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Identifying growth platforms

This document provides a detailed case study on the Sci Fi Channel, focusing on its brand-driven innovation process aimed at identifying growth platforms. It discusses the channel's background, strategic opportunities for brand extension, target audience segmentation, and potential business concepts for enhancing the brand experience. The study emphasizes the need for a redefinition of the target consumer base to adapt to changing entertainment consumption trends and identifies various innovative product and service ideas to expand the Sci Fi brand beyond traditional television.

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PROPRIETARY AND CONFIDENTIAL Identifying growth platforms through a brand-driven innovation process A case study on the Sci Fi channel Michael Million mmillion@fullsurge.com University of Chicago Graduate School of Business Innovation Roundtable
SUBSECTION TITLE 2University of Chicago GSB Innovation Roundtable Sci Fi Channel – Background •  A 14 year-old, niche cable channel offering both syndicated and original shows •  Parent company: GE / NBC Universal •  Ranked #7 basic cable channel, after USA, TNT, TBS, FX, SPIKE, and LIFE •  Revenues: $435 million (primarily from licensing and advertising fees) •  Operating profits: 34%; Ratings growth: 8% •  Fully distributed in 88M U.S. homes, with operations in Europe •  SciFi.com ranked #1 Sci-fi website •  Core audience: Older males, average age: 42
SUBSECTION TITLE 3University of Chicago GSB Innovation Roundtable Sci Fi Channel – Background Strides to change perceptions were being made (more contemporary shows / branding) Although there were stereotypes of the Sci-fi genre …. Freaks, geeks, and pocket protectors … Opportunities to become a “category killer” existed Space, aliens, dark / apocalyptical, Star Trek Sci-fi genre includes the top grossing movies Others successfully grew beyond TV platform
SUBSECTION TITLE 4University of Chicago GSB Innovation Roundtable The Project Business Strategy & Innovation •  Assess strategic business opportunities •  Formulate business cases for extending the Sci Fi brand through various concepts •  Identify new, innovative products and services the Sci Fi brand could offer •  Help prepare for S1M discussions (strategic planning process) Brand Strategy •  Understand the sci-fi / fantasy genre from the consumer perspective •  Explore the potential extendibility of the Sci Fi brand beyond its core television platform •  Refine the brand strategy to allow for significant business growth with a target audiences Objective: Identify growth platforms by re-imagining the entire business and brand in ways that significantly increase opportunities for expansion
SUBSECTION TITLE 5University of Chicago GSB Innovation Roundtable Approach Art Science External Internal Size New Businesses Redefine the Sci Fi Brand Define Target Segments New Media Consumer Electronics Travel & Leisure Retail Explore New Offers Growth Platforms
SUBSECTION TITLE 6University of Chicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
SUBSECTION TITLE 7University of Chicago GSB Innovation Roundtable Sci Fi Segments InvolvementNone High Religion Realists 16% Escapists 16% •  41 •  Female •  $50K •  Married / Kids •  Low College •  Heavy TV •  Heavy Readers •  Love Fantasy •  40 - 50 •  Mothers •  Married •  Southern •  Moderate TV •  Light Internet •  Conservative •  Love God & Family •  31 •  Male/Female •  $45K •  Single •  Ethnic. Diverse •  Heavy TV •  Heavy Gamers •  Love Thrills Screamers 19% •  27 •  Male •  <$40K •  Single •  Ethnic. Diverse •  Heavy TV •  Heavy Movies •  Love Being Scared TV Snobs 17% •  40 •  Male/Female •  $45K •  Married •  Caucasian •  Light TV •  Readers •  Love Learning Young Marvels 16% SciPhiles 16% •  42 •  Male •  $55K •  Married •  College •  Light TV •  Heavy Internet •  Love science
SUBSECTION TITLE 8University of Chicago GSB Innovation Roundtable Addressing shortfalls with the Sci Fi segments •  Segmentation based primarily on TV watching behaviors – tomorrow's segments will have to be based on broader entertainment consumption •  There was limited future potential with how targets were defined (we did not know enough about them outside of the TV / sci-fi categories) •  High potential groups (children) were not included in the segmentation Address the shortfall •  We developed a hypothetical consumer framework more useful and actionable for future offer development •  We validated and refined those hypothetical consumer groups with inputs from the qualitative research
SUBSECTION TITLE 9University of Chicago GSB Innovation Roundtable Tomorrow’s target will: •  Look very different than today’s core viewing audience •  Skew considerably younger •  Move toward more of a gender balance, but might slightly skew male •  Consume more forms of entertainment (including digital) vs. traditional TV •  Have higher incomes and more sophisticated tastes
SUBSECTION TITLE 10University of Chicago GSB Innovation Roundtable Target Audiences Adults Children Young adults w/ no kids (18 – 30) Families w/ children 4 – 12 Tweens (8 - 12 ) Young Kids (4 – 8) All large groups with significant purchasing power and/or influence ~  35M (people) ~  $750B (total spend) ~  35M (HH) ~  $1,650B (HH expenditures) ~  15M (people) ~  $85B (total spend) ~  20M (people) ~  $105B (total spend on kids) § Significant purchasing power § Extremely tech savvy § Hungry for exploration, self expression, sharing of information and new experiences § Many interested in sci-fi related genres § Increasingly influenced by children § Increasingly difficult to target as interests within family fragment § Significant influence on parents / family § Establishes a pipeline for future offers § Less likely to have limiting associations of “sci-fi” § Increasing buying power § Extremely tech savvy § Media-centric – they spend 6.5 hours/day online and/or watching TV § Offers developed could be leveraged into young adults § Has an affinity for the unknown / sci-fi § Tech savvy § Heavy TV watchers § Heavy readers § Impressionable
SUBSECTION TITLE 11University of Chicago GSB Innovation Roundtable An iterative process to redefine the brand and determine the best concepts to consider •  Development of multiple offer ideas from different sources •  From: TV-centric •  To: a broader definition to direct future concept development •  Combining multiple ideas into bigger , broader, more digestible concepts •  Packaging ideas to generate excitement and elicit internal feedback •  Overall Appeal •  Differentiation •  Brand Extendibility Idea Generation Brand Redefinition Concept Development Evaluation & Prioritization Diverge Converge
SUBSECTION TITLE 12University of Chicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
SUBSECTION TITLE 13University of Chicago GSB Innovation Roundtable Idea Generation Participants Internal •  Sci Fi •  NBC Universal •  Prophet •  Agencies partners Creative Consumers Pulled from panels consisting of creative thinkers Genre Enthusiasts Self identified enthusiasts of the Sci-fi genres Methodology •  Management Interviews •  Channel Retreat - over 50 internal participants •  Full group discussions and break-outs •  3 - 4 sessions •  Each group to focus on distinct topics to provide breadth of ideas •  Warm-up – getting participants in the right frame of mind (“all things sci-fi”) •  Multiple techniques used •  Several short-burst discussions Facilitators •  Professional facilitator specializing in creative thinking, innovation, and new product development •  Trained to strike appropriate balance between “blue sky” ideation, and idea generation that is more pragmatic Hundreds of Ideas & Brand Insights
SUBSECTION TITLE 14University of Chicago GSB Innovation Roundtable Brand Definition & Concept Development Brand Themes and Filters / Criteria 1.  Be entertaining and fun 2.  Be thought-provoking 3.  Be mysterious / a little quirky 4.  Be significant Hundreds of Ideas & Brand Insights Business Concepts
SUBSECTION TITLE 15University of Chicago GSB Innovation Roundtable Brand Theme: “Transform” Transform From - To Moment-in- time Another Realm Role Playing New Experiences Escape
SUBSECTION TITLE 16University of Chicago GSB Innovation Roundtable “Transform” Business Concepts University of Chicago, GSB Innovation Roundtable Slide 16 •  Brand a large plot of land, or self contained property •  Stage fantasies for 6-8 people who share similar fantasies •  Transport consumers to a different time, place, under an assumed role •  Sell take-home products, subscriptions to an online community Fantasy Destinations •  A room within houses that enables transformation to a different time or place •  “Dynamic media wall” •  Additional accessories (e.g., music, objects, furniture) to enhance the transformation •  Revenues from user fees and media fees Changing Room Interactive Role Play •  Sci Fi MMORP, based on new sci-fi themes and existing programs •  Participants subscribe to game and purchase characters and tools to advance to higher levels •  Tie-into actual Sci Fi TV content, with winners determining the fate of characters, outcomes
SUBSECTION TITLE 17University of Chicago GSB Innovation Roundtable Brand Theme: “Explore” Explore The Journey Uncover Unknown Discovery Soul Search Mysterious
SUBSECTION TITLE 18University of Chicago GSB Innovation Roundtable “Explore” Business Concepts •  A kiosk that uses virtual reality technology to provide users with an exploration of the unknown •  Themes to include “time travel” to numerous different combinations of location and time (e.g., space, the human mind, etc.) •  Kiosks could be freestanding or reside in a mall •  An overnight train ride that stages an exploration of themes relating to sci fi •  The staff, always in character, interact with passengers to facilitates exploration •  Periodic stops along the journey brings the exploration to life •  Children and adult versions Fantasy Train Virtual Reality Pods
SUBSECTION TITLE 19University of Chicago GSB Innovation Roundtable Brand Theme: “Create” Create Self-express Enabled Play Personal Connect Community Experiment
SUBSECTION TITLE 20University of Chicago GSB Innovation Roundtable “Create” Business Concepts •  Sci Fi stages themed social events; includes creating party entertainment kits •  Event planning that taps into social trend of kid-designed, creative entertainment •  Themes to include space travel, extreme adventure, special effects, alien abduction, etc. •  Web-based, user-generated story creation contest, using tools from Sci Fi including video clips, characters, sample scripts •  Consumers form virtual teams and create a “finished product” •  The winning team has story produced by Sci Fi into multiple media forms Networked Story-building Staged Events
SUBSECTION TITLE 21University of Chicago GSB Innovation Roundtable Qualitative research to gain insights on the Sci Fi brand and business concepts •  8 Total Groups (2 hour sessions) •  3 U.S. Cities •  3 types of participant make-ups, 8 participants each •  Trend-setting young adults w/ no kids (4 groups) •  Progressive adults with kids 4 – 8 (2 groups) •  Social Tweens 11 - 13 (2 groups) •  Key Topic Areas •  Attitudes, perceptions and behaviors relative to entertainment and sci-fi genres •  Reactions to business ideas (favorable or not, why, improvement modifications) •  Perceptions of Sci Fi brand (equity / extendibility relative to business ideas) •  Reactions to brand positioning platforms / identities •  Refinement of ideas (to increase their value, differentiation, and credibility to Sci Fi)
SUBSECTION TITLE 22University of Chicago GSB Innovation Roundtable Evaluation: Appeal and differentiation were based on three things + •  Fantasy Destinations “If Sci Fi did an amusement park” •  Immersion Pods “It would have to be close to home video games now – high definition” + •  Fantasy Destinations “You can role play..you can create…it’s a fun family thing” •  Mind Bar •  Role Play Game •  Creativity Game + •  Changing Room “I can put anything I want on it - even Johnny Depp” •  Role Play Game •  Fantasy Destinations - •  Virtual Reality Gear “Earlier versions were crappy” •  HH of the Future “A little out of reach; too futuristic” - •  Immersion Pods “So isolating…it’d be more fun if there were others to interact with” - •  HH of the Future “It loses the appeal of home – there is no comfort, no warmth” Believability Interactivity Customizable
SUBSECTION TITLE 23University of Chicago GSB Innovation Roundtable Evaluation: Credibility came primarily from digital gaming and experiences Digital Games Home ProductsEntertainment/Experiences Networked Story Building (UGC) Creativity Game (Education) Mind Bar (Restaurant) Fantasy Experiences (Leisure/Travel) Changeable Living Spaces (Furnishings) Immersion Pods (Virtual Reality) Interactive Role Play Game (MMORPG) Household of Tomorrow (Appliances/Design) Bou-tech (Retail)
SUBSECTION TITLE 24University of Chicago GSB Innovation Roundtable Based on the insights, we refined what the brand should stand for in the future Fueling the Imagination From To For those with curious minds and a love for entertainment, Sci Fi is the lifestyle brand that allows consumers to escape to new realms through continuous transformative experiences Transformative Escapes OptimisticMind-blowing Immersive Wonderfully Eccentric The Sci Fi Experience The Sci Fi Personality Human Stimulating High-Quality Risk-taking Smart Relatable Inviting TV-Centric Experiential (at home, on-the-go, destinations)
SUBSECTION TITLE 25University of Chicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
SUBSECTION TITLE 26University of Chicago GSB Innovation Roundtable Category Distillation 1.  Aerospace & Defense 2.  Agriculture 3.  Auto. & Transport 4.  Banking 5.  Beverages 6.  Business Services 7.  Charitable Orgs. 8.  Chemicals 9.  Computer Hardware 10. Computer Services 11. Computer Software 12. Construction 13. Consumer Products 14. Consumer Services 15. Cultural Institutions 16. Education 17. Electronics 18. Energy & Utilities 19. Envt. Svcs, & Equip. 20. Financial Services 21.Food 22.Foundations 23.Government 24. Health Care 25. Industrial Mfct. 26. Insurance 27. Leisure 28. Media 29. Membership Orgs. 30. Metals & Mining 31. Pharmaceuticals 32. Real Estate 33. Retail 34. Security Pdcts & Svcs. 35. Telecom. Equipment 36. Telecom. Services 37. Transportation Svcs. Started with 37 SIC codes Media Consumer Products Leisure Ended with 3 Categories B2C Entertainment or Educational Lifestyle Oriented Sci Fi Screens
SUBSECTION TITLE 27University of Chicago GSB Innovation Roundtable Related Industries – Opportunity Landscape •  Conventions Accessories •  Mobile •  merchandise Gaming Hardware •  Consoles, devices, PCs •  Gaming gear Home Appliances •  Sci Fi inspired smart appliances Ready to Assemble •  Changeable Living Spaces HH of tomorrow Architectural Lighting •  Illuminated wallpaper Lighting units •  Line of floor, desk & wall lights Technology enabled apparel & jewelry •  Multi-function wearable device •  Bou-tech Multiple IPTV channels Service Provider Content Extensions •  ringtones & Ring backs •  Wallpaper •  Text Alerts Hotels & Resorts •  Fantasy Destinations Amusement Parks / •  Fantasy Destinations •  Arcades / FECs Gaming Software •  Video Games, Online Games, Mobile Games, Computer games •  Interactive Role Play Game •  Creativity Game Home Storage, Org. Products, & accessories Audio Video Equipment •  Media Wall •  Immersion pods Internet / Digital Music Distribution & Downloads Cable TV Broadcast TV Production & Distribution Motion Picture Production & Distribution (long format) Travel Services •  Staged events Leisure MusicMedia Consumer Products (non-retailing) Commemorative Products Television Film & Video Book Publishing Periodicals •  Online story- building Trading Cards & Comic Books Digital Content Distribution Online story-buildingPublishing Consumer Electronics Toys & Games House wares Home Furniture Lighting Appliances Apparel & Jewelry Lodging Entertainment Specialty Eateries •  Mind Bar Restaurant & Cafes Training Services (support) Mobile 8 7 6 5 4 3 2 1 3 Categories 18 Industries, 8 high priority 36 sub-industries, 13 high priority (darker backgrounds) Concept bundles from bottom-up exploration # Abcd Opportunity Landscape
SUBSECTION TITLE 28University of Chicago GSB Innovation Roundtable Industries were profiled across key dimensions Entertainment - Theme Park (Experience/Ride) Restaurant (Themed Full Service ) Lodging (Mid-Level Hotel) Entertainment – Conventions Entertainment – Arcades / FECs Economics §  $11.3B market §  3% CAGR §  20-30% op. margin §  Avg. $67 for one day ticket / $115 for multi-park §  $510 (total), $174B (themed restaurants) §  6-7% CAGR §  10-20% op. margin §  Avg. HH spend / year: $2,434 §  $121B (total), $42M (mid- level) §  5% CAGR §  35-35% op. margin §  Avg. spend for leisure: $85 - 90 / night §  $10.8B market §  5% CAGR §  Low op. margins §  $1.4B market §  (2-3%) CAGR §  10% avg.op. mgns. §  Wide range of op. margins fr. 0 – 17%) Market Outlook & Trends §  Mature, saturated market w/ low growth and limited revenue opportunity §  High OPEX required, as an operator §  Industry in transition Revenue drivers: §  Admission fees (55% of revenue), then food, games, and merchandise Trends §  Increasingly sophisticated (and costly) rides – more immersive, interactive •  Mature, saturated market w/ low growth and limited revenue opportunity •  Difficult business to sustain growth (23% restaurants fail by year one, 60% by year three) Revenue drivers •  Traffic, revenue per table, high margin items (i.e., dessert, liquor) Trends §  Migration from price to experience (“eater-tainment”) §  Less expansion, more remodeling / re-invention §  Mature market w/ low growth §  Higher rev. generation opportunity §  High OPEX required, as an operator Revenue drivers: §  Occupancy and room rates, other services (food, spa) Trends §  From function to experience §  Many competitors reinventing offers with design, ingredient brands (Heavenly, Bliss) §  Slowly growing market with low op. margins §  Coordination intensive Revenue drivers: §  Qty. of shows / fees, growth in segment Trends §  Increased role of conventions as promotional tools §  Small, declining market w/ stagnant prices §  Severe competition from substitutes (in-home & mobile video games) Revenue drivers: §  Games, admission fees, repeat attend. Trends §  Decreased availability of new games §  Neg. public image Competition §  Top five operators account for most indust. revenues) Critical Success Factors: §  Location (near large tourist destinations) §  Continuous innovation §  Ability to bundle services §  Access to capital §  Brand reputation Major players: §  Disney: 48%, $5.4B §  Universal: 10%, $1.1B §  Six Flags 10%, $1.1B §  Anheuser-Busch 10%, $1.1B §  Highly fragmented, regional, multiple entrants and exits Critical Success Factors: §  Differentiated offering §  Location §  Access to capital §  Op. & HR management §  Recognized brand Major players: §  McDonalds: 1.4%, $7B §  YUM!: 1.2%, $5.9B §  Darden: 1.2, $5.7B §  Wendy’s: 0.5%, $2.4B §  Landrys 0.3%, 1.2B §  Somewhat fragmented Critical Success: §  Advantage comes §  Differentiated offering §  Location §  Access to capital §  Op. management §  Strong brand portfolio §  Loyalty programs Major players (%- rooms): §  Cendant: 9.9%, $3,.3B §  Marriott: 8.7%, $11.5B §  Hilton: 8.1%, $4.4B §  Starwood: $5.9B §  Highly fragm., few large operators assoc. w/ major centers §  Low entry barrier §  Accounts for 1/3 of hotel revs. Critical Success: §  Strong planning / coordination §  Alliances §  Word of mouth Major players: §  The Freeman Co.: 9.3%, 1B §  Fragmented: largest eight account for <30% of revs. §  High fixed cost and capital expenditures Critical Success: §  Location §  New games §  Control on op. exp. Major players: §  D&B: 25%, $0.4B §  Chuck E. Ch.: $0.7B §  Game Works: 4%, $60M
SUBSECTION TITLE 29University of Chicago GSB Innovation Roundtable Each industry was scored to determine attractiveness Entertainment / Other Restaurants Lodging (Hotels) Amusement Parks Conventions Arcades / FECs Financial Objectives (revenue & profit potential) § Moderate size ($11.3B) § Slow growth (3%) § Healthy op. margins (15%) § High fixed costs § Moderate size ($10.8B) § Slow growth (5%) § Low op. margins § Small market ($1.4B) § Declining (-2-3%) § High failure rate § High fixed costs § Large market ($510B) § Slow growth (6-7%) § High failure rate (60%) § Limited rev. potential § Large market ($121B) § Slow growth (5%) § High op. margins § High OPEX Business Strategy (alignment w/ strategy) § Limited potential to broaden viewer ship but high potential to monetize brand § Will diversify business well § Very synergistic w/ other offers and Universal § Limited potential to broaden viewer ship or monetize brand, but relatively easy to enter § Not as diverse as others, more for mktg. than rev. § Limited potential to broaden viewer ship or monetize brand § Could diversify bus. & increase exposure, only if large scale § Limited potential to broaden viewer ship § High potential to monetize brand § Will diversify business § Somewhat synergistic § Limited potential to broaden viewer ship § High potential to monetize brand § Will diversify business § Somewhat synergistic Brand Strategy (reinforces future aspirations) § Very good oppty. to be “transformative” / immersive / fun / unique § Good oppty. to change limiting perceptions of Sci Fi § Natural fit wit the brand § Limited potential to be “transformative” / immersive § Risk of perpetuating current brand image § Won’t help change percpetions § If executed well, can be “transformative” / differentiating § Neg. perceptions of industry could reflect poorly on brand § If well executed, can be “transformative” / diff. § Oppty. to change limiting perceptions of Sci Fi § Food elements could diminish “escape” § If well executed, can be “transformative” / diff/ § Oppty. to change limiting perceptions of Sci Fi § Current perceptions might limit trial Target Segments (fit with target segments) § Very good fit with target’s preferences & behaviors (avg. age: 25 – 44, esp. families) § Captive audience (avg. stay is 5.3 nights) § Increasing interest by adults (1/2 of those visiting Disney World) , rejuvenile phenom. § Good fit with target (families, tweens), but limited exposure to mass audience § Conventions for sc-fi related content is growing in popularity § Trends moving away from entertainment ctrs. and more toward themed restaurants (eater- tainment) and in-home / mobile games § Possible oppty. with tweens, but untested § Very good fit with target’s preferences & behaviors § Increasing spend and traffic of families § Increas. popularity of themed eater-tainment restaurants w/ families § Good fit with consumer trends (blend of uses – lifestyle oriented) § Those who choose a destination based on a TV / Movie more likely to be younger, higher income, college educated, w/ children Overall Attractiveness
SUBSECTION TITLE 30University of Chicago GSB Innovation Roundtable We then developed financial models for each industry Aggressive Scenario INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPEARTING DATA FIXED ASSET DATA Total Investment Moderate Scenario INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPEARTING DATA FIXED ASSET DATA Total Investment 1 Established appropriate line item details for a 5-year pro forma Conservative Scenario Year 1 Year 2 Year 3 Year … INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPERATING DATA FIXED ASSET DATA Total Investment 2 Determined scenarios to model conservative to aggressive projections 3 Made educated assumptions for key financial inputs based on secondary industry data from analogous companies and offers
SUBSECTION TITLE 31University of Chicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
SUBSECTION TITLE 32University of Chicago GSB Innovation Roundtable Six platforms to grow the business Non-Media Related ($15MM: License: $12MM, Memberships: $3MM) Online gamin ($5MM) Mobile ($5MM) Programming for Youth Market ($15MM Ads) Home – Sci Fi Surround ($20MM) Low-hanging Fruit – Extensions ($30MM) Media Related ($15MM: $6MM License, $9MM Content) Custom Devices ($20MM license)Media / Gaming Content ($10MM) Mobile – Sci Fi Jolt ($30MM) International Extensions ($40MM) Low-hanging Fruit ($30MM) Gaming – Sci Fi Blast ($85MM) Video Games ($10MM Licensing) Online Games ($60MM) (Content: $50MM; Ads: $10MM) Destination Games ($15MM Licensing) Household Products ($10MM Licensing) Multi-media Home Theater ($10MM Licensing) Children Adults 1 6 3 2 5 4
SUBSECTION TITLE 33University of Chicago GSB Innovation Roundtable The expected revenue growth from these opportunities is $220 MM over the next 5 years Sci Fi Channel (20XX) Low-hanging Fruit Gaming (Sci Fi Blast) Home (Sci Fi Surround) Total 20XX $0 $500 $750 $436MM $720 MM $MillioninRevenues Mobile (Sci Fi Jolt) InternationalSci Fi Channel Incremental (20XX-20XX) $64MM $250 $30MM $40MM Video & Destination ($25MM) Online ($60MM ) HH Products ($10MM) Multi-media home theater ($10MM) Devices ($20MM) Content ($10MM) Youth market programming $15MM § DVDs § New Broadband Channel § Digi-sodes § Print Publishing § Mobile extensions § Toys & games § Accessories § Consumer electronics § Logo-wear apparel § Conventions § Clubs
SUBSECTION TITLE 34University of Chicago GSB Innovation Roundtable Developments driven by our recommendations Gaming •  Compiled list of 40 potential acquisition/partnership target based on following criteria: 1.  Specializes in games that appeal to SCI FI audience 2.  Develops games across platforms 3.  Is of a manageable size allowing for rapid acquisition 4.  Has track record of releasing successful games 5.  Has operations in close proximity, with similar culture 6.  Has publishing experience/capabilities Low-hanging Fruit Extensions •  New Broadband channels: •  Exploring creation of “Sci Fi classics” broadband channel utilizing public domain genre programming •  SCI FI Anime – early stage exploring acquiring or partnering with existing library companies •  Print Publishing: •  Structuring deal with Hollywood Entertainment (book packager) for novelizations of SCI FI Pictures movies •  SCI FI mobile storefront being developed through NBCU Digital team (content to include ringtones, wallpapers, games - launching X) •  “Digi-sodes” – Establishing a MGM/Stargate deal for iTunes/Amazon International Extensions •  Soon to launch in Scandinavia, Australia •  Developing Asia, Latin America •  Structuring a global brand management infrastructure Programming for the Youth Market •  Kids •  Exploring Joint Venture with BKN to create a Sci Fi branded Saturday morning on-air programming block and corresponding broadband portal - to include ad sales (on-air, online), DVD & licensing/ merchandising •  Youth/Young Adults •  Negotiating Joint Venture with Virgin Comics - initial scope to co-develop/own 5 properties to be executed as comic books, then owned asset to develop TV, film merchandise efforts.
SUBSECTION TITLE 35University of Chicago GSB Innovation Roundtable In Conclusion •  Brands are very important to consider when innovating - they can either be a source of inspiration or limiting factor of inflated ego •  Brands are typically more or less credible in entering new businesses / offerings than companies think they are •  Rarely do companies know exactly how far their brand can / should stretch as they innovate for white space opportunities •  Flexibility around process is also important •  A iterative art / science and top-down / bottom-up approach can garner the best results, but an overly structured approach could limit uncovering the best insights
SUBSECTION TITLE 36University of Chicago GSB Innovation Roundtable Michael Million Bio & Contact Information Michael is a partner at FullSurge, a management consultancy focused on driving growth through brand, marketing and innovation strategies. He has over 20 years experience advising companies on customer, brand, and go-to-market strategies, as well as the communication and design systems driven by those strategies. Michael’s ability to solve a broad set of underlying business challenges comes from his extensive knowledge of insight methodologies, conceptual and strategic skills, and ability to clarify the complicated. Prior to FullSurge, he was a partner at VSA, where he built the agency’s strategy practice to address broader business issues of its clients. Prior to VSA, Michael held senior level positions at top tier brand consultancies including Prophet and Landor Associates. Throughout his career, Michael has successfully led large engagements for a wide variety of Fortune 500 clients including GE, IBM, DuPont, Boeing, CDW, Cargill, Textron, KeyCorp, Kohler, and United Airlines, as well as mid-sized companies such as the College of American Pathologists, Sea Ray Boats, the Syfy Channel, and the Blue Bird Bus Company. Michael has guest lectured on branding and strategy at the Kellogg Graduate School of Management at Northwestern University and Haas Business School at University of California, Berkeley. He has facilitated workshops for the American Management Association, was a panel member for high- ranking business schools, and has frequently spoken at Board Meetings for his clients. mmillion@fullsurge.com 312-957-5801 312-498-1515 C

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Identifying growth platforms

  • 1.
    PROPRIETARY AND CONFIDENTIAL Identifyinggrowth platforms through a brand-driven innovation process A case study on the Sci Fi channel Michael Million mmillion@fullsurge.com University of Chicago Graduate School of Business Innovation Roundtable
  • 2.
    SUBSECTION TITLE 2University ofChicago GSB Innovation Roundtable Sci Fi Channel – Background •  A 14 year-old, niche cable channel offering both syndicated and original shows •  Parent company: GE / NBC Universal •  Ranked #7 basic cable channel, after USA, TNT, TBS, FX, SPIKE, and LIFE •  Revenues: $435 million (primarily from licensing and advertising fees) •  Operating profits: 34%; Ratings growth: 8% •  Fully distributed in 88M U.S. homes, with operations in Europe •  SciFi.com ranked #1 Sci-fi website •  Core audience: Older males, average age: 42
  • 3.
    SUBSECTION TITLE 3University ofChicago GSB Innovation Roundtable Sci Fi Channel – Background Strides to change perceptions were being made (more contemporary shows / branding) Although there were stereotypes of the Sci-fi genre …. Freaks, geeks, and pocket protectors … Opportunities to become a “category killer” existed Space, aliens, dark / apocalyptical, Star Trek Sci-fi genre includes the top grossing movies Others successfully grew beyond TV platform
  • 4.
    SUBSECTION TITLE 4University ofChicago GSB Innovation Roundtable The Project Business Strategy & Innovation •  Assess strategic business opportunities •  Formulate business cases for extending the Sci Fi brand through various concepts •  Identify new, innovative products and services the Sci Fi brand could offer •  Help prepare for S1M discussions (strategic planning process) Brand Strategy •  Understand the sci-fi / fantasy genre from the consumer perspective •  Explore the potential extendibility of the Sci Fi brand beyond its core television platform •  Refine the brand strategy to allow for significant business growth with a target audiences Objective: Identify growth platforms by re-imagining the entire business and brand in ways that significantly increase opportunities for expansion
  • 5.
    SUBSECTION TITLE 5University ofChicago GSB Innovation Roundtable Approach Art Science External Internal Size New Businesses Redefine the Sci Fi Brand Define Target Segments New Media Consumer Electronics Travel & Leisure Retail Explore New Offers Growth Platforms
  • 6.
    SUBSECTION TITLE 6University ofChicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
  • 7.
    SUBSECTION TITLE 7University ofChicago GSB Innovation Roundtable Sci Fi Segments InvolvementNone High Religion Realists 16% Escapists 16% •  41 •  Female •  $50K •  Married / Kids •  Low College •  Heavy TV •  Heavy Readers •  Love Fantasy •  40 - 50 •  Mothers •  Married •  Southern •  Moderate TV •  Light Internet •  Conservative •  Love God & Family •  31 •  Male/Female •  $45K •  Single •  Ethnic. Diverse •  Heavy TV •  Heavy Gamers •  Love Thrills Screamers 19% •  27 •  Male •  <$40K •  Single •  Ethnic. Diverse •  Heavy TV •  Heavy Movies •  Love Being Scared TV Snobs 17% •  40 •  Male/Female •  $45K •  Married •  Caucasian •  Light TV •  Readers •  Love Learning Young Marvels 16% SciPhiles 16% •  42 •  Male •  $55K •  Married •  College •  Light TV •  Heavy Internet •  Love science
  • 8.
    SUBSECTION TITLE 8University ofChicago GSB Innovation Roundtable Addressing shortfalls with the Sci Fi segments •  Segmentation based primarily on TV watching behaviors – tomorrow's segments will have to be based on broader entertainment consumption •  There was limited future potential with how targets were defined (we did not know enough about them outside of the TV / sci-fi categories) •  High potential groups (children) were not included in the segmentation Address the shortfall •  We developed a hypothetical consumer framework more useful and actionable for future offer development •  We validated and refined those hypothetical consumer groups with inputs from the qualitative research
  • 9.
    SUBSECTION TITLE 9University ofChicago GSB Innovation Roundtable Tomorrow’s target will: •  Look very different than today’s core viewing audience •  Skew considerably younger •  Move toward more of a gender balance, but might slightly skew male •  Consume more forms of entertainment (including digital) vs. traditional TV •  Have higher incomes and more sophisticated tastes
  • 10.
    SUBSECTION TITLE 10University ofChicago GSB Innovation Roundtable Target Audiences Adults Children Young adults w/ no kids (18 – 30) Families w/ children 4 – 12 Tweens (8 - 12 ) Young Kids (4 – 8) All large groups with significant purchasing power and/or influence ~  35M (people) ~  $750B (total spend) ~  35M (HH) ~  $1,650B (HH expenditures) ~  15M (people) ~  $85B (total spend) ~  20M (people) ~  $105B (total spend on kids) § Significant purchasing power § Extremely tech savvy § Hungry for exploration, self expression, sharing of information and new experiences § Many interested in sci-fi related genres § Increasingly influenced by children § Increasingly difficult to target as interests within family fragment § Significant influence on parents / family § Establishes a pipeline for future offers § Less likely to have limiting associations of “sci-fi” § Increasing buying power § Extremely tech savvy § Media-centric – they spend 6.5 hours/day online and/or watching TV § Offers developed could be leveraged into young adults § Has an affinity for the unknown / sci-fi § Tech savvy § Heavy TV watchers § Heavy readers § Impressionable
  • 11.
    SUBSECTION TITLE 11University ofChicago GSB Innovation Roundtable An iterative process to redefine the brand and determine the best concepts to consider •  Development of multiple offer ideas from different sources •  From: TV-centric •  To: a broader definition to direct future concept development •  Combining multiple ideas into bigger , broader, more digestible concepts •  Packaging ideas to generate excitement and elicit internal feedback •  Overall Appeal •  Differentiation •  Brand Extendibility Idea Generation Brand Redefinition Concept Development Evaluation & Prioritization Diverge Converge
  • 12.
    SUBSECTION TITLE 12University ofChicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
  • 13.
    SUBSECTION TITLE 13University ofChicago GSB Innovation Roundtable Idea Generation Participants Internal •  Sci Fi •  NBC Universal •  Prophet •  Agencies partners Creative Consumers Pulled from panels consisting of creative thinkers Genre Enthusiasts Self identified enthusiasts of the Sci-fi genres Methodology •  Management Interviews •  Channel Retreat - over 50 internal participants •  Full group discussions and break-outs •  3 - 4 sessions •  Each group to focus on distinct topics to provide breadth of ideas •  Warm-up – getting participants in the right frame of mind (“all things sci-fi”) •  Multiple techniques used •  Several short-burst discussions Facilitators •  Professional facilitator specializing in creative thinking, innovation, and new product development •  Trained to strike appropriate balance between “blue sky” ideation, and idea generation that is more pragmatic Hundreds of Ideas & Brand Insights
  • 14.
    SUBSECTION TITLE 14University ofChicago GSB Innovation Roundtable Brand Definition & Concept Development Brand Themes and Filters / Criteria 1.  Be entertaining and fun 2.  Be thought-provoking 3.  Be mysterious / a little quirky 4.  Be significant Hundreds of Ideas & Brand Insights Business Concepts
  • 15.
    SUBSECTION TITLE 15University ofChicago GSB Innovation Roundtable Brand Theme: “Transform” Transform From - To Moment-in- time Another Realm Role Playing New Experiences Escape
  • 16.
    SUBSECTION TITLE 16University ofChicago GSB Innovation Roundtable “Transform” Business Concepts University of Chicago, GSB Innovation Roundtable Slide 16 •  Brand a large plot of land, or self contained property •  Stage fantasies for 6-8 people who share similar fantasies •  Transport consumers to a different time, place, under an assumed role •  Sell take-home products, subscriptions to an online community Fantasy Destinations •  A room within houses that enables transformation to a different time or place •  “Dynamic media wall” •  Additional accessories (e.g., music, objects, furniture) to enhance the transformation •  Revenues from user fees and media fees Changing Room Interactive Role Play •  Sci Fi MMORP, based on new sci-fi themes and existing programs •  Participants subscribe to game and purchase characters and tools to advance to higher levels •  Tie-into actual Sci Fi TV content, with winners determining the fate of characters, outcomes
  • 17.
    SUBSECTION TITLE 17University ofChicago GSB Innovation Roundtable Brand Theme: “Explore” Explore The Journey Uncover Unknown Discovery Soul Search Mysterious
  • 18.
    SUBSECTION TITLE 18University ofChicago GSB Innovation Roundtable “Explore” Business Concepts •  A kiosk that uses virtual reality technology to provide users with an exploration of the unknown •  Themes to include “time travel” to numerous different combinations of location and time (e.g., space, the human mind, etc.) •  Kiosks could be freestanding or reside in a mall •  An overnight train ride that stages an exploration of themes relating to sci fi •  The staff, always in character, interact with passengers to facilitates exploration •  Periodic stops along the journey brings the exploration to life •  Children and adult versions Fantasy Train Virtual Reality Pods
  • 19.
    SUBSECTION TITLE 19University ofChicago GSB Innovation Roundtable Brand Theme: “Create” Create Self-express Enabled Play Personal Connect Community Experiment
  • 20.
    SUBSECTION TITLE 20University ofChicago GSB Innovation Roundtable “Create” Business Concepts •  Sci Fi stages themed social events; includes creating party entertainment kits •  Event planning that taps into social trend of kid-designed, creative entertainment •  Themes to include space travel, extreme adventure, special effects, alien abduction, etc. •  Web-based, user-generated story creation contest, using tools from Sci Fi including video clips, characters, sample scripts •  Consumers form virtual teams and create a “finished product” •  The winning team has story produced by Sci Fi into multiple media forms Networked Story-building Staged Events
  • 21.
    SUBSECTION TITLE 21University ofChicago GSB Innovation Roundtable Qualitative research to gain insights on the Sci Fi brand and business concepts •  8 Total Groups (2 hour sessions) •  3 U.S. Cities •  3 types of participant make-ups, 8 participants each •  Trend-setting young adults w/ no kids (4 groups) •  Progressive adults with kids 4 – 8 (2 groups) •  Social Tweens 11 - 13 (2 groups) •  Key Topic Areas •  Attitudes, perceptions and behaviors relative to entertainment and sci-fi genres •  Reactions to business ideas (favorable or not, why, improvement modifications) •  Perceptions of Sci Fi brand (equity / extendibility relative to business ideas) •  Reactions to brand positioning platforms / identities •  Refinement of ideas (to increase their value, differentiation, and credibility to Sci Fi)
  • 22.
    SUBSECTION TITLE 22University ofChicago GSB Innovation Roundtable Evaluation: Appeal and differentiation were based on three things + •  Fantasy Destinations “If Sci Fi did an amusement park” •  Immersion Pods “It would have to be close to home video games now – high definition” + •  Fantasy Destinations “You can role play..you can create…it’s a fun family thing” •  Mind Bar •  Role Play Game •  Creativity Game + •  Changing Room “I can put anything I want on it - even Johnny Depp” •  Role Play Game •  Fantasy Destinations - •  Virtual Reality Gear “Earlier versions were crappy” •  HH of the Future “A little out of reach; too futuristic” - •  Immersion Pods “So isolating…it’d be more fun if there were others to interact with” - •  HH of the Future “It loses the appeal of home – there is no comfort, no warmth” Believability Interactivity Customizable
  • 23.
    SUBSECTION TITLE 23University ofChicago GSB Innovation Roundtable Evaluation: Credibility came primarily from digital gaming and experiences Digital Games Home ProductsEntertainment/Experiences Networked Story Building (UGC) Creativity Game (Education) Mind Bar (Restaurant) Fantasy Experiences (Leisure/Travel) Changeable Living Spaces (Furnishings) Immersion Pods (Virtual Reality) Interactive Role Play Game (MMORPG) Household of Tomorrow (Appliances/Design) Bou-tech (Retail)
  • 24.
    SUBSECTION TITLE 24University ofChicago GSB Innovation Roundtable Based on the insights, we refined what the brand should stand for in the future Fueling the Imagination From To For those with curious minds and a love for entertainment, Sci Fi is the lifestyle brand that allows consumers to escape to new realms through continuous transformative experiences Transformative Escapes OptimisticMind-blowing Immersive Wonderfully Eccentric The Sci Fi Experience The Sci Fi Personality Human Stimulating High-Quality Risk-taking Smart Relatable Inviting TV-Centric Experiential (at home, on-the-go, destinations)
  • 25.
    SUBSECTION TITLE 25University ofChicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
  • 26.
    SUBSECTION TITLE 26University ofChicago GSB Innovation Roundtable Category Distillation 1.  Aerospace & Defense 2.  Agriculture 3.  Auto. & Transport 4.  Banking 5.  Beverages 6.  Business Services 7.  Charitable Orgs. 8.  Chemicals 9.  Computer Hardware 10. Computer Services 11. Computer Software 12. Construction 13. Consumer Products 14. Consumer Services 15. Cultural Institutions 16. Education 17. Electronics 18. Energy & Utilities 19. Envt. Svcs, & Equip. 20. Financial Services 21.Food 22.Foundations 23.Government 24. Health Care 25. Industrial Mfct. 26. Insurance 27. Leisure 28. Media 29. Membership Orgs. 30. Metals & Mining 31. Pharmaceuticals 32. Real Estate 33. Retail 34. Security Pdcts & Svcs. 35. Telecom. Equipment 36. Telecom. Services 37. Transportation Svcs. Started with 37 SIC codes Media Consumer Products Leisure Ended with 3 Categories B2C Entertainment or Educational Lifestyle Oriented Sci Fi Screens
  • 27.
    SUBSECTION TITLE 27University ofChicago GSB Innovation Roundtable Related Industries – Opportunity Landscape •  Conventions Accessories •  Mobile •  merchandise Gaming Hardware •  Consoles, devices, PCs •  Gaming gear Home Appliances •  Sci Fi inspired smart appliances Ready to Assemble •  Changeable Living Spaces HH of tomorrow Architectural Lighting •  Illuminated wallpaper Lighting units •  Line of floor, desk & wall lights Technology enabled apparel & jewelry •  Multi-function wearable device •  Bou-tech Multiple IPTV channels Service Provider Content Extensions •  ringtones & Ring backs •  Wallpaper •  Text Alerts Hotels & Resorts •  Fantasy Destinations Amusement Parks / •  Fantasy Destinations •  Arcades / FECs Gaming Software •  Video Games, Online Games, Mobile Games, Computer games •  Interactive Role Play Game •  Creativity Game Home Storage, Org. Products, & accessories Audio Video Equipment •  Media Wall •  Immersion pods Internet / Digital Music Distribution & Downloads Cable TV Broadcast TV Production & Distribution Motion Picture Production & Distribution (long format) Travel Services •  Staged events Leisure MusicMedia Consumer Products (non-retailing) Commemorative Products Television Film & Video Book Publishing Periodicals •  Online story- building Trading Cards & Comic Books Digital Content Distribution Online story-buildingPublishing Consumer Electronics Toys & Games House wares Home Furniture Lighting Appliances Apparel & Jewelry Lodging Entertainment Specialty Eateries •  Mind Bar Restaurant & Cafes Training Services (support) Mobile 8 7 6 5 4 3 2 1 3 Categories 18 Industries, 8 high priority 36 sub-industries, 13 high priority (darker backgrounds) Concept bundles from bottom-up exploration # Abcd Opportunity Landscape
  • 28.
    SUBSECTION TITLE 28University ofChicago GSB Innovation Roundtable Industries were profiled across key dimensions Entertainment - Theme Park (Experience/Ride) Restaurant (Themed Full Service ) Lodging (Mid-Level Hotel) Entertainment – Conventions Entertainment – Arcades / FECs Economics §  $11.3B market §  3% CAGR §  20-30% op. margin §  Avg. $67 for one day ticket / $115 for multi-park §  $510 (total), $174B (themed restaurants) §  6-7% CAGR §  10-20% op. margin §  Avg. HH spend / year: $2,434 §  $121B (total), $42M (mid- level) §  5% CAGR §  35-35% op. margin §  Avg. spend for leisure: $85 - 90 / night §  $10.8B market §  5% CAGR §  Low op. margins §  $1.4B market §  (2-3%) CAGR §  10% avg.op. mgns. §  Wide range of op. margins fr. 0 – 17%) Market Outlook & Trends §  Mature, saturated market w/ low growth and limited revenue opportunity §  High OPEX required, as an operator §  Industry in transition Revenue drivers: §  Admission fees (55% of revenue), then food, games, and merchandise Trends §  Increasingly sophisticated (and costly) rides – more immersive, interactive •  Mature, saturated market w/ low growth and limited revenue opportunity •  Difficult business to sustain growth (23% restaurants fail by year one, 60% by year three) Revenue drivers •  Traffic, revenue per table, high margin items (i.e., dessert, liquor) Trends §  Migration from price to experience (“eater-tainment”) §  Less expansion, more remodeling / re-invention §  Mature market w/ low growth §  Higher rev. generation opportunity §  High OPEX required, as an operator Revenue drivers: §  Occupancy and room rates, other services (food, spa) Trends §  From function to experience §  Many competitors reinventing offers with design, ingredient brands (Heavenly, Bliss) §  Slowly growing market with low op. margins §  Coordination intensive Revenue drivers: §  Qty. of shows / fees, growth in segment Trends §  Increased role of conventions as promotional tools §  Small, declining market w/ stagnant prices §  Severe competition from substitutes (in-home & mobile video games) Revenue drivers: §  Games, admission fees, repeat attend. Trends §  Decreased availability of new games §  Neg. public image Competition §  Top five operators account for most indust. revenues) Critical Success Factors: §  Location (near large tourist destinations) §  Continuous innovation §  Ability to bundle services §  Access to capital §  Brand reputation Major players: §  Disney: 48%, $5.4B §  Universal: 10%, $1.1B §  Six Flags 10%, $1.1B §  Anheuser-Busch 10%, $1.1B §  Highly fragmented, regional, multiple entrants and exits Critical Success Factors: §  Differentiated offering §  Location §  Access to capital §  Op. & HR management §  Recognized brand Major players: §  McDonalds: 1.4%, $7B §  YUM!: 1.2%, $5.9B §  Darden: 1.2, $5.7B §  Wendy’s: 0.5%, $2.4B §  Landrys 0.3%, 1.2B §  Somewhat fragmented Critical Success: §  Advantage comes §  Differentiated offering §  Location §  Access to capital §  Op. management §  Strong brand portfolio §  Loyalty programs Major players (%- rooms): §  Cendant: 9.9%, $3,.3B §  Marriott: 8.7%, $11.5B §  Hilton: 8.1%, $4.4B §  Starwood: $5.9B §  Highly fragm., few large operators assoc. w/ major centers §  Low entry barrier §  Accounts for 1/3 of hotel revs. Critical Success: §  Strong planning / coordination §  Alliances §  Word of mouth Major players: §  The Freeman Co.: 9.3%, 1B §  Fragmented: largest eight account for <30% of revs. §  High fixed cost and capital expenditures Critical Success: §  Location §  New games §  Control on op. exp. Major players: §  D&B: 25%, $0.4B §  Chuck E. Ch.: $0.7B §  Game Works: 4%, $60M
  • 29.
    SUBSECTION TITLE 29University ofChicago GSB Innovation Roundtable Each industry was scored to determine attractiveness Entertainment / Other Restaurants Lodging (Hotels) Amusement Parks Conventions Arcades / FECs Financial Objectives (revenue & profit potential) § Moderate size ($11.3B) § Slow growth (3%) § Healthy op. margins (15%) § High fixed costs § Moderate size ($10.8B) § Slow growth (5%) § Low op. margins § Small market ($1.4B) § Declining (-2-3%) § High failure rate § High fixed costs § Large market ($510B) § Slow growth (6-7%) § High failure rate (60%) § Limited rev. potential § Large market ($121B) § Slow growth (5%) § High op. margins § High OPEX Business Strategy (alignment w/ strategy) § Limited potential to broaden viewer ship but high potential to monetize brand § Will diversify business well § Very synergistic w/ other offers and Universal § Limited potential to broaden viewer ship or monetize brand, but relatively easy to enter § Not as diverse as others, more for mktg. than rev. § Limited potential to broaden viewer ship or monetize brand § Could diversify bus. & increase exposure, only if large scale § Limited potential to broaden viewer ship § High potential to monetize brand § Will diversify business § Somewhat synergistic § Limited potential to broaden viewer ship § High potential to monetize brand § Will diversify business § Somewhat synergistic Brand Strategy (reinforces future aspirations) § Very good oppty. to be “transformative” / immersive / fun / unique § Good oppty. to change limiting perceptions of Sci Fi § Natural fit wit the brand § Limited potential to be “transformative” / immersive § Risk of perpetuating current brand image § Won’t help change percpetions § If executed well, can be “transformative” / differentiating § Neg. perceptions of industry could reflect poorly on brand § If well executed, can be “transformative” / diff. § Oppty. to change limiting perceptions of Sci Fi § Food elements could diminish “escape” § If well executed, can be “transformative” / diff/ § Oppty. to change limiting perceptions of Sci Fi § Current perceptions might limit trial Target Segments (fit with target segments) § Very good fit with target’s preferences & behaviors (avg. age: 25 – 44, esp. families) § Captive audience (avg. stay is 5.3 nights) § Increasing interest by adults (1/2 of those visiting Disney World) , rejuvenile phenom. § Good fit with target (families, tweens), but limited exposure to mass audience § Conventions for sc-fi related content is growing in popularity § Trends moving away from entertainment ctrs. and more toward themed restaurants (eater- tainment) and in-home / mobile games § Possible oppty. with tweens, but untested § Very good fit with target’s preferences & behaviors § Increasing spend and traffic of families § Increas. popularity of themed eater-tainment restaurants w/ families § Good fit with consumer trends (blend of uses – lifestyle oriented) § Those who choose a destination based on a TV / Movie more likely to be younger, higher income, college educated, w/ children Overall Attractiveness
  • 30.
    SUBSECTION TITLE 30University ofChicago GSB Innovation Roundtable We then developed financial models for each industry Aggressive Scenario INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPEARTING DATA FIXED ASSET DATA Total Investment Moderate Scenario INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPEARTING DATA FIXED ASSET DATA Total Investment 1 Established appropriate line item details for a 5-year pro forma Conservative Scenario Year 1 Year 2 Year 3 Year … INCOME STATEMENT Revenues Cost of Goods Sold Gross Profit Gross Margin Operating Payroll Operating Profit Operating Margin CASH FLOW PROJECTIONS Operat. Cash Flow Capital Expenditures Net Cash Flow OPERATING DATA FIXED ASSET DATA Total Investment 2 Determined scenarios to model conservative to aggressive projections 3 Made educated assumptions for key financial inputs based on secondary industry data from analogous companies and offers
  • 31.
    SUBSECTION TITLE 31University ofChicago GSB Innovation Roundtable Process •  Defining target consumers •  Redefining the Sci Fi brand •  Brainstorming offer concepts •  Narrowing in on attractive businesses •  Recommendations
  • 32.
    SUBSECTION TITLE 32University ofChicago GSB Innovation Roundtable Six platforms to grow the business Non-Media Related ($15MM: License: $12MM, Memberships: $3MM) Online gamin ($5MM) Mobile ($5MM) Programming for Youth Market ($15MM Ads) Home – Sci Fi Surround ($20MM) Low-hanging Fruit – Extensions ($30MM) Media Related ($15MM: $6MM License, $9MM Content) Custom Devices ($20MM license)Media / Gaming Content ($10MM) Mobile – Sci Fi Jolt ($30MM) International Extensions ($40MM) Low-hanging Fruit ($30MM) Gaming – Sci Fi Blast ($85MM) Video Games ($10MM Licensing) Online Games ($60MM) (Content: $50MM; Ads: $10MM) Destination Games ($15MM Licensing) Household Products ($10MM Licensing) Multi-media Home Theater ($10MM Licensing) Children Adults 1 6 3 2 5 4
  • 33.
    SUBSECTION TITLE 33University ofChicago GSB Innovation Roundtable The expected revenue growth from these opportunities is $220 MM over the next 5 years Sci Fi Channel (20XX) Low-hanging Fruit Gaming (Sci Fi Blast) Home (Sci Fi Surround) Total 20XX $0 $500 $750 $436MM $720 MM $MillioninRevenues Mobile (Sci Fi Jolt) InternationalSci Fi Channel Incremental (20XX-20XX) $64MM $250 $30MM $40MM Video & Destination ($25MM) Online ($60MM ) HH Products ($10MM) Multi-media home theater ($10MM) Devices ($20MM) Content ($10MM) Youth market programming $15MM § DVDs § New Broadband Channel § Digi-sodes § Print Publishing § Mobile extensions § Toys & games § Accessories § Consumer electronics § Logo-wear apparel § Conventions § Clubs
  • 34.
    SUBSECTION TITLE 34University ofChicago GSB Innovation Roundtable Developments driven by our recommendations Gaming •  Compiled list of 40 potential acquisition/partnership target based on following criteria: 1.  Specializes in games that appeal to SCI FI audience 2.  Develops games across platforms 3.  Is of a manageable size allowing for rapid acquisition 4.  Has track record of releasing successful games 5.  Has operations in close proximity, with similar culture 6.  Has publishing experience/capabilities Low-hanging Fruit Extensions •  New Broadband channels: •  Exploring creation of “Sci Fi classics” broadband channel utilizing public domain genre programming •  SCI FI Anime – early stage exploring acquiring or partnering with existing library companies •  Print Publishing: •  Structuring deal with Hollywood Entertainment (book packager) for novelizations of SCI FI Pictures movies •  SCI FI mobile storefront being developed through NBCU Digital team (content to include ringtones, wallpapers, games - launching X) •  “Digi-sodes” – Establishing a MGM/Stargate deal for iTunes/Amazon International Extensions •  Soon to launch in Scandinavia, Australia •  Developing Asia, Latin America •  Structuring a global brand management infrastructure Programming for the Youth Market •  Kids •  Exploring Joint Venture with BKN to create a Sci Fi branded Saturday morning on-air programming block and corresponding broadband portal - to include ad sales (on-air, online), DVD & licensing/ merchandising •  Youth/Young Adults •  Negotiating Joint Venture with Virgin Comics - initial scope to co-develop/own 5 properties to be executed as comic books, then owned asset to develop TV, film merchandise efforts.
  • 35.
    SUBSECTION TITLE 35University ofChicago GSB Innovation Roundtable In Conclusion •  Brands are very important to consider when innovating - they can either be a source of inspiration or limiting factor of inflated ego •  Brands are typically more or less credible in entering new businesses / offerings than companies think they are •  Rarely do companies know exactly how far their brand can / should stretch as they innovate for white space opportunities •  Flexibility around process is also important •  A iterative art / science and top-down / bottom-up approach can garner the best results, but an overly structured approach could limit uncovering the best insights
  • 36.
    SUBSECTION TITLE 36University ofChicago GSB Innovation Roundtable Michael Million Bio & Contact Information Michael is a partner at FullSurge, a management consultancy focused on driving growth through brand, marketing and innovation strategies. He has over 20 years experience advising companies on customer, brand, and go-to-market strategies, as well as the communication and design systems driven by those strategies. Michael’s ability to solve a broad set of underlying business challenges comes from his extensive knowledge of insight methodologies, conceptual and strategic skills, and ability to clarify the complicated. Prior to FullSurge, he was a partner at VSA, where he built the agency’s strategy practice to address broader business issues of its clients. Prior to VSA, Michael held senior level positions at top tier brand consultancies including Prophet and Landor Associates. Throughout his career, Michael has successfully led large engagements for a wide variety of Fortune 500 clients including GE, IBM, DuPont, Boeing, CDW, Cargill, Textron, KeyCorp, Kohler, and United Airlines, as well as mid-sized companies such as the College of American Pathologists, Sea Ray Boats, the Syfy Channel, and the Blue Bird Bus Company. Michael has guest lectured on branding and strategy at the Kellogg Graduate School of Management at Northwestern University and Haas Business School at University of California, Berkeley. He has facilitated workshops for the American Management Association, was a panel member for high- ranking business schools, and has frequently spoken at Board Meetings for his clients. mmillion@fullsurge.com 312-957-5801 312-498-1515 C