Q1, 2012

Sector Snapshot

Troy Centazzo

Oh, What a Year! – Publishing, Edutainment and Technology

34M Americans used a tablet in

‘11; 90M expected by 2012.

Smart phones surpass 50%

market share. Digital

content tops e-commerce

purchases at 26%. Mobile paid

advertising/search surpassed

email and social media. Apps

are exploding. $38B market

by 2015. Trends are

global.

Interactive Publishing:

Still in its Infancy

• App Store has 25,000

book apps

• iBook Store has

hundreds of

enhanced books

• B&N offers 600 for the

Nook

• Few break-out hits;

continued risk of “busts”

• What’s a “book”? An

“app”? ** EPUB3 **

Any Impact?

$300M in the following

digital book start-ups:

It Finally Was The

Year of Mobile!

Interactive Publishing– Still Early, But Lots of Activity and Momentum

The Big Six (Plus) – Now Aggressively Pursuing Interactive Business and Industry Partnerships

E-Book Sales

Double in

2011 for

Penguin;

20% of US

Rev; Plans

strategic

investments

Oh, What a Year! – Publishing, Edutainment and Technology

US E-Book Revs up 117% in 2011 Total Trade: $5,860M (-4.1% YoY)

E-Books (non religious): $970M (+117%)

S&S digital

revenue

doubled in

2011; juiced up

income

Digital = 1/3

of all Revenue

at Pearson

$1B in US!

Royalty Rates

on the Rise

MORE TRANSMEDIA PARTNERSHIPS

THAN EVER BEFORE

Children’s Mobile Digital Content- “Rapidly Evolving” is an Understatement

Nine Top iOS Children’s

Storybooks in 2011

Oh, What a Year! – Publishing, Edutainment and Technology

TO COME

150 e-books; 25 apps

How to Market to and Develop an

Audience?

1 Million Dr. Seuss

Downloads in 2 years

2M Minutes

Played on FP

Apps in Dec

2011

Licensing agreements with Hasbro, Crayola, SeaWorld, The Wiggles,

Cyberchase and Dino Dan

Safari Books (JV of Pearson

Education and O’Reilly Media )

acquires Threepress (Ibis

Reader) January

Our Bottom Line on the Industry –

And That’s Only Positive for Emerging Companies’ Prospects

Chaos at Enterprise-Level Companies

6

Digital Media “Value Stack” for Emerging Firms

• Do you have a massive number of active buyers? Massive Number of Users /

Readers with Direct Relationship

• Do you have the “secret sauce” on how to publish a top-seller? Control of Useful Data

• Have you built a publishing toolkit that provides an advantage? Can it become the industry standard? Protected Development Tools

• How many successful titles have you developed, published and marketed? In-House (Owned) Titles

• How far “out in front” are you? Competition? Massive Market Leader

• Long-term agreements with A-level content owners Locked License Business

• High margin business for industry leaders. Market share. Project Business for Premier

Firms

• Can you grow 100 miles per hour in the current environment? Infrastructure to Scale Rapidly

• Are you the technology leader? Who’s catching up? Demonstrated Technical

Superiority

About the Author

Troy is an Engagement Partner at GT Securities/Growthink, where he leads investment banking and consulting engagements for the firm’s clients. He focuses on convergence media. Troy brings to GT more than 20 years of experience advising corporations at all stages of development, from start-up firms to Fortune 500 companies.

Troy joins Growthink’s Los Angeles office after serving as the founding Principal of MBL, an advisory and investment firm that assisted clients in all areas of business, including developing their strategies and raising capital. Also a seasoned entrepreneur, he helped found, manage and invest in several start-up companies, primarily in the consumer products, technology and New Media sectors while at and before MBL. Troy additionally worked as an Associate in the Investment Banking and Merchant Banking Divisions at Donaldson, Lufkin & Jenrette (DLJ, now CS First Boston). His first job after college was serving as the founding Director of the RI Enterprise Zone Program. Education • JD, Law School; MBA, Darden School, University of Virginia (Winner, The Faculty Award; Raven Society) • BA, Brown University (Honors; Class Co-President)

Troy Centazzo Engagement Partner

Digital Media Expert

Contact:

Cell: (202) 369-2188

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