The document analyzes the transformation of the OTT video landscape, highlighting disruptions to traditional distribution models and shifts in competitive dynamics due to increased technology adoption and consumer preferences. It discusses the growth of various revenue models (SVOD, AVOD, TVOD), implications for content businesses, and the challenges facing mid-tier cable networks amid fierce competition from digital platforms. The findings emphasize the need for media players and investors to adopt strategic insights for evaluating opportunities in this evolving ecosystem.

1. THE $20B
OTT VIDEO VALUE SHIFT
And The New Power Balance
MC[CO] LABS
Perspectives 2018

2. Premise & Disclaimer
2
§ The information herein provided has been sanitized, edited and re-arranged to protect
the confidentiality of our clients.
§ MC[CO] Labs assumes no responsibility for any error, inaccuracies or omissions in the
content of this document. The information provided in this presentation is provided on
“as is” basis and with no guarantees of accuracy, completeness, usefulness or
timeliness and without any warranties of any kind whatsoever, expressed or implied.
§ This document was written by Mauro Cellore, Managing Partner with MC[CO] Labs in
Los Angeles, CA (www.mccolabs.com). For any question, Mauro can be reached at:
mauro@mccolabs.com
MC[CO] LABS

3. Summary (1/4)
3
• Over the past decade, MC[CO] Labs has been collaborating with the senior leadership at many media, technology companies, brands
and private equity firms, as they were evaluating potential OTT video initiatives and investments in response to growing discontinuity.
• Our work in the space suggests an inevitable and accelerating disruption of traditional distribution models, both in structure as well as
in their economic profiles. We believe the rapid acceleration of OTT video realized in the 2015-2017 timeframe may have forever altered
the competitive dynamics and basis of competition in the video ecosystem, shifting the balance of power beyond the traditional media
value chain, a perspective still accepted with defiance by the Hollywood creative community and many traditional television players.
• The OTT video adoption curve and the shifting basis of competition in media have significant implications when evaluating the role of
content businesses in the broader media-tech ecosystem, the likelihood and degree of success of prospective DTC initiatives amidst
traditional revenue displacements, and the investment opportunities and strategies targeting both public as well as private assets.
• Until 2014 circa, the nature of change in the video industry has been evolutionary rather than discontinuous, allowing all key media
players to gradually modify strategies, value propositions and business models to maintain their established positions. Increased device
proliferation, greater bandwidth and massive investment in content have caused the colliding of the emerging online video value chain
with the legacy MVPD infrastructure (MSO/DBS), giving birth to a scale OTT video business valued today at ~$35B globally:
- Converging technologies. Robust broadband infrastructure, affordable hardware, broad deployment of connected devices, and growing CDNs
have enabled a powerful online video foundation, with streaming enablement currently estimated at 70-75% HH.
- Content richness. Broad availability of compelling content, both originals as well as licensed, has created a strong consumer alternative to
legacy video models, offering consumers with compelling video offerings that weren’t available just five years prior.
- Service maturity. Flexible and improved business models, secure payments, higher levels of customer service and user experience through add-
on services (content discovery, recommendation, voice commands etc.) have fueled customer growth.
- Shifts in value perception. Static viewership preferences (avg number of channel watched : ~15) against ongoing MSO/DBS price hikes (~4%
p.a.) has progressively shifted the value perception among most video customers, driving upticks in cord cutting behavior.
MC[CO] LABS

4. Summary (2/4)
• OTT video operates through three core revenue models: TVOD, SVOD and AVOD, including short-form content and virtual MVPDs (e.g.
Sling, Vue, and other new services at launch from large media conglomerates such as Disney+, WarnerMedia etc.)
- SVOD is the fastest growing segment with 23% CAGR (2013-2017), off a revenue base of ~$12B in the US; AVOD is ~$5-5.5B in size and picking
up steam at 17% growth driven by expanded inventory, ad analytics, pricing and the growth of mobile advertising; TVOD is ~3-3.5B and growing
at ~10%, starting to feel increased competition from the spreading of the competitive field (e.g. SVOD).
- Short-form content posts steady growth at ~15%, but remains small at 3% revenue share of the broad video ecosystem, with key challenges
related to ad inventory, low CPMs and low total viewing hours.
- Alternative bundles (skinny bundles, virtual MVPD and other bundled DTC offerings) have reached a~8M cumulative subscriber base in the US,
showing relative success with the price sensitive consumer, but are still transitory placeholders for “Big Media” before more defined long-term
plans take shape.
• With OTT video achieving operating scale, competition has risen across all three TV value chains (FTA, Pay TV, OTT/IPTV), spreading
the competitive field and blurring the lines of separation between products and business models. As content unbundling continues,
previously separate TV value chains (FTA/OTA, MVPD, and emerging OTT platforms such as SVOD, TVOD and AVOD) all compete for
ownership of the customer relationship.
• More importantly, as content formats, commerce and technology converge and expand, the battle for viewers’ time and attention
increases in intensity and complexity, bringing together critical levers of scale, data, user experience, pricing and other functionality for
the control of the customer relationship.
• Legacy MVPD players (e.g. AT&T, Comcast, Time Warner) are merging/aligning at both ends of the value chain (content and
distribution), gaining relevant scale in content (rights, production capabilities) and subscribers. Scale has become a crucial factor to
build leverage for distribution and ad sales monetization, as well as pushing the tactical integration of technology, content, and
consumer data to optimize margins and returns. New players (tech and retail) of appreciable scale continue to make forays and build
moat around their entertainment offerings, historically dominated by large media conglomerates.
4 MC[CO] LABS

5. Summary (3/4)
• OTT video accelerates towards higher degrees of concentration, with competition playing out in the fields of content, technology,
service, and analytics. Content spend alone has placed Netflix and Amazon at levels comparable to top cable networks
- The large subscriber base of OTT incumbents appears unlikely to be challenged by legacy media players approaching transformation of their old
models.
- The long-tail OTT video opportunities present questionable scale profiles to be meaningful and require a profound re-alignment of cost structure
and programming to become viable as profitable media enterprises.
• Video operating margins are being threatened across the entire value chain, with pressures mostly felt in programming and
aggregation, and small, mid-tier players struggling to remain relevant as consolidation takes hold.
• While the battle in OTT video activity continues to intensify, our work suggests early signs of overheating, with ~10% of subscribers
reported feeling “underserved” (~90% report having the “right amount” of entertainment); marketing battles expected to intensify as
user penetration becomes more challenging.
• As ”Big Media” (traditional media companies and operators) responds more aggressively to the advantages created by large digital
whales such as Amazon and Netflix, we expect a few general trends to take shape in the next few years:
- Progressive re-aggregation of the unbundled offerings, as scale continue to become more prominent as a competitive factor.
- Sustained large scale M&A to solidify control of the customer relationship, leaving a few large media companies in control the bulk of profit pools.
- Mid-tier cable networks struggling to adapt, weakened by audience migration, increasing content costs, and pressures on CPM and license fees
- Content creators and IP owners facing a more dense demand with shifting deal structures resulting from the compression of the syndication
model.
- Advertising slowly moving to programmatic models and a heavier reliance on AI and data analytics for targeting, but still struggling with static
inventories and still questionable ROI improvements.
5 MC[CO] LABS

6. Summary (4/4)
• In this changing environment, video players and media investors benefit from clear playbooks, due diligence and strategic insights for
assessing their near term opportunities, bounding the financial profiles of their DTC models, and building robust perspectives on
content, audience, pricing and marketing platforms associated with their tactical growth strategies.
• Since 2010, MC[CO] Labs has been working with emerging and established industry leaders as they evaluate, develop and design their
global direct to consumer digital services. Our services focus primarily on commercial valuation, content strategy and planning,
business case valuation, M&A strategy and due diligence services applied to the emerging opportunities opened by the shift at play.
• Our work has primarily focused on the following areas:
- Evaluation of content distribution initiatives and new services.
- Commercial valuation and strategy design of DTC offerings.
- Business case development, including the definition of value proposition, target audience sizing, and financial modeling.
- Content strategy, including definition and sizing of the content niche, programming strategy and ROI scenarios.
- M&A strategy, including JV and divestiture assessments (and associated due diligence).
• This illustrative document presents some general insights and perspectives that have guided our most recent work with our clients,
looking to advance their positions in the ecosystem and capture the value shift at play, including:
- A large technology leader contemplating the launch of a new OTT video service.
- A sports entertainment company evaluating their DTC options vs. available options through other aggregation models.
- A large retailer evaluating strategic options for investment in video streaming opportunities.
- A large concert promoter evaluating a market opportunity in video streaming distribution for live music concerts.
- A large private equity fund evaluating an investment in a large media company, and wishing to understand the impact of OTT video on the core
business model and the associated revenue upside.
6 MC[CO] LABS

7. User payments dominate media spend with 70% of the the expected 2020 revenue pools.
Context: Media Industry Revenue Pools
Source: Cowen & Co., IBIS World, eMarketer, ZenithOptimedia, PWC
0
200
400
600
800
1000
1200
1400
1600
1800
2000
2018 2020
Paid content Access Advertising
Global Media Revenues (USD, 2018E vs 2020F)
CAGR
2018-2020
2.5%
4.5%
6%
4%
7 MC[CO] LABS

8. As total consumer media time increases, video continues to hold the largest share amidst
accelerating audience migration and fragmentation.
Context: Consumer Media Time
Source: Comscore, Nielsen, Pew Research, IAB, Wall Street Journal/Activate Forecasts
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2018 2022
Video Audio Games Social Other
Daily Media Hours by Adults (Hrs/Min)
CAGR
2018-2020
0%
2.5%
1%
1%
0%
0.5%12:20 12:30
• Increased multitasking leads to
~ 30 hours of media time for
the average American, 12 of
which spent with tech and
media products.
• Video holds still the largest
share of consumer attention
with ~40%, albeit reflecting
slowing penetration.
• Tech continues to be
responsible for the fastest
growth, hinging on social
media, messaging, games
showing greatest acceleration,
amidst sustained audience
fragmentation.
Key Comments
8 MC[CO] LABS

9. Acting Forces On Video Ecosystem
1. Continuing acceleration of new device penetration and technology adoption, creating a streaming-ready
infrastructure across global markets.
2. Converging value chains, with traditional MVPD media, retail marketing, and technology colliding, accelerating
disruption of traditional MVPD models. Placeholder investments in alternative bundles (MSO/DBS) and sports rights
(cable nets/broadcast) offering some protection from subscriber losses for legacy operators in the near term.
3. Audience migration, fragmentation, and shifts in viewer behaviors, with binging, format multiplication and
concurrent viewership creating segmentation and monetization challenges for all players, with short-term
unbundling driving a flight to quality and affinity and a squeeze of the programming mid-tier, particularly among
cable networks.
4. New formats (AR/VR) and use cases (mobile video 2.0) offer emerging options for new investments, as content
creators start to look into parallel opportunities layered on top/around/with existing OTT platforms.
5. Aggressive content investments to support differentiation for new DTC models roll out. Shrinkage of the cable
mid-tier and increased competition for all content creators vying for audiences in an open source content
ecosystem.
6. Advertising options multiply and gain relevant scale across platforms, starting to exert pressure on live TV CPMs.
As AVOD models continue to roll out, questions remain on inventory depth and ROIs for marketers.
The digital video shift is largely determined by the interplay of several forces in action.
9 MC[CO] LABS

10. The global video landscape comprises three converging value chains, bringing together
legacy infrastructure with emerging online models.
Colliding Video Value Chain
FTA &
BROADCAST
PAY TV
ONLINE &
MOBILE
Content Production/
Rights
Content Aggregation/
Channels
Aggregation/
Distribution
Access/
Display/Devices
• NBA
• Freemantle
• Endemol
• Warner Brothers
• Sony Pictures
Entertainment
• Twenty Century Fox
• MGM
• Walt Disney
• Universal Studios
• Dreamworks
Animation
• Lions Gate
• Awesomeness TV
• RocketJump
• Amazon Studios
• FTA Networks
² Fox Broadcasting
² NBC
² CBS
• Premium Networks
² ESPN
² Discovery
² HBO
² Showtime
² Viacom
• Digital TV Networks
² HBO Go
² MLB.com
² WWE
• FTA Broadcast Stations
² Sinclair Broadcast
Group
² Tegna
² Hearst Television
• Pay TV Distributors
² Comcast
² AT&T
² Dish
² Time Warner
² Liberty Global
• Aggregators
² Netflix
² Hulu
² Amazon
² Youtube
• ISP
² Comcast
² AT&T
² UPC
• TV Set Manufacturers
² Samsung
² Panasonic
² JVC
• STB Manufacturers
² Motorola
² Broadcom
² Technicolor
² TIVO
• Connected devices
• Apple
• Roku
• Sony PS3
• AmazonFire
10 MC[CO] LABS

11. Broad deployment of connected devices has reached critical mass, hitting ~70%
penetration today and providing a strong boost for the streaming video shift.
Supporting Infrastructure: Devices
Game console
only
15M
13%
01
Smart TV only
16M
10%
02
Multimedia
device only
12M
10%
03
All
three
7M
6%
Multimedia device & Smart
TV
6.5M; 6%
Game console & Smart TV
12M, 6.5%
Game console &
Multimedia Device
7M, 7%
Came console: Playstation, X-
Box, Wii
Multimedia Device: Apple TV,
Roku, Google Chromcast and
similar
Smart TV: Internet-connected
TV sets
Definitions
Source: Nielsen Research, Q4 2017
11 MC[CO] LABS

12. Streaming device usage has expanded the total digital viewership and reach, spurring an
extraordinary growth in time spent with video streaming services.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
Game console Smart TV AmazonFire, AppleTV,
Roku
Other multimedia
% use
hr/day
34%
4.6
35%
2.5 3.7
17%
2.2
20%
Penetration and usage of streaming devices
(% HH, hours per day, 2017)
Source: Statista, based on IDC, Comscore, E-Marketer and Nielsen Data elaborations, 2017
Supporting Infrastructure: Device Usage
12 MC[CO] LABS

13. Streaming Infrastructure: Bandwidth & Adoption
Average US consumer download speed
(2014-2017, Mpbs)
Streaming devices sales & installed base
(M units, 2012-2017)
0
5
10
15
20
25
30
35
40
45
50
2013 2014 2015 2016 2017
Streaming
“ready”
population
45% 58% 63% 65%
25 Mbps = min
threshold for HD
quality
streaming
Source: SNL Kagan, Nielsen, IDC
0
50
100
150
200
250
300
350
400
2012 2013 2014 2015 2016 2017
Smart TV Streaming device
Tablets Gaming consolles
Installed
Base
900M
850M
250M
160M
Source: IDC, Forrester
70%
13 MC[CO] LABS

14. Competition in video OTT has continued to increase since early launches.
Key Streaming Models
SVOD/AVOD/TVOD
DIRECT TO
CONSUMER
(DTC)
Virtual
MVPD
(*) Simplified (adapted) version of video streaming market map
14 MC[CO] LABS

15. At its core, OTT replicates the same stack of video services offered by traditional Pay TV,
just on a more sophisticated and user friendly technology platform.
Traditional Vs. OTT Video
PPV
TRADITIONAL VIDEO OTT VIDEO
DVD/Blu-Ray
Live Sports
Live Events & News
First Run TV & Movies
Syndicated TV & Movies
Channels&On
Demand
Cable &
Pay TV
Subscription
Broadcast TV FTA
Professional Content Creators
Video
Service
Model
Content
Creator
Transaction
Supported
(TVOD)
• Google Play
• Vudu
• iTunes
• Amazon Instant
Video
Subscription
supported
(SVOD)
Sports
Live
Originals
Syndicated
• FloHoops
• CBS All Access
• Netflix
• Amazon
• Netflix
• Amazon
• HBO
Now
• HBO
Now
Ad Supported
(AVOD)
• Youtube
• Faceboo
k
Professional Content Creators
Pro Am Content Creators
Amateurs Content Creators
DMVPD•Sling
•Vue
• OTT video competes
against legacy models on
principles of content
unbundling, user experience
and technology scalability,
while replicating a similar
structure to the old content
ecosystem.
• The shift has opened the
door for new DTC ventures
encompassing professional,
pro am and amateur
content.
• In this transformation, all
DTC ventures face
profitability challenges,
requiring significant
planning and investment
intensity as they align
business model,
programming and operating
blueprints under new scale
paradigms.
16 MC[CO] LABS

16. Large streaming operators have matched the content spend of large cable networks, and
are now competing head to head with “Big Media”, driving further fragmentation.
OTT Content Investment
0
2
4
6
8
10
12
N
BC
U
FoxTim
e
W
arner
D
isney
N
etflix
Viacom
Am
azon
C
BS
H
uluD
iscovery
Scripps
AM
C
Apple
Facebook
Source: Analyst Reports, Press Releases, and SEC Filings, Wall Street Journal (Facebook 2018 spend),
MoffettNathanson; Scripps acquired by Discovery in 2018
Annual non sports programming spend ($B aggregate, 2017)
Streaming companies highlighted in red
16 MC[CO] LABS
Source: SNL Kagan, sanitized data from targeted
market research, 2017
60%
62%
64%
66%
68%
70%
72%
74%
76%
2013 2018
Number of shows with ratings <0.5
(US, 2013 vs. 2018)

17. Content spend has been progressively re-directed towards originals, providing compelling
marketing hooks for subs conversions and long-term brand equity building.
OTT Content Originals
0
10
20
30
40
50
60
70
80
2012 2013 2014 2015 2016
Netflix Amazon Hulu
CAGR 2012-
2016
60%
70%
115%
• Netflix aired some 45 titles in 2016, up
from 31 in 2015. Amazon launched 14
original titles (not including pilots), up
from eight the year before, while Hulu
released 10, one more than in 2015.
• On the one hand, this expansion can be
explained by the need to meet the
growing demand for “binge viewing” of
TV series, a behavior made possible by
the new platforms’ capabilities and
windowing strategy.
• Additionally, the increase in OTT
originals spend matches the strategic
pattern often observed in new channel
launches, initially relying on non-
exclusive licensing in high volume, and
sequentially ramping up investment In
original content to build differentiation
and drive viewers’ loyalty.
Original productions by OTT platform
(2012-2016, number of titles by year of release)
Source: IHS Markit TV Programming Intelligence, Web Literature
17 MC[CO] LABS

19. Deeper reliance on data/analytics has driven a short-term boost for drama series, with
rebalancing towards reality, docs and unscripted expected over the next two years.
Source: Elaboration based on Deutsche Bank Analysis, 2017, Expert Interviews
OTT Content Genres Trends
Netflix Original Content Investment
Hours to Date (2017)
0
50
100
150
200
250
300
350
400
Drama Kids Comedy Docs Anime Action Teen
Drama
Film
“The predictive power of analytics and
technology have strongly pointed us in the
direction of drama IP in order to maximize
our content investment so far. Kids
content also has strong strategic relevance
at this juncture, given the changing viewer
dynamics in the connected home.”
Former Netflix Executive
“Genres portfolios at Netflix and Amazon
are about to rebalance…I see increasing
momentum for unscripted and
docs/factual…potentially sports for
Amazon going forward, which will
complement the strengths both streamers
have acquired in drama and scripted”
Former WME Agent
Key Perspectives
19 MC[CO] LABS

20. Mid-tier cable networks are exposed to significant weaknesses as audiences continue to
migrate in response to broader programming options.
The Mid-Tier Programming Squeeze
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2005 2015 2016
Specialty Networks 4-50 Networks 1-3
Overall Share of Ratings
(US Cable Networks 1-100, 2005-2016)
+21
-19
-3
Delta
2005-2016 (P.P)
Source: MC[CO] elaboration based on BCG, SNL Kagan, and Bain & Co. data
20 MC[CO] LABS

21. MVPD Model Moving Beyond Erosion
95
100
105
110
115
120
125
2010 2011 2012 2013 2014 2015 2016 2017 2018
ARPU Subs
Subs
ARPU ($)
100
78
100
83
101
89
102
89
103
93
101.5
96
96
99.5
Pay TV ARPUs and Subscriptions (2010-2018F, 2010 = 100) CAGR
(10-13)
CAGR
(13-18)
4% 3%
2% -2.5%
Source: SNL Kagan, 2017, MoffetNathanson, MCCO Labs elaboration
101.2
97
98
98
21 MC[CO] LABS

22. OTT Tech Platform Advantage
Platform
Experience Content
User Base
Growth
Content
Data informs content development
(originals) and acquisition activities
optimizing returns on a more
efficient operational model.
Experience
Data informs special
promotion, predictive
recommendations and an
optimized user interface
Platform
A data driven, optimally populated tech platform
drives detailed viewer behavior and preference
profiling for a more efficient content model.
User base Growth
User base growth correlates to
content depth and breadth,
pricing, and user experience.
• The concept of scale is crucial for any media
business wishing to operate profitably in today’s
environment, turning the interplay between tech and
user base size as a key competitive weapon and
barrier to entry for OTT players.
• As OTT platforms move towards greater scale, data
accuracy improves, not only enabling cost
efficiencies in distribution (per unit storage
optimization), but also delivering better predictive
analytics, recommendations, promotions and
decision making for content development and
acquisitions.
• Additionally, scale allows for more advantageous
content negotiations, efficient reinvestment in
originals to drive brand differentiation, ultimately
expanding the user base and reducing churn.
New sources of competitive advantage are created by bringing scale, data and content
together in an integrated fashion.
22 MC[CO] LABS

23. Evolving Basis Of Competition in Video
• Defined as “subscriber access and reach”, content assets, and capital.
• Generates direct cost advantages through greater market power to acquire content
globally, technology efficiencies, greater price control and the ability to better monetize
the ad inventory.
Basis of competition
(drivers)
Description, rationale and
value creation modalities
Relative
importance
• SCALE
• Defined as content spend, genre coverage, library size and rights, production capabilities,
original content spend and access to creative relationships
• Generates value as source of differentiation and a bridge to content licensing gaps
• CONTENT
• Defined as platform strength, user experience (UI), and add on services (navigation,
recommendation etc.)
• Generates value as an enabler of superior service levels as well as a critical cost
driver (e.g. as total cloud storage grows – or gigabytes of storage costs - the price
per unit declines.)
• TECHNOLOGY
• Defined as customer service responsiveness and overall user experience
• Generates value as a driver of customer satisfaction and a key lever for differentiation.
• SERVICE
1
2
3
4
• Defined as price per unit (transactional models) or monthly subscription
• Key driver of customer acquisition as consumers display shifts in value perception and
entertainment options continue to proliferate.
• PRICE5
23 MC[CO] LABS

24. Audience migration towards online and mobile video platforms has started to cannibalize
the legacy MVPD ecosystem, with broad reaching disruption felt across all TV players
Streaming Video Becoming Cannibalistic
0
10
20
30
40
50
60
70
2000 2005 2010 2015 2020
TV Online Video Mobile Video
Average Video Consumption Hours
(number of hours per week)
CAGR
2000-
’20
12
0
0
20
40
60
80
100
120
140
160
180
200
2012 2013 2014 2015 2016 2017 2018E 2019E 2020E
MVPD Subscriptions MVPD Ads Online & Mobile Video
US Video Industry Revenues
($B, 2012-2020)
17%
1%
0%
CAGR ‘
14-17
Source: PWC, BCG, Informa Media, Ovum, Statista
24 MC[CO] LABS

25. Margins are threatened across the entire value chain. OTT streaming aggregation expected
to capture the lion’s share of a $20B revenue pool shift in the next 5 years.
A Large $20-25B Value Shift at Play
Content creation Programming Aggregation Distribution
OM
& Trends
Drivers
8-10%
• Must have content
increases in value (e.g.
live sports, A-titles)
• Content buyer universe
expands dramatically with
new OTT players entry
15-25% 10-15% 10-15%
• Traditional Pay TV licenses (and
revenues) decline
• Established, recognized brands
(e.g. Disney) increase in value
• Mid-tier programming brands gets
squeezed and struggle
• Cord cutting/cord trimming
reduces subscriber base
• Skinny bundles reduce ARPU
• New OTT entrants put pricing
pressures against escalating
content costs (unable to pass
on)
Examples • Warner Brothers,
Paramount, NBA, NFL
• ABC, CBS, Fox, A+E,
ESPN
• Comcast, AT&T • Google fiber, Comcast
(Broadband)
• Increase bandwidth
demands sustains price
hikes
Economics Rev.: $60B (2017)-$70B (2022)
Potential change: +$5B
Rev.: $70B (2017)-$60B (2022)
Potential change: -$10B
Rev.: $40B (2017)-$30B (2022)
Potential change: -$10B
OTT
aggrega
tors
NFLX, AMZN
Potential Change: $15B
25 MC[CO] LABS

26. The Future In Re-Bundling
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2016 2017 2018
DTC Apple App Store Amazon Fixed Bundles Mobile Bundles
Share of retail OTT Revenues by channel
(WW, 2016-2018, %)
• The intensifying of recent consumer launch activities
for new OTT video content businesses has reached a
point of maturity, and likely peak in 2019 as recent
mega mergers prepare to launch large offerings in
competition with digital incumbents.
• No vMVPD model is believed to be gross margin
positive today, with many key players (e.g. Hulu, DTV
Now and YT) posting significant losses before
accounting for marketing and technology costs,
distribution fees and other operating expenses.
• We anticipate the streaming video space to go
through consolidation and re-aggregation via an
expansion of the re-intermediation activities for
Apple, Google, Amazon, Roku and other large media
operators.
• This will put pressures on many DTC offerings
currently in market, with growing challenges in
content discovery and digital real-estate, bigger
relevance of data and battles to conquer the largest
share of ad dollars flowing into the new platforms.
High-Level Comments
Source: Ovum, PWC, Spark Associates. Retail OTT revenues include consumer spend on
subscriptions, digital rentals, and EST, and excludes revenues from advertising.
Avg.Streaming
Services/HH:3.2
Emerging sub-scale DTC models expected to be subject to re-aggregation, as they face
economic pressures in the drive to profitability.
26 MC[CO] LABS

27. Themes/Implications for 2019/2020
1. Targeted Media Stocks Due Diligence (Liberty, Disney, Netflix) – Hedge Funds
2. TV Production M&A (Strategic M&A)
3. Sports Programming DTC Opportunity
4. Niche Content DTC Models & Rights Re-Aggregation
5. Mobile Video & Short Formats
6. The Programmatic Advertising Shift And Impact on Video
7. The Business Case for AR/VR Content
8. Branded Content In The Era Of Social Media and Video Streaming
Beginning in 2019, our work has deepened in a few targeted directions.
27 MC[CO] LABS

28. How We Help
Our work has delivered targeted strategic support, valuation and market assessments
around the development and launch of our clients’ digital media offerings.
DEAL SECTOR
CONTENT STRATEGY
MARKETINVESTM
ENTS
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01
02
03
04
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STRATEGIC
ADVISORY
SERVICES
M&A strategy, target
qualification and
strategic due diligence
Deal analysis &
negotiation, including
partnerships and JVs
Content strategy, vertical
prioritization, content portfolio
strategy and content ROI
Targeted market
assessments, viewership
analysis for opportunity
identification and
development.
Sector Analysis and
industry trends for growth
strategy assessments
Business strategy, corporate
strategy and strategic
planning (5 year)
28 MC[CO] LABS

29. Examples Of Our Work
CLIENT SCOPE DELIVERABLES
Fortune 500 Brand Launch of video streaming marketing platform
(sports, music and fashion content verticals).
Content strategy, business model assessment, partnerships
strategy, due diligence and deal analysis, ROI investment
monitoring.
Fortune 100 Tech Leader Development and launch of OTT video platform. M&A strategy and assessment of content partnerships.
Global PE Firm Commercial due diligence for investment in $2B
media company
Threat from OTT video assessment, top line forecasts and
upside opportunity valuation based on advertising revenue
assessment and license fee stability analysis
Large Retail and E-commerce
Player
OTT video opportunity assessment and strategy
definition. M&A strategy, including divestiture
assessment.
Industry trends and white space analysis. Outside-in
assessment of available strategic options and go-forward
strategy.
Large Media Co. M&A Strategy OTT content trends and audience analysis, content portfolio
analysis and target qualification.
Live Concert Promoter Development and launch of OTT live music streaming
business.
Market sizing, business model definition, partnership
strategy and financial modeling.
Our work has served a wide range of content verticals, company sizes and scopes,
including brand marketers, PE firms, and media and technology companies.
29 MC[CO] LABS

30. Mauro Cellore has spent the past two
decades partnering with principal
investors and leading executives at some
of the largest media and entertainment
brands to assess and execute strategic
transformational initiatives.
As the Founder and Managing Partner of
MC[CO] Labs, Mauro collaborates with
corporate leaders, entrepreneurs and
investors to evaluate and structure
growth opportunities, marketing
alignments, corporate development
initiatives and investments.
Embedding a management consulting
approach within a corporate
development and investment
assessment framework, Mauro delivers a
cost-effective solution to support
innovation-driven enterprises with
balanced strategic guidance in high-
stakes initiatives and special projects.
Over a span of 25 years, Mauro has
supported his clients on more than 70
growth initiatives representing $90
billion in media investments and $5
billion in content-marketing alignments
and marketing platform investments.
Among Mauro’s clients are brands such
as American Express, Nestle, Kraft,
Coca-Cola, Starbucks and Intel, private
equity shops such as KKR, TPG, and
Oaktree, and international media
corporations, agencies, labels and
studios such as Warner Bros., Universal
Music, Disney, IPG and Comcast
Entertainment Group.
Prior to founding MC[CO] Labs in 2011,
Mauro worked as an Associate Partner at
Endeavor (WME/IMG), where he
managed corporate growth initiatives
and advised intellectual property
owners, technology companies, content
creators, investors and brands on
strategic opportunities, partnerships,
asset combinations and growth
investments.
His previous leadership roles include a
position as a Senior Principal within the
leadership team at Bain & Co., where he
collaborated with large media and
technology companies and private
equity investors by performing due
diligence, assessing performance
improvement opportunities, and defining
post-acquisition strategies. Mauro also
led investment initiatives within the
broadband infrastructure, video game,
consumer Internet and digital media
sectors for Entertainment Media
Ventures, a $120 million seed and early
stage venture capital fund created by
Softbank, Michael Milken and Burda
Media.
Mauro received his Master of Business
Administration from the Anderson
School of Management at the University
of California, Los Angeles and a Laurea
in Economia e Commercio from
Universita’ Luigi Bocconi in Milan, Italy,
where he graduated summa cum laude.
MAUROCELLORE
MANAGINGPARTNER
13
Biography
30 MC[CO] LABS
MC[CO] LABS

31. MCCO Labs is a boutique consultancy headquartered in Los Angeles.
We specialize in alternative growth opportunities and investments at
the convergence of media, technology, and consumer marketing.
We augment our clients’ senior leadership as they set a new vision for
expansion or transformation, evaluate new growth opportunities and
investments, and design the strategic architecture to inform future
growth-inspired action plans.
Our core expertise is uniquely tied to market assessments and
development, strategic planning and strategic due diligence, driving
the insights that inform large scale corporate development initiatives,
partnerships, M&A moves, and investments.
CONTACT: mauro@mccolabs.com
www.mccolabs.com
Th. 310 701 2117
MC[CO] LABS