Jefferies & Company, Inc. Jefferies 3 rd Annual Internet Conference February 28, 2007 CONFIDENTIAL DRAFT Member, SIPC Panel III: Video Symposium
Panelists Doug Stevenson Founder and CEO
representative of the
many facets of the video
Large corporate and SMEs
Keith Richman Founder and CEO David Liu Managing Director Internet & Digital Media Group Lou Kerner CFO Gus Warren VP, Strategic Partnerships 1
Sector Snapshot 2
The Future of Video Entertainment? 3
What is the Video Market Opportunity?
Source: Wallstreet Research, 2005. Includes paid-subscription and free (over-the-air) television households.
Source: eMarketer, November 2006. Online video viewer defined as an individual ages 3+ who downloads or streams video (content or advertising) at least once a month.
Source: FCC, Kagan Media Research, Company Reports, WPP Annual Report.
Source: eMarketer, November 2006.
1.4% CAGR 13.6% CAGR US Television Advertising Revenue, 2005-2009E 3 US Online Video Advertising Revenue, 2005-2009E 4 ($ millions) ($ billions) 8.5% CAGR 72.7% CAGR 4 US Television Households, 2005-2009E 1 (millions) US Online Video Viewers, 2005-2009E 2 (millions)
How Do We Find Video Today? What Do We Watch?
Source: Jupiter Research, November 2006.
Source: InsightExpress for Advertising.com, January 2007.
From Search Engine Results Recommendations From Friends From a Portal TV or Movie Previews/Trailers Directly From Online Video Sites From a Link in an E-mail Newsletter From Ads on TV, Radio, Or Print From Print Article From a Blog Methods Of Online Video Discovery 1 Video Content Viewed Online 2 News Clips Music Videos Movie Trailers TV Shows User Generated Videos Movies Sports Clips Other 5
Who are the Online Video Media Players?
comScore Media Metrix, February 2007.
Total Unique Video Streamers – July 2006 to December 2006 1 (millions) 6
Meet the Panelists 7
Dave’s Top Ten 8
Dave’s Top Ten
Agree or disagree?
“ Content is king!”
“ Content should be free!”
“ User Generated Content is trash!”
Mobile. Opportunity or money pit?
What will be the advertising unit for video?
Video can be viewed free with ads (network, online), subscription (cable, satellite), and a la carte (pay-per-view). What’s the best model?
What will limit growth in online video?
Search and Discovery Tools?
Dave’s Top Ten (Cont.)
If you could LONG or SHORT any stock to exploit Video 2.0 what would it be?
If you could start ANY Internet based business in 2007 what would it be?
Who loses the most if you gain?
Network TV? Radio? Cable? Newspapers?
What is your biggest competitive threat?
What are the big Internet companies doing? Worried?
Overpaid or underpaid?
Sony buying Grouper for $65 million?
News Corp buying MySpace for $0.6 billion?
Google buying Youtube for $1.7 billion?
Online Video – Hot or Not?
Source: Accustream iMedia Research.
Online Video Has Tremendous Mass
Overwhelming abundance of online video content
While YouTube and MySpace Video have accumulated massive collections, they only encompass a portion of what is available
Every Website either has or is considering video offering
Total Video Streams Served 1 46.7% CAGR (billions) 12
What is Tomorrow’s Advertising Unit?
Video Site Monetization Strategies
“ Pre/post-roll” / In-Stream Ads – 15-30 sec video ads inserted before or after video
“ In-Page” / Rich Media Ads – Ads with video/audio or interactivity which run on any site
Sponsorship – Superimposed logos, integrated content, branded channels or media players
Promotions – Unique contests such as user-generated commercials
Source: JupiterResearch Internet Advertising Model, July 2006.
US Online Display Advertising Spending, 2005 to 2011 1 ($ billions) 13
What are the Major Media Companies Doing?
Rapid Growth of Online Video Demonstrates Major Shift in Viewing Behavior
Rise of UGC (aka User Generated Content)
On-Demand Entertainment: work isn’t just for sleeping anymore!
Traditional Media Companies Trying to Use Online in Cost-Effective / Profitable Manner
Pressuring free video-sharing sites to remove copyrighted material
Launched branded sites allowing access to proprietary content
iTunes and Wal-Mart.com Pay-Per-Download currently seen by major networks as safe online bet
“ The Children Are Our Future”
Despite tensions between old and new media, online sites access to the younger demo has necessitated partnerships and M&A