2008 Budget Presentation November 30, 2007. PAGE 1 Table of Contents 1.Consolidated 2007 Review and...

2008 Budget Presentation

November 30, 2007

Table of Contents

1. Consolidated 2007 Review and Looking Ahead 2. 2008 Consolidated Budget3. Games4. Fantasy Sports5. Sports Information6. Corporate and other

2007 Major Highlights

Rationalization of Asset Group– All divisions right sized post the 2006 business acquisitions

• Headcount reduced from 273 at 12/31/2006 to approximately 200 at year end

– Elimination or deferral of international initiatives• Considerable accretive impact on EBITDA

Realized considerable growth in the Games division, exceeding the 2007 budget by a wide margin

Anticipate completion of the plan of arrangement providing a positive return to shareholders

Set solid foundation for continued growth in 2008– $19 million improvement in EBITDA from 2006

A focused year A focused year

2007 Projected Consolidated Results

The 2007 projected EBITDA exclude approximately $1.0 million of Liberty deal related costs and approximately $1.0 million of restructuring costs

2005 2006 2007 2007 ChangeActual Actual Budget Projected over 2006

Revenue 25,393$ 47,093$ 74,331$ 69,187$ 22,094$ Revenue Growth % 47%

Gross Profit 19,316 26,489 39,638 39,409 12,920 Gross Profit % 76.1% 56.2% 53.3% 57.0%

Operating ExpensesSoftware Development 2,786 8,475 8,136 6,858 (1,617)

SG&A 13,386 31,154 30,703 26,539 (4,615) 16,172 39,629 38,839 33,397 (6,232)

Adjusted EBITDA 3,144$ (13,140)$ 799$ 6,012$ 19,152$

In USD '000

2008 Consolidated Budget

Global Assumptions in the 2008 Budget

Tender process– Completion of the Liberty Plan of Arrangement scheduled for December

21, 2007– Budget assumes the Plan of Arrangement is completed as proposed

and FUN is not public for 2008 (incremental costs of approximately $3.5 million if FUN remains public)

Management– Significant change in leadership of the FUN assets including CEO, COO

and CFO – Budget assumes senior management functions are substantially

provided by Liberty affiliates, with on-going administration costs expected to be approximately $1.0 million in 2008. Budget does not include such costs

Divestitures– Management is currently investigating the potential disposition of the

Don Best operations as well as the Poxnora operationsOperations– The 2008 budget contemplates FUN Games remaining substantially

“stand alone” throughout the year and does not reflect the potential operational integration of the Games operations and GSN

2008 Budget - Continued Momentum from 2007

2005 2006 2007 2008 ChangeActual Actual Projected Budget

Revenue 25,393$ 47,093$ 69,187$ 100,248$ 31,061$ Revenue Growth % 66%

Gross Profit 19,316 26,489 39,409 55,423 16,014 Gross Profit % 76.1% 56.2% 57.0% 55.3%

Operating ExpensesSoftware Development 2,786 8,475 6,858 6,667 (191) SG&A 13,386 31,154 26,539 32,341 5,802

16,172 39,629 33,397 39,008 5,611

Adjusted EBITDA 3,144$ (13,140)$ 6,012$ 16,415$ 10,403$

In USD '000

2008 Budget – By Division

In USD '000 GamesFantasy Sports

Sports Information

Corporate and Other Total '08

Revenue 75,220$ 15,103$ 7,988$ 1,937$ 100,248$

Gross Profit 37,874 9,009 6,796 1,745 55,423 Gross Profit % 50.4% 59.7% 85.1% 90.1% 55.3%

Operating ExpensesSoftware Development 3,447 1,755 753 713 6,667 SG&A 21,898 4,874 2,870 2,701 32,341

25,344 6,628 3,622 3,413 39,008

Adjusted EBITDA 12,529$ 2,381$ 3,174$ (1,669)$ 16,415$

Games – 2008 Plan

Peter Blacklow

WorldWinner.com

SkillJam.com

TeaGames.com

GSN Interactive

Overview

2007 Review

2008 Strategies– Mass market

– Player community

– Cross-platform media company

– Monetize free games

2008 Budget

2007 Business Overview

In USD '000's 2006 2007 2007Actual Budget Projected

Revenue 22,349$ 38,531$ 42,885$

EBITDA (9,850)$ 429$ 7,067$

Outperformance of revenue and EBITDA vs. budget due to: Integration of SkillJam players onto the WorldWinner platform

increased player ARPU by 200%. Segmented marketing programs (Premier Club), new game

content, and additional player liquidity. Consolidation to one primary location reduced headcount from

120 to 71.

2007 Accomplishments

Integrated SkillJam and WorldWinner businesses.

– Single technology platform

– Single location – Boston

– Enhanced revenue for all distribution and content partners

– Modified PopCap game titles for WorldWinner platform

Re-signed distribution agreements with AOL, Microsoft, MyPoints and EA/Pogo.

New games: Scrabble™ Cubes, Family Feud, Sudoku and Diner Dash.

Launch of WorldWinner “Premier Club” -- Community initiative for top players.

WorldWinner/SkillJam Integration

$-

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

Series1 Series2 Series3

Integration with FUN Platform

REVENUE ($000)

October 2007 NAR at $3,412K vs. $2,969K budget and $1,511K in 2006

Actual YTD growth of 125%

2007 Budget (approved 12/4/06) forecasted growth of 99%

All things remaining the same, 20% growth expected.

Integration Results: Cash Entry Fees

$13,211 $12,272

$5,774

$751

$17,511

$8,895

$45,692 $45,619

$38,376 $34,647

$7,844

$44,995 $47,525

$73,948

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

$80,000

SkillJam AOL GSN Lycos MSN MyPoints Pogo*

SkillJam

WorldWinner

SkillJam vs. WorldWinnerPeriod: Nov ’06 vs. Oct ’07

Average Daily Cash Entry Fees

2006 2007

Registrations 4,981,522 3,708,492

Average cash players/month 36,938 42,585

Average cash games/player/month 135 176

Entry fee/game $1.70 $1.83

Net Revenue $17,805,274 $33,178,064

Lifetime Value $348 $462

YOY Key Metrics

Decrease in registrations due to lower thresholds on cost per registration marketing programs from SkillJam as well as transition from white labels.

2007 saw dramatic up-tick in overall “engagement” on WorldWinner.• Players competed in more games, with higher entry fees, as a result of

programming, segmented marketing and launch of new games.

Key Distribution Partners

Cash Entry Fees

October 2007 % of Total CEF Margin to WW

$2,292,041 13.6% 68%

$1,473,276 8.4% 58%

$1,394,854 8.3% 27%

$1,189,668 7.1% 36%

$1,158,360 6.9% 56%

$1,084,999* 6.4% 100%

$1,074,042 6.4% 66%

These seven partners account for approximately 57% of all CEF on a monthly basis. *The partnership with Yahoo! terminated Dec. 2005.

3.0%

3.5%$582,931

4.4%

$6,327,783 37.6%

$737,470

% of totalOctober 2007

Key Content Partners

Cash Entry Fees

$1,049,395

$512,375

6.2%



In USD '000's 2006 2007 2008Actual Projected Budget

Revenue 22,349$ 42,885$ 75,220$

EBITDA (9,850)$ 7,067$ 12,529$

New money player acquisition accelerates 31% YOY averaging 9,800/month.

Branded content from Hasbro, Sony, Fremantle and others will increase game play across the board.

Player retention and programming efforts will drive up the total number of active money players by almost 48%.

2008 Budget

In USD '000's 2007 2008 ChangeProjected Budget

Revenue 42,885$ 75,220$ 32,335$ Revenue Growth % 75%

Gross Profit 21,914 37,873 15,959 Gross Profit % 51.1% 50.3%

Operating ExpensesSoftware Development 2,488 3,465 977 Marketing 3,159 9,301 6,142 SG&A 9,200 12,578 3,378

14,847 25,344 10,497

EBITDA 7,067$ 12,529$ 5,462$

75% revenue increase propelled by key new licensed games. Slight reduction of gross profit % due to increased branded content. Increase in operating expenses predominantly driven by marketing

investment, headcount and related expenses.

Player LifeTime Value

$462.34

$238.23

$0.00

$100.00

$200.00

$300.00

$400.00

$500.00

Sept '05 Sept '06 Sept '07

Pla

yer

LTV

Player LifeTime Value has increased from $238 to $462; increase of 94%.

Tournament velocity, game content, programming and player retention initiatives have played an integral part in increasing player LTV.

LTV for Sept ’08 is projected to be $501.

Consumer Advertising Revenue Summary

Monthly revenue has increased from $13,650 (Oct ’06) to $122,269 (Sep) and RPM from $0.047 to $0.503 (US inventory at .75 cents)

Still under $1.00 due to large % of international traffic (67% on Teagames); 100% remnant introducing direct sales with higher CPMs in Q1 2008.

2008 Strategies

1. Bring online game competitions to the mass market

2. Develop a player community fueled by social interaction and rivalries

3. Build a cross platform media company; not just an online cash competitions site

4. Monetize free game play

Key Strategy: Mass Market

1. Bring online game competitions to the mass market

Marketing: Double online and offline marketing investment, leveraging new network partners.

Distribution: Exploit social networks by introducing programming widgets and in-network tournaments.

Brand: Develop a compelling consumer brand.

Content: License popular mainstream offline games.

Events: Create a signature casual games championship with localized qualifying events in an integrated offline strategy.

http://images.usatoday.com/life/_photos/2006/04/24/monopoly.jpg

Key Strategy: Player Community

2. Develop a player community fueled by social interaction and rivalries

Leverage community of game show enthusiasts

• Grow and extend community Among current playersInvite new players into networkTurn players into “contestants”

Programming 3.0

• Acceleration of tournament diversity• Team competitions• Partner cross promotion

Key Strategy: Multi-Platform

3. Build a cross platform media company Introduce a universal rewards currency Go beyond cash games and into competitive entertainment Create multi-platform game experiences Sell sponsorships around multi-platform marketing concepts

watch. play. win.

Key Strategy: Free Games

4. Monetize free game play

Acquire and develop a world class games network (flash games sites)

Aggregate audience and maximize traffic

Exploit universal registration and currency

Introduce in-game advertising and sponsorship model

Increase game offerings

Integrate rewards engine to cross promote properties

Up-sell to cash competitions

YOY Key Metrics

2007 2008

Registrations 3,708,492 4,987,383

Average cash players/month 42,585 62,223

Average cash games/player/month 176 199

Entry fee/game $1.83 $1.88

Net revenue $33,178,065 $56,542,446

Life time value $462 $501

2008 builds on a solid foundation by adding more players to the engine, focusing on programming, and extending tenure with new retention efforts.

Fantasy Sports - 2008 Plan

Fanball.com

CDMsports.com

FantasyCup.com

2008 Budget – Fantasy Sports

2006 2007 2007 2008Actual Budget Projected Budget

Revenue 11,124$ 17,915$ 13,838$ 15,103$

Gross Profit 7,338 11,276 7,896 9,009 Gross Profit % 66.0% 62.9% 57.1% 59.7%

Operating ExpensesSoftware Development 2,764 3,357 2,949 1,754 SG&A 5,585 7,029 5,471 4,874

8,349 10,386 8,420 6,628

Adjusted EBITDA (1,011)$ 890$ (524)$ 2,381$

In USD '000

Sports Information - 2008 Plan

Donbest.com

2008 Budget – Sports Information


Revenue 12,393$ 12,482$ 10,367$ 7,988$

Gross Profit 11,032 11,271 9,085 6,796 Gross Profit % 89.0% 90.3% 87.6% 85.1%

Operating ExpensesSoftware Development - 666 619 753 SG&A 3,922 2,894 2,548 2,870

3,922 3,560 3,167 3,622

Adjusted EBITDA 7,110$ 7,711$ 5,918$ 3,174$

In USD '000

Corporate and other

CorporatePoxNora

International operations(prior years)

2008 Budget – Corporate and Other


Revenue 1,162$ 5,404$ 2,096$ 1,937$

Gross Profit (710) 1,862 514 1,745 Gross Profit % -61.1% 34.5% 24.5% 90.1%

Operating ExpensesSoftware Development 711 1,657 802 713 SG&A 8,034 8,436 6,161 2,701

8,745 10,093 6,963 3,413

Adjusted EBITDA (9,455)$ (8,231)$ (6,449)$ (1,669)$

In USD '000

2008 Budget Presentation November 30, 2007. PAGE 1 Table of Contents 1.Consolidated 2007 Review and...

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