1. THE MOGUL’S GUIDE TO TMT
HELLO TECH, MEDIA, & TELECOM, MEET THE FUTURE
Joseph Mathew | J.D./M.B.A. University of Virginia
josephmathew10@gmail.com | (706) 255-9793
September 15, 2013
Executive Level
2. TABLE OF CONTENTS
2
Black Box Breach
DragonRex 11
IceDragon 19
Investors Only 25
Empire Building 27
Appendix I: IceDragon Perspectives Analysis 41
Appendix II: Media Industry General Overview 44
Overview 3
6
4. THE MOGUL’S GUIDE: OVERVIEW
This guide is intended as a chart for intelligent media and technology chief
executives
o To be used in navigating the dark and choppy waters of the future
And also presents a few potential blueprints for significant market
opportunities for those executives as well as investors
4
5. THE MOGUL’S GUIDE: SECTIONS
Black Box Breach
o Paints the picture of the future living room
Provides key insights necessary in developing your company’s
comprehensive strategy for the next decade
DragonRex
o Articulates the devices that will own the living room of the future
IceDragon
o Furnishes a missing piece in the advertising technology arsenal for media
firms readying themselves for home entertainment dominated by the
internet
Panthera
o Global news gateway
Empire Building
o Crystallizes and expands the franchise monetization model developed by
The Walt Disney Company
5
7. BLACK BOX BREACH EXECUTIVE SUMMARY
Thesis
o The contest over the future of your living room will be won, in the near
future, in decisive fashion
By hardware, content, and services infused with the internet
throughout their D.N.A.
Rationale
o As Millennials’ & Emerging Markets’ voracious appetites for streaming
video steadily increases,
o Telecommunications providers will eventually meet that need,
Creating a virtuous spiral for online media service creators and
facilitators
7
8. SUPPORTING DATA
Internet data consumption skyrockets
o Netflix accounts for about 1/3rd of peak period downstream traffic in North
America, while YouTube eats up 1/5th of mobile network traffic1
Jet speed internet approaches for landing
o Google Fiber is turning up the pressure on entrenched internet providers
o An Alcatel-Lucent and France Télécom-Orange test in February 2013
clocking speeds at a smoldering 400 gigabits-per-second2
Troublesome youth
o Only 26% of Millennials watch more than 20 hours of television per week,
While 49% of non-Millennials do so
o 42% of Millennials prefer to consume television content through their
computer through services such as Netflix, Amazon Prime, and Hulu,
While only 18% of non-Millennials prefer the same3
Emerging market viewers’ aversion to cable
o Viewers in Brazil and China prefer online video to television4
8
9. RAMIFICATIONS
Crown the internet
o The average future living room, within two decades, will revolve entirely
around the internet
Go global or go home
o Global brands will completely dominate mere domestic players
À la carte is the future
o The available apps, of which there will be hundreds or even thousands,
will each represent branded channels and services
Deploy capital accordingly
o Former cash flow generators will depreciate faster than forecast
Television stations
Cable distribution
Satellite distribution
o Certain properties may be undervalued
Regional wireless communications providers
Entertainment intellectual property owners and generators
9
10. SOURCES
1. Sandvine Global Report: Internet Data Usage Up 120 Percent In North America, Sandvine (April 30, 2013),
http://www.sandvine.com/news/pr_detail.asp?ID=394.
2. Bernhard Warner, Alcatel-Lucent Unveils World's Most Powerful Broadband Infrastructure, Bloomberg Businessweek (April 30,
2013), http://www.businessweek.com/articles/2013-02-15/alcatel-lucent-unveils-worlds-most-powerful-broadband-infrastructure.
3. Christine Barton, Chris Egan, Jeff Fromm, The Millennial Consumer Debunking Stereotypes, The Boston Consulting Group (April
30, 2013). http://www.brandchannel.com/images/papers/536_BCG_The_Millennial_Consumer_Apr_2012%20(3)_tcm80-
103894.pdf.
4. Sam Gutelle, China and Brazil Leading Global Expansion Of Online Video, tubefilter (August 12, 2013),
http://www.tubefilter.com/2013/07/02/edelman-study-entertainment-goes-global/#sthash.W826Wx6W.dpuf.
10
12. WHAT DEVICES WILL RULE THIS FUTURE LIVING ROOM?
DragonRex: Media Dream Machine
o XBox One/PS4 + Smart TV – Cable/Satellite Input + Necessity
Programming (for the Millennial viewer)
= DragonRex
= Media Portal
o Services
A Media & Entertainment Portal
Gaming, Movies, Channels (News/Live Events/Episodes), Indie
Headsets/Glasses
o Virtual Reality (VR)
Oculus Rift
o Augmented Reality (AR)
Google Glass
o VR + AR
Microsoft’s Fortaleza
12
13. DRAGONREX OVERVIEW: PHASE I
DragonRex specs
o Ram - 32 GB, CPU Cores/Threads - 32/32, Storage - 2 TB, Motion
Control - Leap Motion, OS - Android, Data -
Ethernet/WiFi/Bluetooth/HDMI Audio Output, Dimensions - 65”
Diagonal/4 mm Edge, Design - Ellipse
Millennial Necessity Programming à la carte (MNP)
o ESPN
Leverage - Fox Sports One, Tennis Channel, Golf Channel, MLB
Network, NFL Network, NHL Network, NBA TV…
o HBO GO (minus the cable subscription)
Leverage - Netflix, Prime, Showtime, DreamWorks Animation…
o Netflix &/or Amazon Prime
Gaming beast
o EA, Activision Blizzard, Rockstar Games, Valve, Ubisoft…
Leverage - Zynga, Gree, DeNA, Rovio, King…
Movies/Channels/Indie
o Streaming (Netflix, Prime, Hulu, Crackle, YouTube…)
o Download (Hard Disk, IceDragon)
13
14. DRAGONREX MEDIA NEGOTIATIONS: SECRET SAUCE
What do the major media players want?
o Disney/Time Warner/21st Century Fox/Viacom desperately want 24/7
branded channels in China
What does the Chinese government want?
o Their own Disney/Time Warner/21st Century Fox
Multiple media empires originating from China1
What will DragonRex have?
o A media portal built specifically for the needs of emerging markets
Global
Internet based
Zero barriers to entry for channel distribution
14
15. DRAGONREX MEDIA NEGOTIATING: PROPOSED DEAL
The major media players allow their content and apps on the DragonRex
platform
In exchange, the Chinese government allows those players access to their
market via the DragonRex platform
In exchange, DragonRex grants China’s emerging media firms (Xinhua
News Agency, CCTV, Oriental DreamWorks…) Most Favored Channel
status
o Prioritized placement on home screens
o Advertising
o Global audience
o Advisory
15
CHINA
DRAGONREXMEDIA FIRMS
à la carte premium content
access to emerging markets &
millennials
16. HEADSETS/GLASSES INITIAL KILLER MARKETS
AR
o Transport (Driving, Shipping, Aviation)
o Military combat
360° vision+
• 360° cameras
• Drones+
• Satellites+
• Military intel+
• Unit, division, company intel+
• Orders+
VR
o Hardcore gaming
o Sports programming
o Military training
16
VR + AR
o Sports programming
o General gaming
o Shopping
o Social interactions…
17. DRAGONREX & VR + AR GLASSES:
THE FUTURE OF SPORTS PROGRAMMING
DRAGONREX
o Traditional live sports displayed through the main media portal at the
center of the living room
VR + AR Glasses
o VR
Displays multiple additional angles of the action
• Premium subscription potential
o AR
Displays additional data
• Commanded by voice, gesture, and device
• On players, teams, and plays
• Based on recognition of images displayed on the DragonRex
portal
17
18. SOURCES
1. Joseph Mathew, Go For Launch: Disney’s Recipe For Successfully Piercing The Media Veil In China, (August 13, 2013),
http://www.slideshare.net/codycostarica/disney-china-media-memo-joseph-mathew.
18
21. 21
CONSUMER
ICEDRAGON
CLOUD
(Utilizing AWS)
A. Consumer Inputs Data (age/sex/etc. with fewer ads per data)
B. Consumer Provides Ad Feedback (up/down votes, rankings, written)
IceDragon Package Delivered (Ads+Containers+Content)
AdUpdates
AD
AD
CONTENT
AD
CONTENT
ADCONTAINER
Ads Segmented
By Demographic
AD AGENCIES &
CONSUMER PRODUCT COMPANIES
Ad
Updates
IceDragon Proprietary
Binding Tech
DISTRIBUTION
CHANNELS
ICEDRAGON CONCEPT
22. INTERNET
DOWNLOAD
KEY
Hierarchy Of Importance
To Millennials
TIER I = HIGH
TIER II = MEDIUM
TIER III = LOW
22
MEDIA CONTENT LANDSCAPE
MILLENIAL CONSUMER PERSPECTIVE
HIGH PRICE
INFLEXIBLE TIMING
DIGITAL VIDEO
RECORDERS
VIDEO ON
DEMAND
LOW PRICE TIER I
FLEXIBLE TIMING
TIER I
HIGH MOBILITYLOW MOBILITY
LOW QUALITY
HIGH QUALITY
TIER II
TIER II
CABLE
NETWORKS
SATELLITE
HIGH MOBILITYLOW MOBILITY
LOW QUALITY
HIGH QUALITY
HIGH MOBILITYLOW MOBILITY
LOW QUALITY
HIGH QUALITY
HIGH MOBILITYLOW MOBILITY
LOW QUALITY
HIGH QUALITY
DVD/BLU RAY
HIGH ADVERTISING
LOW ADVERTISING
HIGH OWNERSHIPLOW OWNERSHIP
TIER III
TIER III
ICEDRAGON
HIGH ADVERTISING
LOW ADVERTISING
HIGH OWNERSHIPLOW OWNERSHIP
INTERNET
STREAMING
MEDIA
PLAYERS
23. 23
CONTENT VALUE CHAIN
OLD BRAND NEW
LOW PRODUCTION VALUE
HIGH PRODUCTION VALUE
NETWORK SERIES
BRAND NEW
CABLE SERIES
BRAND NEW
YOUTUBE
INDIVIDUAL VIDEOS
BRAND NEW
SHORT MOVIES
BRAND NEW
YOUTUBE
CHANNEL VIDEOS
BRAND NEW
FEATURE FILMS
BRAND NEW
ICEDRAGON APP
SWEET SPOT
NETWORK SERIES
RECENTLY AIRED
CABLE SERIES
RECENTLY AIRED
YOUTUBE
INDIVIDUAL VIDEOS
RECENT RELEASE
SHORT MOVIES
RECENT RELEASE
YOUTUBE
CHANNEL VIDEOS
RECENT RELEASE
FEATURE FILMS
POST-DVD RELEASE
NETWORK SERIES
POPULAR SERIES
CABLE SERIES
POPULAR SERIES
YOUTUBE
INDIVIDUAL VIDEOS
OLD
SHORT MOVIES
OLD
YOUTUBE
CHANNEL VIDEOS
OLD
FEATURE FILMS
CLASSICS
POPULAR MUSIC
BRAND NEW
POPULAR MUSIC
RECENT RELEASE
POPULAR MUSIC
OLD
AMATEUR MUSIC
BRAND NEW
AMATEUR MUSIC
RECENT RELEASE
AMATEUR MUSIC
OLD
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
MILLENNIAL CONTENT
28. OVERVIEW: THE STORY BRIDGE MODEL
The central element
o The most profitable franchises in media & entertainment have a common
core element: a timeless story
The story bridge model
o Six phases
o One continuous story
Data points
o Even with the evidence staring directly at them, no media firm has
completely implemented this model on an institutional basis
2. NOVEL
3. GRAPHIC NOVEL/
COMIC BOOK
4. VIDEO GAME
(IMMERSIVE/SOCIAL)
5. MOVIE
6. CONSUMER PRODUCTS +
THEME PARKS +
ONLINE CONTENT
1. STORY
28
29. CONSIDERATIONS
Non-Monetary
o Brand
Story
Cross-generational fan base
Immersive experience
o Sustained PR
Monetary
o Synergies across businesses
Novel
Graphic Novel
Video Game
Movie
Theme Park
Consumer Products
Online Content
29
30. FRANCHISE
PHASE I: FINDING THE STORY - RESEARCH & DEVELOPMENT
Research & Development
o Cast wide net initially
o Initial emphasis on low cost distribution routes, before minting franchises
STORY
STORY
STORY
STORY
STORY
STORY
Creative Brainstorming
Treatments
Short Stories
Comic Books
Graphic Novels
Novels
Graphic Novels
30
31. PHASE II: THE GRAPHIC NOVEL/COMIC BOOK SERIES
Potential
o Great novels can be turned into great graphic novels and comic books
Why Graphic Novels
o Maximizes fan base
Engages all ages
• Kids through Fan Boys/Girls
o Most valuable customers
Developing deeply loyal fan base ensure lifetime customers
Data Points
o Spiderman, Batman, Avengers…
Implications
o Future storylines can “test the water” by releasing a leather bound, digital
moving image enabled, graphic novel
Before green lighting the screenplay
31
32. PHASE III: THE NOVEL
Potential
o Great stories can be turned into great novels
Why Novels
o Maximizes engagement level
Plot background
Character development
o Customer segmentation
By attacking every customer segment, a media firm builds value
exponentially
Increases the number of potential people with emotional stakes in
any storyline
o Creates potential for spinoffs of secondary characters and storylines
Data Points
o Harry Potter
o The Lord Of The Rings
32
33. PHASE IV: THE VIDEO GAME
Why Video Games
o Immersive
The experience is as immersive as technology allows
o Social
Role Playing Games create vast social networks
o Untapped Potential
Increase value by placing a video game’s story in an actual story
sequence between the first and second novels
Data Point
o Halo
Over 40 M copies sold worldwide, generating more than $3 B in
merchandise
1
Arrogance in Microsoft’s initial foray into the film industry has delayed a
movie deal
2
Even amidst such neglect, fan fiction has propagated
Rooster Teeth’s success with Red vs. Blue
2.1 M subscribers on YouTube
33
34. PHASE V: THE MOVIE
Why Movies
o PR
Press generated by summer event movies
o Society
Mainstream society considers movies as the “ultimate” form of a story
o Reach
Allows casual fans to engage with story with limited price, time, and
commitment
Potential for long term reengagement through television and digital
sales
Data Points
o Star Wars
o Jurassic Park
34
35. PHASE VI: CONSUMER PRODUCTS, THEME PARKS, ONLINE
Consumer Products
o Increases reality for kids by connecting real life sensory experiences,
activating their imaginations
o Data Point
Toy Story 3
• More than $1 B box office sales, but $7.3 B in retail sales
3
Theme Parks
o High CapEx places a barrier to entry for competing firms
o Involves entire family
o Data Points
Pirates Of The Caribbean
Harry Potter
Online
o Potential to provide an additional story bridge between the movies and
video games
o Data point: Pixar’s shorts
35
36. MEDIA TOYS FOR THE FUTURE: THE STORY BRIDGE CONCEPT
By creating a seamless story that bridges from
Graphic novel to
Online episodes to
Movie to
Toy(s) to
Theme parks and beyond!
A media firm multiplies the value generated by their elite intellectual property
Each phase, ideally, should represent a stand-alone chapter, of a continuing
story line
36
37. MEDIA TOYS FOR THE FUTURE: SMART TOYS
Toys should be as smart, or smarter than our phones and tablets
Once toys are infused with near artificial intelligence, the consumer
products phase within the story bridge can be taken to another level
Implications
o Smart toys could lead their owner on an adventure, which is an integral
part of the franchise story line
o Major consumer product plot points could only occur with the combination
of multiple toys together
Encouraging children to organize socially to complete plot points
37
38. THEME PARKS ARE NOT JUST FOR KIDS ANYMORE
Media-technology firms that tend to generate adult focused intellectual
property
o Have enormous monetization opportunities open to them in the form of
live entertainment parks
Adult theme parks
o Military training and competitions (Call Of Duty)
o Weapons training (Assassin’s Creed)
o Science fiction adventures (Halo)
o Racing (Forza Motorsport, Need For Speed)
Meeting live entertainment objectives could have virtual rewards
38
39. ACQUISITION OPPORTUNITIES
Studios
o DreamWorks Animation
o MGM
Consumer Products
o Hasbro
o Mattel
Gaming
o Electronic Arts
o Activision Blizzard
Franchise Potential Properties
o Halo
o Hitchhiker’s Guide To The Galaxy (reboot)
o Red Wall
o Dune
39
40. SOURCES
1. Erik Kain, New Halo 4 Details, Screenshots Emerge As 343 Industries Takes The Warthog's Wheel, Forbes (August 13,
2013)http://www.forbes.com/sites/erikkain/2012/03/05/halo-4-screenshots-details-revealed-new-multi-player-redesigned-master-chief-
as-343-industries-takes-the-warthogs-wheel/.
2. Guest Blogger, Why the Halo Movie Failed to Launch, WIRED, (August 13, 2013) http://www.wired.com/gamelife/2012/04/halo-
movie-generation-xbox/.
3. The Walt Disney Company Investor Conference 2011, (August 13,
2013)http://cdn.media.ir.thewaltdisneycompany.com/2011/events/ic/2011_Investor_Conference_Transcript_FINAL.pdf
40
42. ICEDRAGON PERSPECTIVES ANALYSIS – PART A
42
HARD COPY STREAMING LIVE DVR/ON-DEMAND ICEDRAGON DOWNLOAD
DESCRIPTION Physically tangible
Requires additional device to play
Streaming digitally directly onto
device
Live broadcasts through specific
devices (generally television)
Record onto a specific device
(television)
May be subject to restrictions
Satellite/Cable provided devices
Third party devices (TiVo, Apple
TV…)
Record media onto any
TYPE DVD
BluRay
Flash Drive
Internet
Satellite
Cable
Internet
Cable
Satellite
Network Satellite
Digital Video Recorders
Video On Demand
Internet
Cable
Satellite
Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits
CONSUMER’S
PERSPECTIVE
Tied to physical
location
Mobile Hyper-
Unfriendly
Secure
Portable
Highest
Definition
Skip trailers/ads
Flexible timing
Buffering is
awful!
Often low
quality
Limited
connectivity
across
platforms
Why pay for
permanent beta
products?
Forced ads
Portable
Mobile Friendly
Flexible timing
Connectivity
issues
Mobile
unfriendly
Forced ads
Inflexible timing
Fair quality
Potential for an
“event” dynamic
(Superbowl,
American Idol
Finals)
Premier option
when results
matter (sports,
competitions)
Connectivity
issues
Limited hard
drive space
(depending on
provider)
Not “live”
Mobile
unfriendly
Flexible timing
Skip ads
High quality
Forced ads
Not “live”
Privacy (who
sees the data?)
Highest quality
Mobile friendly
Flexible timing
MEDIA FIRM’S
PERSPECTIVE
Increasing
digitization of
society
Increasing
ubiquity of
mobile devices
Secure (less
piracy)
Charge
premium for
ownership
Available only
through internet
(does not reach
rural areas)
Secure
Forced ads
Lower quality
than live, so
can argue for
higher fees to
distribution
channels and
consumer
product
companies
Mobile Friendly
Mobile
unfriendly
Lower
viewership
depending on
audience
schedules
Enables high
drama for
specific
episodes
Potential to
drive social
conversation
Angers
advertisers,
may drive lower
prices paid
Increases
viewership
potential
Ownership by
the consumer
Secure
Forced ads
Mobile friendly
Maximizes
viewership
DISTRIBUTION
FIRM’S
PERSPECTIVE
Does not use
media
distribution
channels
except physical
and online retail
stores
Bandwidth
strains
Technology not
developed
Consumer
complaints for
purchases that
have low
quality
Flexible timing
Can charge
premium pricing
for in-home
convenience
Potential
bandwidth
strains at big
events
Potential to
show multiple
sources of
content
unavailable in
any other
format
Bandwidth
strains
Technology not
developed
Consumer
complaints for
purchases that
have low
quality
Flexible timing
Can charge
premium pricing
for in-home
convenience
Chance for
increased
subscription fee
Potential to
remove
Cable/Satellite/
Networks
providers out of
the equation for
certain
channels
Potential for
fewer rentals
Reduce
bandwidth
strains and
impending
“bandwidth cliff”
as consumption
patterns evolve
Consumers
can download
outside of peak
hours
43. ICEDRAGON PERSPECTIVES ANALYSIS – PART B
43
HARD COPY STREAMING LIVE RECORDER/ON DEMAND ICEDRAGON DOWNLOAD
DESCRIPTION Physically tangible
Requires additional device to play
Streaming digitally directly onto
device
Live broadcasts through specific
devices (generally television)
Record onto a specific device
(television)
May be subject to restrictions
Satellite/Cable provided devices
Third party devices (TiVo, Apple
TV…)
Record media onto any
TYPE DVD
BluRay
Flash Drive
Internet
Satellite
Cable
Internet
Cable
Satellite
Network Satellite
Digital Video Recorders
Video On Demand
Internet
Cable
Satellite
Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits Drawbacks Benefits
CONSUMER
PRODUCT
COMPANY’S
PERSPECTIVE
Consumers
skip ads
Significant time
delay potential
for ads
Non-targeted
ads
Poor ad quality
Tendency of
consumers to
shift attention to
other screens
and web pages
and/or mute
Forced ads
More targeted
Non-targeted High audience
potential
PR potential
Ability to skip
ads
Highly targeted
ads
Ability to
segment
purchases by
individual
Maximizes
audience
potential
Forced ad
views
ADVERTISING
AGENCIES’
PERSPECTIVE
Consumer may
skip ads
Poorer quality
leads to
potential for
fewer audience
Forced ads
Poorer quality
leads to
potential for
fewer audience
Vague mandate
due to limited
targeting for
large events
High audience
potential
Ability to skip
ads
IceDragon has
leverage on ad
placement
Potential for
forcing to
improve quality
of ad
Potential for
restrictions on
timing (shorten
or lengthen) to
maximize
audience
viewership
Ability to target
ads most
specifically
Potential for
increased
number of
types of ads by
demographic
segmentation
Potential for
customer
reviews of the
advertisements
45. MEDIA INDUSTRY GENERAL OVERVIEW
CONTENT
o Types
Film
• Kids
• Teens
• Adults
Television
• Networks
• Cable
Music
Novels
Comics
Advertising
• Creative
• PR
• Media Advisory
o Production
Story Origination
Talent Management
Financing
Technology
• Hardware
• Software
45
DISTRIBUTION
o Internet
o Cable
o Satellite
o Cellular
o Radio
o Experience
Theme Parks
Concerts
Sports
• Professional
• Amateur
Theater
Gambling
45