The 2016 Watch List

1. 20 trends you need to know when drafting and executing your long term growth strategy THE 2016 WATCH LIST September 2015

2. Assume the world will be fully connected by 2020 Source: United Nations, 2015; emarketer, December 2015; Internet World Stats, 2015 (as of December 2014); Experience Think, 2015; Ericsson Mobility Report, June 2015. 1 2010 2015F 2020E Global Population 6.9Bn 26% 42% 7.3Bn 60% 7.7Bn Internet penetration Smartphone penetration 10% 20% 3.1Bn 4.6Bn 1.9Bn 5.0Bn 0.7Bn 1.4Bn Connected World 66%

3. Soon most devices, products -even clothes- will be connected2 Source: Business Insider, 2014. Cisco IBSG. 2005 2010 2015E 2020E Personal Computers Smartphones Tablets Internet of Things Wearables Smart TVs 0.5Bn 2Bn 12Bn 50Bn Global connected device numbers grew 24X in just 10 years Connected World

4. Consumer Business Security Education Healthcare Government All industries are playing the “digital catch-up” game to stay competitive Source: KPCB, 2015. 3 Estimated global digital penetration, by industry Connected World

5. GENERATION ZGENERATION ZMILLENNIALSMILLENNIALS 16 - 34 years old16 - 34 years oldweb firstweb first 0 - 15 years oldmobile firstmobile first Young adults will redefine how we produce and sell our products and services Source: Sparks & Honey, “Meet Generation Z:Forget Everything You Learned About Mille”nnials, 2014; Rob Norman’s, “Turning 13 in 2014”, BTIG, 2014, IAB México Teens, 2015. Multimedia devices Content focus Socially integrated TV prime-time chasm 2012 - 2014 hours per week change On demand vs. linear paid vs. free 2 share / mostly text 78% -6hrs create / mostly image/video -5hrs 89% 5 50/50 90 on demand mostly freePPV / DVR / ROD ( ) from 23 ( ) from 20 Millennials and Gen Z 4

6. People, values, incentives and global sourcing 5 Enhanced business intelligence Source: PSFK Labs, “The Future of Work,”, 2013. “Great spaces” Future of Work Open Knowledge Constant learning On-Demand Staffing Optimized skillsets Optimal Interaction Digital + physical employees-vendors-clients The work enviroment must constantly adapt to an ever-shifting marketplace

7. 6 Technology investments and partnerships will drive productivity and growth Worldwide enterprise software spending (Bn of USD) 2010 2017E $55.2 $108.7 21.3 34.4 13.9 36.5 10.5 6.8 18.7 13.6 2.6 5.6 Source: Gartner, December, 2014. Enterprise Resource Planning CRM Business Intelligence Supply Chain Management Web Conferencing IT Spending +$54Bn Bn Bn CAGR +10%

8. 7 Actionable business intelligence will be a mandatory competitive edge Source: IBM Software Day, 2014. Enterprises that apply advanced analytics have... 33%more revenue growth 12xmore profit growth & Business Intelligence Have a consistent view of the business Determine where to make investments Get real-time analysis Identify waste and contain costs Improve the decision- making process Access and share information easily Business Intelligence

9. Source: Forrester, eMarketer January, December; 2014; AMIPCI, 2015. $2,541 $491 $75 $12 1998 2006 2014 2018E Top 10 eCommerce companies by revenue eCommerce will enable accelerated growth and set new service standards Share of e-commerce as part of total retail sales (Bn of USD) 0.1% 8.9% 8.5% 3.0% 2.9% 0.05%0.2% 0.3% MEXICO LATAM GLOBAL USA eCommerce 8

10. 9 Source: Deloitle 2015. Bain & Company 2014. Competition will lead us to embrace loyalty programs and new service standards increase in profitabilityChurn reduction Loyalty-CRM 5 % % 25-125 Retailers with loyalty programs are 88% x more profitable One new customer = cost of retaining a current customer7

11. Recurrent revenue models generate exponential value based on lasting relationships10 Source: Gartner. BI, “Suscription Revenue Report ,” 2015 John Warrilow, “The automatic consumer,” 2015. Higher multiples: Enterprise Value / EBITDA (Aug 15) of all media and digital businesses embracing subscription services incremental revenue of reported global 2000 companies 40% 35% Subscription Models 4in 5 CEOs believe customers are switching to new consumption models like sharing or subscribing 128 44 4.28

12. Advertising grows 6%/yr through 2020; digital and mobile capture the lion's share11 Share of global marketing spend, 2004-2020 (% of total) Source: Zenith Optimedia, 2014. 30% 12% 13% 0% 4% 6% 20% 11% 38% 37% 9% 6% 0.5%0.5% 6% 7% @ 2004 2017E TV Radio Film OOHMagazinesNewspaper Digital Mobile 31%31%31% Marketing Re-Mix

13. 37% 41% 11% 11% 4% 18% 8% 24% 24%23% TV Radio Print Internet Mobile Mobile marketing represents the biggest opportunity in terms of time Source: IAB, emarketer, 2014; KPCB, 2015. ADSPEND TIMESPENT OPPORTUNITY $25BN The mobile catch-up opportunity Time spent vs. ad spend (% of US 2015 total) Marketing Re-Mix 11

14. 11 Marketing experts will dramatically change their marketing mix Email marketing LESS MORE Mobile marketing Social media Search (SEO/PPC) Online display advertising Tradeshows and events Direct mail Public relations Print advertising Radio/TV advertising 61% 49% 40% 38% 37% 18% 17% 17% 12% 8% 4% 5% 1% 6% 8% 17% 22% 33% 18% 6% Source: Sensorpro, Strong View Survey 2014. % spend% spend Investment increase/decrease based on "affirmative answers" (according to a survey of 377 global CMOs) Marketing Re-Mix

15. 11 In Mexico alone, the “marketing re-mix” already happened Source: CICOM, April 2015. Marketing/advertising investment plus share change, 2005 vs. 2013 (Bn of USD) Open TV $2.9 -31% Radio $ 0.5 -15% Newspaper $ 0.4 -36% Pay TV $ 0.4 +20% Outdoors $ 0.4 -48% Internet $ 0.6 Magazines $ 0.2 -58% Movies $ 0.1 -51% Direct Marketing $ 2.1 Research $ 0.4 PR $ 0.4 GraphicDesign$0.1 Promotions and BTL $ 3.8 +729% +46% +85%-37% +40% Marketing Re-Mix

16. 33HRS 5HRS 22Min 29HRS Hours spent watching video per week Digital video is starting to compete head-to-head with live and linear TV 2010 2012 2014 2016 2018 2020 2022 Source: The Diffusion Group, 2014. Digital Video Live TV Online Video 12

17. Mobile screens already capture one-third of all viewers13 Hours spent watching video, per day (adults 18+, USA) 2010 2015 7.2hrs 9.5hrs 0.4 6% 2.4 2.4 4.4 33% 61% 29% 26% Source: eMarketer, April, 2015. Mobile spikes from 6 to 29% of screen share Mobile spikes fromMobile spikes fromMobile spikes from 6 to 29% of screen shareof screen shareof screen share TV & Desktop share drops 24% total hours viewed remains flat! Mobile Desktop/laptop TV 2.9 4.3 45% Online Video

18. 14 Source: PwC, 2015. Shared economy sector Traditional rental sectorPeer-to-peer lending and crowdfunding Peer-to-peer accommodations Online staffing Car-sharing Music and video streaming Equipment rental B&Bs/hostels Lending libraries Car rental DVD rental Global shared economy growth (Bn of USD) Limited supply Unlimited idle capacity The sharing economy is impacting most service industries $255 $670 50% $335 50% $335 94% $240 6% $15 2014 2025E The Sharing Economy

19. 15 Source: PWC, 2014; US Dep of Labor, 2015. Future of Education Education/learning systems and protocols are changing dramatically 77%of teachers use technology to motivate students in the classroom 43%of teachers using gaming as a learning resource 23%of total consumer/educational book publishing revenues derived from e-books 65%of today´s grade school kids will end up at jobs that haven’t been invented yet 1 in 3students take an online college course Yesterday 2015-2018 2018-2025 Education/learning largely fixed—centered on pre-programmed computer or classroom Peer-to-peer environment; mobile media target kids in general Learning system adapted to each child (vs. child adapting to school)

20. 16 Source: Singularity 2015. Artificial Intelligence Machine learning is displacing numerous human tasks at accelerated speeds 1026 1020 1015 1010 105 0.0001 204520202015200019801960194019201900 1 Surpasses brainpower of single human Surpasses brainpower of Insect Surpasses brainpower of mouse Calculationspersecondper$1000 Surpasses brainpower equivalent to that of all human brains combined Exponential growth of computing The accelerating pace of change Agricultural Revolution 8000 years 120 years 90 years 22 years Industrial Revolution Light Bulb Moon Landing World Wide Web Human genome sequenced 9 years Data - Information - Wisdom

21. 17 3D printing will disrupt a $10Tn manufacturing and design industry Source: Peter Diamandis and Steven Kotler, "Bold: How to Go Big, Create Wealth and Impact the World," 2015. On-demand parts in space AEROSPACE Co-design and co-creation with customers RETAIL AUTOMOTIVE Sophisticated components/crowdsourced design HEALTHCARE Implants, prostheses, organs COMMERCIAL AVIATION Low-volume replacement parts Disrupted industries 3D Printing material reduction costs energy use reduction Organic and inorganic materials Crowdsourced design Easy prototyping 90% 50%

22. Gaming 18 The gaming industry will revolutionize how people interact, learn, love... Source: Newzoo, 2014 Global Games Market Report & Service. online population 1.8Bn 60% gamers 2000$8Bn $103Bn 3x Box Office $32Bn Gaming Industry Revenue by screen 24% TV/Console 22% Mobile 40% PC 14% Tablet 2017

23. Source: Rock Health funding database, 2015. ANALYTICS AND BIG DATA DIGITAL MEDICAL DEVICES Software/hardware designed to treat a specific disease or condition. HEALTHCARE CONSUMER ENGAGEMENT Consumer tools for the purchasing of healthcare services or health insurance (B2B and B2C). PAYER ADMINISTRATION Management and administration tools for payers. POPULATION HEALTH MANAGEMENT Comprehensive platforms for managing the health of populations under the shift to risk-based payment models. TELEMEDICINE Delivery of healthcare services through non-physical means (e.g. telephone, digital imaging, videoconferencing). Future of Health The healthcare industry seeks to extend/improve quality-of-life $381M $280M $238M $223M $195M $172M Data aggregation and analysis to support a wide range of healthcare use cases. 19

24. New products and services Donations to social causes Quality improvements Social Value BusinessValue Source: Michael E. Porter and Mark R. Kramer, 2014. Corporate shared-value models are effective and profitable20 Shared Value Social-impact business modeling Business as usual Charity Shared-value enterprises Shared-value initiatives

25. 2016 TRENDS TO WATCH MEDIA & MKT RE-MIX DATA & ANALYTICS EXPLOSION GAMING 3D PRINTING SUBSCRIPTION BUSINESS MODELS GLOBAL CONNECTIVITY THE FUTURE OF HEALTH NEW CONSUMPTION SHIFTS MILLENNIALS GEN Z THE SHARE ECONOMY THE NEW WAY TO SHOP: E-COMMERCE INTERNET & SMARTPHONE PENETRATION DIGITAL VIDEO TRUMPS TRADITIONAL TV MOBILE FIRST CORPORATE SHARED VALUE DIGITAL GROWTH VS. TRADITIONAL MEDIA THE FUTURE OF WORK ARTIFICIAL INTELLIGENCE / MACHINE LEARNING IT SPENDING GROWTH BUSINESS INTELLINGENCE FOR COMPETITIVE ADVANTAGE LOYALTY @THE CORE INTERNET

26. ABOUT info@sws.ms sws.ms SWS is a hands-on consulting firm specialized in disruptive and results-oriented strategy. Our client list includes global players and local industry leaders in search for solid future positions that embrace the powerful benefits the connected world can offer. Focused on both the US Latino and Mexican markets, our strengths comprise proven expertise in the telecom, media, marketing and digital space.

The 2016 Watch List

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The 2016 Watch List

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