ZATTOO P2P IP Television

M a y 5 , 2 0 0 8 R IP E #5 6

T h o m a s B ille te r, V P B u s in e s s D e v e lo p m e n t F re d y K ü n z le r, N e tw o rk A rc h ite c t

Z a tto o E u ro p e L td .

T h is d o c u m e n t is c o n fid e n tia l a n d is in te n d e d s o le ly fo r u s e b y its o rig in a l re c ip ie n t fo r in fo rm a tio n a l p u rp o s e s . N e ith e r th e d o c u m e n t n o r a n y o f th e in fo rm a tio n c o n ta in e d in th is d o c u m e n t m a y b e re p ro d u c e d o r d is c lo s e d to o th e r p e rs o n s w ith o u t th e p rio r w ritte n a p p ro v a l o f Z a tto o . What is Zattoo? » S ta rtu p » F o u n d e d in 2 0 0 5 b y B e a t K n e c h t (C H ) a n d S u g ih J a m in (U S ) » + 5 0 te a m m e m b e rs a n d g ro w in g fa s t » O ffic e s in Z u ric h (S w itz e rla n d ) a n d A n n A rb o r (M ic h ig a n /U S A ) » 1 5 m illio n U S D fin a n c in g s e c u re d » R e d H e rrin g T o p 1 0 0 E u ro p e A w a rd What do we do?

» W e b rin g liv e T V to y o u r c o m p u te r » W e tra n s m it c o u n try b y c o u n try th e m o s t p o p u la r c h a n n e ls o n to u s e rs ’ c o m p u te rs » O u r p ro p rie ta ry s o ftw a re a c ts a s a v irtu a l s e t-to p b o x » F re e s u b s c rip tio n , fre e s o ftw a re » A d v e rtis in g is th e p rim a ry s o u rc e o f re v e n u e (a .k .a . B u ffe rta in m e n t) Internet TV Landscape » Z a tto o h a s p u rs u e d a d iffe re n t a p p ro a c h th a n m o s t o f its c o m p e tito rs fo c u s in g o n liv e c o n te n t A rc h iv e C o n te n t L iv e C o n te n t w ith fu ll 2 4 / 7 p ro g ra m m in g (i.e . re p lic a tin g c la s s ic a l T V e x p e rie n c e in C lip s , Y o u tu b e M L B in te rn e t) s h o rt » s e q u e n c e s Its s u c c e s s d e m o n s tra te s th a t in s p ite o f th e n e w c o n te n t c o n s u m p tio n m o d e ls fa c ilita te d b y th e In te rn e t (tim e s h ifte d , o n d e m a n d ) lin e a r F u ll 2 4 /7 J o o s t Z a tto o c o n s u m p tio n s till h a s a lo t o f a p p e a l, p ro g ra m a n d m o s t o f a ll re fle c ts e x is tin g h a b its o f a w id e m a jo rity o f T V v ie w e rs 8 countries so far... » E u ro p e : L iv e in B e lg iu m , D e n m a rk , F ra n c e , G e rm a n y , N o rw a y , S p a in , S w itz e rla n d , U K

U p c o m in g s o o n (h o p e fu lly ): A u s tria , C z e c h R e p u b lic , C ro a tia , H u n g a ry , Ita ly , N e th e rla n d s , R o m a n ia , S w e d e n , F in la n d ...

» N o rth A m e ric a : P la n n e d la u n c h in Q 3 2 0 0 8 Who are our users?

S o far, we have over 2.2 million happy users in Europe. More are joining daily.

You are the kings of int ernet TV. Merci de la Très franchement, je part de tous les télévores trouve la technologie français. vraiment sympa, merci beaucoup à Zattoo ! inux version Nice one Zattoo, the L E xcellent works like a charm … e! App and a great servic

R eally excellent that Thanks for we can watch Zattoo in coming to Norway -well done!! Germany! Good quality, too! Zattoo attracts fleeing viewers back to

A g e d is trib u tio n o f Z a tto o v ie w e rs broadcast TV P e rc e n t B ro a d b a n d In te rn e t a t h o m e is lu rin g U n d e r 1 2 0.1 y o u n g v ie w e rs a w a y fro m T V M o re a n d m o re h o u s e h o ld s a re 1 3 -1 7 • 9.8 s ig n in g u p fo r b ro a d b a n d c o n n e c tio n s 1 8 -2 4 29.6 • Y o u n g a d u lts w ith In te rn e t a c c e s s 2 5 -3 4 a t h o m e w a tc h 7 h o u rs le s s T V 34.4 p e r w e e k th a n th e a v e ra g e v ie w e r 3 5 -4 5 16.0 Z a tto o a ttra c ts fle e in g a u d ie n c e b a c k to b ro a d c a s te rs ’ c o n te n ts 4 6 -5 5 7.1 • Z a tto o v ie w e rs a re te c h n o lo g y - 5 6 -6 5 2.3 s a v v y , w e ll-c o n n e c te d , y o u n g a d u lts in th e ir 2 0 s a n d 3 0’s O v e r 6 5 0.6 • Z a tto o v ie w e rs re p re s e n t g o ld e n s e g m e n ts fo r c o n te n t o w n e rs , b ro a d c a s te rs , a n d a d v e rtis e rs a lik e Fast adoption confirms complimentary to TV offering

Triggering factors driving Zattoo subscribers T h o u s a n d s Padeorcpetniotang e

1,500 “I u s e Z a tto o b e c a u s e … ”

O th e r re a s o n s “I w a n t to w a tc h 1,020 T V w h ile 17 d o in g “T h e T V is 29 o th e r s tu ff o c c u p ie d ” w ith 510 14 m y P C ”

271 18 22 0 5 41 “I’m in a d iffe re - “I d o n ’t e re n t p la c e th a n h a v e a T V ” m y T V ” Q2 Q3 Q4 Q1 Q2 Q3 Q4e 2006 2007

» 4 0 0 ’0 0 0 u s e rs in S w itz e rla n d (2 0 % o f » Z a tto o is n o t a s u b s titu re b u t a a ll b ro a d b a n d u s e rs ) in le s s th a n a c o m p le m e n t a n d a n e x te n s io n to y e a r c la s s ic T V v ie w in g » 1 0 0 ’0 0 0 u s e rs in S p a in in 2 w e e k s » O n ly th a n k s to w o rd o f m o u th a n d m e d ia c o v e ra g e Distinguish Countries: GEOip

» F o r e a c h c o u n try , Z a tto o p ro v id e s a lo c a lis e d T V L in e u p !

» C o u n try s e le c tio n is b a s e d o n G E O ip in fo rm a tio n

» m a x m in d .c o m is o u r c u rre n t G E O ip in fo s u p p lie r Zattoo works with ...

» M a c | L in u x | W in d o w s » M P E G 4 » H .2 6 4 fo r V id e o » A V C fo r A u d io » P 2 P a lg o rith m h a s s o m e in te llig e n c e s u c h a s A S N a w a re n e s s In a perfect world ... » ... in a p e rfe c t w o rld [i.e . C a m p u s L A N w ith >= 1 0 0 M b p s to e a c h d e s k to p ) Z a tto o w o u ld a c h ie v e 1 0 0 % P 2 P

» T h e s e e d in g s e rv e r w o u ld ju s t u s e o n e s tre a m (~5 0 0 k b p s )

» A ll c lie n ts o rg a n is e th e m s e lv e s a s P 2 P s o u rc e s ... but the Internet is far from being perfect!

» ... lo w u p s tre a m b a n d w id th w ith m o s t c o m m e rc ia l re s id e n tia l b ro a d b a n d o ffe rin g s » ... O v e rs u b s c rip tio n / O v e rb o o k in g (e v e ry b o d y d o e s it, n o b o d y a d m its it) » L a te n c y , J itte r, C o n g e s tio n , P a c k e tlo s s – th e c lie n t's n e tw o rk is b e y o n d o u r c o n tro l » Z a tto o n e e d s to s u b s id iz e th e m is s in g u p lo a d b a n d w id th w ith re p e a te r s e rv e rs S idenote: Whitepaper about CDN / P2P » R e c o m m e n d e d re a d in g : W h ite p a p e r fro m W illia m B . N o rto n (E q u in ix ):

V id e o In te rn e t: T h e N e x t W a v e o f M a s s iv e D is ru p tio n to th e U .S . P e e rin g E c o s y s te m (v 1 .5 )

h ttp ://w w w .b lo g g .c h /u p lo a d s /In te rn e t-V id e o -N e x t-W a v e -o f-D is ru p tio n -v 1 .5 .p d f Why is the Zattoo Infrastructure dispersed?

» H u g e b a n d w id th re q u ire m e n ts , fa s t g ro w in g » B e s t b a n d w id th ra te s a v a ila b le n e x t to in te rn e t e x c h a n g e s » P e e rin g ... (y e s , w e d o lo v e P e e rin g !) » G e n e ra lly h o t-p o ta to ro u tin g ... b u t Z a tto o w ill s ta rt to lo n g h a u l tra ffic fo r b e tte r p e e rin g e ffic e n c y , to o Overprovsioning ...

» P e a k lo a d d u rin g s p o rt e v e n ts s u c h a s S o c c e r, F o rm u la 1 , T e n n is a n d o th e r m a jo r e v e n ts a s E le c tio n s re q u ire m a s s iv e o v e rp ro v is io n in g o f th e Z a tto o in fra s tru c tu re . Zattoo tries to be a good citizen ...

» U s in g lo c a l p e e rin g s a n d a v o id lo n g h a u l lin k s re q u ire s th e s e rv e r b e lo c a l

» Z a tto o d o e s n 't e a t u p a ll a v a ila b le re s o u rc e s o n th e c o m p u te r (C P U )

» Z a tto o is n o t u s in g a n y re s o u rc e s o n c e th e Z a tto o c lie n t h a s b e e n s h u t d o w n

» ... a n d la s t b u t n o t le a s t w e w a n t to ta lk to th e e y e b a ll p ro v id e rs to m a k e th e lo a d a s e a s y a s p o s s ib le ! The business model: “Buffertainment“

» U p o n c h o o s in g a n e w c h a n n e l th e re is a te c h n ic a lly in d u c e d tra n s m is s io n in te rru p tio n o f 5 to 7 s e c o n d s

» T h is in te rru p tio n e n a b le s th e e x c lu s iv e d is p la y o f a n a d v e rtis e m e n t • Z a tto o C h a n n e l S w itc h A d

» A n im a te d fla s h fo rm a t c o m b in e d w ith a n in te ra c tiv e b u tto n , w h ic h a p p e a rs in th e c h a n n e l b ro w s e r

» S e v e ra l n e w fe a tu re s p la n n e d S howcase for growth pattern: S witzerland

6 Million streams (=contact = channel switch ad) per month J a n u a ry 2 0 0 8 : U n iq u e u s e rs : 5 7 5 ’7 5 5 u s e rs • 5 0 ‘0 0 0 p e r d a y , • 8 5 ‘0 0 0 p e r w e e k , 600,000 • 1 8 0 ’0 0 0 in fo u r w e e k s , • 2 3 0 ‘0 0 0 in s ix w e e k s 500,000

400,000

300,000

200,000

100,000

0 November 2006 January April Augus t December 2007

Average usage per active user per week (in minutes): 148 126 124 135 106 108 104 116 119 135 124 136 164 168 173 187 183 210 The case for partnership

• C u s to m e r re la tio n s h ip IS P • In fra s tru c tu re (Q o S a n d M u tlic a s t) • S o m e tim e s e x c lu s iv e c o n te n t

• E x te n d in g re a c h (Z a tto o d o e s n o t c o m p e te w ith Broadcasters / b ro a d c a s te rs ) content networks • A d d in g in te ra c tiv ity • T e s tin g n e w b u s in e s s m o d e ls • A g g re g a tin g a d s

Advertising • In n o v a tiv e p la tfo rm networks/platforms • T e s tin g w ith s o m e s o p h is tic a te d ta rg e tin g o p tio n s • C o n v e rg e n c e p la y Who are our advertising partners?

We have a strong and established advertiser basis Future ...

» Q u o te : “D e r S p ie g e l” (la rg e G e rm a n w e e k ly m a g a z in e ) y e s te rd a y A p ril 1 , 2 0 0 8 :

“Who now discovers in the channel bouquet the BBC and already rejoices, will soon be disappointed: The E uropean TV landscape remains an online quarantine zone. BBC will be for Britain, France gets its local french package, AR D and ZDF for Germany. [...] S o Zattoo remains like the last year as overzealous acclaimed high- quality but still largely unsubstantial Joost: An outlook of what in Web TV is possible, if it would be allowed.” S ign up today!

» w w w .z a tto o .c o m

(P e o p le o u ts id e o f th e Z a tto o -e n a b le d c o u n trie s c a n s ig n u p fo r th e w a itlis t). Zattoo Europe Ltd.

E lia s -C a n e tti-S tra s s e 7 VDirc.e T Phorems iadse nBt iBllluestienre s s D e v e lo p m e n t M o b ile + 4 1 7 9 4 7 4 1 2 2 8 C H -8 0 5 0 Z ü ric h E m a il th o m a s @ z a tto o .c o m S w itz e rla n d NFreetwdyo rKk üAnrzclheitre c t P h o n e + 4 1 4 3 5 0 0 2 1 1 4 E m a il fre d y @ z a tto o .c o m