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Investor Overview
Summer 2015
2
Purpose To connect under-served fans & enthusiasts
with genre-specific & lifestyle-specific
video content & community
A portfolio of fan-focused, micro-SVOD video channels
 Broadband penetration at 79% in US
 SVOD services adoption at 52%+ in US with 35% year-over-year growth
 Over-the-top (OTT) video service subscribers to surge to 330M+ in 2019 from 90M in 2014
Market
Shifts
 Mass market OTT players – Netflix, Hulu, Amazon – use “something for everyone” strategy
 Few OTT players adopting “everything for someone” approach – deep, genre-specific content & community
Customer
Opportunity
 Much genre-specific content not in demand by mass market OTT services (focus on high-potential originals)
 Content licensing windows continue to collapse / multiply
 Creates opening to acquire genre-specific and independent content cost-effectively
Content
Opportunity
 Channel break-even at 50K subscribers
 Low-cost online customer acquisition channels
 Cloud-based platforms enable minimal upfront capital investment
Favorable
Economics
Opportunity
3
Curated, genre
specific content
Content
Fan focused
product design
Customer Experience
Highly social
experiences
Community
Multi-platform &
device access
Connection
Low price point
with high value
price ratio
Cost Advantage
Our Approach
4
5
We Are
David Wolfe
Chief Executive Officer
Kirk Johnson
Head of Product
Gary Rosenfeld
Head of Business
Development
Mike Lang
Co-Founder,
Board Member
Dan March
Founder,
Board Member
6
First Channel: Horror
 Screambox beta launched end of 2014
 Currently $3.99 monthly subscription fee
 8k subscribers as of August 2015
 Positive customer feedback & strong user engagement
 Key platform partnerships signed :
 Roku
 Microsoft Xbox
 Sony PlayStation
7
User Feedback
“Awesome site. Every movie I
have watched so far is
awesome! And no buffering or
pixelating. And to top it all of,
it’s at a great price! What’s not
to like?”
- Bill M.
“First let me say that
Screambox is outstanding! I’m
a huge fan of the horror genre
and am sure your product is
going to be a huge success.”
- Michael C.
“The fact that this is the first of
its kind geared towards us die
hard horror fans makes it
badass in my book.”
- Lauren C.
“I’m in, hell yes.”
- Nick M.
“I’ve been waiting for
something like this.”
- Ciara S.
“I just signed up your channel
on my Roku and love this
already. Your categories are
too funny.”
- Dori G.
“Started my free trial today. I
don’t expect I’ll be cancelling
once the 30 days is up. The
website is the best of ideas.”
- Zach B.
“This seems like a good idea.
My Netflix has nothing but
horror suggestions but they
don’t have that many horror
movies.”
- Jay J.
8
Subscriber Unit Economics
Lifetime Value = subscriber lifetime x (subscription price – [direct costs + content costs])
$4 $3 $4
$5
$6
$7 $6
$7
$13
$15
$14
$18
$16
$15
$20
$17
$0
$5
$10
$15
$20
$25
Blended SAC Lifetime Value*
3,349
4,445
4,892
5,492
6,717 6,676
7,577
8,020
25%
21% 22%
18%
20% 21%
16%
19%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
%Churn
Subscribers
Subscribers % Churn
9
Beta Key Performance Indicators (KPIs)
Phase Key User Actions Beta KPIs Market Averages / Comps
Acquisition Clicks on ad unit  ~3% click-thru rate (CTR)  <1% CTR
Visits Screambox.com  50K unique visits / month
 60% organic / 40% paid
 NA
Activation Signs up for account  25% visit-to-account conversion rate
 30K accounts to date
 2-5% visit-to-account rate
Starts 30-day trial  33% account-to-trial conversion rate
 14K trials to date
 NA
Revenue Becomes subscriber @
$3.99 / month
 70%+ trial-to-subscriber conversion rate
 7,500 subscribers as of May 31st
 ~$7 blended subscriber acquisition cost
($ SAC)
 <$10 micro SVOD $ SAC
 $15-20 mass market SVOD $
SAC
Retention Continues subscription  20% churn rate or 5 month lifetime
 $21 lifetime value (LTV) or ~3x LTV / $
SAC multiple
 5-7% steady-state mass
market SVOD churn
 3x+ LTV / $ SAC multiple
target
Comes back to service  2-4x average weekly log-in  NA
Engagement Streams video  ~10 hours / month / user
 ~15 titles / month / user
 Netflix 30-50 hours / month /
user
Engages with community  25K Facebook fans
 2x Facebook average engagement
(likes, comments, shares)
 NA
10
Platform Opportunity & Schedule
Platform Est. Base Date
10M Launched
25M Q1 2015
20M Launched
65M Launched
50M Oct 29, 2015
225M Launched
110M Oct 26, 2015
180M L6aunched
Total Estimated Installed 800M – 1B
Appendix
Motor
Sports
Guns /
Hunting
Martial
Arts
Horror
Snow
Sports
Jazz
Surfing
Military
Fashion
Astronomy
High
School
Sports
Large & addressable market
Currently underserved
Accessible content
Rapid concept testing
Analytics-based selection
Source & deploy content
Develop & launch key device minimum viable products (MVPs)
Begin to scale user acquisition approaches
Get to 20K subscribers in 6 months
Increase content investment & develop original programming
Expand device footprint & accelerate product innovation
Accelerate branding & marketing efforts
Dedicated channel team
Fantasy
Sports
Identify & Validate
Launch & Beta
Magic
Scale & Grow
Comics
~$1.5M per channel to break-even
Channel Development
Cycling
Film
Noir
DIY
Law
Enforcement
Bollywood
Weight
Loss
Fishing
Medieval
Times
LGBT Broadway
12
$0.2
$3.0
$9.2
$19.8
$32.9
$46.1
$(0.5) $0.7
$4.3
$9.7 $17.3 $22.810
60
175
375
625
875
-
200
400
600
800
1,000
$-
$10
$20
$30
$40
$50
Beta Year 1 Year 2 Year 3 Year 4 Year 5
ThousandsofSubs
Millionsof$s
Revenue Contribution Average Subs
Per Channel Economics
1313
Channel
Break-even
Subscriber
Lifetime Value
Subscriber Break-even: 50k Subs
$12
$7
$6
$5 $5 $5$(7)
$22
$36
$49 $51
$47
$(20)
$-
$20
$40
$60
$-
$3
$6
$9
$12
$15
Beta Year 1 Year 2 Year 3 Year 4 Year 5
LifetimeValue
$SAC
$ SAC (Blended) Lifetime Value (Net)

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SFN Investor Deck Oct_2015_Public

  • 2. 2 Purpose To connect under-served fans & enthusiasts with genre-specific & lifestyle-specific video content & community A portfolio of fan-focused, micro-SVOD video channels
  • 3.  Broadband penetration at 79% in US  SVOD services adoption at 52%+ in US with 35% year-over-year growth  Over-the-top (OTT) video service subscribers to surge to 330M+ in 2019 from 90M in 2014 Market Shifts  Mass market OTT players – Netflix, Hulu, Amazon – use “something for everyone” strategy  Few OTT players adopting “everything for someone” approach – deep, genre-specific content & community Customer Opportunity  Much genre-specific content not in demand by mass market OTT services (focus on high-potential originals)  Content licensing windows continue to collapse / multiply  Creates opening to acquire genre-specific and independent content cost-effectively Content Opportunity  Channel break-even at 50K subscribers  Low-cost online customer acquisition channels  Cloud-based platforms enable minimal upfront capital investment Favorable Economics Opportunity 3
  • 4. Curated, genre specific content Content Fan focused product design Customer Experience Highly social experiences Community Multi-platform & device access Connection Low price point with high value price ratio Cost Advantage Our Approach 4
  • 5. 5 We Are David Wolfe Chief Executive Officer Kirk Johnson Head of Product Gary Rosenfeld Head of Business Development Mike Lang Co-Founder, Board Member Dan March Founder, Board Member
  • 6. 6 First Channel: Horror  Screambox beta launched end of 2014  Currently $3.99 monthly subscription fee  8k subscribers as of August 2015  Positive customer feedback & strong user engagement  Key platform partnerships signed :  Roku  Microsoft Xbox  Sony PlayStation
  • 7. 7 User Feedback “Awesome site. Every movie I have watched so far is awesome! And no buffering or pixelating. And to top it all of, it’s at a great price! What’s not to like?” - Bill M. “First let me say that Screambox is outstanding! I’m a huge fan of the horror genre and am sure your product is going to be a huge success.” - Michael C. “The fact that this is the first of its kind geared towards us die hard horror fans makes it badass in my book.” - Lauren C. “I’m in, hell yes.” - Nick M. “I’ve been waiting for something like this.” - Ciara S. “I just signed up your channel on my Roku and love this already. Your categories are too funny.” - Dori G. “Started my free trial today. I don’t expect I’ll be cancelling once the 30 days is up. The website is the best of ideas.” - Zach B. “This seems like a good idea. My Netflix has nothing but horror suggestions but they don’t have that many horror movies.” - Jay J.
  • 8. 8 Subscriber Unit Economics Lifetime Value = subscriber lifetime x (subscription price – [direct costs + content costs]) $4 $3 $4 $5 $6 $7 $6 $7 $13 $15 $14 $18 $16 $15 $20 $17 $0 $5 $10 $15 $20 $25 Blended SAC Lifetime Value* 3,349 4,445 4,892 5,492 6,717 6,676 7,577 8,020 25% 21% 22% 18% 20% 21% 16% 19% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 %Churn Subscribers Subscribers % Churn
  • 9. 9 Beta Key Performance Indicators (KPIs) Phase Key User Actions Beta KPIs Market Averages / Comps Acquisition Clicks on ad unit  ~3% click-thru rate (CTR)  <1% CTR Visits Screambox.com  50K unique visits / month  60% organic / 40% paid  NA Activation Signs up for account  25% visit-to-account conversion rate  30K accounts to date  2-5% visit-to-account rate Starts 30-day trial  33% account-to-trial conversion rate  14K trials to date  NA Revenue Becomes subscriber @ $3.99 / month  70%+ trial-to-subscriber conversion rate  7,500 subscribers as of May 31st  ~$7 blended subscriber acquisition cost ($ SAC)  <$10 micro SVOD $ SAC  $15-20 mass market SVOD $ SAC Retention Continues subscription  20% churn rate or 5 month lifetime  $21 lifetime value (LTV) or ~3x LTV / $ SAC multiple  5-7% steady-state mass market SVOD churn  3x+ LTV / $ SAC multiple target Comes back to service  2-4x average weekly log-in  NA Engagement Streams video  ~10 hours / month / user  ~15 titles / month / user  Netflix 30-50 hours / month / user Engages with community  25K Facebook fans  2x Facebook average engagement (likes, comments, shares)  NA
  • 10. 10 Platform Opportunity & Schedule Platform Est. Base Date 10M Launched 25M Q1 2015 20M Launched 65M Launched 50M Oct 29, 2015 225M Launched 110M Oct 26, 2015 180M L6aunched Total Estimated Installed 800M – 1B
  • 12. Motor Sports Guns / Hunting Martial Arts Horror Snow Sports Jazz Surfing Military Fashion Astronomy High School Sports Large & addressable market Currently underserved Accessible content Rapid concept testing Analytics-based selection Source & deploy content Develop & launch key device minimum viable products (MVPs) Begin to scale user acquisition approaches Get to 20K subscribers in 6 months Increase content investment & develop original programming Expand device footprint & accelerate product innovation Accelerate branding & marketing efforts Dedicated channel team Fantasy Sports Identify & Validate Launch & Beta Magic Scale & Grow Comics ~$1.5M per channel to break-even Channel Development Cycling Film Noir DIY Law Enforcement Bollywood Weight Loss Fishing Medieval Times LGBT Broadway 12
  • 13. $0.2 $3.0 $9.2 $19.8 $32.9 $46.1 $(0.5) $0.7 $4.3 $9.7 $17.3 $22.810 60 175 375 625 875 - 200 400 600 800 1,000 $- $10 $20 $30 $40 $50 Beta Year 1 Year 2 Year 3 Year 4 Year 5 ThousandsofSubs Millionsof$s Revenue Contribution Average Subs Per Channel Economics 1313 Channel Break-even Subscriber Lifetime Value Subscriber Break-even: 50k Subs $12 $7 $6 $5 $5 $5$(7) $22 $36 $49 $51 $47 $(20) $- $20 $40 $60 $- $3 $6 $9 $12 $15 Beta Year 1 Year 2 Year 3 Year 4 Year 5 LifetimeValue $SAC $ SAC (Blended) Lifetime Value (Net)

Editor's Notes

  1. Key Points: SFN is a portfolio – of one right now - genre-specific SVOD channels that focus primarily on niches with fanatical enthusiasts– horror, surfing, martial arts, science fiction, etc. Our goal is connect them with content & community Alternative content: Purpose a) To create communities of under-served fans & enthusiasts connected by relevant and genre specific video-based viewing experiences Purpose b) To connect under-served fans & enthusiasts with genre/life-style specific content & fan-based community
  2. Key Points: Consumers not just adopting OTT , but strong indicators they are leaning away from “owned” models (TVOD, DVD) to “all you can eat models” "All you can eat players" leaning into mass market programming models with focus on original episodic TV Problem for consumers &producers/distributors who want/do niche – classic long tail problem Consumers: Opportunity to deliver “Everything for someone” service to smaller audiences (Golden Coral vs. All u can eat Sushi) Producers: Long tail distributors & producers hurting. Netflix getting 50-100 titles a year from big Indie distributors (Radius, Magnolia, IFC). Opportunities to distribute lower demand content shrinking (1st/2nd windows limited. 3rd shrinking) Can support a channel with 65k subs & opportunities to reach & acquire subscribers not limited by walled gardens (MSO’s, Big media company bundles)
  3. Key Points: We fulfill our purpose by delivering Content – films of all types, lengths, from around the world, TV, long & short form video. Curation – We handpick our films, make sure they perfectly fit the needs of our fan-base. We use curators to score & solicit community feedback Context – We intend to add film-reviews, director cuts, interviews, and commentary related to the films we deliver as well as other content forms to enhance the viewing experience Community – We are addressing the needs of passionate fans. We spark important conversations about genre specific concerns and issues Connection – We are at the nexus of entertainment & technology. We enable our communities to connect with video-experiences and each other through the our comprehensive device penetration and careful use of data and algorithmic technology
  4. Key Points: Origin Story - Dan : Founder – rock in shoe – was the OTT opportunity, but tackling with a Everything for someone instead of a Something for everyone strategy - started with Horror and Scream Entertainment - Mike joined as co-founder : Digital media visionary / idea man behind Hulu / architect of MySpace / Consultant to UMG - saw opportunity, but realized it was broader than Horror and accumulated operating experience could allow for many successful channels - Realized they needed a operator with digital roots in technology to drive the ship. I joined in Feb - I joined because of the market opportunity, the customer-centric nature of the business, and because I believe winning is not just about great content, but about engineered and differentiated experiences Super Powers (Great team) - Mike – Understand of the market place, Experience & Connections - Dan – Experience with Content distribution specifically with independents & international - Kirk - Product & Strategy with domain experience in entertainment & mobile - Gary -Entertainment focused Business Development & Distribution partner sourcing & management - Kelly - HBS grad / deep undertanding of business modeling & strategic finance - David - General Management, company building – startup/growth mode, Product Strategy, Technology Dev, & Direct Response Marketing
  5. Key Points: Launched in Sep 2014 Key thesis to validate (Customer Discovery & Validation) Could we acquire, retain, delight, & get em to pay With lower cost, but highly targeted content & a very horror-centric user experience Being on all devices matters
  6. Key Points: Our users love the service The are 3x more active on FB then the mean and engage in a meaningful way on our FB page
  7. Key Point: - Our LTV > 3xCAC on a per subscriber basis we cover our variable costs by a factor of 3 TODO: update with data
  8. Key Points: We have a healthy subscriber funnel Acquisition – do well with paid and unpaid source & traffic is split 60/40 Opportunity to push new channels Very good at activating our Trialers Opportunity to improve with onboarding Revenue & Retention healthy with a LTV that pays back 3x against our blended SAC Opportunity to improve both with price-sensitivity testing, better content, more devices, improved UEX, & CRM programs Engagement is healthy – 10 hours & 16. More content & better community integration is our oportunity here TODO: update
  9. Key Point: We have had launched on 2 streaming device platforms, 1 IP TB, & 2 mobile OS – Seeing adoption on Roku We are going live with Xbox in June We are going live with Sony PS by Oct (Halloween) TODO: -Reorder & structure launched Remove Other Tabulate addressable
  10. Key Point: We have ideas about what channel to pursue, but we don’t have religion. We have religion about how we choose the channels we pursue Rigorous process of Validating the idea with tests Entering into a beta period to see if the channel has legs Then moving into a growth mode
  11. Key Point: - <Channel breaks even at 65k subs and contributes to fixed costs by year 2. A channel with 900k subs generates ~50 million a year with a 45% contribution As churn drops we will see our LTV (- variable costs > direct/content) will be almost 10x ouf