IGNITE SPORTS -- CONFIDENTIALPAGE 1 Ignite Sports Publishing & iTV Market Strategy

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  • Ignite Sports

    Publishing & iTV Market Strategy

    IGNITE SPORTS -- CONFIDENTIAL

  • SummaryIgnites historical focus has been on interactive publishing for sports properties and media companies

    Always envisioned as the first leg of Ignites strategy to exploit the sports property, fan, and sponsor relationshipEstablish sports domain experienceDevelop important relationshipsFurther understanding of the fan/consumer relationship to interactive technologies

    Ignite has demonstrated expertise and competitive advantage in this areaMajority of current and historical revenue is from publishingProducts deliver acceptable gross margin and meet demonstrated client needs

    Sports vertical, however, has some unattractive dynamicsBoth major client target groups lose money and have little to spendMajority of economic value flows to the Athlete/TalentSales cycles are long and clients generally difficult to work with Absolute size of Ignite relevant market is relatively small

    IGNITE SPORTS -- CONFIDENTIAL

  • Summary (cont.)Interactive television is the next phase in Ignites evolutioniTV presents a new, and very attractive opportunityProprietary publishing system provides backbone of Ignite iTV offeringIgnite has or is developing key relationships along iTV value chainIgnite solutions enhance viewers television experience drive real valueOnce implemented, Ignite solutions can drive recurring monthly revenue streams (per subscriber fees)Relevant market size for Ignite is Billions, not millions

    IGNITE SPORTS -- CONFIDENTIAL

  • Remember this?

    IGNITE SPORTS -- CONFIDENTIAL

  • Interactive publishing - market positionIgnites position as the leading interactive sports solution provider to professional teams and leagues is built around several skills/assetsStrong team and league relationshipsProprietary publishing system, live event/data managementDemonstrated operational success with multiple clients, good reputation in the sports industrySkills in publishing data across multiple platforms (internet, wireless, iTV)Subject matter/domain expertiseWithin the sports vertical, these skills combine to form a competitive advantage that isnt easily replicatedOutside of sports domain, skills arent as uniqueWithout domain expertise & reputation, core strength is live event/data managementStrong, established players in other verticals (finance, weather, news, etc.)

    IGNITE SPORTS -- CONFIDENTIAL

  • Interactive publishing sports verticalSports vertical has two main target customer segmentsSports properties leagues, teams, governing bodiesMedia companies broadcasters, cable companiesIgnite has four main publishing products targeted toward the sports vertical SportsEditorTM Productized site offering Mainly geared toward teams but extensible for leaguesTeamConnectTM Email marketing servicesTicketWindowTM Season ticket management and customer serviceCustom Publishing Custom solutions for properties and leaguesEncompasses everything from custom sites to infrastructure type elements (e.g., digital asset management, universal registration, etc.)Market sizes, gross margins, and average deal size for each of these products vary greatly

    IGNITE SPORTS -- CONFIDENTIAL

  • Publishing sports vertical - market sizing$400$200$300$100$020%40%60%50%30%Anticipated Gross Margin (per deal)Average Deal Size (000s)Custom Publishing ($10 mm)Sports-Editor ($13 mm)Team-Connect ($3 mm)Ticket-Window ($1 mm)= $1 mm in market sizeEstimated Sports Publishing Market (2004)

    IGNITE SPORTS -- CONFIDENTIAL

  • Publishing sports vertical additional issuesBesides core product offerings, there are a number of other tools/capabilities Ignite maintains and develops to deliver publishing solutionsUDS, XPS, MemCache, JSLib, MSTNFL, NHL, MLB ToolkitFuseTalk, eShare, etc.Current costs/resources required to manage these tools not very visible or well understoodNo formal product managers or roadmapsRequirements primarily driven by customers, frequently at the 11th hour

    IGNITE SPORTS -- CONFIDENTIAL

  • Publishing strategy core products

    IGNITE SPORTS -- CONFIDENTIAL

  • Publishing strategy - summaryInteractive publishing business is still an integral part of the original Ignite vision of exploiting the relationship between sports properties, fans, and sponsorsAs adoption of new technologies advances, our focus shifting from PC to iTVPublishing market very important to Ignite in near-term75% of Ignite current revenueSignificant long-term revenue growth constrained by several factorsSize of Ignite relevant marketFinancial resources of customer baseResource allocation for Publishing is currently at 70% of Ignite total resources, higher than it should be given long-term strategy

    IGNITE SPORTS -- CONFIDENTIAL

  • Interactive television market positionIgnite competitive position is low-to-moderatePublishing strengths translate wellUnique IP real-timeCross-platform approachGood relationships, need moreUnbrandedAward-winning experience - MSG/CablevisionGetting knownOthers already playing with our clients have more dealsMetaTV Cox, ComcastExtend Cablevision, ESPNMarket attractive58M iTV subs in 2005DTV revenue $20+B in 2003iTV ad revenue $20+B in 2005Gut Check:Need to focus on investment, prepare for growthMindshare before marketshareCustomer-centric before profit-centric$ / Sub is the ultimate goal, but we wont get there this year

    IGNITE SPORTS -- CONFIDENTIAL

  • Interactive television - market sizing$2,000$1,000$1,500$500$020%50%80%65%35%Anticipated Gross MarginAverage Deal Size (000s)Broad- cast Events ($15 mm)= $5 mm in market sizeEstimated iTV Market (2004)

    IGNITE SPORTS -- CONFIDENTIAL

  • iTV & Publishing - market sizing$2,000$1,000$1,500$500$020%50%80%65%35%Anticipated Gross MarginAverage Deal Size (000s)Broad- cast Events ($15 mm)= $5 mm in market sizeEstimated Market (2004)Custom Pub ($10mm)Team-Connect ($3 mm)Ticket-Window ($1 mm)

    IGNITE SPORTS -- CONFIDENTIAL

  • Ignite iTV assets: Products, Intellectual Property, & Intellectual CapitalIgnites real-time publishing system Cross platform now and cross-genre capable3 Products built on system that manage and enhance live programmingCustomization engineAlert capabilitiesPatent developmentSystem and Method for event-driven programming Others in developmentRelationships and/or prototypes for all significant middleware players:Liberate Compact and Liberate Standard, MSNTV, MSTV, UltimateTV programs, OpenTV, Spyglass, Sony, PowerTV, Seachange VOD, Wink, Canal+ Media Highway, MotorolaStrategic PartnershipsHave: Teams, Leagues, Media Cos (many); MSO (Cablevision); Content (TMS, SportsTicker, AP, IDS, etc.); MiddlewareNeed: MSOs, broadcasters, tech companies (Motorola, Intel, MetaTV, etc.)Bandie award for best virtual channel.

    IGNITE SPORTS -- CONFIDENTIAL

  • Ignite iTV solution: managing the live TV experienceIgnite solutions uniquely allow consumers to create a better TV experience. Sports is the leading category for live content. Architecture is extensible to cross-genre.

    IGNITE SPORTS -- CONFIDENTIAL

  • Customers and CompetitionIgnite has developed relationships with individual companies in each client category; has not fully penetrated categories. Ignites value proposition is unique versus the competitionCustomers:MSOs (Cablevision, Comcast) Note 100s of potential clientsBroadcast Nets (NBC, CBS)Cable Nets (ESPN, MSG)DBS (DirecTV, Echostar)Leagues (NFL, NASCAR, WWE)Middleware providers (Liberate, Microsoft)Platforms (Motorola, S-A)E-commerce & Services (Ticketmaster on Cablevision)CompetitionDevelopers: Extend, Gold PocketTools: MetaTV (portal), Intellocity/ACTV (ad insertion), Watchpoint (post production tools)MSOs or middleware providers themselves

    IGNITE SPORTS -- CONFIDENTIAL

  • Ignite In the ITV Market Strategic Position AnalysisWhat do we do to BUILD / INVEST?Hire / Train More people working on ITV productsGain additional experience; build products Focus on sports first, then cross-genre. InfrastructureProve out application services modelIntegrate TMS dataBuild prototypesDCT2000, Fantasy Alerts, Copilot, Cast productsDo trials with key partners Gain additional broadcast experience through these partnershipsEstablish relationships with key sponsorsNeed to build barriers to entry Core IP, File more patentsWhat do we prepare to GROW the business?Increase Mindshare more PRLeverage existing relationships with Leagues, Teams (i.e Consulting opportunities)Get involved in trials S-A, Comcast, DigeoDemonstrate thought leadership paint picture of the future Alerts, PVRs, PIP, cross-platform, etc. Trade show speaking engagements, other PR.Take prototypes to key industry shows and demonstrate to key potential clients Core IP, multiple platforms, multiple STBs, multiple infrastructuresClose revenue gap TicketMaster, HITS, etc.

    IGNITE SPORTS -- CONFIDENTIAL

  • Ignites iTV Model will evolve with the industry

    Today: Product & Service Future: Subscription/Licensing

    IGNITE SPORTS -- CONFIDENTIAL

  • Gemstar-TV Guide International, Inc. (GMST)

    2001 Total Revenue: $1.4bn; $327mm in Tech and Licensing Current Market Cap: $4.7 billion 52 week high-low: $49.95-$8.88 Gemstar installations: 30,000 per day Gemstar IPG subscribers: 15.1mm in 02; projected 27.2mm in 05 Per sub licensing fees and HW mfg fees: $327 mmAdvertising, interactive services, e-commerceTV Guide magazine, TV Guide Channel, Sky Mall

    IGNITE SPORTS -- CONFIDENTIAL

  • iTV Market in households and digital TV revenues (U.S. only)

    IGNITE SPORTS -- CONFIDENTIAL

  • Interactive television is projected to have the highest media growth over a 5 year window

    Source: Forrester, eMarketer*iTVs revenues include advertising revenues and consumer generated revenue streams (VOD and t-commerce).

    IGNITE SPORTS -- CONFIDENTIAL

  • Current Ignite personnel allocation

    IGNITE SPORTS -- CONFIDENTIAL

  • Future Ignite personnel allocation (draft)

    IGNITE SPORTS -- CONFIDENTIAL

    Technology and Licensing:Responsible for the development, licensing and protection of intellectual property and proprietary technologies (The Companys technology includes IPGs marketed under Guide Plus+ and TV Guide Interactive brands, the VCR Plus+ and eBook

    Revenue from ongoing per unit license fees typically charged to HW manufacturers are earned based on shipping

    Revenues from on-going per subscriber license fees typically charged to MSOs are earned and recognized in the month service is provided using the Companys patented proprietary technologies.

    Interactive Platform: Revenue from advertising, interactive services and e-commerce on the Companys proprietary platforms

    Media and Services Sector:Operates TV Guide Magazine, TV Guide Channel, TVG, SkyMall catalogs, SNG and other non-interactive platforms and media properties.

    IGNITE SPORTS -- CONFIDENTIAL

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