Sony Pictures Television Networks Digital MRP FY14 – FY16
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Sony Pictures Television Networks D i g i t a l MRP FY14 – FY16 Presented July 17, 2012 Introduction: Digital Networks Group Crackle Crackle US CA, UK, AU Content Crackle Studio Br/LatAm SPT Networks Digital Networks Group Common Platforms, Products and Approach Games / Apps Rapid Shift to a Connected World Significant Adoption of Connected Devices People are Watching Video Everywhere Target Audience is Global ● % of People Watching Online Video World of Pay TV and OTT is Colliding 2012 2016 SET Authenticate d PAY TV AXN SPIN THE NEW NETWORKS WORLD Convergenc OTT The line between authenticated and e Mobile open networks blurs; consumers can seamlessly access all channels Crackl Web e without deference to source Woma DIGITAL Open n NETWORK S Music Health As a company that already is out in front, now is the time to invest ● For Networks, move to Common Platform 3.0 for mobile and tablets, Tech / and Drupal by FY16 Platforms ● Establish Crackle Shared Services ● Build fully distributed set of products across online, mobile and OTT ● Establish a dedicated Crackle sales team in the US to get to $100M Sales ● Augment digital sales in Latin America ● Evolve Dolphin into a digital sales company in Europe Portfolio ● Launch new brands (e.g., Women’s network in LatAm, Animax in Growth / UK) Expansion ● Extend mobile Games onto OTT TV platforms ● Explore acquisitions of new digital networks ● Invest in original long-form series and IP for the Networks Content organization ● Develop brand extensions and original IP in the games space ● Acquire long-term rights to movies and TV from outside studios U.S. MRP Presentation July 17, 2012 Crackle Growth Strategy Themes for FY13 Retention, Global and Not Just Acquisition Scalable Minors to Majors: Consumer Quality is Pervasive World Class Experience Platform (sales, software, product, content, marketing) 3 Platform Sales as a Product Business (Ad Experience) …and keep building the talent pool, and hit financial milestones - 10 - Key Metrics Across Platforms Increased engagement across multiple platforms will drive growth Uniques Streams Ad Impressions (monthly in MM) (avg monthly in MM) (avg monthly in MM) OTT 2x ad load Mobi le Onli ne Streams Per Unique Ad Pods Per Stream Y-o-Y Growth 5.5 5.5 5.5 5.5 2.8 3.2 3.9 4.9 4.2 4.9 4.9 4.9 2.3 2.5 3.1 3.9 OTT 86% 20% 20% 1.9 1.8 1.9 1.9 2.9 3.2 3.7 4.4 Mobile 37% 20% 20% Online 0% 8% 9% - 11 - Sales Revenues Crackle is poised to match sales with inventory created over online, mobile, and OTT TV platforms. OTT Mobil e Onlin e Net Total $44.7 $67.2 $97.6 CPM OTT Mobile Web Premium $18 $25 $15 Sellout 85% 85% 85% Network $11 $14 $9 - 12 - CPMs held flat across forecast period Premium 70% 80% 80% Network 30% 20% 20% Crackle U.S. Historical Context: FY08 to FY16 FY08 FY09 FY10 FY11 FY12 FY13 Fcst FY14 MRP FY15 MRP FY16 MRP SPT Ad Sales $ 1,615 $ 2,969 $ 6,781 $ 7,522 $ 11,324 $ 17,700 $ 44,747 $ 67,228 $ 97,566 Other Revenue 557 1,673 3,312 9,185 6,286 9,007 7,625 6,922 6,790 Total Revenue 2,172 4,642 10,093 16,707 17,609 26,707 52,372 74,150 104,356 Op Income Before SPE Content (23,329) (18,145) (11,725) (846) (2,786) 1,095 4,500 13,200 23,400 SPE Content Cost 1,177 (1,394) (4,484) (3,660) (4,021) (4,095) (4,500) (6,000) (9,000) EBIT (22,152) (19,539) (16,208) (4,506) (6,807) (3,000) (0) 7,200 14,400 Cash (27,204) (27,171) (14,597) (8,890) (11,411) (12,100) (18,300) (8,200) (4,600) Headcount Crackle U.S. 53 53 43 38 41 52 40 42 43 Ad Sales Plan 24 35 48 58 76 75 90 101 Moved Crackle to First full year of Los Angeles – new Crackle – re- November 2008 launched April 2009 • From $2.2M revenue to $10M in FY10 (New Crackle) to $104M in FY16 (10x increase in 6 years). • In 8 years, from ($22M) EBIT loss to $14.4M profit, and from ($23M) loss to SPE to $23.4M. - 13 - Crackle U.S. Plan-Over-Plan Comparison FY13 FY14 FY15 FY16 Q2 Fcst Budget Variance 2012 MRP PY MRP Variance 2012 MRP PY MRP Variance 2011 MRP SPT Ad Sales $ 17,700 $ 17,700 $ - $ 44,747 $ 32,385 $ 12,362 $ 67,228 $ 45,560 $ 21,668 $ 97,566 Other Revenue 9,007 12,460 (3,453) 7,625 10,860 (3,235) 6,922 9,560 (2,638) 6,790 Total Revenue 26,707 30,160 (3,453) 52,372 43,245 9,127 74,150 55,120 19,030 104,356 OI Before SPE Content 1,095 2,550 (1,455) 4,500 7,700 (3,200) 13,200 11,700 1,499 23,400 SPE Content Cost (4,095) (4,200) 105 (4,500) (4,000) (500) (6,000) (4,000) (2,000) (9,000) EBIT (3,000) (1,650) (1,350) (0) 3,700 (3,700) 7,200 7,700 (501) 14,400 Cash (12,100) (11,000) (1,100) (18,300) (8,000) (10,300) (8,200) (6,300) (1,900) (4,600) Headcount Crackle U.S. 52 52 - 40 51 (11) 42 52 (10) 43 Ad Sales Plan 24 - 24 35 35 48 48 58 76 52 24 75 51 24 90 52 38 101 - 14 - Distribution - 15 - Distribution & Global Partnerships Shift focus from building our distribution network to driving audience growth and retention on critical strategic partners and our existing integrations Strategies & Tactics ● Focus on top five strategic partnerships that drive ~75% of our offsite revenue: Xbox, Deepen Existing iOS, SEL/PS3, Android, and Roku Strategic ● Secure and expand tier one partnership status via preinstall and premium placement Partnerships opportunities ● Work with partners to gain early access and insights into their strategic initiatives to leverage for our own advantage: HTML5, companion experiences, second screen, etc. ● Establish ourselves as the market leaders in OTT and mobile distribution to help improve overall brand awareness Improve Retention, ● Improve and update native integrations Loyalty, Usage, ● Optimize ad experience (develop next gen ad units, improve measurement, etc.) and User ● Develop products for next generation connected platforms Engagement ● Secure early access to strategic discussions with major emerging platforms (e.g. Drive New Apple TV, Nexus) Business ● Prioritize online efforts on existing and new dominant platforms (e.g., Win8, Development Facebook) Opportunities ● Leverage global partnerships to support incremental international expansion and the launch of new digital networks ● Hit revenue targets for licensing, subscription, and CYC businesses ● Exploit Crackle IP by continuing- 16 - to leverage SPE’s ancillary distribution channels Distribution Partnerships 2/3 of revenue will come from OTT and Mobile; several key accounts will drive success. FY14 OTT and Mobile Revenues Total: $29,563,602 All figures in millions $0.3 $0.3 $0.3 $0.2 $0.1 $0.5 $0.3 $0.0 $0.7 Xbox $0.7 IOS PS3 $1.4 $8.2 Android - Google Play ROKU BIVL $2.0 Samsung Android - AMZ Kindle Vizio $2.6 LG Panasonic Windows Toshiba $2.9 Android - Nook $6.0 Western Digital Playstation Home $3.1 GoogleTV - 17 - Ad Sales - 18 - Exec Summary Situation Strategy • Inventory is growing a year ahead of plan • Transform the Crackle positioning, but ad-revenue is lagging value proposition and sales — Eight part time sales reps organization — RFP driven business • Move from a video ad network to a — Value proposition unclear premium network to drive revenue • FY14 plan $32MM • Accelerate FY14 plan by one yr/ • FY15 plan $45MM $13MM to $45MM Sales & Revenue End-to-End Sales Support & Strategy Sales Structure Tactics 1. Go directly to clients 1. Sales talent and 1. Marketing solutions & (brands) footprint Research 2. Strategic acct builds 2. Support scope & 2. Marketing / brand drive planning & scale awareness solution requirements 3. Yield mgmt 3. Quality programming content 4. Tech & Product capabilities 19 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Sales Leadership Requirements Sales Outreach Structure & Experience • Focus on Clients (brands) in • Dedicated sales leadership in parallel with agencies all regions that positions us for success • Change overall proposal • Proven digital track record for activity to be a balance of securing meetings with clients “proactive” pitches to clients to influence “media buy” and RFPs from agencies decisions and close multiple $400M to $1MM+ major accounts 20 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Revenue Composition Revenue by Category and Revenue by Category Major Accounts Model Premium Revenue Analysis QSR; 5% Retail; 5% Automotive; 16% Categor MJR Acct y % of Rev Rev Major Accts Rev % of Rev Other; 14% Studio/T V 21% 7,405,230 9 4,620,000 13% CPG 17% 5,994,710 7 3,740,000 11% Auto 16% 5,642,080 7 3,520,000 10% Alcohol; 3% Other 14% 4,936,820 6 3,080,000 9% Studio/Tune GamingIn; 21% 10% 3,526,300 4 2,200,000 6% Mobile 9% 3,173,670 4 1,980,000 6% QSR 5% 1,763,150 2 1,100,000 3% Mobile; 9% Retail 5% 1,763,150 2 1,100,000 3% Alcohol 3% 1,057,890 1 660,000 2% Gaming; 10% Measurements100% 35,263,000 for Success:44 22,000,000 62% Packaged Goods; 17% Source: Sales MRP Plan • 4-5 Categories: 65% of revenue • 44 Accounts/Brands: 62% of revenue 21 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Campaign Analysis Mrkt Solutions have a maJor impact: • 352 premium campaigns sold • 44% of revenue will be tied to marketing solutions • 56% media only • 4% of the campaigns will represent 24% of revenue Campaign %/Campaig Ad Revenue Type Revenue %/Total$ Avg s ns Premium Custom Integrated Mrkt 10,650,500 24% 500,000 21 4% Premium OTS Mrkt 8,950,000 20% 100,000 90 17% Premium Media Only 15,662,500 35% 65,000 241 45% Network Media Only 9,486,075 21% 50,000 190 35% 44,749,075 100% 82,642 541 100% 22 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES FY14 Revenue & Sales Activity Output Q1 Q2 Q3 Q4 Total Premium Revenue Total 5,641,691 8,462,536 10,578,170 10,578,170 $35,260,567 Premium Revenue % 16% 24% 30% 30% 100% Proposals 469 704 879 879 2931 Campaigns Sold 56 84 106 106 352 Network Revenue Total 3,320,126 3,320,126 1,422,911 1,422,911 $9,486,075 Network Revenue % 35% 35% 15% 15% 100% Campaigns Trafficked 66 66 28 28 190 The Path to Revenue • FY14 Sales activities begin FY13 Q3 • 2900+ proposals and media plans will be created • Premium revenue will ramp up by Qtr • Dependency on network revenue will decrease by Qtr 23 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES SPT Ad Sales P&L Crackle is at a critical state to develop its own sales team to stay competitive and achieve higher goals.