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Amusing- music streaming platform for bars/coffee shops/clubs (South Korea market entrance plan)
The document outlines the strategy and financial analysis for a high-tech entrepreneurship course focused on a music streaming application designed for venues, enabling users to curate music experiences in real-time. It presents market analysis, competition, licensing considerations, and a detailed financial forecast, highlighting the potential for growth in South Korea's digital music landscape. The strategy includes a timeline for development, funding requirements, and marketing strategies aimed at maximizing user engagement and monetization.
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Amusing- music streaming platform for bars/coffee shops/clubs (South Korea market entrance plan)
- 1. TEAM 07 High-TechEntrepreneurship course, July 2015
- 2. AGENDA Team and idea MarketAnalysis Strategy Financial Analysis Summary
- 3.
- 4. Team Elisabeth Ulander (CPO) Francesco Gambardella (CEO) UrosJovanovic (CFO) Mustafa Guray Taydas (CAO) Vladimir Stoiljkovic (CTO) ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 5. Mission “To use musicas the key connection bridge and communication tool between venue owners and visitors and provide customizable and ultimate in-venue music experience, through online and real-time interaction based on musical taste.“ ANALYSISIDEA STRATEGY FINANCE SUMMARY
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- 9. Media Player App Choosethe venue and perform check in Vote and suggest songs Play their songs Match people with similar music taste Licensed music for businesses Improve customer satisfaction Customer analytics Greater visibility of the venue Solution ANALYSISIDEA STRATEGY FINANCE SUMMARY
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- 11. Market trends The globalrecording industry passing through a new transition Global digital revenues increasing year over year Music subscription services becoming a major driver of digital growth 46% 46% 8% Share of industry revenues - 2014 Digital Physical Performance rights and sync 52% 23% 3% 9% 12% Permanent downloads Subscription streams income Mobile personalization Ad-supported streams income Other 0 0.1 0.2 0.3 0.4 0.5 0.6 Global digital revenues by sector - 2014 * Taken from IFPI Digital Music Report 2015 ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 12. Competitors Competitors AMUSING MelOnRockbot Spotify Business Social Jukebox experience Search for a venue based on user’s music taste Users participation in the music played in the venue Unlock of the rewards and special discounts Licensed music for business venues Improved visibility of venue owners Engagement with customers through notifications Analytics Easiness of use Presence in South Korea ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 13. Licensing LICENSED MUSIC PERFORMING RIGHT ORGANIZATIONS RIGHT HOLDERS Right holders% of revenue Writers 10% of revenue from one subscriber Performers 6% of revenue from one subscriber Producers 44% of revenue from one subscriber ANALYSISIDEA STRATEGY FINANCE SUMMARY * Taken from government pay-per-stream system in South Korea
- 14. Selection of thecountry Highest number of bars per capital App addicted population Android driven market Government pressure on venue owners No direct competition Indicator Japan USA Brazil South Korea Number of bars in capital per 100.000 people 108 88 133 231 Performing market size (millions) 78,837 391,864 55, 545 7,974 Performing market growth rate 13% 46 % 103 % 89 % Competition presence NO YES NO NO Number of apps installed 36,4 32,8 22 40,1 Internet Bandwidth (kb/s per person) 52 36 44.8 63 ANALYSISIDEA STRATEGY FINANCE SUMMARY * Sources : IFPI Digital Music Report 2015 , WCCR 2014, Statista 2013
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- 16. Target groups andsize Venues Festivals App users 1. Single location venues with normal capacity of visitors (10 -100) 2. Low number of locations (<5) with large capacity of visitors (over 200) 3. High number of locations (10 to 1000) and normal capacity of visitors (30-200) Music festivals, public parties and similar events Visitors of the business venues, festival and events with smartphone access 8,697 22,006 145,037 700+ 9,3 M ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 17. 2015 • Develop product •PRO agreement • Funding round 2016 • Launching in SK • Market penetration • Database expansion 10k VENUES 300k HITS 3M SONGS ANALYSISIDEA STRATEGY FINANCE SUMMARY Timeline and Milestones
- 18. 2015 • Develop product •PRO agreement • Funding round 2016 • Launching in SK • Market penetration • Database expansion 2017 • App promotion • Token system • Strong advertising 22k VENUES 1M HITS 10M SONGS ANALYSISIDEA STRATEGY FINANCE SUMMARY Timeline and Milestones
- 19. 2015 • Develop product •PRO agreement • Funding round 2016 • Launching in SK • Market penetration • Database expansion FUTURE • Finding potential buyers • Entering Japan and Brazil 2018 • Maintain high MS • Further expansion • Keep churn rate low 70k VENUES 1.5M HITS 14M SONGS 2017 • App promotion • Token system • Strong advertising ANALYSISIDEA STRATEGY FINANCE SUMMARY Timeline and Milestones
- 20. One time fee(200€) + Monthly subscription (40€ -50€) Freemium model (free download + tokens for extra service) PRICEPLACEMENTPROMOTION MEDIA PLAYER APPLICATION Sales agents Website Android market Trials Special eventsStrategic partner ReferralOnline ANALYSISIDEA STRATEGY FINANCE SUMMARY 4Ps and Marketing Strategy
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- 22. Software & Appdevelopment - 150,000 € Negotiate with PROs, and label houses - 20,000 € Prototype testing - 10,000 € Agreement with label house - 25,000 € Initial marketing campaign - 25,000 € HQ opening in Seoul - 250,000 € Korean partner for legal issues - 20,000 € TOTAL START-UP PHASE COST = 500,000 € ANALYSISIDEA STRATEGY FINANCE SUMMARY Startup phase costs
- 23. Pessimistic Scenario Realistic Scenario OptimisticScenario 2015 2016 2017 2018 7M 6M 5M 4M 3M 2M 1M 0 -1M -2M 1st Round 2nd Round Distribution through Forecasted Years CumulativeNetCashflowin€ Capital Needs for Start-up 500,000 € Personal Funding 50,000 € Crowd funding 30,000 € Minimum investment needed 420,000 € Investors 420,000-500,000 € 25% - 35% of shares will be sold to Investors 1st Round Fundraising in 2015-Q4 2nd Round Fundraising in 2017-Q1 *Optional in case of pessimistic scenario ANALYSISIDEA STRATEGY FINANCE SUMMARY Capital Requirements
- 24. Cost of ServiceStructure Royalties 50% Streaming 37% Commission 13% Average Revenue Structure Subscription 64% Media Player 32% App 4% Selected Data from P&L and ROI Income Statement (Realistic) 2016 2017 2018 Total Revenues 4,237,530 11,577,600 32,809,150 Cost of Service 3,166,054 9,275,112 25,320,625 Total Expenses 834,500 1,544,000 1,984,000 EBIT 236,975 758,488 5,504,525 Profit 189,580 606,790 4,403,620 ROI 37.92% 121.36% 880.72% ANALYSISIDEA STRATEGY FINANCE SUMMARY Revenue and Cost Structure
- 25. 2015 2016 20172018 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 PES* -110000 0 -27450 -64395 -15909 -58062 51 38049 179655 353669 980569 1529415 2503791 3010211 REA* -110000 0 38331 65947 188229 223580 174180 417169 718552 864371 1988654 3093633 4565305 5301991 OPT* -110000 0 455207 886720 1354993 1390926 1802803 2512600 3406459 4268811 6326903 9003115 12746671 14635712 OPT* REA* PES* Net Present Value 2018 19,9 M 5,03 M 1,19 M Enterprise Value 2019 161,36 M 53,05 M 23,55 M Q4-2016 Q1-2018 Q3-2018 Payback Period Breakeven Point 9093 clients location Cumulative Cash Flow With Minimum Investments * PES- Pessimistic REA-Realistic OPT-Optimistic ANALYSISIDEA STRATEGY FINANCE SUMMARY Cash Flow and Indicators
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- 27. Conclusion Key Partners Keyactivities Value Proposition Customer Relationships Customer segments National Performance Right Organizations Record companies Hosting and audio streaming providers Korean partners regarding legal issues and sales Software development Obtaining music database and licenses Setting up streaming service Finding right partners Media player Legal music streaming with added extra features Mobile App Better in-venue experience Sales representatives Online technical support Website Venues Festivals App users Key Channels PPL music licenses Music database Media player and app Organizational team Local sales agents Online selling Google Play Cost Structure Revenue Streams Prototype development and software PPL music licensing Royalties Music streaming and hosting costs Marketing sales and wages costs Software one time purchase price Monthly subscription fees Advertising space in mobile app On request license for events App’s tokens system
- 28. Thank you foryour attention!
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- 30. Political factors • GovernmentPressure on Streaming Services • Good Government Incentives for Start-ups • North Korea Disputes • Strong Foreign Relationship (EU Improving) • Unemployment Rate (3.2 %) • Strong military influence ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 31. Economical factors • Relativelylow Tax Rate (20%) • GDP, PPP Growth Rate (2.8%) • Low Interest Rate (1.75%) • Low venture capital availability (2.1 out of 7 rating) • Exchange Rate (1€ = 1,25 KRW) • Liberalized service sector ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 32. Social factors • TechSavvy. Population • K-POP music Phenomenon • Most Active App Users • High Education Standards • Nationalistically oriented and Language Barriers • Growing local aversion for foreign companies ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 33. Technological factors andtrends • Most Innovative Country • Fastest Internet and Downloading Capacities • Android-driven Market • Most R&D Intensive Country • Strong Telecom Sector • Application market is growing ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 34. Legal factors • Anti-PiracyNew laws about digital music • Strict Copyright Policies about performing rights • Only one PRO - KOMCA (partner) • Open-Net Korea Legal Initiative • Over-regulated Governance • Strict legal mechanisms ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 35. Digital music industryfactors • High Share of Digital Music (58 %) • Growing digital music market (+20 %) • Local Music Oriented business • High music Royalty Rates • Strong Music Streaming Services (Melon, Milk) • No direct competition ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 36. Application features Feature FreeToken User registration Vote for songs from the playlist in venue Synchronization of music from device, Facebook, Last.fm and other similar services to create a music taste Sharing on social media Search for a venue based on user’s music taste or genre Suggest music from smartphone’s users library Check-in in the venue Visualization of all songs in the playlist Discovery of currently playing songs in the venue Ad-free experience Matching users with similar music taste “Prioritized instant request” of the song to be played next Vote counts for 10 votes Access to DJ’s Club Rewards unlock and participation in special offers
- 37. Media player margins ExpectedMargin from Media Player Price Decision 2016 2017 2018 Media Player Price (one time) 200 Development Cost 10000 20000 20000 Total Expense 834500 1544000 1984000 Commissions on Software (40%, 30%, 20% with years ) 80 60 40 Forecasted Numb. of Buyers 9300 13250 46000 Unitary Fixed Cost 90.81 118.04 43.57 Expected Margin 109.19 81.96 156.46 ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 38. Price calculation forsubscription Streaming, Licensing and Copyright Costs by Music Venue Monthly based on one location (€/month) Franchis e Premiu m Indie Licensing Cost (to KOMCA ) 11.67 15.17 11.67 Streaming Cost (Data Transfer) 4.15 Copyright Cost - 60% of Subs. Revenue 24 30 24 Monthly Subscription Fee 40 50 40 Contribution Margin 0.18 0.68 0.18 Copyright Cost 41.61 ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 39. SWOT analysis Strengths Weaknesses Licensed music solution for businesses allowing music to be played in public environments Creation of the strong social integration between customers Innovative concept: easy and intuitive First mover advantage in South Korea HQ location in Seoul allows exploiting Asian market Overall system architecture allows easy expansion to other countries Mandatory agreement with record companies and performing right organizations Lack of competences in software programming, legal aspects and South Korean culture Lack of patent in the initial stage Big amount of revenue goes to right holders and performing right organizatioons Opportunities Threats Wide potential of the market may result in fast growth of the company Exploitation of tech-savvy community Functional outsourcing possibilities Continuous product innovation through R&D Time required to develop a product could be higher than expected High entry barrier costs Potential competitors copying the idea ANALYSISIDEA STRATEGY FINANCE SUMMARY
- 40. Income Statement 2016 2017 2018 ScenarioPessimistic Realistic Optimisti c Pessimist ic Realistic Optimisti c Pessimisti c Realistic Optimisti c Total Revenues 2794530 4237530 11162030 7807600 1157760 0 26659600 22587150 3280915 0 69040150 Cost of Service 2052091.5 3166054. 5 8631373 6135187. 5 9275112 21560743 .5 17324971. 5 253206 25 54140023 Gross Profit 742438.5 1071475. 5 2530657 1672412. 5 230248 8 5098856. 5 5262178. 5 748852 5 14900127 Total Expenses 834500 834500 834500 1544000 1544000 1544000 1984000 1984000 1984000 EBIT -92061.5 236975. 5 1696157 128412.5 758488 3554856. 5 3278178.5 550452 5 12916127 Profit -92061.5 189580.4 1356925. 6 102730 606790. 4 2843885. 2 2622542. 8 440362 0 10332901. 6 ROI -11.88% 37.92% 271.39% 13.26% 121.36% 568.78% 338.39% 880.72% 2066.58%