers are down this year. Well, the brands are telling their agencies, well, if the numbers aren't there, if you don't have that reach anymore, we can't pay you that kind of money. So they get involved in this vicious circle and broadcast executives are always telling me, they're saying, who's going to pay for this, Richard? You know, how's this going to pay for this, you know, this utopian vision of you having the internet coming together with television and a happy marriage? And I'm like, well, it's not going to be a happy marriage, actually. It's going to fragment. And you know, there's very little to stop it, in a sense. Interestingly enough, I also saw, and mid TV, I saw Red Bull. Red Bull, there's a brand. You know, a drinks brand. Actually, I call them a media company that sells drinks. They have over a thousand episodes of their own content, which they're selling to broadcasters. If anybody's bucking the system in terms of the traditional value chain, it's like, what is a brand doing here? What are they doing? Well, because they're actually a media company who have built up a lifestyle around their brand itself. I mean, there's a drink that doesn't taste very good, to be honest. It's not very good for you, and it's kind of expensive. You know, it's there. They can spend 30 million sending a guy up in this, you know, jump from space. But television, where are we going? To the niche. Right now, what's great, for all the Duck Dynasties of the world and all the crap reality that we're seeing come out, there's also a lot of really good television being made. Actually, we're in a golden age of television. You know, if you watch television today, and you know, there's like Danish cremies, and there's, you know, there's some really great stuff going on. The dialogue is great. The storylines are great. The story arcs are great. The plots are great. There's some really wonderfully well-written television at the same time. And it's just going into niche. Now I'm going to talk a little bit about second screen, because this is kind of my area of expertise in television. And this is the ecosystem with which is what I work with within. It's incredibly complex. There's a lot of players, and there was a lot of hopes built up. And I'll explain this why. What happened was basically the iPad came out in what, 2005, 2006, whatever it was, 2008, 2007. And all of a sudden, you know, at the trade shows for television, some of the forward-thinking innovators were taking iPads and doing really cool things with them, like being able to change channels. And, wow, you know, you're watching a show, and suddenly you have like contextual information about the show. So who's in the show? And who's starring in it? And there became this snowball effect, and everybody said, wow, plus we had all these statistics from Nielsen saying, hey, you know, 50% of all tablet owners are using them every day while they're watching TV. This, like, people got this really strong idea that tablets were going to really ultimately, hugely change the industry. Because in essence, it's not really the second screen. A lot of people think it's the first screen. But the problem was with that, and why it didn't really take off as it should have, or maybe it could have, a couple of good reasons why. One is a lot of shows aren't written with the second screen in mind. That's a big problem. That's only starting to happen now. Production companies are saying, end them all, and the free mantas of the world are saying, hey, you know what, if we write the second screen into the show, we can own that. We don't have to give that to the broadcasters, or we can leverage them and get a better deal on it if we can make money out of it. So only now they're starting to write that stuff in. But that's been one of the main problems, is they haven't written the second screen into the shows. It's been kind of a gimmicky thing. I think the second grade problem with second screen is the fact that, you know, I think it works for a certain genre, like sports. I think, yeah, you know what I mean? You want to see extra stats. You want to have a different camera angle on the goal or something. You can do cool things with the second screen. And I think with game shows, it can work. We have a show called Million Pound Drop in the UK. 100,000 people play along with it live every Friday night. It's a lot. And I think maybe with news documentaries, you can get contextual stuff that works. But try watching a really complex drama and having a synchronous experience. It doesn't work. You can't, you know, you don't really want to be getting away from the dialogue too much or the storyline or the story arc itself. You want to be involved in that. And I think that's one of the things that they're really now starting to discover with second screen in terms of drama in particular, is that it works as an asynchronous experience, better than it works as a synchronous experience. So how many of you have heard of the word transmedia here? A few? Okay. For those who don't know, transmedia is an awful word, but I believe it's an Emmy award now in the United States, so we're kind of stuck with it. But it's a word that kind of describes, from the writer's perspective, this intersection of the internet and television. It's their world. It's the writer's world, basically. So for them, it's about taking the narrative into different directions using different platforms and different technologies and different devices, let's say, different ways to bring the story into another dimension. That can be through games. That can be through ARGs. That can be through second screen asynchronous or synchronous experiences, if you like. That can be through, some people are using augmented reality. That can be through gamification. There's lots of different ways to do it. It's a very interesting field. And it's something that's getting much more interesting. And this comes back to the production company saying, okay, how are we going to write second screen or how can we write the experience and continue the journey other than just putting it on for 60 minutes and saying, okay, it's over. I'll wait until next week. So that's part of what transmedia is about. That's definitely part of this ecosystem as well. The storm is coming. A lot of TV executives are always like, yeah, right, come on, we're couch potatoes, humans, we don't want anything to change. We just want to escape through television. And there is some merit in that fact, in a way. But I use stuff like this to try and convince them that they should be aware that change can happen and can happen a little bit quicker than they expect. Took 38 years to reach 50 million radio listeners. Took 13 years to reach 50 million TV listeners. The Internet took four years to reach that many. The iPod took three years to reach that many. Facebook added 100 million users in less than nine months. And iPhone applications hit a billion in nine months. How long before 100 million tablets and smartphones appear in front of 100 million smart TVs? It's not 2014. Probably next year. Especially with China and India. So the next five years of television, these are my predictions based on my work at App Market TV. So I've written about 1,500 articles there the past four years. Got a lot of great guest writers there. And this is why I think it's going. It's really my own opinion. If you have any rebuttals, please raise your hand and let me know. I think cloud services will make TV everywhere a reality. Let me give you an example of cloud services in TV everywhere. TV everywhere is kind of a concept of, imagine this. You're taking the train home from your, let's say from the airport to your house. You're on the train for two hours. You're watching a movie on your tablet. You stop the movie because you're there. You have to get on your bike. I have to get on my bike. Drive home. Get to my house. In a TV everywhere world where it's cloud based, I would simply turn on my television and pick up exactly where I left off. Continue my movie in front of the big screen this time. That's the TV everywhere concept in a nutshell. You'll be able to access your content on any device you own, essentially. Electronic program guide, content discovery, content dissemination will move to the second screen. I honestly wonder if the electronic program guide will be here in five to ten years. As we're flooded with more and more content, we're going to need systems to help us find what we want. But we're also in a bit of a danger of becoming locked in a niche in a way. Where's the I feel lucky button? You're going to be forever stuck in some algorithm that decides that you like sexy reality shows and that's all you're going to get. I think that's what public broadcasting serves in essence. That's what it really provides, the ultimate service, is allowing us that flexibility for a show like Wonders of the Universe in the UK to get five billion people watching it on a Saturday night. That's fantastic. That's what happens in the BBC. If you're locked in some kind of niche without that kind of major broadcaster involved in your television consumption, how's that going to work? Second screen, sorry, linear TV will not die. I think it will always be there, linear TV as in how TV is delivered, become social, participative, and curated, and like the music industry, will focus on live and event-driven revenue. Second screen engagement will drive curated interactive models and new monetization models. So connected world with TV everywhere, new content gatekeepers in the living room. Here's a little bit of a mosaic of some of the companies that are fighting for that position in your living room. The technology company, let's say the hardware company is more or less. So what does it mean for broadcasters, big cable and pay TV? Well, disruption. Their business model is breaking. The commercial business model is under severe stress, the way it operates. As I pointed out in some of the other slides, their role as the gatekeeper in the living room is seriously under threat. What does this mean for content producers? Well, actually it's democratization. Interesting enough. Do you know there's a company called All Three Media in the UK? I don't know if you know how the TV business works, but let me explain. If you're content companies, most people don't know who content producers are. Who knows who All Three Media, or who knows who FreeMantle and Endemol are? Anyone? FreeMantle and Endemol probably create 40% of what you watch on TV, maybe. Or a lot of, maybe mass television audience. The people who don't know who they are. They basically sell their content to broadcasters who work with the brands and agencies, so they're outside of that value chain in a sense. A company like All Three Media in the UK suddenly said, you know what? We're looking at the music industry. They have this kind of direct thing happening with their fans. We create the content. Why shouldn't we give it to the fans who enjoy it? So they created their own application in the US called the best of British television. And they're selling that on connected televisions in the US. I think it's like a $3.99 a month subscription rate for people who like funky British television. It's kind of another, you know, it's the content producers seeing their industry become more wide open and democratizing the sense that they can, now, because of technology, they can reach their consumers in a way that they could never do before because broadcasters were the gatekeepers. What does this mean for brands and agencies? Well, if you look at a brand like Red Bull, they've completely turned everything upside down, interestingly enough. Obviously other brands are going like, wow, how did you do that? Why can't we have a lifestyle brand like that? Mercedes is trying. There's other companies that are doing pretty well. But nobody's done it like Red Bull. I kind of think agencies are going to have a really difficult challenge in the future because not only are they having to fight for the money, and they're in the middle of this great battle in a sense, because they're the creative arm of the brands in a sense. They have been traditionally dealing with the broadcasters and figuring out things, also creating commercials that currently fuel the industry. So for them, it's a bit of democratization and a bit of disruption. So for the brands, they're now free to make their own content. They're like, content used to be really difficult stuff to make, but there's 14-year-old kids in their basements using Final Cut. Those cameras that shoot like 1,080, they cost under a 500 euro. The technology is empowering us to create our own content. We are the media. And they're not stupid. The brands, they realize the value that the agencies provide in a sense, but they're also seeing the market contract, contract, get smaller. The numbers aren't there anymore. They don't want to give out so much money. They're looking at other ways to reach their audience and build their brands. So they're free to do that, but their model is being disrupted as well in the sense that business is not the way it used to go. They're really being challenged. The agencies are being challenged to like, well, how are we going to deal with the second screen? What kind of creative thing? We don't know what transmedia is. That's what the writers are doing. So they're all trying to figure out the brands and the agencies at this point are in a very tenuous position in the UK and the US in terms of how this is moving forward, but they are the backbone. They are what funds this industry, the commercial industry. What does this mean for national regulatory bodies? This is off-com here, and that's the big guys. It's funny, I often speak to German regulators. I've been here a few times in Cologne and talking to German regulars about it, and it's quite interesting because they're in a state of flux in a sense. Because the big problem with regulatory issues and television is you have two choices. You can deregulate broadcast to create a level playing field, because you're going to have Netflix in Germany, by the way, probably in October. RTL and the other companies aren't going to be happy about that because Netflix doesn't have any rules. And RTL and everybody else operates under this strict regime of broadcasting regulation. And they're saying, lower this regulation because we can't compete with these guys unless we are free to do more business. The other option is, and a German MEP actually tried to push through some legislation in Brussels recently, is to start regulating connected television, or in essence, start regulating the internet, because that's what it is. The TV is just a big monitor. If you think about it, if it's a connected TV, it's a monitor. All TVs, connected TVs as of 2011, come with Internet browsers. You can go to Pirate Bay on your TV if you want. So this is the great challenge for the regulators in the future, definitely. So Telco is also in the picture. They're the companies like Deutsche Telekom, British Telekom, Vodafone and the rest. For them, they failed to do what they should have done, which was the Netflix model. And IPTV never really worked for them. They're still trying, but I'm not sure it's going to work still, because the big problem is, like a lot of the major broadcasters, is they're just too big. The companies are too big. They can't move. Quick enough to adapt. They're not flexible. Third-party developers migrating from the web, for us, it's great. It's a whole new money pot. We can also create new money, though. We're not just taking money. We're also creating new value. So there's a lot of excitement within the development community, especially when we're doing TV hack and cons. So currently, what's happening, the new value chain is emerging in television. We'll share much in common with a retail value chain. Creators, retailers, devices. It's currently a market being played out. So you have the creators. They're trying to maintain traditional economics. They're exploring new incremental revenue streams, direct relationships with brands, creating content, brands and producers exploring to grow direct to consumer. Retailers. Broadcasters are being turned into retailers. Broadcasters' traditional revenue streams are threatened, but live is still strong, and news, and sports. Retailing is becoming an open market, a lot of Netflix in Germany. Video on demand will be differentiated on price and brand. $4.99 a month, not bad. There's a lot of good content in Netflix. The CE devices, IPTV, OTT, hybrid, smart and connected TVs, these are also having a huge impact, and they're the new gatekeepers of the living room, or they will be. More and more. So I'm going to throw a few stats. In the US, 77% use TV and internet simultaneously. This is from Nielsen. 50% do it every day. 62% of TV viewers pick up their smartphones or tablets as soon as TV advertising breaks. 50% of Canadians have a second screen device at hand most of the time while watching TV, from the CRTC. Video viewing on mobile devices tripled in 2012. 300% for smartphones, 360% for tablets. People are not only watching TV on the televisions, they're watching on the devices. So the introduction of the iPad and tablets into the market has fundamentally changed the way we watch TV in the future. And they're quickly becoming ubiquitous in our world. So I'm going to talk a little bit about, this is kind of coming full circle again, because we had some elections in Holland this year, last year actually, which were fantastic. If only four, our debates for our leaders were televised, like they do in many countries around the world. But RTL Netherlands decided, actually it wasn't the tech guys, it was the news department who pushed this, but they said, we want to use the second screen to allow people watching the debates to vote for who's winning during the debates themselves. They could use, it was all in HTML5 for the coders here, so they could use their PCs, they could use their laptops, they could use their smartphones, they could use their tablets, and they could kind of, like this one is winning. And they actually used that audience vote, that real time audience vote, to declare who would get the last word in that presidential debate or that debate that was happening. So now we're seeing actually the second screen become a form of participatory politics in a way, it's not direct democracy yet, but it is having an impact, or starting to have an impact in more than just entertainment. So three big debates were powered by the second screen. Next day polls, swings followed the second screen. Huge increase in visibility for the second screen, everybody was like, wow, this is really neat, we can get involved. A mix of excitement and fear amongst the establishment, I think RTL Netherlands took a big risk, and it was a very big payoff for them, and better predictions than the official polls. So I'm running a health hack fest next month in Brussels, anybody wants to come, just letting you guys know. And my name is Richard Castellin, my name online is ExPathos, my hacker name, thank you very much. Any questions? Hi, thank you for that fantastic presentation. I have a question regarding your thesis with the cloud computing or accessing the web, the UTV through the cloud. That was one of your five theses the first you threw up there. And now I try to be very connected, and nonetheless I would never trust things to be available on the cloud, that's because the internet connection is simply not good enough, even in a city like Berlin, even though I'm using 4G, even though I'm spending a hell of a lot of money just to have perfect internet connection almost everywhere, it just takes way too long to download. And I would just take issue with your statement there, because I don't see in with all this debate about net neutrality, I don't see bandwidths going up as fast to guarantee me having just this freedom, I need to actually download content to have it available and to be able to watch it, even in a city like Berlin. That's not talking about me going off to my little retreat in Brandenburg or even to the Alps or something. So maybe you could comment on that, thanks. Well, we call that the last mile issue in the VOD world, and it is certainly an issue, because if I'm watching Netflix in my house and my kids are watching Netflix upstairs and my neighbors are watching Netflix, nobody's watching Netflix. So this is an issue, definitely. Unfortunately it's an issue that's creating now issues with net neutrality in the United States or the loss of net neutrality in the United States, because these companies are saying we need to have the highway and kick everybody off so we can get our goods to our consumers better. So it's a difficult issue. I think technology will solve a lot of these issues in a way in the upcoming years. We've come from IPTV and being only kind of a fiber geeky thing 10 years ago to becoming a mass proposition in the United States and Canada and every other country that Netflix and video on demand is working. So I live in the Netherlands, I'm fortunate. We have good pipes. So I often don't deal with these kinds of problems at this point in terms of getting content over the internet pipes. And you've got to understand also that a lot of countries in the third world are going to skip, right, just like they didn't get the laptop. They went straight from desktops to tablets, more or less. There's going to be a jump to LTE and other methods of wireless dissemination that could have higher bandwidth. I know that the satellite guys are working on some lower-bottom technology which could change the ball game. And new kind of antennas that basically will give you 20 down and four up with a box like that big anywhere in the world. Anywhere in the world. So we're not there yet. In a sense there are limitations from technology, but we all went through the, well not all of us, but a lot of us went through the 90s. Sort of the slow JPEG file and waiting to load. We all dealt with those kinds of trials and tribulations. And certainly it's going to affect the dissemination of the technology in the short term. But I think in the long term or medium term, these will be overcome through technology. So any more questions? Oh, yeah. How is the content different in the Netherlands, for example, with Netflix compared to the US? So the question is time-wise how long do we still need to use VPNs to be able to see the content we want to see in the language we want to watch? The release windows, you mean? They vary actually between country and country. It depends on the deals that are done with the studios. It's one of the advantages that Netflix has. Is there an American company? Probably their head offices in LA or one of their big offices. So they're sitting there with all the deal makers. But you know, I can't answer that question on the granular level. What's available now or how long the windows are differentiated between what's released in the US and what's not. But I think there won't be a reason to have a VPN once you have it, if you're piping it like a lot of people do. I think there's something like 200,000 people in Australia that get Netflix, even though it's not in the country yet. So I'm sure people are doing that in Europe as well or in Germany. How close it is to America? I'm not sure. Probably not that much difference. Okay, one more. Oh, yeah. My name is David. Do you think that one of the big fives like Amazon, Apple, Microsoft will build their own Netflix or will buy Netflix or some kind of video on demand platform? And if yes, which will be the first? They're all going full blast. Okay. AT&T just signed a deal with the chain and group last week. They're sinking a half, what is it, half a billion into content? Everybody wants to create content, which is great for young content producers. There's enough niches around too now that you don't have to lock into their mold so much. I mean, you can be a little bit more free to, as a creative in the television industry or the film industry, to find new resources for creating content. Other than just sort of, typically in Europe, a lot of documentary filmmakers that I know, people in television, they're from smaller countries, they're looking towards the EU and government bodies and trying to go from one trough to the next to find money. And it's always tough. So it's nice to see that there's perhaps some more commercial resources available for young filmmakers and television producers in the future. So Richard, thank you very much. I think that's it. Thank you. Cheers. Thank you. Thank you.
other areas such as health. I'm doing a health how TV is funded by commercials? How is TV going via blogs and social media is competing with the based on my work at App Market TV. So I've will drive curated interactive models and new retail value chain. Creators, retailers, devices.