Clips & Trailers Outlook FY15-19 June 2013 DRAFT EXECUTIVE - PowerPoint PPT Presentation

Clips & Trailers Outlook FY15-19 June 2013 DRAFT

EXECUTIVE SUMMARY Current Scale March 2013 Comscore* and YouTube Reported Performance on Business Recap both Provider Channels and UGC • The Crackle team continues to manage and grow Clips & Worldwide US Trailers content claiming business on YouTube 220M Views 46M Views • Expected to generate ~$1M EBIT 90M Uniques 18M Uniques per year, growing 6% y-o-y through FY2019 12M Hours Viewed 2.8M Hours Viewed • YouTube partnership continues to be rocky, requiring us to plan around a 55/45 rev share, rather than the more favorable 70/30 Worldwide US currently in place 23M Views • One Full Time Coordinator (existing resource) 9.1M Uniques Comscore not yet integrated WW* • Ad Ops Head Starting FY2014 1M Hours Viewed (to enable manual operations on Provider channels) *comScore reporting is in still in early phase of integration, therefore remains a work-in-progress to capture total addressable reach and match to YouTube reporting

CURRENT BUDGET AND MRP EBIT TARGETS Steady Gross Revenue and EBIT growth anticipated in base plan: • Assumes YouTube deal continues through FY2019 at 55/45 (upside if long term 70/30 agreement is reached). • Flat reseller (sold by YouTube) fill rate and CPM • One additional ad operations head is currently in plan to start FY2014, creating lift in Provider Channel inventory (increased CPM and fill); although limited scale due to manual ad operations and no access to UGC Gross Revenue (millions) EBIT (millions) $2.9 $2.8 $2.6 $2.4 $2.3 $1.4 $1.3 $1.2 $1.1 $1.0 FY15 FY16 FY17 FY18 FY19

PROVIDER CHANNELS GENERATE A GLOBAL AUDIENCE 2015 FORECASTED MONTHLY AVERAGE UNIQUE VIEWERS IN PROVIDER CHANNELS 13 Million Worldwide Unique Viewers (Monthly) Provider Channel Uniques (mm) Provider Channels are channels operated by SPE and monetized via the Crackle CMS tools. US Theatrical Marketing channels drive the bulk of Provider Channel usage. Less than 6.3 5% of usage originates via SPT Networks Channels. 3.6 2.1 0.5 0.3 0.3 ROW US LATAM UK CA AU 4 Note: Assumes historical conversation rates between monthly views and monthly unique visitors to projected 2015 data

CONTENT ID (UGC) CONTRIBUTES MASSIVE AUDIENCE 2015 FORECASTED MONTHLY AVERAGE UNIQUE VIEWERS IN PROVIDER AND UGC CHANNELS 95 Million Worldwide Unique Viewers (Monthly) 51.0 Provider Channel Uniques (mm) UGC Channel Uniques (mm) 44.7 18.2 16.8 14.6 14.6 4.0 3.0 1.5 1.3 6.3 3.4 2.1 3.6 2.7 0.5 0.3 0.3 ROW US LATAM UK CA AU 5 Note: Assumes historical conversation rates between monthly views and monthly unique visitors to projected 2015 data

FINANCIAL SUMMARY CASE 1 – BASE CASE (MANUAL AD SERVING, LIMITED) Case Highlights Summary Financials FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 • Minimal investment in headcount allows the group to Gross Revenue¹ maintain historic growth trajectory US Revenue $1,012,640 $1,077,051 $1,145,805 $1,219,197 $1,297,539 • Gross revenue growth projected at 6% from FY2015 – Canada Revenue 201,179 213,647 226,956 241,162 256,326 FY2019, increasing ~$150K to $170K y-o-y UK Revenue 149,004 158,258 168,135 178,679 189,934 - FY2019 gross revenue target of $2.9M Australia Revenue 103,685 110,064 116,874 124,143 131,902 • Minimal growth in operating costs, maintaining EBIT growth Latam Revenue 357,963 380,565 404,691 430,444 457,934 at ~$75K to $85K y-o-y ROW Revenue 478,631 508,510 540,404 574,448 610,789 - FY2019 EBIT target of $1.4M (cumulative FY2015 – Total Gross Revenue $2,303,103 $2,448,095 $2,602,865 $2,768,074 $2,944,424 FY2019 $6.0M) Operating Expenses • CONSIDERATIONS: Headcount $200,880 $195,174 $204,933 $215,179 $225,938 - Minimal investment in headcount limits ability to G&A 14,115 14,821 15,562 16,340 17,157 maximize eCPM and traffic drivers Marketing - - - - - - Requires long term revenue agreement with YouTube. Total Operating Expenses $214,995 $209,995 $220,494 $231,519 $243,095 Safely planned at 55/45 rev share. 70/30 remains a EBIT² $1,039,065 $1,123,810 $1,198,434 $1,278,274 $1,363,691 possibility (low confidence) Key Assumptions • Organic traffic growth based on historical usage • CPM flat and fill rate flat for projected years • No additional fingerprinting tools • Revenue share with YouTube at 55/45 • One additional ad operations head coming FY2014 (already in budget) • No marketing budget requested 6 1 Gross revenue does not include revenue share to YouTube or SPE Theatrical; CPM is net potential reseller revenue share in ex-Crackle territories 2 Includes revenue share, operating expenses, and one-time charges

FINANCIAL SUMMARY CASE 2 – INVESTMENT CASE (PROVIDER AND UGC CHANNEL AD SERVER MONETIZATION) Case Highlights Summary Financials FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 • Investment in headcount allows for uplift in Provider and UGC Gross Revenue¹ Channel revenue and enables future upside US Revenue $1,571,949 $1,996,254 $2,240,475 $2,375,242 $2,510,008 • Compared to Case 1, Case 2 incurs ~$400K of additional Canada Revenue 221,420 392,087 442,137 468,732 495,327 headcount costs per year, which leads to an increase in gross revenue of $710K, $2.7M, $3.2M, $3.4M, and $3.6M in FY2015 – UK Revenue 165,114 289,483 326,053 345,665 365,278 FY2019, respectively Australia Revenue 111,991 176,374 199,256 211,241 223,227 - FY2019 gross revenue target of $6.5M Latam Revenue 405,076 764,078 854,969 906,396 957,823 ROW Revenue 540,873 1,566,089 1,755,817 1,861,431 1,967,044 • Compared to the Case 1, significant investment in headcount in Total Gross Revenue $3,016,423 $5,184,364 $5,818,707 $6,168,707 $6,518,707 FY2015 leads to a decline in EBIT of $140K, driving an increase in EBIT of $1.0M, $1.3M, $1.3M, and $1.4M in FY2016 – FY2019 Operating Expenses - FY2019 EBIT target of $2.8M (cumulative FY2015 – FY2019 Headcount $608,580 $570,409 $598,929 $628,876 $660,320 $10.9M) G&A 39,282 41,246 43,308 45,473 47,747 Marketing 50,000 50,000 50,000 50,000 50,000 • CONSIDERATIONS: Total Operating Expenses $697,862 $661,655 $692,237 $724,349 $758,067 - Heavily dependant on YouTube’s approval to allow SPT to ad serve to UGC content. Will require XFP ad operations EBIT² $899,071 $2,132,949 $2,450,860 $2,607,808 $2,763,150 - Requires long term revenue agreement with YouTube. Safely planned at 55/45 rev share. 70/30 remains a possibility (low Key Assumptions confidence) • Double organic traffic growth (2% monthly) in UGC Channels with organic traffic growth in Provider Channels based on historical usage; $350K of gross revenue growth from FY2017 to FY 2018 and from FY2018 to FY2019 • Progressive introduction of ad resellers to Provider and UGC Channels to increase eCPM and fill rate target in US (H1 FY2015), Canada/UK/Australia (H2 FY2015), Latam/ROW respectively (H1 FY2016); UGC Channels are targeted 4 months after entry into Provider Channels • $30K investment in FY2015 to increase fingerprinting tools • Revenue share with YouTube at 55/45 • Six total headcount (four additional) to enable global ad serving and reselling in Provider Channels • Establish minimal marketing budget of $50K per year 7 1 Gross revenue does not include revenue share to YouTube or SPE Theatrical; CPM is net potential reseller revenue share in ex-Crackle territories 2 Includes revenue share, operating expenses, and one-time charges

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FINANCIAL DETAIL CASE 1 – BASE CASE (MANUAL AD SERVING, LIMITED) FYE March 31st, FY 2015 FY 2016 FY 2017 FY 2018 FY 2019 Gross Revenue US Revenue $1,012,640 $1,077,051 $1,145,805 $1,219,197 $1,297,539 Canada Revenue 201,179 213,647 226,956 241,162 256,326 UK Revenue 149,004 158,258 168,135 178,679 189,934 Australia Revenue 103,685 110,064 116,874 124,143 131,902 Latam Revenue 357,963 380,565 404,691 430,444 457,934 ROW Revenue 478,631 508,510 540,404 574,448 610,789 Total Gross Revenue $2,303,103 $2,448,095 $2,602,865 $2,768,074 $2,944,424 % Growth 6.3% 6.3% 6.3% 6.3% 6.4% Net Revenue (Less YouTube Share) US Revenue $556,952 $592,378 $630,193 $670,558 $713,646 Canada Revenue 110,649 117,506 124,826 132,639 140,979 UK Revenue 81,952 87,042 92,474 98,274 104,464 Australia Revenue 57,027 60,535 64,281 68,279 72,546 Latam Revenue 196,880 209,311 222,580 236,744 251,864 ROW Revenue 263,247 279,680 297,222 315,947 335,934 Total Net Revenue $1,266,707 $1,346,452 $1,431,576 $1,522,440 $1,619,433 % Gross Margin 55.0% 55.0% 55.0% 55.0% 55.0% Net Revenue (Less SPE/Theatrical Share) Revenue Share with SPE Theatrical $12,647 $12,647 $12,647 $12,647 $12,647 Total Net Revenue (Ex-SPE Theatrical) $1,254,060 $1,333,805 $1,418,929 $1,509,793 $1,606,786 % Gross Margin 54.5% 54.5% 54.5% 54.5% 54.6% Operating Expenses Headcount 200,880 195,174 204,933 215,179 225,938 G&A 14,115 14,821 15,562 16,340 17,157 Marketing - - - - - Total Operating Expenses $214,995 $209,995 $220,494 $231,519 $243,095 % Gross Margin 9.3% 8.6% 8.5% 8.4% 8.3% Incremental One-Time Expenses Fingerprinting Tools - - - - - Total One-Time Expenses $0 $0 $0 $0 $0 EBIT $1,039,065 $1,123,810 $1,198,434 $1,278,274 $1,363,691 % Gross Margin 45.1% 45.9% 46.0% 46.2% 46.3% 9