- 1 -
NEW NETWORK.NEW LIVING ROOM.
Crackle US - MRP FY15-FY17
- 2 -
Vision and Strategy
OUR VISION
To be a leading on-demand programming network around the world
“CRACKLE…ALSO,” meaning Crackle is a welcomed choice even for subscribers and viewers of Pay TV (e.g., Comcast) and OTT services (e.g., Netflix)
OUR STRATEGY
Differentiate ourselves and build audience by
offering programmed experiences that are freely accessible on all connected devices
Connect brands with consumers through premium content experiences on connected devices
Online
Connected TV
Mobile
World Class Distribution
People are noticing….
“The 20 Best iOS and Android Apps Of 2012”
– TechCrunch
● “Amazon’s Best of 2012: Apps and Games” --
Amazon Editors
● “Xbox Top 5 App of the Year”
● “Best of TV on the Web in 2012” ● – USA Today
2012 Mobile Excellence Award Finalist
Top 5 Application on: PlayStation, Xbox, ROKU, BRAVIA, and
SAMSUNG
Top 10 iPad Apps of 2012
#3 Most Popular Entertainment
Application on Android
- 5 -
• Sales Organization• Proving a real revenue model exists• Built systems to support sales and Yield Management
• Platform – Efficient relative to competitors – 20 apps/4 continents
• Original Content Studio – premium slate; accolades; cost capability
• Movies/TV - Creating AVOD licensing market
• Audience and Engagement – 50% increase in time; 30M apps;YT
• Distribution Partnerships – solid terms and relationships, globally
Solid Foundation and Asset Creation
- 6 -
Advertisers Issues:Money moving to cTV slower than expectedBuying 3 quarters outOnline targeting is desired
Competition Issues: TVE and SVOD – taking consumer attention, and spending $billions on tech
Content – Prices bid up through exclusivityPortals – more premium video in AVOD space matched with scale
Critical Success Factors:Brand – build strong awarenessEngagement - combine product and programming in compelling mannerOriginal programming – stand-outTech platform – competitive, and able to maintain 20+ productsTargeting – systems and consumers to target campaigns
Market Conditions That We Face
- 7 -
“It takes a Village…”
Platform Content
Marketing
The Consumer
Distribution
Ad Sales
US MRP Crackle Digital Media Sales
2015-2017 Go to Market Strategy
- 9 -
Identify & maximize the value of our inventory & products
Leverage inventory
packages by core Lines of
Business
Identify the size, cycles
& anatomy of our
marketplace
Align & localize a
best in class sales team
with our marketplace
Leverage data to
penetrate all revenue
channels in the
ecosystem
2014 Sales Strategy & Principles
Leverage inventory packages by core
The “Build Year”
- 10 -
Yr/Yr Quarterly Revenue Pacing
2014 Sales Pacing & Execution
Q1 Q2 Q3 Q40
2000000400000060000008000000
10000000120000001400000016000000
F2014F2013
- 11 -
2014 Current Pipeline
2014 Sales Pacing & Execution
Pipeline Revenue by Status - Full Value FY14 Q1 FY14 Q2 FY14 Q3 FY14 Q4
90% Hold $2,651,785 $1,635,215 $- 60% PIN $1,425,126 $2,207,754 $5,023,766
30% Proposed $10,300,807 $19,750,490 $7,025,271 0% Initial $3,779,343 $1,200,050 $493,151
Total $18,157,061 $24,793,508 $12,542,187
Pipeline Revenue by Status - Discounted Value FY14 Q1 FY14 Q2 FY14 Q3 FY14 Q4
90% Hold $2,386,607 $1,471,693 $- 60% PIN $855,075 $1,324,652 $3,014,259
30% Proposed $3,090,242 $5,925,147 $2,107,581 Total $6,331,924 $8,721,492 $5,121,841
- 12 -
2014 Sales Highlights
2013 Annual Total
2014 Sold to Date
0 2000000 4000000 6000000 8000000
Closed Revenue
2013 Annual Total
2014 Sold to Date
0 20 40 60 80 100 120 140
Active Client Prospects
2013 Annual Total
2014 Sold to Date
0 50 100 150 200 250 300 350
Proposed Deals
2013 Annual Total
2014 Sold to Date
0 50000 100000 150000 200000 250000 300000
Average Deal Size
- 13 -
Retain customers & reduce client
burn rate
Identify & break New Audience Segments
and pockets of video buying
Leverage Relationship
Equity to drive upfront
buying
Capitalize on Originals
success and incubate Crackle Studios
Enhance Ad Technology & targeting
to drive premium pricing &
GRP parity.
2015 Sales Strategy & Principles
Retain customers
Leverage Capitalize
Sustain & GrowDouble Down
- 14 -
2014 Key Learnings from Ad Community
Headwinds Tailwinds
OCR & VCE
Brand awareness
CTV
Content
Scale
Targeting
Ad model
Originals
Talent
Mobile & Tablet
Distribution
cRoll
Performance
- 15 -
2014-2017 Sales Cycle & Growth Projections
+42% +33% +1%2014 2015 2016 20170
20000000
40000000
60000000
80000000
100000000
120000000
140000000
Q1 Q2 Q3 Q4
5 8 13 12
Q1 Q2 Q3 Q4
10 10 15 15
Q1 Q2 Q3 Q4
15 15 20 20
Q1 Q2 Q3 Q4
25 25 35 35
$38M
$50M
$70M
$120M
Quarterly Goals
Marketing/ProgrammingCycles & Impact to Revenue
- 16 -
2014-2017 Growth Projections & Incremental Gain
2014 2015 2016 2017
$38M
$50M
$70M
$120M
‘17 Incremental Growth to $120M
Premium Content Rotation $15MHolding Company Upfronts $15MData & B. Targeting $5MSony Pictures Studio $5M New Distribution Partners $5MLocal $5M
* All include rev gains in CTV
‘16 Incremental Growth to $70M
Tier 1 Publisher Upfronts $10MPremium Content Rotation $7MSony Pictures Studio $3M
‘15 Incremental Growth to $50M
AE Yield / Full Sales Cycle $10MTier 1 Publisher Upfronts $8M
- 17 -
Market Size, Cycles & Anatomy
Total Size of Digital Ad Market2013 Total Digital Spend Excluding Search: $31.8B
Sources: Search, Display, Social Networks, Rich Media and Online Video 2014 from: “Advertising Forecasts 2012: US Market Trends and Data for All Major Media” (SNL Kagan, 2012); Mobile 2012 and 2013 from “US Online Advertising Spending to Surpass Print in 2012” (eMarketer, Jan 2012), Mobile 2014 from “Mobile Marketing Economic Impact Study” (Mobile Marketing Association, 2013); Online Video 2012 and 2013 from “iAB Internet Advertising Revenue Report : 2012 Full year Results” (April 2013)
Display
Mobile Video
Social Networks
Connected TV
12.8
3.4
0.242.5 2.6
1.60.19
14.5
4.1
0.52
3.1 31.6
0.52
16.1
4.9
0.92
3.9 3.31.7 0.93
Digital Media Spending by Year
201220132014
Tot
al D
olla
r A
d S
pend
(i
n $
Bill
ions
)
- 18 -
Market Size, Cycles & Anatomy
Total Size of Digital Video Ad Market2013 Total Digital Video Spending: $4.1B
+42% +33% +1% NC
Sector 2011 2012 2013 2014
Online* 17.2 20.9 28.9 33.3
Online Video 1.8 2.5 3.1 3.9
Mobile* 0.8 1.4 2.4 3.6
Mobile Video 0.1 0.2 0.5 0.9
Connected TVs 0.1 0.2 0.5 0.9
Broadcast TV 24.8 27.4 x x
Cable TV 23.6 24.4 x xSyndication TV 4.7 5.1 x x
--$ Billions--
Sources: Total Ad Spend 2011, Total TV, Total Print, and Total Internet 2013, 2014 est: US Online Advertising Spending to Surpass Print in 2012 – eMarketer (Jan 2012); Radio 2013 and Mobile 2014: Mobile Marketing Economic Impact Study: Mobile Marketing Association (2013); Online Video 2014: Advertising Forecasts 2012: US Market Trends and Data for All Major Media (SNL Kagan, 2012)
- 19 -
Break New Audience Segments
Male Audience$13.4B
Female Audience$18.4B
Hispanic Audience$2.5B
AA Audience$1.6B
- 20 -
Market Size, Cycles & Anatomy
Total Size of Digital Ad Market2013 Total Digital Spending: $31.8B
2013 Digital Spending Male Audience: $13.4B
Source: Forecasts calculated from SNL Kalgan, 2011 and iamb October 2012; classified and lead generation not shown
Online Video Connected TV
1477.5
134.0457.06 60.48
1550
279.56178.24 133.92
20122013$M
illi
on
s
- 21 -
Market Size, Cycles & Anatomy
Total Size of Digital Ad Market2013 Total Digital Spending: $31.8B
2013 Digital Spending Female Audience: $18.4B
Source: Forecasts calculated from SNL Kalgan, 2011 and iamb October 2012; classified and lead generation not shown
Online Video Connected TV
1025
109.67 48.6 20.16
1550
238.14158.06
52.08
20122013
$Mil
lio
ns
- 22 -
Market Size, Cycles & Anatomy
Total Size of Digital Ad Market2013 Total Digital Spending: $31.8B
2013 Digital Spending Hispanic Audience: $2.5B
Source: Forecasts calculated from SNL Kalgan, 2011 and iamb October 2012; classified and lead generation not shown
Online Video Connected TV
317.5
38.99 21.13 16.13
396.8
86.46 67.2646.5
20122013
$Mil
lio
ns
- 23 -
Market Size, Cycles & Anatomy
Total Size of Digital Ad Market2013 Total Digital Spending: $31.8B
2013 Digital Spending AA Audience: $1.6B
Source: Forecasts calculated from SNL Kalgan, 2011 and iamb October 2012; classified and lead generation not shown
Online Video Connected TV
237.5
24.37 12.68 9.68
285.2
51.77 40.3624.18
20122013
$Mil
lio
ns
- 24 -
Market Size, Cycles & Anatomy
Spending Cycles
All Digital & Male Audience
Source, IAB totals by type, Kantar distribution by month, comScore Male Aud Composition; EXCLUDES SEARCH
FQ4 FQ3
4100041030
4106141091
4112241153
4118341214
4124441275
4130641334
0
200
400
600
800
1,000
1,200
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1.6
1.8
2
Total Digital Spending
Total Digital Spending Male Audience
$Mil
lio
ns
FQ2 FQ4
- 25 -
Market Size, Cycles & Anatomy
Spending Cycles
All Digital & Female Audience
Source, IAB totals by type, Kantar distribution by month, comScore Male Aud Composition; EXCLUDES SEARCH
FQ4 FQ3
4100041030
4106141091
4112241153
4118341214
4124441275
4130641334
0
200
400
600
800
1,000
1,200
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5
Total Digital Spending
Total Digital Spending Female Audience
$Mil
lio
ns
FQ2 FQ3
- 26 -
Male Audience Total Digital Video
Spending Cycles: By Category
Market Size, Cycles & Anatomy
Top 5 Categories in 20121. Media & Advertising2. CPG Food (Total)3. Department Stores4. Automotive, Auto Access & Equip5. CPG Health (Total)
April June August October DecemberFebruary0
5
10
15
20
25
Automotive, Auto Access & Equip
CPG Food
Communications
Department Stores
Games, Toys & Hobbycraft
Media & Advertising
Misc Services & Amusements
CPG Health
Retail
Ind
ustr
y R
ank
Sources: Kantar Stradegy Trend US Internet Display Spend: Male Product Categories, April 2011-March 2012; April 2012- March 2013
- 27 -
Female Audience Total Digital Video
Spending Cycles: By Category
Market Size, Cycles & Anatomy
Top 5 Categories in 20121. Media & Advertising2. CPG Food (Total)3. CPG Health (Total)4. Retail5. Medicines & Proprietary Remedies
April June August October December February0
5
10
15
20
25
CPG Food
CPG Health
Discount Department & Variety Stores
Household Supplies
Media & Advertising
Medicines & Proprietary Remedies
Misc Services & Amusements
Retail
Indu
stry
Ran
k
Sources: Kantar Stradegy Trend US Internet Display Spend: Male Product Categories, April 2011-March 2012; April 2012- March 2013
- 28 -
Regional Allocation of F15 GoalOrganizational Design
WEST$14M
CENTRAL$14M
EAST$22M
2015 Resource Requirements
4 Sellers1 SA
1 Sr. Lead( 0 )
4 Sellers1 SA
1 Sr. Lead( 0 )
6 Sellers2 SA’s
1 Sr. Lead( +2 )Yr/Yr Change
- 29 -
Key Dependencies
Retain customers & reduce client
burn rate
Leverage Relationships Equity to drive upfront buying
Capitalize on Originals
success and incubate Crackle Studios
Enhance Ad Technology & targeting to
drive premium pricing
Identify & break New Audience
Segments and pockets of
video buying
Performance
Customer service
Delivery
Campaigns shifting
Client seasonality
Reach in segment
Targeting
Programming
Ecosystem marketing
Targeted originals
Full sales cycle
Early slate release
Holding Co. deals
One Sony deals
NewFront
Larger slate
Top talent
Big ideas
Long sales cycles
Production resources
OCR/VCE solve
Premium rotation
Behavioral targeting
First Party Data
CTV ad tech
F
MRP FY15+ SALES SOLUTIONS PLANNINGv3
- 31 -
FY14 Ad Revenue Business Requirements
CONFIDENTIAL
Drivers
Direct Sales Team Support Marketplace Requirements
1. Sales Support – resources needed for $30M direct sales business
2. Yield Mgmt – manages monetization of portfolio
3. Ad Networks – manages $8M reseller business
4. Market Leadership – swimming upstream to be leader in industry
Budget Priority Areas
- 32 -
FY14 Ad Revenue Business Requirements: Report Card
CONFIDENTIAL
120Proposals in June
20Campaigns executed in June
6 MthsNew Infrastructure
$2MLeft on table in FY13
+24%CPM - Desktop
+16%CPM - Mobile
20MMobile IMPs delivered to Rhythm
in June
Sales Support
Yield Mgmt
Ad Networks
- 33 -
- 34 -
FY14 Market Leadership: Swimming Upstream Report Card
CONFIDENTIAL
2. Research
3. Ad Community Awareness 4. Sales Tools & Collateral Materials
DCNF Newfronts, Ad Age Digital and IAB Cross-screen
comScore Multi-Platform Audience Measurement
New Network. New Living Room. , Sizzle Videos & Media Kit
1. Media Innovation
cRoll Imagery Gallery & cRoll Cinema
- 35 -
FY15 – FY17 Directional Strategy
CONFIDENTIAL
Create advertising beachhead for multi-platform video that capitalizes on audience scale with growth of CTV and mobile/tablet , first-in-market media innovation and first party data
Strategy
Tablet Mobile
CTV
Media InnovationAudience Scale
- 36 -
FY15 – FY17 Directional Strategy: Short-term
CONFIDENTIAL
Priority Tactics
Sales Support
• Custom marketing solutions ie. integration in Originals• Scale with growth but find efficiencies
Yield Mgmt • Expand yield portfolio• Fold in Ad Ops as part of overall Yield Mgmt approach
Ad Networks
• Leverage CTV position and ad infrastructure to create new revenue opportunities
Market Leadership
• Improve ad experience• More cRoll• CTV education through trade mrkt
Compete and win through multi-platform innovation, custom marketing solutions and education on CTV
Strategy
- 37 -
FY15 – FY17 Directional Strategy: Long-term
CONFIDENTIAL
Secure first party data from device partners, Sony and Crackle to take a market leadership position for ad targeting on CTV
Strategy
Acxiom
UMI PROJECT
US PROGRAMMING
- 39 -
THE CHANGING COMPETITIVE LANDSCAPE
YESTERDAYTODAY
LINEAR TV WORLDMSO-driven experience
EXPLOSION OF APPS, BRANDS, & PLATFORMS
Convergence & chaos combined
TODAY TOMORROW
EVEN MORE CHAOS & PLATFORMS
Wearables, Cars, In-Flight, etc
What does this mean for Programming?
- 40 -
PRICING AND AVAILABILITY
- 41 -
MARKET PRICING & SPEND
- 42 -
THE NEED TO ESTABLISH A BRAND
- 43 -
PROGRAMMING STRATEGIES & TACTICS
How Crackle’s Programming will adapt, compete and thrive
Voice & Tone:- Reinforce brand via editorial/celebrity Watchlists- Produce on-brand Originals- Improve consumer messaging around content exclusives and windows- Increased retention
Licensing:- License exclusive content, multi year deals- Increase 3rd party licensing efforts (# of partners and volume)- Improve TV offering, including full seasons of driver titles
Expand Core Demographics:- Identify niche verticals and opportunities- Target new audience demographics: Hispanics, African Americans- Expand demographics for co-viewing
- 44 -
Editorial VoiceStreaming Exclusives
& Themed Events
Premium Movie & TV Content in Key
Genres
Crackle Only
+ + +
Weekly Featured Watchlist
Guest Curators
Original Productions
Crackle Only
Crackle Only
Crackle Only
Denis Leary heads a heroic cast in a darkly funny and incendiary firehouse TV saga that has more grit than sandpaper.
On-Brand “Why It Crackles” Statement
VOICE & TONE
- 45 -
WEEKLY WATCHLISTS
Curate content in fun, interesting and relevant weekly packages to reinforce voice, drive retention and elevate Originals
- 46 -
Watchlists & Collections
Premium Movies & Full
TV Series
Exclusive Content & Originals
RETENTION: INCREASED ENGAGED VIEWING AND REPEAT VISITORS
RETENTION
- 47 -
FY15 Titles
FY16 Titles
FY17 Titles
Library Titles
*Titles subject to change
Lock-in exclusive network windows & driver library titles for multi-year deals
SONY CONTENT BUYING STRATEGY-- Illustrative
- 48 -
• Features $2.6MM• TV $1.8MM
FY15$4.4MM
• Features $3MM• TV $2.1MM
FY16$5.1MM
• Features $5.3MM• TV $5.1MM
FY17$10.4M
M
THIRD-PARTY CONTENT STRATEGY
FY15
Current MRP Target
$20MM
Increased investment in third-party titles with focus on multiyear deals, premium drivers and complete series for binge viewing
- 49 -
TV STRATEGY
Premium series provide strong
brand recognition and cultural relevance
Driver Television
Genre-Supporting, Hour-Long Series
Influential and Visionary
Cult Series
Non-Fiction & Reality
Devotedly followed
franchises that align with
Crackle’s core genres
Influential series that pushed
boundaries and remain relevant
Interesting, smart fare from networks such
as Discovery and Smithsonian
Anime
Premium titles drive binge
viewing engagement via
a highly retainable and loyal audience
On-brand, complete TV series and Anime from multiple licensors to encourage binge viewing and bolster retention
- 50 -
Continue to grow and expand relevant, influential and full-length narrative-based premium music content
Music-Themed Feature Films
Original SeriesPerformance / Concert Films
Music Documentaries
OPPORTUNITIES
Content Exclusivity High Dollar Sponsorships Strategic Partnerships
EXPANSION INTO NICHE VERTICALS: MUSIC (CONTINUED..)
- 51 -
Narrative-Based Feature Films, Documentaries, TV shows, and Reality Sports Programming that drive sponsorship opportunities
Crackle Users
• 43% Say sports are a big part of their life
• 23% Regularly visit a sports website (ESPN, FoxSports, CBS Sports)
• 26% Watched 1+ hours of sports content on TV in the last week
• 7% Used ESPN to watch a sporting event on Xbox
• 3: Avg number of pay-per-view live sports events watched in the last 3 months
*SOURCE: Interpret NMM Q4 2012
EXPANSION INTO NICHE VERTICALS: SPORTS
- 52 -
Crackle Users
• 12% of U.S. Crackle users identify as African American
• 82% Spend 1+ hours watching TV or movies online daily
• 5: Average hours watching movies online per week
• 12% Prefer to watch movies by streaming them online
• 49% Of AA Crackle app users used an app (past week) to stream movies/TV
• 64% Saw 1+ movies in theaters (3 months)
• 86% Owns a video game system
• 83% Spent 1+ hours playing video games
• SOURCE: Interpret New Media Measures: Q3 2012
Program movies, shows, stand-up comedy and music that target African American males, 18-34
EXPANDED DEMOGRAPHICS: AFRICAN AMERICAN
- 53 -
Crackle Users
• 15% of U.S. Crackle users identify as Hispanic
• 61% Male
• 28 = Median age
• 26% HH income of $50K+
• 91% Own a game console
• 95% More likely to play a new video game
• 63% More likely to try a new technology
• when released
• 41% Agreed they would unplug the TV and turn exclusively to the Internet for video entertainment
• 240 min: Average time spent watching TV Shows Online
• SOURCE: Interpret New Media Measures: Q3 2012 Survey; comScore Plan Metrix Dec 2012; What Men Want 2012/2013 Crackle proprietary study
EXPANDED DEMOGRAPHIC: ENLGLISH SPEAKING HISPANICS
Program movies, shows and music that target tech-savvy second and third generation U.S. Hispanic males, 18-34
- 54 -
Crackle Users
• 41% of U.S. Crackle users identify as female
• Women are (slightly) more likely to watch Crackle content with someone else
• Female users are 3% more likely to recommend Crackle than male users
• Onsite female Crackle users are much younger on average than males
SOURCE: ForeSee Crackle Browse (May ‘12-May’13)
Program movies, shows, stand-up comedy and music that appeal to both women and men, 18-34
EXPANDED DEMOGRAPHICS: CO-VIEWING
- 55 -
FY14$5MM
FY15$8MM
FY16$10MM
FY17$14MM
0
5000000
10000000
15000000
33942005752200 6426000
86784001506000
26520003312000
5356800
Movies
SPT 3rd Party
Year-over-year increased investment in third-party licenses for Movies and Shows
**Illustrative content progression over MRP**
CONTENT BUDGET ALLOCATIONS
FY14$2MM
FY15$4MM
FY16$3.5MM
FY17$9MM
0
2000000
4000000
6000000
8000000
10000000
1399350 1769862 18232323787230705021.35
1847482.94 1945588.24
5189301.53
TV
SPT 3rd Party
FY14 FY15 FY16 FY170
5
10
15
20
25
MoviesTV
$7MM
$12MM$13.5MM
$23MM
Cumulative Content Spend
- 56 -
CRACKLE STUDIO
- 57 -
Crackle Studio – Original Content Programming
Build Upon Success
Multiple Full Length Formats
• ½ Hour Series
• Features
• Unscripted / Music programming
A Creative Home for Talent:
• Jerry Seinfeld
• David Spade
• Robert Downey Jr.
• Danny Glover
• David Arquette
• Gina Gershon
A Key Lever to Building The Business
• A partnership with Advertisers
• A strong consumer branding opportunity
• Awards (Streamy, Webby, Rockie….)
- 58 -
Crackle Studio – Original Content Programming Strategy
Evolve Production Volume and
Quality
● LENGTH:
• Evolve to 10 x 1/2 hour scripted approach
• Test 10 x 1 hour format in FY16
● SEASONS:
• Produce multiple seasons of successful shows to build franchise
properties
• Greenlight/Produce 6 series over the year -- beat linear networks to
punch on burgeoning year-round original programming model
● BUDGETS:
• Increase per ep scripted budgets from $175k to $500+k by FY17
● NEW OPTIONS:
• Adopt orphaned linear series e.g., ‘Happy Endings’
- 59 -
Crackle Studio – Original Content Programming
Features as “back-door
pilots”
Fully integrate “second
screen” into production
Crackle Branded/ Built-If-Sold Series
• Build 360 experience (second screen, gaming platforms, social
integrations, etc.) around original production franchises
• Second screen experience executed in parallel with production
• Explore a greater degree of social engagement
• Create more unscripted ‘built-if-sold’ revenue opportunities such
as “Play It Forward”
• Expand into built-if-sold 6x22 scripted comedy series and
features
● Produce original features to serve as pilots for future
franchises
● Launch AXN / Crackle international back-door pilot / feature
partnership for FY15
- 60 -
CRACKLE NETWORK
DVD & EST
LINEAR TV
GLOBAL
Crackle and Beyond
CONTINUE TO LEVERAGE MULTIPLE WINDOWS OF DISTRIBUTION
- 61 -
CRACKLE US MARKETING
- 62 -
Marketing Approach
CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES
3/4 of the US will have heard of Crackle
• Brand top of mind for at least 25%
Double retention across all platforms
}
Dis
cover/
Watch
En
gag
e/D
ialog
ue
GoalsBrand Omnipresence: Our audience must see Crackle everywhere: online, offline, in the press, from their friends
Brand engagement: users must be reminded to return, and involved in 2 way communication with the brand
Critical Success Factors
Customer acquisition: Cast a wider net, increasing flow of new users
Retention: communicate with them in an ongoing, relevant dialog
Strategy
+4m +6m +12m
FY 15 FY 16 FY 17
New Users
- 63 -
Discover
Engage
Dialog
Share
Tactical Approach
CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES
}
Discover
Dialog
• 360° media• Multiple press
touchpoints• Partner and platform
marketing• Stunts and events• Brand and Originals focus
• Social recruitment• Registration• Open graph
• CRM• New social destinations• New user forums• 2 way communication
• Brand evangelists• Exclusive social
assets• Social visibility
- 64 -
Discover
Engage
Dialog
Share
Consumer Acquisition and Retention Evolution
CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES
}
FY 15 FY 16 FY 17
More monthly users sourced from return users, and customers acquiring customers
- 65 -
Media
CONFIDENTIAL
FY 15 FY 16 FY 17
• Shift spend from online traffic to brand building
• Majority of media spend to support brand
Less than 25% spent to drive
traffic
90%+ brand buildingTraffic
vs.Brand
Media Tactics
Partner-ships
• Major campaigns against key originals
• Outdoor, online, cable TV• Events and sponsorships• YouTube as media
• Year round media reach
• Evolve from ad hoc editorial promotions to long term platform marketing partnerships
• Co-op media from marketing partners
• Featured inplatform partner ad campaigns
• Joint events• Joint productions
Crackle will look and feel like a major network brand, driving continued discovery and achieving top of mind status
- 66 -
Stunts and PR
CONFIDENTIAL
FY 15 FY 16 FY 17
• Mainstream press, digital press, bloggers, niche/targeted press, business press.
• Direct contactTargets
Involve-ment
Awards and
Events
• Establish ongoing press relationships with management
• Deepen consumer press involvement in Originals with set visits, specially produced assets, “embedded journalists “
• Management called upon as industry experts
• Hold dedicated Originals panels and launch parties at major events (Comic-Con, TCA, etc.)
• Shift focus from web centric awards to “major leagues” (Emmy) with full on FYC campaigns
• Press friendly stunts leveraging Crackle advantages or Originals IP
Press presence will match media presence, with Crackle always in the conversation
• Annual events garner annual coverage
- 67 -
Community Development & Management
CONFIDENTIAL
FY 15 FY 16 FY 17
• Aggregate disparate databases (NL, Mobile, CS, Notify); grow and integrate YT subs
• Collect and store relevant volunteered and behavioral data
• Initiate profile based communication
• Increasingly granular, targeted and relevant communication
CRM
Social
Outreach
• Establish baseline platforms to launch and facilitate a dialog:
• “Want To Follow” social destinations around Originals, genres, etc
• True CS function
• Incentivize “power followers” with sharable and exclusive assets, designating as brand evangelists
• Leverage social platforms to “break news” and assets, inviting feedback and enhancing WTF dom
• Originals dedicated brand evangelists, potentially serving as sponsor evangelists
Newly aware users will be engaged by relevant 2 way communication, ultimately sharing and recruiting new users
• Involve followers/users in content and product:
• Interactive Originals forums (speculation, conversation, reactions)
• Content decisions• User recognition on social
and off
- 68 -
CRACKLE – CLIPS & TRAILERS
- 69 -
Business Recap
• The Crackle team continues to manage and grow Clips & Trailers content claiming business on YouTube
• Expected to generate ~$1M EBIT per year, growing 6% y-o-y through FY2019
• Business is fully dependent upon YouTube Platform
• One Full Time Coordinator (existing resource)
• Ad Ops Head Starting FY2014 (to enable manual operations on Provider channels)
Executive summary
Worldwide US
220M Views 46M Views
90M Uniques 18M Uniques
12M Hours Viewed 2.8M Hours Viewed
Worldwide US
Comscore not yet integrated WW*
23M Views
9.1M Uniques
1M Hours Viewed
Current ScaleMarch 2013 Comscore* and YouTube Reported Performance on
both Provider Channels and UGC
*comScore reporting is in still in early phase of integration, therefore remains a work-in-progress to capture total addressable reach and match to YouTube reporting
- 70 -
13 Million Worldwide Unique Viewers (Monthly)
70
Global Audience: Provider channels 2015 FORECASTED MONTHLY AVERAGE Unique Viewers IN PROVIDER CHANNELS
Provider Channel Uniques (mm) UGC Channel Uniques (mm)6.3
3.6
2.1
0.5 0.3 0.3
ROW US LATAM UK CA AU
Provider Channels are channels operated by SPE and monetized via the Crackle CMS tools. US Theatrical Marketing channels drive the bulk of Provider Channel usage. Less than 5% of usage originates via SPT Networks Channels.
Note: Assumes historical conversation rates between monthly views and monthly unique visitors to projected 2015 data
- 71 -71
Global Audience: UGC 2015 FORECASTED MONTHLY AVERAGE Unique Viewers IN PROVIDER and UGC CHANNELS
Provider Channel Uniques (mm) UGC Channel Uniques (mm)
100 Million Worldwide Unique Viewers (Monthly)
Note: Assumes historical conversation rates between monthly views and monthly unique visitors to projected 2015 data
6.3 3.6 2.1 0.5 0.3 0.3
44.7
14.614.6
3.4 2.71.3
51.0
18.216.8
4.0 3.01.5
ROW US LATAM UK CA AU
- 72 -
REVENUE and EBIT vs Last Years MRP
Current Plan includes: 1) Integrated ad serving on Provider Channels, and 2) Ad serving to UGC (TBD), we create significant EBIT improvement in FY16-FY19.
Gross Revenue and EBIT (millions)
Last Years MRP Current Plan
FY15 FY16 FY17 FY18 FY190
0.51
1.52
2.53
3.54
4.55
5.56
6.57
FY15 FY16 FY17 FY18 FY190
0.51
1.52
2.53
3.54
4.55
5.56
6.57
HEADCOUNT
Digital Networks Organization
FY14 FY15 FY16 FY17Crackle U.S. 30 29 32 56
Crackle CA 3 9 11 13
Crackle UK & AU 2 15 17 23
U.S. Sales 33 38 42 51
Digital Platform Group 38 44 53 61
Studio 3 6 8 11Global Digital Partnerships (a) 0 2 2 2Clips & Trailers (b) 2 6 6 6
Games 7 11 14 18
Digital Media 11 39 43 47
Total 129 199 228 288
YOY Increase 54% 15% 26%
(a) Includes a new head (on Home Office overhead) and 1 head from U.S.
(b) Clips & Trailer is part of Crackle US financial
Headcount: OTT Digital Platforms Group
ProductProject
ManagementTechnology
● Digital Media Platform Group
• App Producers• Backend Producer(s)• UI and Design mgmt• Video Producer
• Systems• Engineers• QA• Ad Technology
• Project Managers
Technology Product PMO Total
FY14 22 12 4 38
FY15 27 12 5 44
FY16 31 16 6 53
FY17 34 20 7 61
Headcount (EOY):
Digital Media Networks Headcount FY14 - 17
76
PMO• Common Platform
• Vendor Management
• Ad Operations
PRODUCT DEVELOPMENT•Consumer App Development
•Original Programming Content
•Global Acquisitions Content
•Second Screen & Social TV
•Emerging Platforms R&D
•Frontend Architecture
TECHNOLOGY• Platform Development
• Video Technology
• Backend Architecture
• Systems Integration
• API Configuration
• Platform Production
• Ad Technology• Analytics & Reporting
• QA
BUSINESS PLANNING•New Business Analysis
•Platform Partnerships
•Service Partners
•Business Affairs •Legal Affairs
HC (EOY)
EXECUTIVE PMO TECHNOLOGY PRODUCT BUSINESS TOTAL
FY14 2 1 3 4 1 11
FY15 2 4 17* 13 3 39
FY16 2 4 19* 15 3 43
FY17 2 5 19* 17 4 47
*3 Shared with DPG
FINANCIALS
SPT Digital Networks – Revenue & EBIT (BU and SPE)
Does not include Digital Media
FY15 FY16 FY17
(in millions) Rev BU EBIT
Rev to SPE
SPE EBIT Rev BU
EBITRev to SPE
SPE EBIT Rev BU
EBITRev to SPE
SPE EBIT
CRACKL
E
US $ 60.0
$ (9.5)
$ 7.6
$ (1.9)
$ 85.1
$ (0.0)
$ 8.3
$ 8.3
$ 137.6
$ 12.5
$ 12.5
$ 25.0
CA, UK, AU 7.8
(6.9)
3.8
(3.1)
13.3
(5.0)
3.9
(1.1)
20.9
(2.2)
3.9
1.7
LATAM 14.4
(7.4)
1.7
(5.7)
19.9
(4.0)
2.4
(1.6)
23.5
(4.2)
3.4
(0.8)
Kalista 5.9
(2.9)
1.1
(1.8)
10.1
(0.1)
1.6
1.5
13.0
0.9
2.3
3.2
Games 10.8
-
2.5
2.5
15.2
0.2
2.7
2.9
20.4
3.2
2.9
6.1
Total $ 98.9
$ (26.7)
$ 16.6
$ (10.1) $
143.6 $
(8.9) $
18.9 $
10.0 $ 215.4
$ 10.2
$ 25.0
$ 35.2
Note: Crackle US - Rev to SPE includes SPT programming and Clips rev share to MPG
Assume LATAM absorbs the DPG allocation as passed
CRACKLE U.S.
Q2 FCST (1) FY15 FY16 FY17
RevenueAdvertising 41.6$ 50.0$ 70.0$ 120.0$
Licensing & Clips (2) 2.7 2.0 2.9 3.2 Originals 3.4 8.1 12.2 14.4 Total Revenue 47.6$ 60.0$ 85.1$ 137.6$
COGSContent (14.8) (19.9) (24.8) (38.1) Dist. Partner Share (1.3) (1.5) (2.1) (3.7) Bandwidth (3.1) (4.9) (6.8) (11.7) Ad Serving (1.4) (2.8) (3.2) (3.6)
(20.6) (29.2) (36.9) (57.2) Operating
Operations(4) (2.6) (2.4) (3.2) (5.2) Marketing (6.4) (13.8) (17.5) (25.6) DPG Allocation (3.9) (7.2) (9.0) (11.0) G&A (15.6) (17.0) (18.5) (26.2)
(28.6) (40.3) (48.2) (67.9)
Total Expenses (49.1)$ (69.5)$ (85.1)$ (125.1)$
EBIT (1.5)$ (9.5)$ (0.0)$ 12.5$
HEADCOUNT 68 80 89 123 CASH (24.6)$ (30.0)$ (27.0)$ (18.0)$
Notes:
(1) Includes Comedian Having Coffee in Cars Season 2 with no EBIT
(2) No SVOD after FY14
(3) Content includes SPT content, 3rd party content and originals amortization and distribution costs
(4) Operations include web and video operations, web analytics, music fees, amortization of intangibles (last year in FY14)
Stay on
Q1F
FY14-17 Financials
FY15-17 Financial vs. Last MRP
Last MRP FY15 Variance Last MRP FY16 Variance FY17
RevenueAdvertising 67.2$ 50.0$ (17.2)$ 97.6$ 70.0$ (27.6)$ 120.0$
Licensing & Clips (2) 3.3 2.0 (1.1) 2.8 2.9 0.1 3.2 Originals 3.7 8.1 4.3 4.0 12.2 8.2 14.4 Total Revenue 74.2$ 60.0$ (13.9)$ 104.4$ 85.1$ (19.2)$ 137.6$
COGSContent (15.6) (19.9) (4.3) (21.8) (24.8) (3.0) (38.1) Dist. Partner Share (3.2) (1.5) 1.7 (4.6) (2.1) 2.5 (3.7) Bandwidth (10.0) (4.9) 5.1 (14.0) (6.8) 7.2 (11.7) Ad Serving (2.3) (2.8) (0.5) (3.1) (3.2) (0.1) (3.6)
(31.1) (29.2) 1.9 (43.5) (36.9) 6.5 (57.2) Operating
Operations(4) (3.5) (2.4) 1.1 (4.9) (3.2) 1.7 (5.2) Marketing (11.7) (13.8) (2.1) (19.2) (17.5) 1.8 (25.6) DPG Allocation (6.4) (7.2) (0.8) (6.8) (9.0) (2.2) (11.0) G&A (17.8) (17.0) 0.8 (21.0) (18.5) 2.5 (26.2)
(39.4) (40.3) (0.9) (51.9) (48.2) 3.7 (67.9)
Total Expenses (70.5)$ (69.5)$ 1.0$ (95.3)$ (85.1)$ 10.2$ (125.1)$
EBIT 3.6$ (9.5)$ (12.9)$ 9.0$ (0.0)$ (9.0)$ 12.5$
HEADCOUNT 92 80 (12) 105 89 (16) 123 CASH (7.6)$ (30.0)$ (22.5)$ (5.5)$ (27.0)$ (21.5)$ (18.0)$
Notes:
(1) Includes Comedian Having Coffee in Cars Season 2 with no EBIT
(2) No SVOD after FY14
(3) Content includes SPT content, 3rd party content and originals amortization and distribution costs
(4) Operations include web and video operations, web analytics, music fees, amortization of intangibles (last year in FY14)
Plan Over Plan EBIT Reconciliation
FY14 FY15 FY16 FY17
EBIT, Budget / 2012 MRP $ (0.0)
$ 3.6
$ 9.0
Advertising Revenue
0.6 (17.2)
(27.6)
Originals - TV/HE Distribution (net) -
4.3
8.2
Programming & Originals Production Ultimate
(1.6)
(4.3)
(3.0)
Partner's Rev Share 0.9
1.7
2.5
Hosting / Bandwidth -
5.1
7.2
Marketing -
(2.1)
1.8
Digital Platform savings
0.9
(0.8)
(2.2)
G&A
(2.3)
0.8
2.5
All Others, net
0.1
(0.7)
1.6
Total Variance $ (1.5)
$ (13.1)
$ (9.0)
$ 12.5
EBIT, Q2 Fcst / 2013 MRP $ (1.5)
$ (9.5)
$ (0.0)
$ 12.5
DIGITAL PLATFORMS GROUP - FINANCIALS
DPG Financial
($ in thousands)FY14
Q2 FcstFY15 MRP FY16 MRP FY17 MRP
OPERATING COSTS
Product Development
(1,200)
(2,500) (2,500) (2,500)
Engineering Development (500)
(1,000) (1,000) (1,000)
Creative Development -
(500)
(600)
(700)
General and Administrative
(6,160)
(8,000) (9,500) (11,000)
TOTAL OP. EXPENSES
(7,860)
(12,000) (13,600) (15,200)
ALLOCATION
CRACKLE US 60% 4,715 7,200 8,100 9,100
CRACKLE ELI 10% 785 1,200 1,400 1,500
CRACKLE LATAM 30% 2,360 3,600 4,100 4,600
7,860
12,000 13,600 15,200
EBIT -
-
-
-
Headcount 38
44
53
61
YOY HC Increase
6
9
8
DPG FY14 Q2 Reforecast
($ in thousands)FY14 Q2 Fcst
Budget Variance Q1 Fcst Variance
OPERATING COSTS
Product Development
(1,200)
(1,200)
-
(1,200)
- Engineering Development
(500)
-
(500)
-
(500)
Creative Development
-
-
- -
- General and Administrative
(6,160)
(7,100)
940
(7,100)
940
TOTAL OP. EXPENSES
(7,860)
(8,300)
440
(8,300)
440
ALLOCATION
CRACKLE US 60% 4,715
4,980
(265)
4,980
(265)
CRACKLE ELI 10%
785
830
(45)
830
(45)
CRACKLE LATAM 30% 2,360
2,490
(130)
2,490
(130)
7,860
8,300
(440)
8,300
(440)
EBIT
-
-
- -
-
Headcount
38
38
-
38
-
- Lower allocation due to savings from delayed hire of Group Lead
DPG MRP Financial
($ in thousands)FY15 MRP
Last MRP
Variance FY16 MRP Last MRP Variance FY17 MRP
OPERATING COSTS
Product Development
(2,500)
(1,300)
(1,200)
(2,500)
(1,400)
(1,100)
(2,500)
Engineering Development
(1,000)
(1,800) 800
(1,000)
(2,000)
1,000
(1,000)
Creative Development (500)
(500)
(600)
(600)
(700)
General and Administrative
(8,000)
(7,600)
(400)
(9,500)
(7,900)
(1,600)
(11,000)
TOTAL OP. EXPENSES
(12,000)
(10,700)
(1,300)
(13,600)
(11,300)
(2,300)
(15,200)
ALLOCATION
CRACKLE US 60% 7,200
6,420
780
8,100
6,780
1,320
9,100
CRACKLE ELI 10% 1,200
1,070
130
1,400
1,130
270
1,500
CRACKLE LATAM 30% 3,600
3,210
390
4,100
3,390
710
4,600
12,000 10,700
1,300
13,600
11,300
2,300
15,200
EBIT -
-
-
-
-
-
-
Headcount
44
39
5
53
39
14
61
YOY HC Increase
6
9
8
CANADA FINANCIALS
Canada MRP Financial
($ in thousands) FY17
Last MRP Variance Last MRP Variance
REVENUEAdvertising 3,174$ 3,215$ (41)$ 5,652$ 5,060$ 592$ 8,348$ - - - - TOTAL REVENUE 3,174 3,215 (41) 5,652 5,060 592 8,348
COST OF REVENUES - - - - Content Cost (1,552) (800) (752) (1,821) (1,000) (821) (1,990) Partner's Revenue Share (200) (218) 18 (350) (380) 30 (561) Hosting/Bandwidth (274) (539) 265 (434) (643) 209 (628) Ad Serving Fees (74) (69) (5) (219) (99) (121) (250)
TOTAL COST OF REVENUES (2,100) (1,627) (473) (2,824) (2,121) (703) (3,429)
Website/TechnologyDigital Platform (400) (357) (43) (533) (377) (156) (600) Traffic & Music Fees (79) (67) (12) (141) (105) (36) (209)
Sales and Marketing (1,496) (444) (1,052) (1,685) (460) (1,225) (1,697)
TOTAL OPERATING EXPENSE (1,975) (867) (1,108) (2,359) (941) (1,418) (2,506)
GROSS PROFIT (901) 721 (1,622) 469 1,997 (1,528) 2,413 - - - - General and Administrative (1,102) (444) (658) (1,692) (463) (1,229) (2,149) - - - - TOTAL COSTS (5,177) (2,937) (2,240) (6,875) (3,525) (3,350) (8,084) - - - - - - - -
EBIT (2,003)$ 278$ (2,281)$ (1,223)$ 1,534$ (2,757)$ 264$ - - - - Headcount 9 4 6 11 4 8 13
SPT EBIT (1,122)$ 1,078$ (2,200)$ (233)$ 2,534$ (2,767)$ 1,381$
FY15 FY16
UK & AU FINANCIALS
U.K. MRP Financial
($ in thousands) FY15 FY16 FY17
Last MRP Variance Last MRP Variance
REVENUEAdvertising 3,579$ 1,530$ 2,049$ 5,934$ 2,520$ 3,414$ 9,538$ - - - - - - - TOTAL REVENUE 3,579 1,530 2,049 5,934 2,520 3,414 9,538
COST OF REVENUES - - - - - - - Content Cost (2,223) (700) (1,523) (2,965) (900) (2,065) (3,599) Partner's Revenue Share (329) (104) (225) (478) (189) (289) (667) Hosting/Bandwidth (201) (151) (50) (339) (181) (158) (513) Ad Serving Fees (124) (50) (74) (212) (89) (123) (341)
TOTAL COST OF REVENUES (2,877) (1,006) (1,871) (3,994) (1,359) (2,635) (5,120)
Website/TechnologyDigital Platform (400) (357) (43) (533) (377) (156) (600) Traffic & Music Fees (89) (32) (57) (148) (52) (96) (238)
Sales and Marketing (1,565) (296) (1,269) (1,737) (460) (1,277) (2,000)
TOTAL OPERATING EXPENSE (2,054) (684) (1,370) (2,418) (889) (1,529) (2,838) - - - - GROSS PROFIT (1,352) (160) (1,192) (478) 272 (750) 1,580 - - - - - - -
General and Administrative (1,234) (190) (1,044) (1,454) (198) (1,256) (3,049) - - - - - - - TOTAL COSTS (6,165) (1,880) (4,285) (7,866) (2,446) (5,420) (11,007) - - - - - - - - - - - - - -
EBIT (2,586)$ (350)$ (2,236)$ (1,932)$ 73$ (2,005)$ (1,469)$ - - - - - - - Headcount 10 2 9 12 2 11 18
SPT EBIT (781)$ 350$ (1,131)$ 35$ 973$ (938)$ 530$
($ in thousands) FY15 FY16 FY17
Last MRP Variance Last MRP Variance
REVENUEAdvertising 1,178$ 255$ 923$ 1,808$ 921$ 887$ 2,993$ - - - - - - - TOTAL REVENUE 1,178 255 923 1,808 921 887 2,993
COST OF REVENUES - - - - - - - SPE Content Cost (1,055) (145) (910) (1,161) (400) (761) (1,317) Partner's Revenue Share (143) (17) (126) (168) (69) (99) (225) Hosting/Bandwidth (79) (52) (27) (117) (125) 8 (200) Ad Serving Fees (56) (6) (50) (84) (10) (74) (141)
TOTAL COST OF REVENUES (1,333) (221) (1,112) (1,530) (604) (926) (1,883)
Website/TechnologyDigital Platform (400) (357) (43) (533) (377) (156) (600) Traffic & Music Fees (29) (5) (24) 45 (19) 64 (75)
Sales and Marketing (707) - (707) (584) (230) (354) (677)
TOTAL OPERATING EXPENSE (1,136) (362) (774) (1,072) (626) (446) (1,352) - - - - GROSS PROFIT (1,291) (328) (963) (794) (308) (486) (242) - - - - - - -
General and Administrative (791) - (791) (793) - (793) (826) - - - - - - - TOTAL COSTS (3,260) (583) (2,677) (3,395) (1,230) (2,165) (4,061) - - - - - - - - - - - - - -
EBIT (2,082)$ (328)$ (1,754)$ (1,587)$ (308)$ (1,279)$ (1,068)$ - - - - - - -
Headcount 5 - 5 5 - 5 5
SPT EBIT (1,237)$ (182)$ (1,055)$ (851)$ 92$ (943)$ (220)$
AU MRP Financial
NETWORKS DIGITAL FINANCIALS
FY15 Digital Media Networks Investment
$0
$0.6
$2.3 $0.7
$0.0
$0.5
$1.0
$1.5
$2.0
$2.5
Expenses Overhead
Product
FY14 FY15
$1.3M
$0.2
$0
$0.2
$-
$0.1
$0.1
$0.2
$0.2
$0.3
$0.3
$0.4
$0.4
$0.5
$0.5
Expenses Overhead
Business Planning
FY14 FY15
$0.4M
$3.8
$1.5
$3.8
$3.0
$4.6
$1.0
$-
$2.0
$4.0
$6.0
$8.0
$10.0
$12.0
$14.0
Expenses Overhead
Platform
FY14/Web Platform FY15/Augment Platform
FY15/Build Apps
$12.2M
$5.2M
5
16
7
28
2
1
3
5
3
8
Augment Platforms: HC Costs
Platform Growth 6 $1.2
Platform Features 4 $0.6System
Integration 6 $1.216 $3.0
Digital Media Networks Financial
FY'14 FY'17 Budget Q2 FCST Bgt vs Q2 2012 MRP 2013 MRP Difference 2012 MRP 2013 MRP Difference 2013 MRP
Expenses
Common Platform Operating Expenses 3,400$ 3,400$ (0)$ 3,800$ 3,800$ -$ 4,200$ 4,200$ -$ 9,300$
TV Everywhere Operating Expenses- App Initiative 1,800 (1,800) 2,500 (2,500) 2,600 Applications Development - - - - 4,600 (4,600) - 1,800 (1,800) 1,800 Content - - - - 800 (800) - 1,000 (1,000) 1,400 R&D - - - - 1,500 (1,500) - 1,500 (1,500) 1,500
System Integration 2,000 (2,000) 1,000 (1,000) 1,000
Overhead 2,200 2,200 0 2,240 6,900 (4,661) 2,309 8,400 (6,091) 9,700
Total Expenses 5,600$ 5,600$ 0$ 6,040$ 21,400$ (15,361)$ 6,509$ 20,400$ (13,891)$ 27,300$
Headcount 11 11 - 11 39 (28) 11 43 (32) 47
FY'15 FY'16