Social Addiction - A recent Pew Research survey suggests that only 11% of consumers would find social media "very hard" to give up, as compared to 28% and 36% who said it would be very hard to live without their fixed telephone line or email, respectively. We believe that this survey does not necessarily reflect on the value that social media creates for users, and that social media engagement is likely to keep growing as services and content that leverage social media platforms become better. We see interaction with real time TV events as a great example: a study by Influenster found that most US female Internet users were planning to watch the Oscars, while using social media to see other people's reactions (79%) and because it made the show more entertaining (77%). This provides a great opportunity for brands as 89% of this group was open to interacting with brands who tweeted during TV cultural events.

Mobile Marketing - Mobile is having a significant impact on a several digital marketing efforts, in particular paid search, SEO, display, social media, and email marketing, according to a survey of marketers and agencies by Econsultancy/SEMPO. Within mobile, company marketers viewed GOOG's Universal Analytics as the most significant trend. Agency respondents identified geo-targeting as the most significant mobile marketing trend, an area that we believe will play a significant part in ad revenue growth for mobile-centric services such as TWTR. Spending on mobile still has more catching up to do, representing just 3% of digital marketing budgets vs 31% paid search, 18% SEO and 18% email.

Media Consumption - 79% of consumers still consume their video content through "conventional" MVPD sources, and use digital to increase/supplement traditional sources rather than replace them, according to a CEA study. Online U.S. adults turn to DVD/Blu-ray (65%), free streaming (47%), and paid streaming services (37%) as their digital sources, with younger adults skewing more to paid streaming. The study points to traditional media being a key source for discovering (digital) content, despite that 53% of survey respondents said they skip commercials. Separately, Nielsen data points to increased traditional TV viewing (to over 170 hours), even-though live TV viewing decreased slightly. Media consumption on traditional computers continues to decline while smartphone use continues to rise.

Regulatory Review - The FCC is set to review joint sales agreements (JSAs), associated "sidecar" agreements and shared services agreements (SSAs) among broadcast TV stations. The FCC is proposing to make JSAs attributable, meaning that they would be viewed as effective control if they generate more than 15% of a stations ad revenue. The FCC is also exploring full disclosure of all SSAs and prohibiting two or more of the big 4 stations from working together in retrans negotiations. These steps are being taken to in part to address the upward pressure on cable pricing. While this could help cable operators, we believe rising retrans will remain one of the top drivers for MVPD programming cost inflation.

Gaming Updates - AMZN is increasing its exposure to the gaming industry after acquiring gaming company Double Helix and focusing on marketing a game called Air Patriots. They are expected to launch their own console (likely Android-based) this year, and use the game to help market the console. Separately, Respawn/EA's Titanfall (Xbox exclusive) launched Mar-11 and could provide a lift to MSFT's Xbox One sales (which have been lagging PS4). MSFT introduced an Xbox One bundle with the game, effectively reducing the price of the console by $60. We view Titanfall as an important data point for software demand, although we note that the XB360 version will launch later on Mar-25.

Tony Wible joined Janney Montgomery Scott in 2008 and is a Managing Director covering the Media and Entertainment sector after spending the previous 10 years at Citigroup Investment Tony WibleResearch—most recently covering the Broadcasting and Entertainment Services industries.
Tony can be reached at twible@janney.com.

Janney Montgomery Scott LLC, is a U.S. broker-dealer registered with the U.S. Securities and Exchange Commission and a member of the New York Stock Exchange, the Financial Industry Regulatory Authority and the Securities Investor Protection Corp. Disclosures may be reviewed at Wible's Weekly.

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