HappyKids!

Keeping  both  Kids  AND  Parents  Happy  On-­‐the-­‐Go    

Investor  Presenta,on  

Lauren  Campion  Kyle  Hilbrenner  Courtney  Kiel  Sara  Maaske  Ike  Nwankwo  Paul  Rudolph  

Have  you  ever…..  

•  …watched  siblings  fight  over  their  favorite  outside  toy?  

•  …seen  a  bored  child  at  a  siblings  pracFce?  

•  …seen  a  child  who  was  just  disheartened  overall?  

We  have  and  that’s  why  we  created  HappyKids!  

Agenda  

•  IntroducFon  •  Trends  &  CompeFFon  •  Industry  Overview  •  CompeFFve  Landscape  

•  Weaknesses  &  Blocking  Strategy  •  Closing  Remarks  

Introduction!

Necessary  framework  to  understand  the  key  reasons  HappyKids!    will  be  

successful  

We  Are  HappyKids!    

We’re  Here  to  Keep  BOTH  Kids  and  Parents  Happy  On-­‐the-­‐Go    

•  Solves  problems  with  keeping  kids  happy  AND  occupied  – Families  on  the  go:  Soccer  games,  grocery  shopping,  travel  

•  Helping  parents  maintain  sanity  – Happy  kids  =  happy  parents  – Re-­‐live  your  favorite  childhood  memories  &  pass  them  on  to  your  kids  

HappyKids!  has  MulFple  Key  DisFncFons  

•  Both  Stream  and  Download  children’s  movies,  shows,  games  –  Targeted  at  Children  ages  0-­‐8  – Wide  variety  with  a  complete  soluFon  of  TV,  movies,  games  

both  educaFonal  and  entertaining  –  App  for  downloading  directly  to  tablet  /  mobile  

•  Lower  cost  than  our  compeFFon,  because  of  kid  focus  

•  Offer  an  online  community  for  both  parents  and  kids  –  Plus  online  games  for  kids  

Several  Key  Ways  to  MoneFze  this  Service  

•  SubscripFon  Model  –  3  key  pricing  Fers  –  Downloads  expire  72  hours  or  30  days  

•  Partnership  with  Disney  &  Warner  Bros  –  Exclusive  Sponsoring  Rights  –  PromoFon  of  trailers  

•  UFlizing  Older  Content  •  Click  through  rights  for  partners  

–  Kids  can  click  through  to  view  partners’  content  on  their  pages  –  Kids  can  play  unlimited  games  via  partners’  pages  

Trends & Competition!

Analysis  of  the  current  state  of  the  market  and  how  HappyKids!    can  

effecFvely  enter  

Market  Status  Leaves  Room  for  Growth  

•  19.8%  of  families  in  the  US  have  children  under  the  age  of  6  

•  Parents  connect  emoFonally  when  purchasing  for  their  children  

•  Parents  in  constant  need  to  cut  costs  

•  Our  Goal:    1.  ExploiFng  exisFng  problems  in  the  industry    2.  Focus  on  one  segment    3.  Force  our  compeFFon  to  move  NE  

Key  Success  Factors  Lead  to  Sustainability  

•  CriFcal  Success  Factors:  – Strategy  – Partnerships  – ExecuFon  

•  Sustainability  – SubscripFon  model  (constant  flow  of  revenue)  

– RecommendaFons  

– Sharing  between  community        

MulFple  Ways  to  DifferenFate  and  Increase  Revenue    

•  PosiFoned  Against  CompeFFon  – Specialist  Company  – Pick  up  “over-­‐served”  customers  

– Force  compeFtors  NE  

•  Future  revenue  sources  (Growth  Strategies)  – Expansion  outside  of  the  U.S.  – Expansion  to  ages  outside  of  0-­‐8  (tween,  teen)  – Possibility  of  creaFng  original  content  – Growing  categories  of  content  

HappyKids!  Business  Model    

Customization of content

Entertainment for the child

*without the need for parental controls

Access to downloads

for 72 hours / 30 days

Low cost

Multiple pricing options

Avoid new releases

(Only get movies that are over 13 weeks old)

Quick Download Speeds

(Downloads complete in under 5 min)

Categorized videos by age, age

appropriate content

Play / access free

online games

Learning, Interactive, Entertaining

content

Recommendations based

on past purchase

Email sent with

streaming capacity of

movies

Access to multiple

languages

Interactive website, easy for

children to use

Application for mobile devices ,

tables, etc.

Online games

sourced from

partners

Children’s online rating

system

Parent’s online

message board / Forum

Online forum for parents to

chat

Multiple subscription tiers

(3 separate pricing options)

Wide selection of options

(2000 movies, 1000 shows, 500 games)

Download content easily

& quickly

Ability to download

Ability to stream content

Amazon Cloud based servers

Partnership with Warner

Bro’s and Disney

Content for kids that parents enjoy

Access to Wide Selection of children's content

Have a Complete Solution

Industry Overview!

Highlights  the  current  status  of  movie  rental  industry  and  HappyKids!    key  

disFncFons  

Overall  Movie  Rental  Industry  is  in  MulFple  Phases  

•  Moving  to  online  format,  moving  away  from  linear  TV  &  DVDs  

•  Able  to  use  portable  devices  to  watch  or  stream  movies  and  shows  –  Over  61%  of  Gen  X  and  younger  

own  a  smartphone  –  Over  40MM  Americans  own  a  

tablet  

•  Increase  in  mobile  usage  leaves  opportunity  for  growth  

Majority  of  Key  Distributors  are  Integrated  

•  Although,  Nemlix  is  a  Product  Leader,  Blockbuster  is  the  most  integrated  –  Blockbuster  has  the  highest  cost  and  is  the  least  flexible  

•  Redbox’s  overall  low  price  and  ability  to  modify  the  movies  in  each  box  based  on  demand  

•  HappyKids!  will  focus  on  being  Integrated  while  retaining  overall  flexibility  

IntegraFon     Modularity  

Growth  is  Possible  via  Successful  CRM  

•  Currently  the  3  major  video  outlets  are  in  different  segments  

•  Customer  InFmacy  has  the  most  growth  potenFal  

•  Based  on  anributes,  able  to  anract  customers  in  CI  and  PL  categories      

Performan

ce  

Price  

Competitive Landscape!

Detailed  analysis  and  how  three  direct  compeFtors  can  impact  HappyKids!    overall  success  

Redbox  Disrupts  the  Movie  Rental  Business  with  a  Southwest  Anack  

Redbox’s  Low  End  Delighters  

•  No  membership  required  •  Last  minute  rentals  of  latest  new  releases  •  Return  DVD  to  any  Redbox  kiosk  locaFon  •  Low  Cost  compared  to  Blockbuster  •  Convenience  and  proximity    (68%  of  

populaFon  within  5  minutes  of  a  kiosk)  

External  Factors  (Porters  5  Forces)      

•  Customers  are  over-­‐served  by  services  of  BB  and  Nemlix    

•  Recession  in  late  2000’s  caused  need  for  lower  cost  rentals    

•  Customers  willing  to  accept  lower  performance  (less  movie  >tles)  for  greater  convenience  (store-­‐front  kiosks)    

Strategy  Lane:  Redbox’s  Cri,cal  Success  Factors                    

•  Partnerships-­‐wide-­‐ranging  agreements  with  McDonalds  and    retailers  Walmart,  Walgreens,  Albertsons  and  7-­‐Eleven  

•  Technology  to  Scale-­‐kiosk  approximately  $15k  to  install    

•  Vision  and  Innova,on-­‐Took  advantage  of  recession  and  kiosk  boom,  for  customers  seeking  convenient  last  minute  rentals  

•  Execu,on-­‐within  3  years  Redbox  had  surpassed  Blockbuster  in  number  of  locaFons  

Redbox’s  Business  Model  

Lower Cost

Last Minute Rentals

At Low Cost

Tailoring DVDS

for Specific Areas

To Obtain Reliability

Service with No Hassle

Better Value Relative to

In-store Rentals

Target the Budget Conscious

Movie Renter

Focus on Strategic

Partnerships (Revenue sharing with

retailers 15%)

Access to a Large Amount of Consumers (68% of people live within 5

min drive of kiosk)

Return Rentals At any Kiosk

Location

Create Foot

Traffic for

Retailers

Send Teams To Purchase

Movies At Retailers To Supply

Kiosks

Relocate kiosks to

more profitable locations

Sign Wide Ranging

Installation Agreement

Movies Available For Sale

$7

No Membership

Required

Kiosks in Top

Retailers: WMT,WAG, MCD,7-11 Albertsons

Automated Kiosks

Direct Sales

From All Hollywood

Studios

New Releases Available Same Day As Retail

Stores

Increase Utilization Of Kiosks

(Average Daily Rental 49.1 a day)

Immediate usage for consumer

Continue to Increase DVD Rental Share (As of 2010, 25%

Streaming away from DVDS)

Provide Current Movies

(200 newest titles

630 disks per kiosk)

Online Streaming

with 4 Video

credits/mo

Verizon Joint

Venture

Located in High

Traffic 24/7 Locations

Rigorous Data

Analytics

Video Game & Blue Ray Rentals

Sold used DVDs Much

Quicker Than BB

Increased Convenience to Consumers

Nemlix  has  NE  MigraFon  &  Adjacency  Moves  

•  Consistent  NE  MigraFon  with  Adjacency  moves  –  IntroducFon  of  Streaming,  Global  Expansion,  Original  Content  &  Series  

•  Resources:  SophisFcated  algorithm  helps  the  company  decide  what  content  to  invest  in,  leadership  that  is  constantly  innovaFng,  great  brand,  high  number  of  streaming  customers  

•  Ac,vi,es:  Streams  new  content  online  through  its  own  plamorm,  recommends  original  content  to  Nemlix  members  

•  Values:  Only  shown  through  streaming  &  those  subscribers  make  up  80%  of  their  total  number  of  subscribers,  spent  the  same  amount  on  “cards”  as  it  would  have  on  an  exclusive  streaming  deal  with  an  outside  studio    

High Performance

Delivery

Access to both DVD rentals and

Streaming

Unlimited monthly

rentals with no late fees

Sophisticated, Navigateable

website

Low Cost, Subscription Based Model

Access to a Wide

Selection, Large Variety

of Titles

Ultimate online destination for

movie enthusiasts

Personalized Recommendation

& rating system

Copyright  ©  2007  Zafar  Iqbal  

Wide selection of titles (more that 100,000 DVD titles)

Personalized database and Recommendations

(3 bil + member ratings, 60% member selected moves

on recommendations)

Integrating service into a growing # of

devices (ex: game consoles)

Match customers with new

& obscure films

Personalized member

pages

Titles reaching customers

quickly

Highly automated /

rapid processing

Create Original

Programming

Easy for customers to return

Sophisticated systems to track

customer’s queues & inventory

Partnerships with

distributors, Sony /

Microsoft and

Hollywood

Streaming Capabilities

Online platform for ordering /

searching / queue

Agreements with USPS

CineMatch / proprietary

rating system

R& D on what people

watch, nventing & fine tuning algorithms

Original & On Demand

Content

High switching

costs

No pressure of Late Fees,

Unlimited Viewing

Quick delivery (95% of customers

received DVDs in 1 day)

Long Tail Selection (70% of DVDs shipped were

titles released older than 13 weeks)

60 regional distribution

centers

Nemlix’s  Business  Model  

Blockbuster  has  had  Bad  Responses  to  DisrupFons  

•  Poor  response  to  previous  disrupFon  – Result:  Large  market  share  stolen  – Forced  eliminaFon  of  many  ‘physical’  locaFons  

– Anack  Blockbuster  in  Customer  InFmacy  – Bankruptcy  –  not  posiFoned  well  to  defend  their  space  

– Not  personal  enough    – No  kid  focus  –  carve  out  a  niche  

Blockbuster’s  Business  Model  

Affordable Price

Multi-channel Presence (store,

online, mail, kiosk)

Focus on increasing

USA presence

Customer Service

Wide Selection

Reliable Service

Increased Sales

Versatile Website (5 ways to get

movies)

Local Connections

(Approximately 500 stores)

Have a wide array of movies

and games

Leverage name, image

and brand

Sustain only

Profitable stores

Capable to review,

order, purchase

videos online

High costs to cover

old business model

Connect with

customers

Megastores and

standard stores

Sell used DVDs

Rent DVDs,

VHS, and Games

Good Brand Awareness

Blockbuster.com

No late fees

“Rent it, Like it, Buy

it” promotion

Clean family-friendly

environment

Remain current with consumer

preferences

Broad Presence Each Store

(Average store had 6,000 units )

Efficient Pricing ($3.50 pricing)

Global Footprint

Customer Loyalty

Final Analysis!

Highlights  potenFal  weaknesses  and  provides  confirmaFon  that

HappyKids!  will  be  successful  

Weaknesses  of  HappyKids!  can  be  Overcome  

•  StarFng  out  with  less  content  •  Establishing  &  maintaining  relaFonships  

•  Start  up  in  a  compeFFve  market  •  DifferenFaFng  ourselves  from  other  children’s  networks  

•  Building  a  brand  -­‐  CreaFng  customer  awareness  from  scratch  

HappyKids!  has  an  EffecFve  Blocking  Strategy  

•  Become  InFmately  Involved  with  the  Customer  – Create  a  Community  &  History  of  RecommendaFons  

•  Creates  high  switching  costs    – Gain  visibility  in  community  (partner  with  schools,  sponsor  community  events)  

•  Launch  Loyalty  Program    

•  Create  IncenFves  for  Referrals  

Closing  Thoughts  

•  Specialist  company  taking  slice  of  business  from  Nemlix  and  Blockbuster  

•  Lower  subscripFon  cost  than  NFLX  and  BB  for  over-­‐served  customers  

•  SaFsfying  the  ‘Job  to  be  Done’  of  keeping  children  entertained    &  happy  

•  Focus  iniFally  on  limited  content  through  strategic  partnerships  

•  Seize  upon  conFnuing  trend  away  from  DVDS  to  streaming  &  downloads  

•  Heavy  focus  on  developing  a  strong  online  brand  community  

Looking for Angel Investors to make this crying stop!

Invest  in  us  to  help  get  HappyKids! off  the  ground  and  stop  kids  from  crying  

everywhere!!!    

You’ve got Questions?

If  so,  HappyKids!  has  answers!!!  

References  

•  Consumer  CharacterisFcs  –  hnp://www.hiebing.com/wp-­‐content/uploads/2009/10/4_EmoConnecFon.pdf  –  hnp://nces.ed.gov/programs/digest/d10/tables/dt10_024.asp  

•  Redbox  – Verizon  to  set  up  streaming  service  with  Redbox:  Associated  Press  2/5/12    Peter  Svensson  

–  Redbox  Instant  vs.  Nemlix:  newsnet5.com  3/31/13  John  Matarese  –  How  Redbox  Instant  Will  Take  on  Nemlix  AdAge|Digital    04/4/2013  Jeanine  Poggi  –  Movie  Rental  Business:  Blockbuster,  Nemlix,  and  Redbox:  02/08/2012  Sunil  Chopra  –  Wall  Street  uncertain  about  Redbox:  L.A.  BIZ  04/30/2013  Gina  Hall  –  Lessons  from  a  Dying  Business:  Inc.  12/13/2011  Karl  Stark  and  Bill  Stewart  

•  Nemlix  –  Chopra,  Sunil  (2012).  Movie  Rental  Business:  Blockbuster,  NeHlix,  &  Redbox.  Kellogg  School  of  Management.  –  Wesley,  David  (2012).  NeHlix  Inc.:  Streaming  Away  from  DVDs.  Richard  Ivy  School  of  Business.  

•  Blockbuster  –  Coughlan  Peter  (2004).  Blockbuster  Inc  &  Technological  Subs>tu>on  (B):  Confron>ng  New  Digital  Formats.  

Harvard  Business  School  •  Overall  Industry  

–  hnp://www.newmediatrendwatch.com/markets-­‐by-­‐country/17-­‐usa/855-­‐mobile-­‐devices