CONFIDENTIAL Grouper: Competitive Landscape and Alternative Growth Strategies DRAFT
page 1 Distinct Service Categories Formed at the Outset of Digital Video StoreChannelPromotional On-demand videos programmed in channels or on a show-by-show basis Advertising supported, with some upsell to subscription Short video clips promoting the site owner’s content, merchandise, and brand May include some advertising and limited commerce capabilities Aggregate video across providers for purchase Includes sell-thru, rental, and subscription User Generated Video (UGV) Allow audience to watch and share videos created and uploaded by users Primarily advertising based revenues Social Network Online communities enabling interactivity between users Primarily advertising based revenues
page 2 Players with the Largest Audience are Acquiring to Broaden their Offerings, Blurring the Line Between Service Categories Service Original FocusAreas of Expansion Store Social Network Channel (e.g., Music Videos on Yahoo! Music) UGV – Acquired YouTube for $1.6BN UGV – Launched MySpace Videos Channel – Fox Full Throttle Store – Download-to-own Episodes UGV Tools – Acquired JumpCut UGV Content – CurrentTV Partnership
page 3 Players with Smaller Online Audiences are Gaining Traction through Increased Focus on Key Service Differentiators ServiceFocus Area Attract high quality “prosumer” videos by offering cable distribution Attract high quality UGV through revenue sharing Offer easy-to-use tools for online video creation and editing Provide robust video sharing infrastructure and turn-key offering for syndicators
page 4 The Evolution of Digital Video May Follow Other Media Markets Content / Service Offering DepthBreadth Audience Targeted Mass Appeal ABC NBC CBS Fox HGTV CourtTV Speed Channel History Channel E! A&E Lifetime Cartoon Network Content / Service Offering DepthBreadth Audience Targeted Mass Appeal Yahoo! Google MSN AOL CNN.com ESPN.com Weather Channel Consumer Reports New York Times CNET TV NetworksOnline Information Media Markets Traditionally Support 3 to 5 Broad Offerings with Mass Appeal and a Variety of Targeted Services
page 5 Moving Grouper to Leadership Through Breadth or Focus Dictates Distinct Expansion Priorities Scale / Breadth Mass Traffic Mass Content Adjacent areas (e.g., Social Networking) Focus Targeted Content Offers Differentiated Technology Winning through focus may be more achievable organically through alignment of content and technology –Build well-programmed, targeted channels Invest in clearances for SPE content to ensure channel depth Acquire and / or license rights to targeted content libraries –Invest in development of differentiated technologies to address needs of core audience Address needs of prosumers through ties to Madison Media Software’s best-in-class, high-end video editor Develop or acquire easy-to-use online video editor Winning through scale may require a significant investment in distribution and acquisitions –Exclusive distribution partnerships with leading online destinations –Large scale acquisitions to acquire audience –Multiple acquisitions to address adjacent markets (e.g., Social Networking, Video Editing) –Large, dedicated cross-Sony marketing budget
page 6 Content College Humor (0.9) JibJab (0.6) SingingFool/VideoDetecitve Broadband Sports (0.1) RocketBoom(0.04) Ruckus (0.02) Revision3 (0.02) Channel 101 (0.02) 2 1 Audience + Functionality PhotoBucket (12.0) Roo Media (N/A) Six Apart (10.4) Image Shack (9.3) Xanga (5.5) Reunion (4.7) MetaCafe (3.1) Digg (2.1) Friendster (1.0) Tagged (0.8) Functionality Meetup (0.7) Piczo (0.5) Text America (0.5) Imeem (0.2) VideoEgg (0.2) eyeSpot (0.2) MotionBox (0.2) Famster (N/A) Potential Acquisition Candidates Audience AddictingClips (1.9) DailyMotion (0.8) vMix (0.8) vidiLife (0.8) ManiaTV (0.6) Revver (0.5) Vimeo (0.5) Audience + Content Break.com (3.3) eBaum’s World (3.0) Bolt.com (2.9) Heavy.com (2.7) Content + Functionality Pure Video (0.9) Castpost (0.2) Now Public (0.09) Bix (0.08) Blip.tv (0.06) Dave.tv (N/A) 3 4 5