Mediaset Presentation For Nagra Apr08

Pay DTT in Italy
Madrid, 24 April 2008

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Table of contents
Pay DTT: just another pay TV platform in Italy? The importance of iDTV and CAMs availability for future growth in Italian DTT
Source: BAH Analysis
Pay TV market strategy in Italy: newcomers needed a different approach from the incumbent
Main features of traditional Pay TVs
Entertainment Cartoons Documentary News Sport
Implications for operators and subscribers

High TV programming costs for maintaining the wide multi-channel offer
Multichannel
Pay TV Operators
Costly back-office systems for client management and billing Large call-center Complex and expensive SMS / billing system investments High acquisition costs (discounts, decoder & installation incentives, )
Premium Events
Major sport events TV first run of Movies TV Series Reality shows
Clients
Costly monthly subscription Fees are independent from time spent watching TV Clients pay for a wide offer but are actually interested in a small portion of it
Mobile phone market demonstrated that a low-cost prepaid offering can boost sales, in order to reach the mass market
Mobile Phone Market in Italy
Before 1998 After 1998 Prepaid pay-perPrepaid pay-perconsumption consumption no subscription required no subscription required Scratch card used to recharge mobile phones in Italy
Service Service Description Description
Subscription compulsory Subscription compulsory
Target Target
High-spender, business High-spender, business and niche private market and niche private market
Mass market Mass market (private and business) (private and business)
Pricing Pricing
High cost per minute High cost per minute
Low cost per minute Low cost per minute (recharges available for 3) (recharges available for 3)
Penetration Penetration
Low Low
High High (~100% penetration) (~100% penetration)
Mediaset identified an innovative positioning in the DTT Pay TV market, complementary to the one of the incumbent, based on the open horizontal DTT platform
Platform Positioning
SUBSCRIPTION
Satellite and IPTV
COST PER USER
PAY PER VIEW
FREE
Analogue Terrestrial
Ca. 10
DTT
30 60
100 +
NATIONAL CHANNELS
developing a pay-per-view offer, based on re-chargeable pre-paid smart cards

DTT Pay TV Model Pay per View
1 Purchase of smart cards at shops or large distributors (like mobile phone rechargeable cards)
Periodic replacement of cards after expiry date Pre-paid smart card
2 Access to pay-per-view content by decreasing the credit on the card by Set Top Box
3 Card Recharge (using scratch card and/or virtual voucher)
In summary, low-cost pay-per-view offers advantages to both TV operators and users

Advantages for broadcasters and final users
Limited Investments: Pay TV operators invest only on key premium content TV rights, without sustaining the cost of a multichannel offering
Broadcasters Broadcasters
Simpler and cost effective customer management in respect to traditional pay-TV operators: events are purchased through a pre-paid card - which enables to buy content locally with credit / debit stored in the smart card - avoiding to implement complex billing systems High volumes: the low cost model has the potential to reach the mass market Flexible, cheap and user friendly offer: No subscription Pay-per-consumption Possibility to choose only valuable content Low pricing of smart cards and flexible recharge Plug and Play hardware (no Sat dish, no cables, )
Clients Clients
Mediaset Premium has reached 2.5 million Smart Cards activated by December 2007
Smart Cards Premium Sold (1) (2004-2007, 000 Smart Cards)
2,795 2,574 2,500
Active Smart Cards Premium (1) (000 Smart Cards)
1,436
0
Dec 04 Dec 05 Dec 06 Dec 07 Dec 07
Smart Card activated/recharged by clients
Smart Card sold to Retailer

(1) Net data (excluding Smart Card expired in june 2007) Source: Mediaset
creating new value for the company

Mediaset Total Revenues 2001 2,351.1 Mio/Euro
Other 5% 17%
Mediaset Total Revenues 2007 3,002.1 Mio/Euro

Other (including Pay TV)
95%
Advertising
Advertising
83%
Table of contents
Pay DTT: just another pay TV platform in Italy? The importance of iDTV and CAMs availability for future growth in Italian DTT
IDTVs will be the driver of future DTT growth
Total DTT Receivers Sales (comparison 4Q06 vs. 4Q07)

431.694
100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0%
1.114.559
Comments Comments In the last year the IDTV diffusion In the last year the IDTV diffusion experienced a boom, today more experienced a boom, today more then half of DTT receivers sold is then half of DTT receivers sold is constituted by iDTVs constituted by iDTVs iDTVs are the main driver for iDTVs are the main driver for future DTT mass diffusion future DTT mass diffusion Is the set top box the only way to Is the set top box the only way to grant operators and viewers, grant operators and viewers, access to pay per view content? access to pay per view content?
26% 55% IDTV STB MHP 71% 37% Zapper
3%
4Q'06
8%
4Q'07
Fonte: DGTVi, GFK, Analisi BAH
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With the growth of the iDTV market, the Conditional Access Module is strategic for DTT pay services diffusion
Conditional Access Module
IILL LLU UST STR RAT ATIV IVE E
Comments Comments
The availability of CAMs for Pay TV reception on iDTVs is strategic for DTT diffusion: The availability of CAMs for Pay TV reception on iDTVs is strategic for DTT diffusion: iDTVs will be the driver of future DTT growth iDTVs will be the driver of future DTT growth Premium contents offering has been in Italy a key driver to increase DTT penetration Premium contents offering has been in Italy a key driver to increase DTT penetration Italian DGTVi labelling program has already delivered the first results: Italian DGTVi labelling program has already delivered the first results: On March the 15th, the first CAM developed by SmarDTV was marketed in Italy On March the 15th, the first CAM developed by SmarDTV was marketed in Italy In the last months, many iDTV manufacturers have ordered CAMs to be bundled with their iDTVs In the last months, many iDTV manufacturers have ordered CAMs to be bundled with their iDTVs
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Italian DGTVi has issued a trademark to certify iDTVs compliancy to Pay TV through compatible CAMs
iDTV trademark: only pay TV (Common Interface + CAM)
Comments Comments
DGTVi has already certified major TV DGTVi has already certified major TV manufacturers: manufacturers: SAMSUNG SAMSUNG PANASONIC PANASONIC TELEFUNKEN TELEFUNKEN FINLUX FINLUX INNO HIT INNO HIT The DGTVi trademark is widely present on the The DGTVi trademark is widely present on the shelves, > 40% of the iDTV market is in the shelves, > 40% of the iDTV market is in the program program Manufacturers involved in the labelling Manufacturers involved in the labelling program accept to add MHP to their iDTV by program accept to add MHP to their iDTV by the end of 2009, becoming eligible for the full the end of 2009, becoming eligible for the full trademark trademark
Major TV Set requirements: DTT Tuner for free TV, Common Interface for Pay TV(+ bundled CAM options)
Under discussion
DGTVi associates will promote all DGTVi trademarks on their networks and will not develop any commercial initiatives with companies not enrolled in the program
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Mediaset Presentation For Nagra Apr08

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Pay DTT in Italy

Madrid, 24 April 2008

Source: BAH Analysis

Implications for operators and subscribers

Major sport events TV first run of Movies TV Series Reality shows

Source: BAH Analysis

Service Service Description Description

Subscription compulsory Subscription compulsory

High cost per minute High cost per minute

High High (~100% penetration) (~100% penetration)

Source: BAH Analysis

Satellite and IPTV

COST PER USER

PAY PER VIEW

Source: BAH Analysis

developing a pay-per-view offer, based on re-chargeable pre-paid smart cards

Periodic replacement of cards after expiry date Pre-paid smart card

3 Card Recharge (using scratch card and/or virtual voucher)

In summary, low-cost pay-per-view offers advantages to both TV operators and users

Source: BAH Analysis

Active Smart Cards Premium (1) (000 Smart Cards)

Smart Card sold to Retailer

creating new value for the company

Mediaset Total Revenues 2007 3,002.1 Mio/Euro

Source: BAH Analysis

IDTVs will be the driver of future DTT growth

Total DTT Receivers Sales (comparison 4Q06 vs. 4Q07)

26% 55% IDTV STB MHP 71% 37% Zapper

Fonte: DGTVi, GFK, Analisi BAH

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