March 2010

                                        Internet & Digital Media
                                             ...
Market Spotlight | Online Video


                            Large addressable video market                              ...
Market Spotlight | Online Video


                     2007 film studio revenue                                           ...
Time

                                                                                                                    ...
5
    Emerging Creative         Established                                    Traditional
                               ...
Company Spotlight | Online Video




  Founded:            •   2009                                               •   1998...
Company Spotlight | Online Video




  Founded:            •   2007                                            •   2006
  ...
Trading Statistics†

                                                         Stock Price         Market Value            ...
Trading Statistics†

                                                      Stock Price         Market Value               ...
Trading Statistics†

                                                      Stock Price         Market Value               ...
Market Movement & Traffic Data


                        30 Day Stock Performance(1)                                      ...
Market Movement & Traffic Data


                         30 Day Stock Performance(1)                                     ...
Market Movement & Traffic Data


                      30 Day Stock Performance(1)                                        ...
Legal Disclaimer


    This publication is authored by the Investment Banking Department of Oppenheimer & Co. Inc.
    (“O...
Upcoming SlideShare
Loading in...5
×

March 2010 Newsletter - Spotlight: Online Video

3,536

Published on

Internet & Digital Media Newsletter March 2010 - Spotlight: Online Video

0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
3,536
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
3
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

March 2010 Newsletter - Spotlight: Online Video

  1. 1. March 2010 Internet & Digital Media Industry Perspectives Oppenheimer Internet & Digital Media Investment Banking Team Gerry Walters Bill Lisecky Mathew Salter Andrew Bracy Managing Director Managing Director Director Director Head of Digital Media Head of Media & Entertainment Digital Media Media & Entertainment gerry.walters@opco.com william.lisecky@opco.com msalter@opco.com andrew.bracy@opco.com (650) 234-2482 (212) 667-5888 (650) 234-2469 (212) 856-3756
  2. 2. Market Spotlight | Online Video Large addressable video market U.S. online video revenue by business model $250.0 $16.0 $14.0 $14.0 $200.0 $191.0 $196.5 $177.7 $181.8 $12.0 $167.0 $171.8 $171.0 $10.0 $8.8 ($ billions) $150.0 ($ billions) $8.0 $100.0 $6.0 $5.5 $4.0 $3.4 $50.0 $1.9 $2.0 $0.0 $0.0 2007 2008 2009E 2010E 2011E 2012E 2013E 2008 2009E 2010E 2011E 2012E TV advertising Cable subscription Home video / DVD PPV & VoD Advertising Subscription Download Rental • The U.S. Television and Home Video Market is a $172 • The online video market is a ~$2 billion market expected to grow billion market in transition and expected to grow by a 2.7% by a 65% CAGR over the next 4 years CAGR over the next 4 years • Online video subscription services, driven primarily by TV shows, • Consumers watched, on average, 140 hours 20 minutes of movies, and sports content, are expected to be the largest TV in the home per month in Q3 2009, representing a revenue segment and grow by a 58% CAGR from 2008-12 slight decrease of 0.3% from Q3 2008 becoming a $6.2 billion market • In contrast, consumers watched, on average, 12 hours 11 - if content / channels are truly unbundled online, the minutes of online video per month in Q4 2009, subscription services revenue segment may be smaller than representing a 209% increase over Q4 2008 anticipated • So far, online video has not cannibalized traditional TV • Video advertising is the next biggest revenue segment and is video consumption, but the threat is real forecasted to grow by a 46.1% CAGR from 2008-12 into a $4.3 billion market, as more premium content is made available online and consumers become more comfortable viewing video ads online - enhanced targeting capabilities inherent in online video and large investment in emerging online advertising technology could cause this revenue model to become bigger than subscription services U.S. online video revenue by content type Long-form video is expected to account for the majority of revenue generation in 2012 and projected to grow from $1.5 billion in 2009 to $7.8 billion in 2012, representing a 71% CAGR 2009 2012 Total: $1.9 billion Total: $14.0 billion Long-form video 1% 1% 1% 1% 6% 3% 3% content (TV shows 5% and movies) Sports 9% 7% Other News 48% 56% Music videos 26% Movie trailers 33% UGC 2 Sources: Veronis Suhler Stevenson, 2009; IDC, 2009; Nielsen, 2009; comScore 2009
  3. 3. Market Spotlight | Online Video 2007 film studio revenue Home entertainment spending Total: ~$27.0 billion $35.0 4% $30.4 $30.2 $29.8 8% $30.0 $29.3 $28.7 $28.8 $28.4 $28.6 $28.3 $28.6 $28.8 6% $25.0 ($ in billions) $20.0 $15.0 54% $10.0 $5.0 28% $0.0 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E DVD VHS Online download PPV & VoD DVD Theatrical Broadcast TV Cable TV PPV & VoD • DVD sales to the home video market account for over • Blu-ray DVD shows promise but consumer adoption has 50% of all studio revenue, but have been declining: DVD been slow and sales have not been sufficient to offset sales are projected to decrease from $24 billion in 2008 traditional DVD declines to $19 billion in 2013 • Video on Demand and Pay-per-View are the fastest • The 80/20 revenue split on retail DVDs, represents a growing home entertainment segments, accounting for lucrative channel the studios are reluctant to change 6.3% of total spend in 2009, and highlight the importance of digital distribution to the industry • Despite the decline in DVD sales, studios have been slow to embrace newer online distribution channels, • While still nascent, the online download market preferring to protect this large and profitable retail represents a large opportunity with many emerging channel companies looking to capitalize on the shift towards digital distribution New digital media business models present a challenge to the existing ecosystem Retail / Retail / Rental / VoD Rental / VoD Subscription Subscription AdAd supported supported download download 2009 traditional market size $ 14.8 billion $8.2 billion $69.3 billion $73.2 billion Incumbents 2009 online $ 0.8 billion $4.6 billion $1.4 billion $5.4 billion market size Emerging Sources: Wall Street Research; Veronis Suhler Stevenson, 2009; Stevenson Communications Industry Forecast, report dated August 3 2009; IDC, 2009
  4. 4. Time Box Office Retail DVD Digital VoD Rental DVD Cable TV Ad supported Syndication Cable PPV Internet download Internet rental Broadcast TV Internet Release - 0 + 21 days + 28 days + 5 months + 10 months +∞ Window Consumer $7.18 $29.99 $5.99 $14.99 $3.99 $1.00 $14.99 / month - - Price Studio $5 billion $15 billion $1 billion $2 billion $2 billion $1.5 billion $50 million Economics split: 50/50 80/20 60/40 30/70 75/25 Market Spotlight | Online Video Distribution Partners Emerging Access Partners Games TV / DVD • Worldwide box office • The largest and most • Release window has been shrinking (e.g. Sony simultaneous release of DVD • Release window has • Increased distribution • With 2011 revenues projected to surpass YouTube, • Online syndication of reached an all-time high in profitable studio channel; and VoD titles) as studios try to figure out the optimal revenue / profitability mix been expanding and access options in the Hulu has validated the ad supported online model older studio content 2008 at $28.1 billion, strong attempt to maintain (WB/Netflix/Redbox) as Digital VoD release presents an emerging and increasing 5.2% over release window despite • Access platform landscape is very unclear. Box or no box? Emerging platforms studios try to protect retail window is putting • Hulu's exclusive licensing deals with NBC and Fox potentially lucrative 2007 anticipated DVD declinescontinue to struggle with this question - Boxee has moved to a box solution while DVD channel - pressure on Premium are set to expire - will studios abandon Hulu in favor distribution channel Vudu has abandoned its box for a software distribution model. Traditional CE Blockbuster positioning is Cable providers to move of a direct to consumer link on their own sites (HBO 28 days later: where will the bodies be buried? • 3D movie technology • Retailers are embracing manufacturers (TV/DVD/Game Console) are providing direct access to yet to be determined online and sell through GO model, Viacom pulling Comedy Central from (e.g. Avatar) is enhancing digital access partners consumers by partnering with embedded solutions providers (Yahoo Widgets, more digital channels Hulu)? the consumer experience (Walmart/Vudu, DivX, CinemaNow, Netflix) who are looking to reach broader audiences • Netflix: will gains from (HBO GO, StarzPlay) BestBuy/CinemaNow) as additional streaming titles • As long-form and premium content become more • AMC, Cinemark and digital becomes more • The industry is watching for a much stronger play from Apple (AppleTV, iPad) and lower DVD costs be • As more studio content pervasive online, will YouTube's market position, as Emerging Regal have secured prevelant high enough to offset lost is distributed digitally, king of UGC, ever lead to meaningful revenue $660m in funding to • Critical question is to what extent studios/content providers will bypass consumer demand for Premium Cable providers opportunities? Trends convert most of their traditional distribution channels to port directly on devices (e.g. MLB.com) and new releases? will demand lower pricing theaters to digital screens how this will disrupt later release windows and partner economics and shorter release • Like Premium Cable providers, Broadcast TV will Sources: Adams Media Research, MPAA, company filings and websites, Wall Street research, Oppenheimer estimates by 2013 windows demand lower pricing and shorter studio release • Can Xfinity, or similar offerings, keep cable operators in the game? windows as more content is consumed in earlier • Digital infrastructure • Unified authentication is channels offers cinemas more key to driving bundled flexibility on programming, subscription online and e.g. live sports and few solutions have concerts emerged to solve this problem 4
  5. 5. 5 Emerging Creative Established Traditional Emerging Content Tools Creative Tools Content Creation CMS Content Delivery Distribution Emerging Platforms Video Search Aggregators Access Ad Rights Metadata Ad Mgmt. Analytics Ad Networks Serving Mgmt. Mgmt. Monetization Digital video landscape Market Spotlight | Online Video
  6. 6. Company Spotlight | Online Video Founded: • 2009 • 1998 Headquarters: • Los Angeles, CA • Research Triangle Park, NC Employees: • 20 • 42 Investors: • Benchmark Capital, Redpoint Ventures, Jafco, • .406 Ventures, Aurora Funds, Chrysalis and Allen & Company Ventures, Cisco Systems Profile: • Clicker provides the most comprehensive, • Videosense solution powers next generation organized and unbiased way to navigate what’s search, discovery, and navigation of video available to watch online, where and when to through rich metadata to deliver on the promise watch it, and, finally, what’s worth watching of any content, anywhere on any device amongst infinite choices • Ability to index video with ~78 tracks of time • The solution is powered by a massive based metadata structured database with more than 400,000 • Computer vision-based video indexing, search, episodes, from over 7,000 shows, from over and interpretation algorithms aim to allow 1,200 networks - in addition to more than content owners and publishers to monetize their 30,000 movies, and over 50,000 music videos digital video content, and advertisers to target from over 20,000 artists ads to thematically relevant video content • Programming is organized by episode, show, • Digital content publishing system enables network, media type, title, popularity, duration simplified multi-platform content syndication, and artist, and divided into over 1,200 intelligent content recommendations, and categories reporting and analytics • Clicker complements this database with search and recommendation technologies, a proprietary playlist system for saving and tracking shows, social features for sharing and discovering programs, and trending lists of the most popular shows by category or time Customers: • Online consumers • WarnerBros, Buena Vista, Paramount, Fox/Twentieth Century Business Model: • Advertising, lead-generation • Technology license and fee for search Financial: • Amount raised: $19 million • Amount raised: $18.2 million Founded: • 2005 • 2004 Headquarters: • Palo Alto, CA • San Mateo, CA Employees: • 25 • 23 Investors: • Greylock Partners, Redpoint Ventures • Intel Capital, Mayfield Fund, Polaris, Cisco, Comcast Interactive Capital Profile: • Video ad platform for publishers to better • Provides advanced advertising products and monetize and index online video content technology for network programmers and • Ad platform supports ad flighting and serving, content distributors creative management, yield optimization, • Offers a multiplatform advertising system detailed forecasting, and real-time reporting designed specifically for video content • Indexing system automates the process for distributed over any on-demand platform, content owners to identify, track, and monetize enabling networks and content distributors to video content across the web maximize advertising revenues Customers: • Apple, Comcast, DoubleClick, eBay, Google, • Adobe, Akamai, Arris, BrightCove, Cisco, PayPal, MTV Networks, MySpace, Warner EdgeCast, Highwinds, Limelight Networks, Brothers and Yahoo! Motorola, Move Networks, Multicast Media, RGB Networks, SeaChange, thePlatform Business Model: • Advertising, lead generation • Software license Financial: • Amount raised: $11 million • Amount raised: $32 million 6 Sources: VentureSource, CapIQ, Press releases
  7. 7. Company Spotlight | Online Video Founded: • 2007 • 2006 Headquarters: • San Mateo, CA • New York, NY Employees: • 90 • 36 Investors: • Battery Ventures, Foundation Capital • Spark Capital, Globespan Capital Partners Profile: • Offers a robust system for digital video ad • Online video portal for instructional, knowledge management and monetization and lifestyle videos • Monetization Rights Management product • Enables consumers to share video on “how to” allows content owners to effectively manage ad and instructional guides in the arts, business, sales rights, analyze video ad performance, fashion, sports, health, technology, and food and forecast future inventory areas Customers: • Sling Media, Vevo, CBS, Warner Brothers, and • Online consumers Next New Networks Business Model: • Revenue share of ad revenue • Online video advertising Financial: • Amount raised: $12 million • Amount raised: $12.5 million Founded: • 2001 • 2005 Headquarters: • Fremont, CA • New York, NY Employees: • 80 • 51 Investors: • Canaan Partners, European Founders Fund, SAP Ventures, Meritech Capital Partners Profile: • Popcorn Hour provides digital media players to • Developer of rich media and online video stream video and other digital media from the advertising solutions internet to consumer TVs • Video ad network that provides in-banner and • Popcorn Hour’s set top boxes handle a variety in-stream video advertising on leading publisher of file and content types based on open sites development platforms, which allow media companies to rapidly develop and deploy a wide range of interactive high definition applications and content • Popcorn Hour’s latest set top box, Popbox, is expected to launch Spring 2010 • Popcorn hour has a large network of premium content partners including Twitter, MLB, and Clicker Customers: • Online consumers, large international installed • Major consumer brands and online video base publishers Business Model: • Hardware sales, advertising revenue share • Video advertising revenue share Financial: • Amount raised: $1.8 million • Amount raised: $39.4 million • Revenues: ~$20 million; profitable 7 Sources: VentureSource, CapIQ, Press releases
  8. 8. Trading Statistics† Stock Price Market Value Valuation Multiples Margins P/E/G Price % 52 Market Ent. Revenue Ebitda P/E Ebitda Growth CY 09 Ticker 3/8/10 High Value Value CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 Rate P/E/G (US$ millions, except per share data) Advertising | Search, Marketing Services Google Inc. GOOG $562.48 89% $178,857 $154,372 6.6x 5.5x 14.2x 12.0x 24.6x 20.5x 46% 46% 23% 1.1x Yahoo! Inc. YHOO 16.52 92% 23,131 19,909 4.3x 4.0x 12.0x 11.4x 38.7x 34.1x 36% 35% 19% 2.1x AOL, Inc. AOL 25.59 95% 2,726 2,655 0.8x 1.0x 2.4x 3.5x 5.6x 10.0x 35% 29% N/A N/A ValueClick, Inc. VCLK 10.15 73% 848 689 1.3x 1.7x 5.0x 6.0x 13.6x 16.7x 26% 28% 13% 1.0x Arbitron Inc. ARB 23.04 79% 613 672 1.8x 1.7x 8.1x 7.0x 16.2x 14.0x 22% 24% 16% 1.0x comScore, Inc. SCOR 16.18 83% 490 403 3.2x 2.6x 14.3x 11.8x N/A 70.0x 22% 22% 23% N/A InfoSpace Inc. INSP 11.58 95% 412 186 0.9x 0.7x 7.3x 6.4x N/A 37.8x 12% 11% 43% N/A Marchex, Inc. MCHX 5.59 93% 197 164 1.8x 1.8x 13.3x 11.9x 50.4x 41.1x 13% 15% 13% 4.0x Local.com Corp. LOCM 5.94 89% 86 79 1.4x 1.1x 38.7x 8.9x N/A N/A 4% 12% N/A N/A Answers Corporation ANSW 8.80 79% 70 58 2.8x 2.4x 7.9x 7.7x N/A 20.5x 36% 31% N/A N/A Median 1.8x 1.7x 10.1x 8.3x 20.4x 20.5x 24% 26% 19% 1.1x Mean 2.5x 2.2x 12.3x 8.7x 24.9x 29.4x 25% 25% 21% 1.8x Advertising | Vertical Content, Lead Gen WebMD Health Corp. WBMD $43.78 98% $2,335 $2,358 5.4x 4.6x 22.5x 15.2x N/A 52.0x 24% 30% 23% N/A QuinStreet, Inc. QNST 15.39 99% 691 806 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A eHealth, Inc. EHTH 17.77 91% 415 261 1.9x 1.7x 8.2x 7.9x 31.0x 29.2x 23% 22% 16% 1.9x Internet Brands, Inc. INET 8.55 96% 386 326 3.2x 2.9x 8.0x 7.3x 32.9x 26.1x 40% 39% 25% 1.3x The Knot, Inc. KNOT 7.94 66% 268 136 1.3x 1.3x 8.3x 10.5x N/A N/A 15% 12% 21% N/A Move, Inc. MOVE 1.96 62% 305 375 1.8x 2.0x 16.0x 20.0x 26.1x N/A 11% 10% 18% 1.5x TechTarget, Inc. TTGT 5.44 68% 229 160 1.9x 1.8x 10.2x 8.2x 28.5x 23.2x 18% 21% 17% 1.7x Travelzoo Inc. TZOO 15.03 98% 247 227 2.5x 2.2x N/A N/A N/A 42.9x N/A N/A N/A N/A Health Grades Inc. HGRD 5.71 100% 170 151 2.9x 2.4x 11.9x 9.6x 25.4x 20.8x 25% 25% 25% 1.0x Rewards Network Inc. DINE 14.50 93% 126 99 0.5x 0.5x N/A N/A 25.9x 18.1x N/A N/A 15% 1.7x TheStreet.com, Inc. TSCM 3.75 100% 118 55 1.0x 1.0x 48.1x 17.4x N/A N/A 2% 5% 18% N/A zipRealty Inc. ZIPR 4.90 96% 100 56 0.5x 0.4x N/A N/A N/A N/A N/A 0% 20% N/A Tree.Com, Inc. TREE 8.80 67% 97 90 0.4x 0.4x 7.7x 8.3x N/A N/A 5% 5% N/A N/A Median 1.8x 1.7x 10.2x 9.6x 27.3x 26.1x 18% 17% 19% 1.6x Mean 1.9x 1.7x 15.6x 11.6x 28.3x 30.3x 18% 17% 20% 1.5x Cloud Services | Consumer Netflix, Inc. NFLX $68.68 98% $3,677 $3,594 2.1x 1.7x 15.9x 11.9x 36.4x 27.5x 13% 14% 19% 2.0x TiVo Inc. TIVO $17.08 95% $1,877 $1,632 8.6x 8.6x N/A N/A N/A N/A 4% 4% 40% N/A RealNetworks Inc. RNWK $5.08 97% $685 $307 0.5x 0.6x 13.6x 11.9x N/A N/A 4% 5% 13% N/A Ancestry.com Inc. ACOM 17.78 93% 755 755 3.4x 3.0x 9.4x 8.5x 22.7x 23.0x 36% 35% 12% 1.9x LoopNet, Inc. LOOP 10.67 93% 369 288 3.8x 3.9x 9.4x 11.5x 41.4x 52.0x 40% 34% 24% 1.7x Intersections Inc. INTX 4.40 65% 77 104 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Median 3.4x 3.0x 11.5x 11.7x 36.4x 27.5x 13% 14% 19% 1.9x Mean 3.7x 3.5x 12.1x 11.0x 33.5x 34.2x 19% 18% 21% 1.9x Cloud Services | Business Intuit Inc. INTU $33.98 100% $10,667 $10,719 3.3x 3.1x 11.3x 8.6x 20.6x 16.4x 29% 36% 13% 1.6x Salesforce.com CRM 72.95 97% 9,111 8,346 6.5x 5.4x 33.6x 29.8x N/A N/A 19% 18% 31% N/A Vistaprint N.V. VPRT 61.72 100% 2,680 2,527 4.5x 3.3x 20.7x 15.4x 36.5x 27.3x 22% 21% 24% 1.5x Monster Worldwide, Inc. MWW 15.70 81% 1,972 1,737 1.9x 1.9x 15.3x 18.9x N/A N/A 13% 10% 17% N/A j2 Global Communications, Inc. JCOM 22.82 91% 1,031 802 3.3x 3.1x 6.3x 6.1x 12.3x 12.6x 52% 51% 11% 1.1x OpenTable, Inc. OPEN 37.01 99% 828 758 11.2x 9.1x 50.8x 33.0x N/A 70.9x 22% 27% 50% N/A Constant Contact, Inc. CTCT 19.90 86% 564 451 3.5x 2.6x 38.0x 20.8x N/A 57.0x 9% 13% 36% N/A Dice Holdings, Inc. DHX 7.52 98% 470 472 4.3x 4.2x 9.9x 11.3x 39.6x 35.0x 44% 38% 13% 2.9x LogMeIn, Inc. LOGM 19.50 83% 440 310 4.2x 3.4x 19.6x 14.3x 34.6x 30.3x 21% 24% 23% 1.5x InnerWorkings Inc. INWK 5.39 72% 246 219 0.5x 0.5x 10.9x 7.9x 35.2x 20.9x 5% 6% 18% 2.0x Stamps.com Inc. STMP 9.99 96% 155 83 1.0x 1.0x 8.5x 8.6x 31.2x 16.7x 12% 11% 18% 1.7x Web.com Group, Inc. WWWW 5.40 68% 144 105 1.0x 1.0x 5.3x 5.5x 8.1x 9.4x 18% 18% 30% 0.3x support.com, Inc. SPRT 3.20 99% 149 68 4.2x 1.7x N/A N/A N/A N/A N/A N/A 15% N/A Median 3.5x 3.1x 13.3x 12.8x 32.9x 24.1x 20% 20% 18% 1.5x Mean 3.8x 3.1x 19.2x 15.0x 27.3x 29.7x 22% 23% 23% 1.6x 8 Source: CapitalIQ
  9. 9. Trading Statistics† Stock Price Market Value Valuation Multiples Margins P/E/G Price % 52 Market Ent. Revenue Ebitda P/E Ebitda Growth CY 09 Ticker 3/8/10 High Value Value CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 Rate P/E/G (US$ millions, except per share data) eCommerce | E-tail Amazon.com Inc. AMZN $130.11 89% $57,840 $51,867 2.2x 1.6x 29.0x 20.6x 67.4x 45.3x 7% 8% 27% 2.5x eBay Inc. EBAY 24.84 96% 32,267 27,324 3.2x 3.0x 9.0x 8.2x 16.3x 15.0x 35% 37% 16% 1.0x priceline.com Incorporated PCLN 240.18 98% 10,948 10,343 4.4x 3.6x 19.8x 14.1x 29.1x 21.9x 22% 25% 20% 1.5x Expedia Inc. EXPE 23.13 72% 6,708 6,981 2.4x 2.1x 8.3x 7.4x 16.9x 14.6x 29% 28% 13% 1.3x IAC/InterActiveCorp. IACI 23.98 100% 2,795 1,185 0.9x 0.8x 7.4x 5.6x 54.1x 31.6x 12% 14% 22% 2.5x Mercadolibre, Inc. MELI 45.44 82% 2,005 1,944 10.7x 8.4x 30.7x 22.9x 59.7x 43.0x 35% 37% 33% 1.8x Blue Nile Inc. NILE 56.09 84% 812 720 2.4x 2.1x 24.1x 21.6x 64.8x 53.6x 10% 10% 21% 3.1x Systemax Inc. SYX 17.68 97% 644 562 0.2x 0.2x 6.9x N/A 14.5x 12.1x 3% N/A N/A N/A Orbitz Worldwide, Inc. OWW 6.75 83% 682 1,212 1.7x 1.5x 8.2x 8.2x N/A 40.4x 20% 19% 13% N/A Shutterfly, Inc. SFLY 21.41 99% 555 374 1.6x 1.4x 9.0x 6.9x N/A 58.8x 18% 20% 22% N/A Drugstore.com Inc. DSCM 3.41 95% 342 308 0.8x 0.6x 18.4x 14.8x N/A N/A 4% 4% N/A N/A Overstock.com Inc. OSTK 14.19 79% 324 306 0.4x 0.3x 12.4x 11.6x 46.8x 19.4x 3% 3% 25% 1.9x Vitacost.com, Inc. VITC 11.76 92% 323 288 1.5x 1.2x 11.7x 8.3x 32.7x 20.8x 13% 14% 15% 2.2x U.S. Auto Parts Network, Inc. PRTS 7.33 100% 219 181 1.0x 0.9x 15.2x 11.3x N/A 50.9x 7% 8% 11% N/A 1-800-Flowers.com Inc. FLWS 2.36 48% 150 186 0.3x 0.3x 7.6x 4.5x 19.4x 13.6x 4% 6% N/A N/A Geeknet, Inc. LNUX 1.47 84% 89 50 0.8x 0.6x N/A N/A N/A N/A -10% -5% N/A N/A BIDZ.com, Inc. BIDZ 2.08 43% 46 47 0.4x 0.4x 8.4x 5.9x 18.4x 9.3x 5% 6% 25% 0.7x Tix Corporation TIXC 1.22 29% 40 30 N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Median 1.5x 1.2x 10.4x 8.3x 30.9x 21.9x 10% 12% 21% 1.8x Mean 2.0x 1.7x 14.1x 11.5x 36.7x 30.0x 13% 15% 20% 1.9x eCommerce | Services GSI Commerce Inc. GSIC $27.07 100% $1,635 $1,612 1.6x 1.2x 16.1x 11.7x 69.4x N/A 10% 10% 23% 3.1x CyberSource Corporation CYBS 19.02 90% 1,342 1,214 4.6x 3.9x 21.4x 17.9x 24.7x 21.6x 22% 22% 18% 1.3x Digital River Inc. DRIV 29.29 71% 1,132 733 1.9x 2.0x 7.0x 11.1x 17.0x 34.6x 27% 18% 14% 1.3x Art Technology Group Inc. ARTG 4.37 90% 666 587 3.3x 2.9x 15.5x 13.8x 21.7x 20.4x 21% 21% 22% 1.0x Liquidity Services, Inc. LQDT 12.60 97% 342 281 1.2x 1.1x 10.1x 8.6x 30.7x 24.0x 12% 12% 17% 1.8x Web.com Group, Inc. WWWW 5.40 68% 144 105 1.0x 1.0x 5.3x 5.5x 8.1x 9.4x 18% 18% 30% 0.3x BroadVision Inc. BVSN 13.21 73% 59 (3) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A PFSweb Inc. PFSW 2.68 57% 27 33 0.1x 0.1x 9.5x 8.1x N/A N/A 1% 1% N/A N/A Median 1.6x 1.2x 10.1x 11.1x 23.2x 21.6x 18% 18% 20% 1.3x Mean 2.0x 1.7x 12.1x 11.0x 28.6x 22.0x 16% 15% 21% 1.4x Gaming Activision Blizzard, Inc. ATVI $11.11 85% $13,886 $10,641 2.4x 2.4x 6.9x 6.7x 17.4x 15.4x 34% 35% 15% 1.2x Electronic Arts Inc. ERTS 17.28 73% 5,644 3,860 1.0x 1.0x 20.9x 8.9x N/A 31.1x 5% 11% 13% N/A Ubisoft Entertainment SA UBI 12.58 52% 1,184 1,203 1.0x 0.9x 3.1x 2.6x N/A 68.6x 31% 36% 4% N/A Take-Two Interactive Software Inc. TTWO 10.18 81% 861 853 1.1x 0.9x N/A N/A N/A N/A -8% 0% 7% N/A THQ Inc. THQI 6.55 73% 443 325 0.4x 0.4x N/A 7.3x N/A 20.1x -4% 5% 19% N/A Glu Mobile, Inc. GLUU 0.93 51% 28 34 0.4x 0.6x 8.4x N/A N/A N/A 5% -7% N/A N/A Median 1.0x 0.9x 7.6x 7.0x 17.4x 25.6x 5% 8% 13% 1.2x Mean 1.0x 1.0x 9.8x 6.4x 17.4x 33.8x 11% 13% 12% 1.2x 9 Source: CapitalIQ
  10. 10. Trading Statistics† Stock Price Market Value Valuation Multiples Margins P/E/G Price % 52 Market Ent. Revenue Ebitda P/E Ebitda Growth CY 09 Ticker 3/8/10 High Value Value CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 CY 09 CY 10 Rate P/E/G (US$ millions, except per share data) Digital Media Technology Apple Inc. AAPL $219.08 100% $198,661 $173,865 4.2x 3.1x 16.9x 10.7x 37.7x 18.1x 25% 29% 19% 2.0x Adobe Systems Inc. ADBE 35.06 92% 18,427 17,522 6.0x 4.9x 14.4x 11.7x 23.0x 19.4x 41% 41% 14% 1.6x Dolby Laboratories Inc. DLB 56.72 99% 6,468 5,719 8.6x 7.1x 18.5x 13.7x 35.8x 27.0x 46% 52% 14% 2.6x Rovi Corporation ROVI 35.47 100% 3,696 3,853 8.0x 7.3x 17.9x 15.0x 23.9x 18.8x 45% 48% 19% 1.3x Logitech International SA LOGI 16.19 82% 2,846 2,565 1.4x 1.1x 30.4x 9.7x N/A 19.9x 4% 12% 13% N/A EchoStar Corp. SATS 20.57 94% 1,745 1,118 0.6x 0.6x 4.7x 4.2x 18.9x N/A 13% 13% 5% 3.8x IMAX Corporation IMAX 14.84 98% 925 950 5.9x 5.0x 19.1x 12.7x N/A 26.3x 31% 39% 30% N/A DG FastChannel, Inc. DGIT 32.95 94% 781 850 4.5x 3.9x 11.3x 9.0x 42.8x 25.5x 40% 44% 22% 2.0x Harmonic Inc. HLIT 6.81 87% 657 386 1.2x 1.1x 12.5x 11.0x 39.1x 23.8x 10% 10% 15% 2.6x Avid Technology Inc. AVID 14.64 95% 549 440 0.7x 0.7x N/A 6.5x N/A N/A 0% 10% 5% N/A DTS Inc. DTSI 34.95 98% 612 536 7.0x 6.6x 24.3x 18.5x 60.3x 45.4x 29% 36% 23% 2.6x Monotype Imaging Holdings Inc. TYPE 9.97 96% 346 403 4.4x 3.9x 11.2x 9.9x 17.4x 25.4x 39% 40% 4% 4.0x Sonic Solutions SNIC 11.30 88% 345 288 2.7x 2.7x N/A N/A N/A N/A -4% 1% 20% N/A DivX, Inc. DIVX 7.00 97% 229 89 1.3x 1.2x 21.5x N/A N/A N/A 6% -2% 20% N/A Immersion Corporation IMMR 4.56 88% 128 58 2.1x 2.2x N/A N/A N/A N/A -86% -25% N/A N/A Digimarc Corporation DMRC 20.33 100% 148 106 N/A N/A N/A N/A N/A N/A N/A N/A 10% N/A SRS Labs Inc. SRSL 8.28 100% 121 80 3.2x 2.6x 19.0x 9.8x 61.3x 24.9x 17% 26% 15% 4.1x Median 3.7x 2.9x 17.9x 10.7x 36.8x 24.9x 21% 27% 15% 2.6x Mean 3.9x 3.4x 17.0x 11.0x 36.0x 24.9x 16% 23% 15% 2.7x Diversified Media & Entertainment Walt Disney Co. DIS $33.19 99% $64,373 $76,778 2.1x 2.0x 10.0x 8.6x 17.8x 16.4x 21% 24% 9% 2.0x News Corp. NWSA 14.28 99% 39,386 48,189 1.6x 1.5x 9.7x 8.5x 18.1x 14.3x 16% 18% 10% 1.7x Time Warner Inc. TWX 30.64 93% 35,243 46,202 1.8x 1.7x 8.1x 7.6x 17.2x 14.4x 22% 23% 13% 1.3x Viacom, Inc. VIA.B 30.39 96% 18,557 25,005 N/A 1.8x 7.9x 7.7x 13.9x 12.2x N/A 23% 9% 1.6x CBS Corporation CBS 14.71 99% 9,958 16,238 1.3x 1.2x 9.0x 7.4x 28.5x 15.8x 14% 16% 4% 6.7x Discovery Communications, Inc. DISC.A 31.68 96% 12,967 15,899 4.5x 4.3x 11.5x 10.1x 24.6x 19.2x 40% 42% 23% 1.1x Scripps Networks Interactive, Inc. SNI 40.94 87% 6,791 7,686 5.0x 4.0x 12.0x 9.3x 23.1x 19.6x 42% 43% 14% 1.6x Liberty Media Interactive LINT.A 13.23 97% 7,901 13,535 1.7x 1.6x 8.6x 8.0x 38.8x 19.4x 19% 20% 5% 7.8x DreamWorks Animation SKG Inc. DWA 41.75 96% 3,634 3,403 4.8x 3.6x 17.7x 9.7x 26.2x 15.6x 27% 37% 17% 1.6x The New York Times Company NYT 11.77 79% 1,734 2,470 1.0x 1.1x 7.9x 7.0x 60.4x 18.5x 13% 15% 4% 17.2x Warner Music Group Corp. WMG 6.20 79% 959 2,622 0.8x 0.8x 6.4x 6.7x N/A N/A 13% 12% 4% N/A CKX Inc. CKXE 5.06 61% 471 535 1.8x 1.6x 8.4x 5.4x 22.0x 13.3x 22% 30% N/A N/A Martha Stewart Living Omnimedia Inc. MSO 5.59 63% 307 282 1.2x 1.2x 41.7x N/A N/A N/A 3% 0% 15% N/A Median 1.7x 1.6x 9.0x 7.8x 23.1x 15.8x 20% 23% 10% 1.7x Mean 2.3x 2.0x 12.2x 8.0x 26.4x 16.3x 21% 23% 11% 4.3x †Oppenheimer & Co. Inc. makes a market in the following companies: AAPL, ADBE, AMZN, ANSW, ARTG, ATVI, AVID, CKXE, CTCT, CYBS, DGIT, DIVX, DRIV, DSCM, DTSI, DWA, EBAY, EHTH, ERTS, EXPE, FLWS, GOOG, GSIC, HGRD, HLIT, IACI, IMAX, INSP, INTU, INWK, JCOM, KNOT, LNUX, LOGI, LOGM, LOOP, LQDT, MCHX, MOVE, NFLX, NILE, NWSA, OPEN, OSTK, PCLN, PRTS, RNWK, ROVI, SCOR, SFLY, SNIC, SPRT, STMP, THQI, TIVO, TSCM, TTGT, TTWO, TZOO, VCLK, VITC, VPRT, WBMD, YHOO, AOL, ARB, CBS, CRM, DHX, DIS, DLB, MSO, NYT, OWW, SNI, SYX, TWX, VIA.B, WMG 10 Source: CapitalIQ
  11. 11. Market Movement & Traffic Data 30 Day Stock Performance(1) February Traffic Metrics(2) Advertising | Search, Marketing Services Unique Page SCOR 25% Visitors growth Views growth (mm) (YoY) (mm) (YoY) INSP 13% GOOG 171.9 15% 41,990.7 30% YHOO 153.1 6% 36,485.3 -9% Index 6% AOL 110.4 5% 12,762.6 -30% ANSW 49.2 97% 215.4 93% ANSW 3% LOCM 13.8 21% 52.8 6% Index 521.4 14% 91,640.6 1% ARB -6% Index median 31.5 73% 163.5 80% -30% -20% -10% 0% 10% 20% 30% Advertising | Vertical Content, Lead Gen Unique Page TZOO 30% Visitors growth Views growth (mm) (YoY) (mm) (YoY) HGRD 28% WBMD 22.6 17% 303.2 34% INET 13.1 95% 199.2 179% Index 9% HGRD 9.8 92% 53.6 79% MOVE 8.4 8% 256.3 -19% EHTH -3% TSCM 3.7 9% 45.3 76% Index 69.4 31% 1,054.6 18% KNOT -16% Index median 1.9 -27% 45.3 51% -30% -20% -10% 0% 10% 20% 30% Cloud Services | Consumer Unique Page TIVO 94% Visitors growth Views growth (mm) (YoY) (mm) (YoY) ACOM 29% NFLX 16.9 17% 650.2 58% ACOM 5.7 -3% 299.4 17% Index 36% LOOP 1.4 4% 26.3 16% TIVO 0.1 -42% 2.0 -21% NFLX 13% RNWK 0.0 -43% 0.1 -58% INTX 3% Index 24.2 10% 978.0 41% Index median 1.4 4% 26.3 16% 0% 20% 40% 60% 80% 100% Cloud Services | Business Unique Page OPEN 43% Visitors growth Views growth (mm) (YoY) (mm) (YoY) SPRT 25% MWW 17.1 -13% 253.7 -18% CTCT 4.6 14% 69.2 30% Index 16% VPRT 4.5 5% 125.6 8% OPEN 1.6 2% 22.5 28% WWWW -2% LOGM 1.3 30% 163.3 97% Index 56.5 5% 1,952.9 7% INWK -2% Index median 1.3 11% 47.3 170% -10% 0% 10% 20% 30% 40% 50% (1) 30 day stock price measured from 2/1/10 through 3/1/10 according to CapitalIQ; Index composites calculated based on aggregate 11 values for the comparable groups listed on pages 8-10. (2) Traffic metrics reflect comScore data for the month of February 2010
  12. 12. Market Movement & Traffic Data 30 Day Stock Performance(1) February Traffic Metrics(2) eCommerce | E-tail Unique Page PRTS 31% Visitors growth Views growth (mm) (YoY) (mm) (YoY) VITC 30% EBAY 67.3 0% 7,299.1 7% AMZN 60.6 21% 1,595.5 35% Index 12% EXPE 25.8 13% 534.6 -9% OWW 11.5 -17% 209.7 -20% SYX 2% PCLN 10.7 11% 188.7 5% Index 207.9 7% 10,379.9 9% TIXC -2% Index median 3.2 15% 46.2 14% -10% 0% 10% 20% 30% 40% eCommerce | Services Unique Page DRIV 20% Visitors growth Views growth (mm) (YoY) (mm) (YoY) GSIC 16% GSIC 4.5 5% 125.6 8% ARTG 0.9 49% 1.8 -18% Index 14% BVSN 0.3 -50% 3.4 -40% Index 5.7 4% 130.8 5% PFSW 3% Index median 0.9 43% 3.4 -40% WWWW -2% -30% -20% -10% 0% 10% 20% 30% Gaming Unique Page THQI 19% Visitors growth Views growth (mm) (YoY) (mm) (YoY) TTWO 10% ERTS 2.3 81% 17.2 30% ATVI 1.2 -64% 13.0 -87% Index 6% UBI 0.9 -5% 3.6 -37% THQI 0.3 -28% 2.3 -51% UBI -6% GLUU 0.0 37% 2.0 NM GLUU -28% Index 4.7 -21% 38.2 -70% Index median 0.6 -12% 3.0 -43% -50% -25% 0% 25% 50% Digital Media Technology Unique Page SNIC 42% Visitors growth Views growth (mm) (YoY) (mm) (YoY) DMRC 32% AAPL 61.1 20% 974.8 7% ADBE 37.4 12% 317.3 16% Index 12% LOGI 1.8 130% 16.9 142% SNIC 1.4 -9% 22.9 144% DIVX 1.3 54% 4.0 42% LOGI 2% Index 104.1 18% 1,358.6 12% IMMR -3% Index median 0.9 68% 10.6 222% -10% 0% 10% 20% 30% 40% 50% (1) 30 day stock price measured from 2/1/10 through 3/1/10 according to CapitalIQ; Index composites calculated based on aggregate 12 values for the comparable groups listed on pages 8-10. (2) Traffic metrics reflect comScore data for the month of February 2010
  13. 13. Market Movement & Traffic Data 30 Day Stock Performance(1) February Traffic Metrics(2) Diversified Media & Entertainment Unique Page CKXE 28% Visitors growth Views growth (mm) (YoY) (mm) (YoY) MSO 25% CBS 62.8 28% 1,150.8 31% VIA.B 59.3 34% 1,577.9 -25% Index 11% NYT 52.4 13% 561.4 11% DIS 28.1 NM 688.3 NM NYT -1% TWX 25.1 -3% 310.2 -73% Index 293.4 25% 5,630.5 -13% SNI -3% Index median 19.0 31% 333.2 0% -30% -20% -10% 0% 10% 20% 30% (1) 30 day stock price measured from 2/1/10 through 3/1/10 according to CapitalIQ; Index composites calculated based on aggregate 13 values for the comparable groups listed on pages 8-10. (2) Traffic metrics reflect comScore data for the month of February 2010
  14. 14. Legal Disclaimer This publication is authored by the Investment Banking Department of Oppenheimer & Co. Inc. (“Oppenheimer”) and is not the product of the Equity Research Department of Oppenheimer & Co. Inc. This publication is provided for informational purposes only, and is not intended as a recommendation or an offer or solicitation for the purchase or sale of any security or financial instrument. Nothing contained herein shall constitute an offer or solicitation to buy or sell any securities discussed herein in any jurisdiction where such offer or solicitation would be prohibited. This report may contain statistical data cited from third-party sources believed to be reliable, but Oppenheimer & Co. Inc. does not represent that any such third-party statistical information is accurate or complete, and it should not be relied upon as such. All market prices, data and other information are not warranted as to completeness or accuracy and are subject to change without notice. Oppenheimer may be a market maker and trade on a principal basis, or may have undertaken or may undertake and own account transaction in the financial instruments or related instruments of any security discussed herein and may act or has acted as an underwriter, placement agent, advisor, or lender to such security. Oppenheimer and/or its employees may hold a position in any securities or financial instruments mentioned herein. Past performance is not a guarantee of future results, and no representation or warranty, express or implied, is made regarding future performance of any security mentioned in this report. The price of the securities mentioned in this report and the income they produce may fluctuate and/or be adversely affected by exchange rates, and investors may realize losses on investments in such securities, including the loss of investment principal. Oppenheimer & Co. Inc. accepts no liability for any loss arising from the use of information contained in this report, except to the extent that liability may arise under specific statutes or regulations applicable to Oppenheimer & Co. Inc. © 2010 Oppenheimer & Co. Inc. is a Member of All Principal Exchanges and Member SIPC. All rights reserved. 14

×