Participation TV Platform - WikiLeaks · Distribution: 5 Shows, 5 title sponsorships sold in Q1 2013. Ratings: "Watch What Happens Live” episodes with Play Live interactivity delivered

Jury Hahn: Founder & CEO Dan Albritton: Founder & CTO

invest@megaphonetv.com • 1450 Broadway, Suite 1205, New York, NY 10018 • 646.875.8743 • www.megaphonetv.com • Confidential

Participation TV Platform

IntroductionJury Hahn: Co-Founder & CEO

‣ Product Design & Broadcast Design & BD

‣ MTV Networks, Samsung, Comedy Central (Daily Show, Colbert, South Park), Fluent in English, Korean, Conversational in Japanese

Daniel Albritton: Co-Founder & CTO

‣ Engineering & Advertising & Operations

‣ Co-founder of iminlikewithyou/OMGPOP (sold to Zynga), YCombinator ’06, Dentsu, NTT Docomo, Netflix, Sega,Fluent in Japanese

TeamColin Moock - Chief Platform Officer: 15 years of multiuser platform development, Author of O’Reilly reference books for programming, official Adobe spokesperson for ActionScript 3.0, Fluent in Japanese

Derek Clayton - VP Scaled Systems: 15 years of multiuser platform development, deep experience in insurance and banking oriented server side development

Chris Kairalla - VP Network Infrastructure: Mix of background in TV production, movie special effects, and programming, Adjunct Professor at NYU

Sam Gilman - Sr. Web Developor: Web specialist, Author of education software, Conversational in Chinese

Jane Lim - Interactive Designer: Background in post production, 3D, broadcast design, Conversational in Korean

Kora Manheimer - PM/AM: Project and Program Management at software companies and agencies, including Apple, Google, R/GA, Digitas

AgendaProduct ‣ Overview, Showcase, Traction & Case Studies, Value Proposition,

ComparisonFinancial‣ Business Model, Market, Projected P&L, Revenue HistoryPost Funding‣ Product Roadmap, Use of FundsQ&A Topics‣ Team, Patents, Company History, Twitter, Exit Strategy, Historical P&L,

Sales Tactics, New Show Formats, Death of TV, Double Down, One Trick Pony

Product

Megaphone

Megaphone Interactivity Suite Overview

Call-to-action, graphics, and aggregated user input appear on-air during the show

Controller is an HTML5 webapp embedded in Broadcaster’s website, works on any browser (phone/tablet/PC)

On-air + Digital Sponsorship (360 Transmedia)

Megaphone Advertising Suite Overview

Call-to-action, graphics, and aggregated user input appear on-air during ads

Controller is an HTML5 webapp embedded in Broadcaster’s website, works on any browser (phone/tablet/PC)

On-air + Digital Sponsorship (360 Transmedia)

ShowcaseLatest Reel (megaphonetv.com/reel)

‣ Client: Bravo

‣ Show: “Watch What Happens Live”

‣ Sponsorship & Interactive 30s ads: Samsung

Playable Product Demo

Gameshow Sizzle Reel

More reels, Playable Product Demo, and Gameshow Sizzle Reel are available for in-person meetings.

Traction & Case Studies

5 networks, 10 shows, 10 sponsors, 1 production studio

NBCU/ComcastMSA: Master Service Agreement allows for billing to any NBCU channelNetwork Ops Center Integration: Allows interactivity on any NBCU channel

WNBC New York8 sponsored campaigns, 2-11% Ratings lift, 80% repeat players, Usage based pricing

Sponsors:Paul McCartneyBilly JoelBon JoviCirque du SoleilRadio City Music HallSister ActOncePriscilla, Queen of the Desert

Bravo (Branded as PlayLive)Distribution: 5 Shows, 5 title sponsorships sold in Q1 2013. Ratings: "Watch What Happens Live” episodes with Play Live interactivity delivered 13% higher live ratings on average compared to those episodes without the experience. (As measured by Nielsen)

http://www.forbes.com/sites/meghancasserly/2013/03/13/bravo-andy-cohen-play-live-tech-tv-social-media/http://techcrunch.com/2013/03/06/bravo-extends-their-play-live-tv-platform-and-advertisers-sign-up/http://allthingsd.com/20121022/a-second-screen-you-cant-not-watch-bravos-play-live-adds-polls-games-to-all-its-shows/http://mashable.com/2012/11/26/bravo-play-live-launches/http://lostremote.com/bravo-pulls-back-curtain-on-play-live-interactive-product_b35273

UnivisionMSA: Master Service Agreement allows for billing to any Univision network, including the new Sports and English-language networksPremio Lo Nuestro 2012: 75,000 Simultaneous voters during Red Carpet event

Fox NewsEmbedded in live.foxnews.comRepublican Debate: 175k total voters, 55k max simultaneous voters

VenevisiónMiss Venezuela 2012: Used for the Audience Choice winnerNext up: Miss Venezuela 2013, “Who wants to be the next Miss V” Reality Show

FremantleCo-development (including co-production credit and significant back-end revenue share) of new show formats with the creators of:

Value PropositionTo Broadcasters: Higher Ratings, More Revenue, Social Media Connections, Demographic Data, Virality

To Advertisers: Brand engagement, Targeted Advertising, Add trackable ROI to existing media buys

To Production Studios: New formats with interactivity, Low cost prototype for pitches, Low cost international syndication, Defend cutting edge of programming universe

To Users: Interactive content/games integrated with their favorite programming, Interact with show talent, Talk back to broadcasters

Comparison: Second Screen AppsMegaphone   Second Screen (e.g., Zeebox,

Viggle, IntoNow, Get Glue)

Content Adjacency First Screen, on-air, part of shows/ads Second Screen

ROI to Broadcasters Ratings lift and new 360 ad units (on-air + digital) -

ROI to Advertisers Adding interactivity to existing 30s ads -

Ops Center Integration Integrated with Network Operation Center Audio Content Recognition

Core interactivity Gaming suite for shows and ads More info, Twitter Chat

Barrier to entry URL App Store > Download > Launch > Register

User ownership Part of broadcaster’s website (B2B) Their own portal (B2C)

Financial

Megaphone

Business Model OverviewSell Interactivity Suite to networks and cable channels (Platform-as-a-Service)‣ Quiz, Survey, Prediction, Rating, Social Media Connector (e.g., Tweet-to-Screen, Tweeter Chatter)

‣ 1) Platform license or 2) Usage based or 3) Revenue share, plus 4) Customization

‣ Average $100k per show per year (small, medium, large packages)

Sell Advertising Suite to brands and agencies‣ Coupon, Commerce, Geo-targeted info, Gamified Ads, Push product microsite, Social Media Connector

‣ Phase 1: Title sponsorships, Flat fee

‣ Phase 2: CPM/CPC/CPA, Rev-share back to broadcast partners

Co-produce shows with production studios‣ Participation gaming engines using Interactivity Suite and Advertising Suite

‣ Application development fee plus significant Back-end share with studios

Advertising Suite Phase 1Broadcasters’ on-air and digital ad sales force sells Megaphone to Advertisers

Hey Advertiser, would you like to buy a big package of ad time and Megaphone?

Yup

Thanks Megaphone,here’s your check!

Broadcasters AdvertiserMegaphone

Advertising Suite Phase 2

Broadcasters Advertiser

Megaphone sells directly to advertisers and rev-share back to broadcasters

Megaphone

Hey Broadcaster, do you want Megaphone to add interactivity to ALL your 30s inventory without you having to do anything, and give you a check when we’re done?

Great. We will sell inventory in the controller on all our partner networks as a package to agencies for all of their clients at once, and give you a rev share based on how frequently you show those ads, and how many people interact.

We will keep 30% of this revenue, and split 70% across all our broadcaster partners.

This is a product that needs to be sold in bulk, so Megaphone will package and sell it to agencies (as one network is too small for them to buy against).

This doesn’t compete with anything your existing on-air or digital ad sales teams currently sell, since it is a brand new type of ad unit.

Hey Advertiser, do you want to add internet-style actionable interactivity to all of your existing 30s TV ad buys for all of your client brands across all Megaphone-enabled networks?

Great. You can do that for your entire client base with a single buy from Megaphone. Megaphone will handle trafficking the ad, and report it’s actions and effectiveness per client, per campaign, and per network.

Market: Attention

Source: Nielsen March 2013 Cross Platform Report

Market: Attention

Source: Nielsen March 2013 Cross Platform Report

Market: Spending

Market: CustomersUS Example

‣ Over 1300 local broadcast stations

‣ Most of them affiliated with the 5 largest networks

‣ Over 450 cable channels

‣ e.g., NBCUniversal

‣ 220 affiliate stations (WNBC New York)

‣ 28 cable channels (Bravo)

‣ Produce 307 original shows per year.

Projected P&L OverviewSell Interactivity Suite to networks and cable channels (Platform-as-a-Service)‣ In 2013, Megaphone projects growth to $2.2MM in Interactivity Suite revenue, but

this includes steep initial discounts for new clients. ‣ For 2018, Megaphone is targeting 180 shows internationally, yielding ~$40MM in

revenue.Sell Advertising Suite to brands and agencies‣ The Advertising Suite has just launched in Q1 2013‣ Scaling with the Interactivity Suite, 2018 Advertising Suite projected revenue is ~

$30MM.Co-produce shows with production studios‣ At worst, it is revenue neutral. At best, a single hit show of the scale of Idol could

generate in excess of $200MM a year.

Projected P&L (spreadsheet available)

Year%1% Year%2% Year%3% Year%4% Year%5%Cost% $3,441,618%% $6,084,369%% $10,608,001%% $13,890,896%% $17,004,091%%

Gross%Revenue% $1,139,938%% $5,632,140%% $16,468,742%% $35,321,720%% $71,203,947%%

Profit% ($2,301,681)% ($452,229)% $5,860,741%% $21,430,823%% $54,199,856%%

($10,000,000)%

$0%%

$10,000,000%%

$20,000,000%%

$30,000,000%%

$40,000,000%%

$50,000,000%%

$60,000,000%%

$70,000,000%%

$80,000,000%%

Cost% Gross%Revenue% Profit%

Projected P&L: Non-linear costs

Projected P&L: Revenue by Source

$0##

$10,000,000##

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Year#1# Year#2# Year#3# Year#4# Year#5#

Revenue by Source

Agency#Sales#Revenue#

Sponsorship#Fees#

Usage#Based#Fees#

PlaEorm#and#ApplicaGon#Fees#

Projected P&L: Cost by Source

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$2,000,000##

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System#Costs#

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Revenue History: by Category

2007: v1.0 founders build product by hand, pre funding, first sale2008: raise funding mid year, hire staff, selling to conferences/marketing events as Interactive OOH platform2009: v2.0 (bigger scale) begin working in cinemas, concert venues, stadiums2010: expand to 51 sports stadiums (NFL, NHL, MLB, NBA) 2011: first TV tests, pivot out of OOH and into TV, focused on v3.0 development for TV scale2012: v3.0 (massive scale) complete, free pilots and preferential pricing to early clients, market awareness2013 Projection: with funding (1M+), without funding (685k)

$25,000&&

$264,925&&

$585,458&&

$1,008,524&&

$119,465&&$153,739&&

$0&&$0&& $0&& $0&& $0&&

$124,118&&

$395,075&&

$84,555&&

$0&&

$200,000&&

$400,000&&

$600,000&&

$800,000&&

$1,000,000&&

$1,200,000&&

2007& 2008& 2009& 2010& 2011& 2012& 2013&

Yearly&Revenue&By&Category&

OOH&

TV&

Revenue History: $2.7MM to date

$25,000&&

$264,925&&

$585,458&&

$1,008,524&&

$243,584&&

$548,815&&

$84,555&&

$0&&

$200,000&&

$400,000&&

$600,000&&

$800,000&&

$1,000,000&&

$1,200,000&&

2007& 2008& 2009& 2010& 2011& 2012& 2013&

Total&Revenue&

Post Funding

Megaphone

Use of FundsSeries B: 5MM+

‣ Build Sales Force (1 CRO, 2 Direct Sales)

‣ Build Marketing Team (1)

‣ Expand Engineering Team (1)‣ Expand Customization Team (1)

‣ Expand Ops, Project/Account Management (2)

‣ Increase burn rate from $125k to $220k/month

Series A: 5.15M, from angels including Michael Birch

We’ve reached product/client fit by selling it ourselves.We’ve learned the pain points and sales tactics.We know current and future product needs.

Now it’s time to scale sales.

Q&A Topics‣ Team, Patents, Company History, Twitter, Exit Strategy, Historical P&L, Sales

Tactics, New Show Formats, Death of TV, Double Down, One Trick Pony