Emotiv SystemIt’s the Thoughts that Count

Team 8Strategic Management of New Technology

Agenda

Company Background

Q1 : PC vs Console ?

Q2 : Marketing Strategy

Q3 : Demand for Each Scenarios

Q4 : Guitar Hero Analogy ?

Q5 : Alternative Application for Emotive

Q6 : Tan Le & Nam Do’s Vision

Emotiv Company Background Founded in Sydney in December 2003. President & co-founder : Tan Le CEO & co-founder : Nam Do Emotiv hired PhD engineers and

undergraduate students to cut cost.

Emotiv Technology Background

EEG (electroencephalography) is used as the basic theory for Emotiv’s technology.

“Brain Wave Detector” Emotiv spent 25000 hours for the 1st

working prototype Emotive took 4 years to complete

EPOC headset

Q1 : PC vs Consoles ?

Why Console? Money Money Money Far bigger market size with consoles The Console-enabled market has high demand for

accessories-related innovation Co-branding with console can create big demand Lack of blockbuster game in PC segment. Unclear demand for EPOC for PC hard-core gamers

Q1 : PC vs Consoles ? (cont..)

Why PC? Higher margin in PC games PC-Gaming segment is much less concentrated Platform of choice for very hard-core gamers High willingness-to-spend of this hard-core gamers Speed to launch the product

Q1 : PC vs Console ? (cont..)

Product- ready for commercial launch Co-develop the platform with a strategic partner- our choice SONY PSP3 Note- SONY is not doing well and would be most open to accepting cutting edge path breaking

technology to regain domination in this space, and generate superior revenues.

Price- penetration pricing Offer a sweet deal to SONY as a partner with very competitive penetration pricing- emotiv

needs traction and acceptance with both its partner , SONY and the consumer and this strategy, by offering a “BUNDLE” with PSP3 and emotiv EPOC headset could be a win- win for both partners

Place- through strategic partnership with one of the leading game console providers Emotiv would gain global traction through SONY retail channels with this strategic partnership

at the cost of minimum margin (penetration pricing)

Promotion- strategic partnership will enable emotiv to considerably reduce promotion costs through cross subsidy

Emotiv would gain through this cross selling platform when the BUNDLE PSP3 is offered to the gaming community. If it goes it alone the costs of promoting its application would be considerable and a drag on its break even.

Q2 : Marketing Strategy

Q3 : Demand for console ONLY scenario

Entry level pricing for emotiv would have long term marketing benefits of inducing user trials, generating proof concept and gaining traction in other verticals

Premium could be charged by emotiv for exclusive long term strategic agreement with SONY and the margins could be improved at the time of negotiations.

Scenario 1: emotiv manufactures less than 1

million units. Cost of production= 110$, add 50$ for fixed costs (salary and rent), no cost for advertising and distribution (because of strategic partnership with SONY)

It launches with only 250,000 PS3 Bundle offers (0.25% of the PS3 market share)

Generates revenues of $ 40 million

Scenario 2: emotiv manufactures more than

1 million units. Cost of production= 60$, add 50$ for fixed costs (salary and rent), no cost for advertising and distribution (because of strategic partnership with SONY)

It launches with only 1,000,000 PS3 Bundle offers (1% of the PS3 market share)

Generates revenues of $110 million

Note- SONY sold approximately 100 million PSP consoles in 2011.

Q3 : Demand for PC ONLY scenario

Emotiv has to factor in higher distribution and advertising cost to go global and capture this estimated market initially, which may skew the price upwards.

Penetration pricing could again be deployed to gain initial traction in the retail side of the business, but that will hurt margins and delay break even and profits.

Scenario 1: emotiv manufactures less than 1

million units. Cost of production= 110$, add 100$ for fixed costs (salary +rent+ advertising and distribution )

Add retail margin of 80$= consumer price will be 290$

It is able to sell 250,000 EPOC through retail outlets, globally

Generates revenues of $ 72.5 million

Note- the user will have to download the SDK in order to use EPOC

Scenario 2: emotiv manufactures more than 1

million units. Cost of production= 60$, add 100$ for fixed costs (salary +rent + advertising and distribution )

Add retail margin of 80$= consumer price will be 240$

It is able to sell 1,000,000 EPOC through retail outlets, globally

Generates revenues of $ 240 million

Note- the user will have to download the SDK in order to use EPOC

Note- in 2011 the PC game market was worth $ 18 billion, of which 30% was from China, worth an estimated $ 6 billion. Total PC gamers population is estimated to be 54 million.

SIMILARITIES : Guitar Hero changed the game playing experience, developed by Harmonix

Emotiv is also trying to change the game experience.

Accessories-related game.Emotiv is also an accessory related game.

Guitar Hero is compatible in multiple console (Xbox, PS3 & Wii)Emotiv should aim for the same compatibility in the future.

Q4 : Guitar Hero Analogy

Q4 : Guitar Hero Analogy (Cont..)

Only 1 Genre of Game

Can be used for all games

UI UI / UX

RPG SportAction

Casual Music

Tactical

Music

Medical• Self healthcare- thought controlled self help healthcare management for

paraplegics• Mental heath management.

Military• Thought-controlled and operated weapon systems.• Communication channel

Marketing• Accurate and real time information from customers.• Detection of emotional engagement

Lifestyle• Thought controlled home entertainment systems.• Thought controlled home appliances.

Q5 : Alternative Applications for Emotive

Zynga announces its initiative to launch a full fledged gamers social platform.

United States DOD and their contractors like Northrop Grumman, Lockheed Martin, Boeing, General Dynamics working on military applications of thought controlled weapon systems.

Mind controlled toys- hobby aircraft and drones

The Business opportunities..

The Vision:“A World where we all have headsets on all the time, doors open when we

approach them because our brain generates a signal that is received by the sensor on the door; entertainment medium modifies or proposes appropriate content; ads are served that best fit the type of products you are thinking about. Ultimate way to interface with the digital world.”

Q6 : Tan Le & Nam Do’s Vision

The vision is similar to what we have about the future. The world where digital technology create digital life that replace manual process. However, we don’t want to use headset all the time.

Q&A