Video Consumption and Consumer Attitudes 2016

1. Optimizing the Power of Golf Video: A Consumer Perspective 2. Golfer Perspectives on 2016: Expectations and Impact

AGENDA

2

3

OPTIMIZING THE POWER OF GOLF VIDEO: A CONSUMER PERSPECTIVE

4

OVERVIEW •  MEDIA-AGNOSTIC STUDY OF NEARLY 4,300 GOLFERS (AVID,

CORE AND CASUAL) SURVEYED

o ANALYSIS INCLUDES:

»  TOTAL GOLF MARKET

» PARTICIPATION (AVIDITY AND COMMITMENT)

» GOLF-RELATED SPENDING

» ABILITY

•  MULTI-MODAL APPROACH TO COMBINE QUALITATIVE AND QUANTITATIVE RESEARCH PHASES

•  FORCED CHOICE OPTIMIZATION AND CONJOINT ANALYSIS TO ASSESS THE OPTIMAL CONFIGURATION OF GOLF-RELATED ONLINE VIDEOS

A VIEW FROM 30,000 FEET

5

PERVASIVE. Golf online video viewership has become a welcome element of the golf media mix, with particular resonance among golf’s most coveted and valuable customers.

CREDIBLE, OBJECTIVE AND AUTHENTIC. Golfers value the measured evaluations of well known, endemic third party brands when watching videos on new golf equipment and travel destinations. They do not want to be overtly sold to.

PERSONALIZED. Golfers are particular in sourcing content that they find to be personally relevant, through varied gateways, often through search-related or known golf-specific media brands.

SYNERGISTIC AND COMPLIMENTERY. While a third of the total golf market, and nearly 2 in 3 of golf’s best customers, actively consume golf-related video, they perceive these as another component of their golf media content mix, that works in lockstep as an augment to First Tier media such as television and print.

BITE-SIZED. While golfers are particular about specific content, they subscribe to the K.I.S.S. method when seeking out the optimal golf-related online videos.

6

NEARLY A THIRD OF THE GOLFER MARKET HAS ACCESSED GOLF-RELATED CONTENT THROUGH ONLINE VIDEOS OVER THE PAST SIX MONTHS

Q: You indicated that you participate in golf. Please indicate which, if any, of the following media sources, you have used to learn more about or follow golf content over the past six months.

32%

68%

Watched golf-related online

videos

7

Avid Golfers: Estimated size:

6.4 Million (26%)

Core Golfers: 7.2 Million (29%)

Occasional Golfers: Estimated Size: 11.1 Million (45%)

Total 8+ Rounds: 13.6 Million

Note: Includes women and juniors. Source National Golf Foundation, Golf Participation in the U.S. 2014

2.3 Million Online Video Watchers (21%)

2.6 Million Online Video Watchers (36%)

2.7 Million Online Video Watchers (42%)

5.3 Million Online Video Watchers

(40%)

A LOOK AT THE GOLF VIDEO MARKET BY AVIDITY

•  Golf’s 5.1 million Best Customers, make up 30% of the male market, 75% of the spending and two-thirds of the rounds played

•  An estimated 3.2 million of these best customers (63%) have watched golf-related online videos within the past six months

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WHO’S WATCHING?

153

146

133

125

115

66

Generation Next

Golf Publication Readers

Avid Players

Mid Level Handicappers

Core Players

Casual Players

Index

+Denotes INDEX vs. Total Golf Market

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WHAT ARE THEY WATCHING?

78%

77%

77%

69%

58%

55%

53%

51%

51%

48%

45%

44%

Golf-Related News

Golf Equipment

Golf Tournament Coverage

Golf Instruction

Golf Personalities

The Rules of Golf

Golf Trick Shots

Golf History

Golf-Related Travel

Golf-Related Physical Fitness or Conditioning

The Mental Side of Golf

Other Golf Lifestyle Content

10

MULTIPLE POINTS OF ACCESS DRIVE GOLFERS TO VIDEO Q: From which of the following sources have you accessed or received golf-related video

content?

Searched on YouTube or a similar video site; Search Engines such as Google

Golf publications or digital magazines; Directly visited OEM or Golf Retailer Website; Social Media

platforms such as Twitter or Facebook; Online newsletters received via email

Direct emails

•  Equipment Junkies are particularly more likely to access golf videos from multiple sources

•  Third Parties are just as important as direct OEM or Travel Provider Gateways

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GOLF VIDEO IN CONTEXT-- COMPLEMENTARY, NOT DISRUPTIVE TO FIRST TIER GOLF MEDIA CONSUMPTION

32%

36%

46%

Golfers overall

Who also watch golf on television

Who also read golf magazines

Incidence of those accessing golf video content over the past six

months…

Top three box agreement

“Golf Videos are a complement to the golf publications that I read” (Indices relative to golfers overall)

q Highest Spenders (Index 151)

“I find golf-related videos to be additive to golf content that I read about”

q Golfers <35 (Index 114)

q Highest Spenders (Index 113)

v  Magazine readers are more likely to also watch golf video

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v  Golfers are More Likely to be Increasing Their Time Spent with First Tier Golf Media (Print and TV) Than They Are to be Increasing their Time Watching Golf Videos

MORE IS STILL MORE

Q: Compared to a year ago, would you say you are spending more time, less time or about the same amount of time doing each of the following activities?

49% 52% 51% 53%

34% 34% 41% 38%

Total Golfers Avids/Core Golfers <35 Highest Spenders

First Tier Media

Golf Videos

MORE TIME

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CREDIBILITY, TRUST, OBJECTIVITY AND UTILITY TIP TO 3RD PARTY BRANDING AND GATEWAYS Golf Videos on a

golf manufacturer’s

website %

Golf Videos on a third party golf media website

%

Golf videos found through

a search engine

%

Golf videos found through YouTube

%

Golf videos on social media

%

Most Informative 33 32 15 13 8

Most Useful 23 34 18 16 10

Most Believable/ Credible 22 39 16 14 8

Most Entertaining 17 23 13 30 17

Most Memorable 19 24 15 26 16

Most likely to make me want to learn more about a product or service

29 31 16 14 11

Contains most information I can’t find elsewhere

26 28 19 16 11

Most Trustworthy 24 40 16 14 7

Most Objective & Unbiased 17 42 14 15 11

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•  “I’m looking for a credible person…one of the top instructors, who can relate to my game. I want to see videos that are tailored for me. I’m never going to swing like Rory McIlroy.”

•  “Any kind of third party that has credibility and has conducted their own

tests and independent observation. I want to know which product is really going to make a difference for me.”

•  “If it’s travel, I’m looking to get a feel for the place. I like videos that show

you more of the course. But I’m also looking for data. I want specifics on cost and which courses I can play.”

•  “I want something short and general that reminds me of the basics. It’s

important to know who it’s from.” •  “I’m looking to solve a specific problem. I don’t care about Paulina

Gretzky.”

GOLF VIDEO IN CONTEXT: WHAT MAKES FOR AN ENGAGING VIDEO

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Host/Narrator of the video Source or Origin of the

video

Length of the video

Delivery

Context or Presentation Format

Quantity of Products Shown

Tone

CONJOINT ANALYSIS LEADS TO OPTIMAL EQUIPMENT VIDEO CONFIGURATION Key Findings: The Optimal Combination: 

PGA Tour Pro OR Top Teacher

A known media brand such as a golf magazine/television network or OEM

Under 3 minutes

One needs to click ‘play’ to watch the video

Featured as a product demonstration

Multiple new models of golf equipment

The new golf equipment is discussed or featured in a non-promotional format

Golfer Perspectives on Retail, The Sport and The Economy

The TOURs continue to resonate with the PGA TOUR returning to its 2014 popularity after a slight dip in 2015. Golfers’ insatiable appetite for tournament coverage shows no end in sight. Participation—A nice uptick to those playing more in 2015 is accompanied by typically bullish forward attitudes. 2015’s strong concerns about participation growth recede.   Consumers are still buying into the promise of technological equipment innovation, but confidence in equipment’s ability to bring about immediate game improvement slides to a four year low.   Conditioning towards Equipment Deals has diminished somewhat though golfer spending expectations rise, as more consumers flock to mainline sporting goods retail.

TWO MINUTE TAKE-AWAYS

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TWO MINUTE TAKE-AWAYS

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Consumers clearly anticipate spending more for their golf equipment in 2016 than they did a year ago. However, expectations to buy remain flat to directionally up in most categories. This suggests no abatement in the fierce and tightening battles for market share that we’ve seen suggested, and the market has shown for equipment over the past several years.   Continued stability for private club membership, as the attrition seen through 2013 looks distant. Slight return to discounting as clubs increase the push to attract younger members and ramp up Junior Programs.  

Surge in new non-golf family programming of a year ago, returns to 2014 levels.   Golfer concerns about the labor market shift consumer confidence to four-year lows.   The game is still an oasis, but greater concerns on the macro economy and stresses on resources suggest potential challenges. Golfers still work to manage information overload and time pressures, but the game is a needed escape valve.

BACKGROUND, OBJECTIVES AND METHODOLOGY

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Winter 2016 SLRG Sports Omnibus

•  Assess the attitudes and perceptions of golfers

Initiated by Sports and Leisure Research Group in 2009

2016 online survey of over 1,000 golfer respondents

•  Fielded Jan 4-10, 2016

•  All golfers played a minimum of twice per month, in season

13%

64%

16%

68%

14%

72%

12%

64%

LPGA

PGA TOUR

TOUR POPULARITY AND FANS: BACK TO THE FUTURE

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19%

42%

29%

30%

19%

43%

14%

43%

LPGA TOUR

PGA TOUR 2013

2014

2015

2016

I Watch and Follow Closely

PGA TOUR shows particular strength in the Southern U.S.

% Indicating More Popular

THE YEAR AHEAD ON TOUR

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The Tiger era is over, yet the appetite for tournament coverage couldn’t be better

TOP 3 BOX AGREEMENT

41%

17%

2%

18%

13%

2%

4%

11%

1%

I expect Tiger Woods to win a Major in 2016

The inclusion of golf in the Olympics will diminish

excitement surrounding the Ryder Cup and President's

Cup

There's too much golf on television

2014

2015

2016

PARTICIPATION/SPENDING TRENDS: AN UPTICK IN STORE?

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Expectations Remain High With Slight Spike In Those Playing and Spending More

95% 96% 97% 97%

79% 81% 81%

2013 2014 2015 2016

Expected Actual

Do you expect to/Did you actually play the same amount or more in…?

77% 78% 78% 80%

2013 2014 2015 2016

Do you expect to spend the same amount or more next year?

MORE 32% 28% 27%

More 24% More

33%

Same 56% Same

48%

33%

43%

31%

12%

44%

28% 34%

9%

43%

33% 29%

8%

36%

23%

31%

3%

I have more golf partners to play with

Family obligations have decreased

My game has improved

I'm playing more business golf

2013 2014 2015 2016

WHY GOLFERS ARE PLAYING MORE

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Playing Partners and Game Improvement Still Drive One's Ability to "Find Time,” Though Meaningful Drops Among 2015’s Top Two

Modest increase in those who are playing more with

their families in 2016

STEMMING THE TIDE IN CONFIDENCE REGARDING PARTICIPATION GROWTH

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Agreement with statement: “The game of golf is facing major challenges in regards to growing overall participation”

Strongly Agree 40%

Agree 27%

Neutral 18%

Disagree 15%

Strongly Agree 44%

Agree 27%

Neutral 15%

Disagree 15%

Strongly Agree 50% Agree

26%

Neutral 14%

Disagree 11%

Agreement: 76%

Median Agreement:

7 of 10

2016

Strongly Agree 57% Agree

19%

Neutral 13%

Disagree 11%

Agreement: 76%

Median Agreement:

8 of 10

2015

PERCEPTIONS ON NEW EQUIPMENT PURCHASING

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Consistency Rules The Day, but Does 2016 Need A Jolt In Fulfilled Game Improvement Through Innovation?

AGREEMENT  WITH  FOLLOWING  STATEMENTS:   2013 %

2014 %

2015 %

2016 %

New golf equipment continues to become more technologically innovative every year 59 54 52 53

Buying new golf equipment has become a more complicated process in recent years 35 37 36 36

Buying the right new golf equipment can help me to immediately improve my game 29 27 27 25

I've found one brand of golf equipment that I plan to stick with, when I make my next purchase 26 24 24 23

I won't buy new golf equipment without trying it out first on the golf course 22 24 22 22

TOP THREE BOX AGREEMENT

GOLF PURCHASING TRENDS

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As evidenced elsewhere in this year’s study, consumers clearly recognized less rampant discounting. This may have held many back from the market in 2015.

Consumers clearly anticipate spending more for their golf equipment in 2016 than they did a year ago. However, expectations to buy remain flat to directionally up in most categories.

Higher per capita spending anticipated in 10 of 11 categories would be a welcome sign after actual 2015 reported spending was up relative to reported pre-season expectations in only golf bags.

This suggests continued battles for market share, as we’ve seen over the past several years.

Combining the above trends with a reported increase in shopping activity at sporting goods retail, and macro economic concerns points to a heightened premium placed on brands that can evoke value in the year ahead.

KEY YEAR-OVER-YEAR TRENDS

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Category Purchasing:

2015 vs. 2014 Decreases in % Actually Purchasing •  Drivers

•  Golf Bags

•  Fairway metals/hybrids

•  Irons

2016 vs. 2015 Directional Purchase Expectation Increases •  Irons

•  Drivers

•  Fairway metals

•  Wedges

KEY YEAR-OVER-YEAR TRENDS

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Per Cap Price Achievement: Reported 2015 Per Cap Dollars spent higher than expected for 2015

•  Golf Bags

Reported 2015 Per Cap Price Achievement Increases Over YAG

•  Hybrids (+10%)

•  Golf Bags (+13%)

Expected 2016 Per Cap Spending up over Actual 2015 Per Cap Spending in 10 of 11 Measured Categories

Up >5%: • Drivers • Fairways • Hybrids •  Irons • Wedges • Putters

Up 3-5%: • Golf Balls • Replacement Grips • Golf Bags • Golf Shoes

Only Apparel sees expected 2016 spending decrease relative to reported 2015 per cap spending

OVERALL SPENDING EXPECTATIONS ON GOLF EQUIPMENT SHOW PROMISE

29

Overall, compared to 2015 do you expect that your 2016 total golf-related spending for equipment and apparel will be…?

Q

More 33%

The Same Amount

48%

Less 20%

Same/More 81%

RETAIL DECISION DRIVERS REMAIN FOCUSED ON SERVICE AND

PRODUCT QUALITY, WHILE THE “DEAL CULTURE” HAS DIMINISHED

30

67% 63% 62% 61%

19% 20% 20% 20%

Quality service can make the ultimate difference in

what I buy

If I see something I like, I don't worry about the price

TOP 3 BOX AGREEMENT

65% 67% 66% 68%

37% 41% 39% 35%

2013 2014 2015 2016

Purchase decisions for me are more about substance

than about style

There are so many good deals these days, that I

rarely ever pay full price anymore

RETAIL PREFERENCE: GROWTH IN SPORTING GOODS CHANNEL

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38% 39% 37% 37%

23% 21% 21% 25%

14% 13% 15%

13%

17% 20% 21% 17%

Winter 2013 Winter 2014 Winter 2015 Winter 2016

Off-Course Specialty Sporting Goods Retail Over the Internet Green Grass

► Off-Course specialty is particularly resonant with the under age 35 set and mid level handicappers, while Green Grass shops remain mainstays of private club golfers.

Where are you most likely to make your next golf equipment purchase? Q

SOME SKITTISHNESS ABOUT THE ECONOMY RETURNS IN AN ELECTION YEAR

32

Fall in short term optimism, throws caution at other indicators that continue to show strength

TOP 3 BOX AGREEMENT

33% 33%

53% 51%

30%

44%

58% 56%

29%

47% 51% 55%

29%

44% 46% 46%

I plan to continue working even in retirement

I invest so I can retire early This year will be a better year for me than last year

I plan to spend actively on useful pastimes, in my

retirement

2013 2014 2015 2016

GOLFERS’ OVERALL ECONOMIC OUTLOOK TURNS CAUTIOUS

33

Labor market concerns shift golfer attitudes to four year lows.

60%

16%

34%

5%

61%

27%

40%

8%

56%

30% 35%

8%

58%

18%

31%

5%

There's really no such thing as job security any more

We have seen the U.S. unemployment rate reach bottom, and it will add jobs

this year

I feel better about my financial situation today

than I did a year ago

People will go back to spending freely on luxuries

again this year

2013 2014 2015 2016

TOP 3 BOX AGREEMENT

Report a gain in membership

PRIVATE CLUB MEMBER RETENTION VS. ATTRITION HAS STABILIZED

34

36% 31% 33%

Base: National Sample of Private Club Members

Lost Membership Flat or Consistent Gained Membership

MEMBERSHIP LEVELS OVER THE PAST 3 YEARS

2013 Report a loss in membership

27% 22% 45% 2015

Report a gain in membership

26% 35% 39% 2014

Report a loss in membership

Report a gain in membership Report a loss in

membership

27% 26% 42% 2016

Report a gain in membership Report a loss in

membership

PRIVATE CLUBS: PUSH TOWARDS YOUNGER MEMBERS AND JUNIOR GOLF PROGRAMS

35

After one year spike, new non-golf family programming returns to 2014 levels, with slight uptick in discounting.

Base: National Sample of Private Club Members

Mean: 10 point scale

TOP 3 BOX AGREEMENT

53%

42% 39%

34% 31%

57%

35% 40%

27% 24%

55%

26%

39% 38%

24%

56%

28%

41%

26% 26%

My club has made concerted efforts to attract younger members in the past few

years

My club has aggressively reduced the cost of

membership to attract new members over recent years

My club has been putting more emphasis on junior golf

programs recently

My club recently instituted a variety of new non-golf

programs to attract families

My club has been putting more emphasis on women's

golf programs recently

2013 2014 2015 2016

27%

39%

57%

26%

40%

60%

31%

40%

56%

36%

39%

58%

I'm concerned about the financial stability of my club

My club must make aggressive changes to remain viable in the coming years

Private clubs in general, need to make aggressive changes to remain relevant in the

coming years

2013

2014

2015

2016

THE STATE OF PRIVATE CLUBS: THE FINANCIAL HOUSE REMAINS IN ORDER

36

Focus on Evolution has created stability

Base: Private Club Members 2016

Top Three Box on 10 point scale

TOP 3 BOX AGREEMENT

24-7 DEMANDS AND NEWS CYCLE POSE CHALLENGES

37

Golf is still an oasis, but increased strain on resources and economic cautiousness greet the new year

82%

36% 42%

33%

64%

81%

37% 40% 31%

59%

79%

40% 42% 32%

59%

78%

36% 38% 32%

63%

We live in an age of constant updates

Golf is my personal "oasis" from day-to-day chaos

There's too much new technology to keep up

with

I'm spending more time these days with friends and

family, than I did in the past

Today there is more of a priority on getting things done more quickly with

less resources

2013 2014 2015 2016

TOP 3 BOX AGREEMENT

Still the strongest overall agreement among 44

statements

Golfers in 2016 are significantly less likely than a year ago to:

•  Believe that the year ahead will be better than the previous year

•  Feel bullish about their retirement prospects

FINAL THOUGHTS

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The Market:

Micro-Economic Concern Coupled with Higher Expectations for Equipment Pricing: 2016 will continue to be about perceived value as consumers look for a spark in equipment innovation to justify perceived retrenchment from the discounting of recent seasons.

Yet Cautious Optimism Rules on the Participation Side: Private Clubs continue to focus on attracting younger members and targeting junior programs, while golfers seek to increase their play amidst heightened insecurity.

Online Video Captivates Golf’s Best Customers:

Objective Content is King: Third party endorsement sparks the legitimacy of popular instruction, equipment and travel video.

The Magic Formula: Golfers seek short, simple and customized content, replete with multiple offerings and expert evaluations too.