Click to edit Master title style. Investment Materials November 2013

Transcription

1 Click to edit Master title style Investment Materials November 2013

2 Executive Summary and Company Overview Click to edit Master title style Executive Summary Opportunity: Crackle ad sales has the opportunity to represent for YouTube ad sales and video brand integrations The representation may be executed in conjunction with a potential investment in f@ctory Crackle Commissions: Based on a commission to Crackle at 20% of YouTube ad sales and video brand integrations, Crackle ad sales is projected to benefit from the following revenue: The total commissions to Crackle do not include potential additional overhead costs for ad sales f@ctory Overview1 Description: A next generation media and entertainment company, creating and distributing pop culture orientated video content targeted for the millennial demographic Revenue Model: YouTube advertising, content licensing, marketing placements, f@ctory live events, YouTube paid subscriptions, merchandising, and creative services Distribution: YouTube, f@ctory website, domestic/international licensing, and f@ctory sponsored live events Content Category: Short-form (2:00 to 5:00 minute) original video content orientated toward the culture/lifestyle genre, targeted for the millennial generation (approximately 15 to 30 years old) Joint Venture: Atom Factory Estimated Launch Date: January 1, (1) Source: Company website and Capital IQ.

3 Atom Factory Overview Click to edit Master title style Company 3 Business Overview Description: Music artist, producers, and entertainment management company Operates AF Square, an angel fund with a portfolio including Spotify, Warby Parker, Songza, Uber, Dropbox, and Lyft Operates a record label, a joint venture between Capitol Records and Atom Factory to sign and develop new artists Founded: 2010 Description: Develops, produces, and distributes programming and branded content for TV, digital, films, music, commercials, and entertainment Operates a Film & TV division, focusing on development, production, and distribution of programming and branded content for television, film, digital, and on-site platforms FreemantleMedia, a subsidiary of RTL Group, acquired a 60% stake in October 2010 Estimated Revenue: $140MM Founded: 1993 Clients / Projects Lady Gaga (TBD1) John Legend Bon Jovi Jay-Z Source: Company website and Capital IQ. (1) It was recently rumored in the press that Lady Gaga and Atom Factory are no longer working together. Atom Factory has not confirmed these rumors.

4 Programming Shows Click to edit Master title style A Punk d meets Unplugged live music event Musicians pop up in unexpected places to play their hits, surprising audiences in an intimate, authentic open microphone session The youngest, most gifted musical prodigies in the world blow us away as they tell their stories and perform in f@ctory s live streams From the youngest DJ, up-and-coming MC, or violinist, GIFTD profiles and gives a live stage to the next generation of global musical talent A frank and witty series on love, relationships and sex, hosted by one of the globe s most original and insightful voices on relationships and sexuality, Dr. Ruth Engaging hot young people who are seeking to find the perfect balance between a happy relationship and the thrilling uncertainty of sexual attraction Two creative greats from two different fields are brought together to collaborate on a one-of-akind product, from art to fashion to gadgets, that our community can buy Watch the creative process unfold as egos and perspectives clash on the path to making something unexpected and beautiful available for purchase 4 Source: Company management.

5 Programming Shows Click to edit Master title(cont d) style Young CEOs are this generation s rock stars. Addressing what drives, inspires and consumes these entrepreneurial stars Explore their companies and their philosophies, seeing how they re using their hard-earned expertise to address the issues they re passionate about, from clean water to urban renewal and global poverty Closer than the front row, more intimate than backstage, NOMAD is part travel guide and part video log - true connoisseurs explore the best in global culture with our community A groundbreaking travel series sharing private moments with touring music artists as they visit their favorite spots - or discover new ones - around the world Giving audiences their weekly dose of cutting edge pop culture content featuring breaking tech, new global fashion, rising musical icons, quirky and addictive video horoscopes, and food and wellness Correspondents contribute from around the globe, viewers participate and interact, celebrities and artists drop in with cross-collaboration within the YouTube community Enter the world of Grammy-nominated producers, Da Internz, as they create their next mammoth hit and make their way to the top of the charts These two rising stars will grant us access to their lives and lifestyles, from the studio to the boardroom, as f@ctory chronicles their rise within the music business 5 Source: Company management.

6 Preliminary Programming Details Click to edit YR1 Master title style $3.6MM Year 1 Budget Rolling delivery December 2013 through November 2014 (Production Begins October 1, 2013) Show details: Pop-Spot Da Internz Nomad The Inter Course Mogul Giftd x 5:00 (episodes x minutes) 250 x 2:00 (episodes x minutes) 17 episodes per week Double Camera, Studio Based Live-to-tape; Lighting and Audio; Set Design and Construction 80 x 4:00-5:00 (episodes x minutes) 4 shoot windows, 20 episodes per window 80 x 2:00 (episodes x minutes) Single Camera Documentary/Verite 90 x 4:00 (episodes x minutes) 36 x 2:00 (episodes x minutes) 72 x 4:00 (episodes x minutes) 36 x 2:00 (episodes x minutes) 72 x 4:00 (episodes x minutes) 36 x 2:00 (episodes x minutes) 72 x 4:00 (episodes x minutes) 36 x 2:00 (episodes x minutes) Location Based 15 artists, 8-9 episodes per artist 1 Trip per Artist, Location Based Single Camera Doc/Verite 12 subjects, 9 episodes per subject Location Based Single Camera Documentary/Verite 12 subjects, 9 episodes per subject Location Based Single Camera Documentary/Verite 12 subjects, 9 episodes per subject Location Based Single Camera Doc/Verite

7 YouTube Advertising Click to edit Master titlerevenue style Discussion Revenue Build SPT Case Crackle projected to charge a 20% commission on YouTube ad sales $15.00 gross CPM $3.00 commission to Crackle $9.00 minimum CPM assumed to YouTube $3.00 net CPM to f@ctory Crackle projected to sell 8.4MM impressions in FYE15 (700K /month) growing to 44.9MM impressions in FYE19 (3.7MM /month) Assumes 8 new shows per year produced in FYE15 growing to 12 new shows per year in FYE19 Assumes a 12 month ramp up for Crackle ad sales team to sell f@ctory inventory Total cumulative ad sales revenue to Crackle of $506K from FYE15 to FYE19 based on 20% commission Cumulative gross revenue to f@ctory of $506K over the same time period No additional Crackle ad sales overhead costs (1) have been included Assumes each new program produces 183 annual episodes based off YR1 episodes projections for 8 programs. 7 (2) (3) Assumes $9.00 minimum CPM required to YouTube to serve direct sales. Does not include additional f@ctory Ad Sense revenue from f@ctory YouTube inventory not sold directly through Crackle ad sales team.

8 Brand Click tointegration edit MasterRevenue title style Discussion Crackle sales team projected to sell brand integration in 2 shows in FYE15 growing to 8 shows in FYE19 (1 year contracts) 28.7MM implied views in FYE15 (2.4MM /month) growing to 177.0MM views in FYE19 (14.7MM /month) for sold shows Assumes a 12 month ramp up for Crackle ad sales team to sell f@ctory shows 20% commissions or $3.13 of CPM to Crackle sales team in FYE15 growing to $4.75 in FYE19 Revenue Build SPT Case Shows sold at $225K average revenue per brand integration in FYE15 growing to $525K in FYE19 $15.66 implied gross CPM in FYE15 growing to $23.73 in FYE19 Total cumulative ad sales revenue to Crackle of $3MM from FYE15 to FYE19 based on 20% commissions Cumulative net revenue to f@ctory of $11MM over the same time period No additional Crackle ad sales overhead costs have been included 8 (1) Assumes each new program produces 183 annual episodes based off YR1 episodes projections for 8 programs.