A n i m a x S V O D U K

Business Plan

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ANIMAX DNA

POSITIONING:ANIMAX is the destination for the ultimate anime experience

ATTRIBUTES:... Loud... Colourful... Unconventional... Authentic... Cheeky

ANIMAX is a digital platform for the best in anime

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ANIMAX Target Audience

Primary: 18 - 29 years, Secondary: 15 - 45 years

ANIMAX VIEWERS

• Early adopters with relatively high discretionary income• Pop culture fanatics in search of what’s new…now• Multi-tasking consumers of cross-platform content • Aware of global trends and engaged in global issues • They want to watch TV on-line and on their mobile phones• They’re gamers and they own either a Play station or X-Box

Real time, multi-media consumption lies at the core of our viewers’ lifestyle.

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What you get with ANIMAX

ANIMAX features hit anime series, movies and exclusive materialsuch as behind-the-scenes interviews and music footage.

ANIMAX provides….

• Unlimited access to content

• Subscription = ad free

• Available on IOS, Android, and PS3 from launch, other connected devices in phase 2

• Simulcast – latest shows from Japan

ANIMAX strives to offer its devoted fan base dedicated content tailored to a dedicated platform. World-class production values and first look, high-profile titles.

+ +

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ANIMAX PROGRAM STRATEGY

ANIMAX aims to bring the whole world of anime to a much wider publicwith programming that includes:

• Box Sets – a catalog of complete full seasons• Movies (the competition doesn’t offer movies on their service)• Simulcast series from Japan• First they’ll air on anime-on-demand• Once we have the ANIMAX service they’ll air for 2 weeks in a free window and then move

to the pay window• ANIMAX Music concert (from Japan and Taiwan) • Anime Song Grand Prix (similar to Idol)• Studio Musix’s – each month follow a local artist• Behind the scenes interviews with anime creators (footage provided by ANIMAX Japan)

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ANIMAX - Simulcast Highlights

8-10 new titles every season available day and date with Japanese broadcast

Autumn simulcast titles highlights:

K Project (12 eps)There’s a ton of buzz on the internet as the storyline is shrouded in mystery around this brand-new original anime that will begin airing in October.

Psycho-Pass (24 eps)In the not-too-distant future, a special team of law enforcement officers enact justice based an persons state of mind.

Robotics;Notes (24 eps)Set in a world in the use of Augmented Reality technology is increasing, a group of AR fanatics unearth a sinister conspiracy that could shake the world’s foundations.

Jormungand (12 eps)An arms dealer and her young ward travel the world selling weapons while seeking vengeance for those that have wronged them.

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ANIMAX - Box Set Highlights

Death Note (37 eps)

• When a teenage boy unearths a mysterious notebook, he finds that it possess special powers that allows him to kill anyone he chooses.

• Manga has sold over 26 million copies in Japan.

• As well as the anime and manga, the franchise has been expanded as a live action film series and video game.

Vampire Knight (13 eps)

• When Yuki was a little girl she was attacked by one vampire but saved by another. A decade later, she becomes guardian of the vampire race.

• The Vampire Knight manga continues to be published in Japan.

• Like Death Note, the franchise has been expanded as a video game and radio serial.

Exclusive to ANIMAX!

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ANIMAX - Box Set Highlights

Bleach (366 eps)

• Possessing the power to see ghosts, a teenage boy and his friends use their gifts to solves mysteries involving the spirit world.

• Volumes of the manga have sold more than 72 million copies in Japan, and is one of the most sold mangas in the United States.

• The anime adaptation has been similarly received; it was rated as the fourth most popular anime television series in Japan in 2006 and held a position amongst the top ten anime in the United States from 2006 to 2008.

• In 2011, Bleach was ranked 8th for top selling manga in Japan.

Honey and Clover (26 eps) (EXCLUSIVE TO ANIMAX)

• The story of three college students and their hilarious adventures.

• A manga, live-action film, the series and video game make this a popular series among fans.

From Vampires to Samurai’s all the favourite and top genres are covered with over

Over 20 complete Box Sets at launch.

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ANIMAX CUSTOMER PROPOSITION SUMMARY

SimulcastCatalogue box setsMoviesExclusive behind the scenes/interviewsAnimax Music

Original language audioEnglish SubtitlingEnglish dubbing (boxsets)

No adverts

£5.99 per month14 day free trial

Simulcast (2 week window)

Original language audioEnglish Subtitling

Pre and mid roll adverts

No cost

Video Selection

Language

Video quality

Adverts

Costs

Devices

SD and HD SD only

Phase 1 - PC, iOS, Android, PS3/PS VitaPhase 2 – other connected devices

AD SUPPORTEDPREMIUM

Phase 1 - PC, iOS, Android, PS3/PS VitaPhase 2 – other connected devices

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TRANSITION STRATEGY: ANIME-ON-DEMAND TO ANIMAX

SUGGESTED OFFER BENEFITS

CURRENT AND PROSPECTIVE CUSTOMERS

EARLY ADOPTER DISCOUNTS (1 month before launch)

Examples:

- 3 month season pass for the Anime-On-Demand price of £9.99 (~45% off Animax pricing).

- 1 year annual pass for the Anime-On-Demand price of £34.99 (~50% off Animax pricing).

- Early Adopter Discounts lock in the equivalent of almost 2 months or over 5 months of Animax revenue before the site even launches.

- Offers real cost benefit to users while shifting possible negative perceptions of the Animax price increases to a positive perception of Animax’s incentive promotion.

- Regular pricing will kick in as the default action once the promotional period ends. Studies show consumers will likely accept the new higher default pricing; “consumers favor the quick, easy, default choice supporting natural human inertia.”*

For customers to positively embrace the transition to Animax, they need to see tangible benefits equal to or better than they were receiving with Anime-On-Demand. Efforts should be made to offset the Animax UK price increase.

*(a study by Eric J. Johnson, professor at Columbia; “Nudge” by Richard H. Thaler, economist at University of Chicago; “Predictably Irrational” by Dan Ariely, behavioral economist at Duke and MIT.)

ANIMAX Our Competition

Crunchyroll

£8.99/mo for full

subscription(£4.99 for

anime only)

N HD/SD >4000 Y Y 14 Day Sub only Y-Free

PC/ iOS/ Android/ Windows/ PS3 (not in

UK)/ Roku / Boxee/ WD TV Live/ Google TV/

Samsung & Vizio Smart TVs

Netflix £5.99/mo. N HD/SD>10,000(anime is

<100)Y N 30 Day Dub only N

PC/ iOS/ Android/ PS3/ Xbox/ Wii/ Roku/ Boxee/

Apple TV/ Google TV/ Smart TVs/ Blu-rays/

Tablets

Love Film £4.99/mo.£3.49/£2.49

HD/SD >7,500Y -

minimalN 30 Day Dub only N

PC/ iOS/ PS3/ Xbox/ Wii/ DS/ Tablets

Animax UK £5.99/mo. £0.99 HD/SD>600 at launch

Y Y 14 DaySub and

DubY-Free PC/ iOS/ Android/ PS3

Anime On Demand

£34.99/yr.£9.99/3 mo.

£1.5/wk.N HD/SD <200 Y Y 14 Day Sub only Y-Free PC/ iOS/ Android

SVOD TVOD Format# of

Titles Anime SimulcastFree Trial

Sub/Dub Ad Supported Platforms

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ANIMAX Launch Plan

•Full Animax service launches•Promotional catalogue episodes on Crackle

•Leverage linear branded block and Crackle to cross-promote and up-sell to premium service

•Transition existing Anime-On-Demand audience and subscribers to Animax (AOD then closes)

Month 1 of LaunchOctober

•Simulcast episodes only•Captures anime fans from start of new simulcast season

•Once Animax has been approved add pre-roll teaser “Brought to you by Animax” to each video

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ANIMAX Promotional Road Map

1 Month Pre-Launch Launch PC and PS3 Launch iOS and Android

Simulcast begins on Anime-On-Demand. Pre-roll will build up ANIMAX transition (i.e. “Brought to you by ANIMAX”). ANIMAX VOD service launches

on iOS and Android

Playstation newsletter to 4.5 mil subscribers to announce Animax launch and push the 14 Days Free offer.

Begin Google Adwords and Facebook Ad Campaign directing traffic to ANIMAX and pushing a 14 Days Free offer.

B2B trade release to announce launch of channel

Presence at conventions and film festivals (see next slide)

Start working with consumer trade-cheap ads or barter in anime mags about 14 Days Free offer.

ANIMAX block begins on SPT UK Channel

ANIMAX VOD service launches on PC and PS3

Promo message on Anime-On-Demand homepage and dedicated landing page; build anticipation, offer incentives, explain why/benefits/differences, etc.Email customers of upcoming change with Call-To-Action to learn more and sign-up for incentive programs.

Use social media to create buzz. Launch Animax Facebook page by taking over Anime-On-Demand and rebrand. Work with iOS and Android stores for

placement.

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ANIMAX PROMOTIONAL IDEAS FOR AFTER LAUNCH

PLAYSTATION• Quarterly newsletter and ads on playstation.com• UI promotional areas – what’s new when you turn on PlayStation

VIZ Media• DVD sleeves and inserts for all VIZ Media and other content partner titles (incl Funimation, Manga, MVM)

SONY Home Entertainment• ANIMAX logo is already on anime DVD’s – raise profile- promote 14 Days Free offer.

SOCIAL• eBlast/highlights to fans and anime press• Website banners promoting 14 Days Free offer.• Social (Facebook/Twitter/blogs) – hire somebody to write information about world of anime and our series on a

weekly basis

Facebook+Twitter/ANIMAX All Access Giveaway/ VIRAL - Promo Seeding • Referral-based. The user that introduces the most friends to the service will win a special, unlimited pass to the

service. Three month initiative. Syndicate trailers for programming highlights on YouTube, Facebook, Twitter. Offer to Anime Fansites

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• London MCM Expo

• Happens twice a year in April and October.

• Biggest Anime event in UK at the ExCeL Convention Centre, Royal Victoria Dock (Attendees: 125,000)

• Shared booth space with VIZ and SONY Playstation

• Alcon

• September 6-9, 2012

• De Montfort University Leicester, UK

• J-Con

• September 14-15, 2012 The Riverside Centre

• Derby, UK (Attendees: 1000)

• The Entertainment Media Show

• September 29-30, 2012 Olympia Grand Hall

• London, UK (Attendees: 25,000)

• Scotland Loves Animation

• Glasgow: 12-14

• October/Edinburgh: 19-21 October

ANIMAX EVENT PARTICIPATION

Anime fans love events and the UK has plenty of them. These are targeted to our consumers and a cost effective way to reach our audience

• Eirtakon• November 9-11, 2012 The Helix• Dublin, Ireland (Attendees: 1,550)

• Hyper Japan Christmas• November 23-25, 2012 Earls Court• London, UK (Attendees: 25,000)

• Midlands Anime and Manga Fan Event• December 8, 2012 Burton Town Hall• Burton-on-Trent, Staffordshire, UK

• We Love Animation

• Glasgow/Edinburgh/Leeds/Cardiff/Dublin/Belfast (Attendees >10,000)

• SunnyCon

• March 23-24, 2013 Seaburn Centre• Sunderland, UK (Attendees: 900)

Year One we’ll be trying to get new users at all events to sign up for our

14 Days Free offer.

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A n i m a x S V O D U K

Product Launch Strategy

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OVP OPTIONS AND BUILDING FOR THE FUTURE

Home Office already has in-house Product, Producer and Engineering experts to guide agency builds.–Experience implementing large scale

projects. Positions Home Office for future growth

of similar businesses. MPX is the superior platform for

implementation. The implementation complexity is currently unknown, but indications imply similar complexity and time. Upfront cost will be higher due to Northpoint integration. However, the benefits of implementing MPX will be far reaching for content management and business expansion opportunities.

Recommended

Launch 3.0 and Brightcove

Launch 3.0 and MPX Launch on Crackle’s platform

Networks group does web theme, launch and support Animax UK as a region. Responsibilities for PS3, iOS, Android, Product & Strategy handled by UK.

Northpoint builds MPX integration. Networks group plays a bigger role. Product & Engineering managed from Home Office. Programming and Marketing managed in UK.

Use as the start of a new business model where Networks group builds a pay wall on the Crackle platform.

Option: 1 Option: 2 Option: 3

Team responsibilitiesHome Office

UK Office

% of Current Staff

Marketing Manager

MobilePS3Website

REGISTRATION SEN

REGISTRATION SEN

REGISTRATION SEN

PAYWALLInvideous

PAYWALLInvideous

PAYWALL/APP DEV

InvideousOVPMPX

OVPMPX

OVPMPX

Finance Manager

ADVERTISING

Videology

ADVERTISING

Videology

ADVERTISING

VideologySITE DEV3rd Party

OPS & LAUNCH

Home OfficeVIDEO OPS

Viz Media18

Operations Coordinator

Producer/Product Manager

RESOURCES: UK officeRESOURCE RESPONSIBILITY BASE

Marketing Manager - Day-to-day management of the Animax service- Promote and manage the Animax website, PS3 application, mobile applications- Market the Animax applications with targeted online marketing tools- Create advertising creative for advertising partners- Manage communities on main social media accounts- Build weekly programming schedule- Manage relationship with external partners

$66,220

Finance Manager - Manage all financial matters related to Animax- Management accounting- Royalty reporting- Performance analysis and business planning

$58,520

Operations Coordinator - Operate and administer the Animax website, PS3 application and mobile applications

- Traffic video content to the applications- Manage the pay wall on the applications- Manage ad operations on the applications- Create monthly billing and traffic reports- Work together with the Channel Manager to create programming highlights

$38,500

Producer/ Product Manager(6 month contract @ $93,000/yr)

- Drive project management and deliverables across all vendors and platforms- Ensure navigation flow and user experience is consistent across all platforms- Lead creative oversight consistent across all platforms- Prioritize and drive feature development

$46,500

TOTAL $209,740

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Platform rollout

Month Month Month Month Month Month Month Year1 2 3 4 5 6 7+ 2

Launch Animax marketing message

Web IA, design

OVP dev

PS3, iOS/Android IA, design

Web IA, design

OVP dev

PS3, iOS/Android IA, design

Investigate Crackle as a platform

Maintenance,New feature development,Review other OTT platforms, Producer becomes FT

6 Month Production CycleSEN ID development/access not under our management

Contract signed,

positions hired, work

starts

Smashing Ideas

MPX

Invideous

Web dev

OVP dev

PS3, iOS/Android dev (contingent on SEN ready)

Web dev

OVP ready

PS3, iOS/Android dev (contingent on SEN ready)

Web Prod/QA

OVP ready

PS3, iOS/Android ready, submit app approval (contingent on SEN ready)

Web launch

OVP launch

PS3, iOS/Android launch (contingent on SEN ready)

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Web PS3 iOS & Android App Payment System Integration

VENDOR Smashing Ideas + Home Office

Invideous Invideous Invideous

COST $75,000 $11,000 $22,000 $10,000

PROS Inexpensive InexpensiveExperience on PS3

Inexpensive Inexpensive

CONS No custom development; unknown issues with SEN

No experience with web or 3rd party payment integration; unknown issues with SEN

Unknown working relationship; unknown issues with SEN

Unknown working relationship; unknown issues with SEN

Platform rollout

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COST: $118,000

RESOURCES: PRODUCT OPERATIONS

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RESOURCE RESPONSIBILITY COST

Kristen Huntley Project lead needing to allocate time here when otherwise would allocate elsewhere.

Soft cost

Mike Weksler Tech lead needing to allocate time here when otherwise would allocate elsewhere.

Soft cost

The Common Platform 3.0 APIs will supply metadata across all platforms.

Backend and systems engineering

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Video technology

RESOURCE RESPONSIBLE COST

Kristen Huntley Project / Product lead Soft cost

Mike Weksler Technology lead Soft cost

Invideous will integrate into Brightcove.

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AD OPERATIONS

RESOURCE RESPONSIBLE COST

Greta Lin Ad set-up and management % of time/salary

Luiz Gustavo Coordination with Greta and UK Soft cost

FreeWheel 3rd party video ad server FY13: ~$2,042FY14: ~$7,786FY15: ~$8,634FY16: ~$9,128FY17: ~$9,525 (based on Gary’s ad stream projections and FreeWheel’s costs: $0.28/1000 served)

Videology 3rd party video ad network % of revenue

We recommend implementing FreeWheel and Videology, set up and managed by Greta Lin who currently handles those vendors for Crackle UK ad operations.

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SUMMARY RECOMMENDATION COSTS

EXPENSES Y1 COST

Overhead $209,740

Web: Smashing Ideas $75,000

PS3 app: Invideous $11,000

iOS & Android apps: Invideous $22,000

Payment Integration: Invideous $10,000

Ad Operations $2,042

TOTAL $329,782

BUSINESS PLAN

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