Transcript Presentation Composed By: James Wang, Linda Yu, Michael Tao, Tony Liu April 20, 2007

Presentation Composed By:
James Wang, Linda Yu, Michael Tao, Tony Liu
April 20, 2007
Please do not click on the screen at this moment
Projected US Online Video Advertising Spending Growth
Men 18 to 34 as a percentage of:
and
Share
2006-2010
% of Age Groups
that TV
Watch
Online/Mobile
Video Once a
BBC/ICM
Viewing
Habits Survey
Online Video Growth
(% increase vs. priorWeek
year and
of total online ad spending)
or%More
Viewing Habits
Age Groups
90.00%
30%
United States male population
1%
80.00% 25%
25.3%
3%
20%
70.00%
20%
Males Online
50.00% 15%
Capturing the Market
40.00%
36.4%
Male internet users
60.00%
10%
I watch a lot less normal TV as a result of
my online/mobile viewing
I watch a bit less normal TV as a result
I watch about the
same amount of TV % change
my online viewing is extra
Share of internet total
I watch more TV because of my
online/mobile viewing
23%
54%
40.7%
Time spent online by males
30.00%
Data Analysis:
Online
The
This
largest
convergence
demographic
videoviewer
is ofis
growing
reducing
demographic
one
these
offactors
therapidly
the
most
time
creates
foras
online
a an
share ofis
people
videos
influential
opportunity
spend
total
the
for
inage
online
on
online
thegroup
advertising
watching
16
based
market
to 34.
services.
which
traditional
spending.
did not
television.
exist
before.
Joost is
Additionally,
will
expected
consequently
this to
is the
benefit
Similarly,
draw
preferred
Joost
its
is from
uniquely
viewers
market
Joost
thiswill
trend.
of cut
heavily into
primarily
television
situated
tofrom
advertisers.
capitalize
TV’s
this
market
demographic.
upon
this
share.
opening.
None
20.00% 5%
10.00%
0.00%
0%
42.1%
Total pages viewed by males
16-24
2006
25-34
2007
35-44
2008
45-54
2009
55-64
2010
65+
Source: comScore Media Matrix for OnlineSource:
Publishers
Association
eMarketer
Report
Source: BBC/ICM
Further improvements to online video sharing:
Joost Background
About the Product
Benefit Analysis
Business Model
What is it?
-High
qualitythrough
video:
of files
provides
Free
TV provided
thePeer-to-peer
internet. It reliessharing
on partnerships
with
content a
distributors
programming.
Additionally,
incorporates
network toforprovide
sharing
videos. This
systemit seamlessly
eliminates
up to one
internet
features
such as instantneeded
messaging
news feeds
into the product.
third of
the bandwidth
to and
download
content.
The company, founded by Niklas Zennstrom and Janus Friis in early 2006,
-Ease of
currently
hasnavigation:
80 employees. Channels organized both in list form
and by category.
The next step
Currently in Beta-version and only available by invitation. Expected to be
-Elegant
design:
Web applications
integrated in an
widely
available
in the second
quarter of this year.
unimposing way.
Analysis:
Joost takes advantage of the
interactions between the
parties exhibited to
formulate a strong base for
revenue growth.
-High quality, reliable content: Professional programming
(i.e. MTV, National Geographic, BET, Comedy Central, etc.)
provided by TV networks eliminates copyright issues.
Overall Ratings
Joost
YouTube
Sling Media
Media Center
Traditional TV
1
2
Joost
Income Statement ($ U.S. Dollars)
Income Statement
FY 2008
x 10 million
3
2
Joost
Within a year, Joost is
expected to break even
and begin turning a
profit.
FY 2012
$11,700,636
$164,717,797
$169,461,997
$172,828,060
$175,438,981
$0
$0
$0
$0
$0
Product Three
$0
$0
$0
$0
$0
Services
$0
$0
$0
$0
$0
$11,700,636
$164,717,797
$169,461,997
$172,828,060
$175,438,981
$759,700
$794,325
$785,881
$824,055
$864,138
$10,940,936
$163,923,472
$168,676,115
$172,004,004
$174,574,843
100%
$6,120,672
4%
$22,746,761
14%
$4,627,968
3%
$33,495,401
Sep-08
20%
100%
$6,406,545
4%
$23,421,538
14%
$4,761,243
3%
$34,589,326
Dec-08
20%
100%
$6,706,713
4%
$23,928,135
14%
$4,868,874
3%
$35,503,722
Mar-09
21%
100%
$7,021,888
4%
$24,344,632
14%
$4,963,419
3%
$36,329,938
21%
2 Sold
Cost of Goods
$ U.S. Dollars
FY 2011
Product Two
Total Revenue
Analysis:
Estimates based on
Silicon Valley high tech
salaries, recent TV
viewing trends, and
advertising revenue of
similar firms.
FY 2010
Cash Flow Breakeven
Revenue
Cash Flow Graph
FY 2009
Gross Margin
1
% of Revenue
Operating Costs
Engineering
% of Revenue
1
Marketing/Sales
% of Revenue
Administration
% of Revenue
Total Operating Expenses
Jun-07
% Sep-07
of Revenue
Income(1)
Before Int & Taxes
% of Revenue
Income Before Taxes
Tax Exp
Net Income
% of Revenue
Dec-07
Mar-08
Receipts
94%
$5,848,411
50%
$3,541,757
30%
$1,531,063
13%
$10,921,231
Jun-08
93%
$19,705
0%
$19,705
$7,882
$130,428,071
79%
$130,428,071
Disbursements
$52,171,228
$134,086,789
79%
$134,086,789
$53,634,716
$136,500,282
79%
$136,500,282
$54,600,113
$138,244,904
79%
$138,244,904
$55,297,962
$11,823
0%
$78,256,843
48%
$80,452,073
47%
$81,900,169
47%
$82,946,943
47%
Sources: All data are PROJECTED values. Based on standard financial model
incorporating standard tax periods and rates. Data gathered from Indeed, Inc.,
Nielsen Media Research, Forbes.com, and A VC. Projections are subject to
change based on market conditions and cyclical volatility.
Plan of Action
Threats
Weaknesses
Opportunities
Strength
Expand
Joost
Correcting
Catch
can
themanagement
overtake
market
beta stage
trend
competitors
along
flaws
by meeting
with
draws
by
offering
more
the
public
engineering
customers
features
demand
team.
and
that
for
advertisers.
emphasize
internet
consumer benefits.
Additional
television.
From
ad revenue
there, will
proceed
maketo
up for the
global
Continue
andto
large
mobile
maintain
fixed
markets.
cost.
relationships
With large
with
its proven
TV networks.
management team,
Joost
In
Take
addition,
advantage
is expected
PewofInternet
tofirst-mover
maintain
Survey
its
extremely
noted
momentum,
Improving
increasingly
favorable
technology
with itsrapid
media
benefits
continually
adoption
of
coverage.
of
consumer
enhances
broadband
the
Furthermore,
trust
experience
internet
and high
inby
American
consumer
of the
achieving
homes.
switching
consumer
Widespread
while
criticalkeeping
costs.
mass
international
asvariable
a firstmover,
adoption
costs
low.
Joost
of broadband
further raises
is expected
barriers
to soon
entry follow.
for competing firms.
Online TV Market: Joost's Potential Market Capture
$100,000,000,000.00
Mobile Video Revenue
$90,000,000,000.00
Projected Revenue from Mobile Video Content
$80,000,000,000.00
Total
Percentage of American Households with Broadband Internet
$70,000,000,000.00
Data
Analysis:
Data
Analysis:
Data
Analysis:
Joost has
designed its
Joost’s
potential
is
Addressing
Joost’s
platform
to
tap
into
enormous
because
itthe
bandwidth
problem,
the
expanding
mobile
captures
many
fast a
chart
trend
projects
market.
This
positions
growing
markets,
high
growing
rate of
Joost
to
take
advantage
making
it
undeniably
a
households
with
of
the rapid
adoption of
strong
investment.
broadband.
mobile technologies.
Revenue
Online TV Market
$60,000,000,000.00
$50,000,000,000.00
$600
$40,000,000,000.00
$500
2004
$30,000,000,000.00
24%
$20,000,000,000.00
$400
$10,000,000,000.00
2005
$300
$-
Millions
Broadband Internet
$200
30%
2005
2006
2007
2008
2009
42%
2006
$100
Total Online Ad Market Spending (US)
Online Video (America) Ad Market Revenue
$0 0%
20%
40%
Mobile Video Market
Revenue
Currently
in 2005
2010
2011
2012
2013
2014
2015
Year
TV Ad Market Revenue
Online Video (Asia/Pacific) Market Valuation
60% Total Online Video
80% Revenue
100%
Projected in 2010
Source: Data based on current 10-year trends of the Dow Jones Industrial, extrapolating expected volatility and seasonal variation. All other
Source: Pew
Internet
& American
Life
Project
variables and potential influences upon the market are held constant.
Projections
on specific
industries
drawn
from
Source: JupiterResearch
"U.S.
Wireless
Forecast
2005
toresearch
2010" by
IAC/PriceWaterHouseCoopers, TVB Research, eMarketer Internet Video Report, inStat, and Jupiter Research. Projections are subject to change
by market conditions and events.
Return liquidity/cash likely through acquisition rather than IPO
 The strength of Joost’s platform is enough to take Joost to IPO as a
standalone company
 However, the current market environment makes it difficult to IPO
companies. Additionally, Joost’s product characteristics make it
complementary to the business strategies of major corporations moving in
the direction of online TV.
 Thus, it is likely that Joost would be acquired by large companies seeking to
expand their capability, such as Google (which announced its intentions
recently) and Microsoft (Media Center), which are the most likely acquirers.
 Furthermore, the history of the founders’ past acquired companies makes it
likely that corporations will have confidence in the strength of Joost, making
it an appealing acquisition target.