IGNITE SPORTS -- CONFIDENTIALPAGE 1 Ignite Sports Publishing & iTV Market Strategy.

IGNITE SPORTS -- CONFIDENTIAL

PAGE 1

Ignite Sports

Publishing & iTV Market Strategy


PAGE 2

Summary

• Ignite’s historical focus has been on interactive publishing for sports properties and media companies

> Always envisioned as the first leg of Ignite’s strategy to exploit the sports property, fan, and sponsor relationship

– Establish sports domain experience– Develop important relationships– Further understanding of the fan/consumer relationship to interactive technologies

> Ignite has demonstrated expertise and competitive advantage in this area– Majority of current and historical revenue is from publishing– Products deliver acceptable gross margin and meet demonstrated client needs

> Sports vertical, however, has some unattractive dynamics– Both major client target groups lose money and have little to spend

» Majority of economic value flows to the Athlete/Talent– Sales cycles are long and clients generally difficult to work with – Absolute size of Ignite relevant market is relatively small


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Summary (cont.)

• Interactive television is the next phase in Ignite’s evolution

• iTV presents a new, and very attractive opportunity> Proprietary publishing system provides backbone of Ignite iTV offering> Ignite has or is developing key relationships along iTV value chain> Ignite solutions enhance viewers’ television experience – drive real value

– Once implemented, Ignite solutions can drive recurring monthly revenue streams (per subscriber fees)

> Relevant market size for Ignite is Billions, not millions


PAGE 4

Remember this?

The vision remains true!


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Interactive publishing - market position

• Ignite’s position as the leading interactive sports solution provider to professional teams and leagues is built around several skills/assets> Strong team and league relationships> Proprietary publishing system, live event/data management> Demonstrated operational success with multiple clients, good reputation in the

sports industry> Skills in publishing data across multiple platforms (internet, wireless, iTV)> Subject matter/domain expertise

• Within the sports vertical, these skills combine to form a competitive advantage that isn’t easily replicated

• Outside of sports domain, skills aren’t as unique> Without domain expertise & reputation, core strength is live event/data

management> Strong, established players in other verticals (finance, weather, news, etc.)

Ignite’s relevant focus in interactive publishing will continue to focus on the sports vertical


PAGE 6

Interactive publishing – sports vertical

• Sports vertical has two main target customer segments>Sports properties – leagues, teams, governing bodies>Media companies – broadcasters, cable companies

• Ignite has four main publishing products targeted toward the sports vertical >SportsEditorTM – Productized site offering

– Mainly geared toward teams but extensible for leagues>TeamConnectTM – Email marketing services>TicketWindowTM – Season ticket management and customer service>Custom Publishing – Custom solutions for properties and leagues

– Encompasses everything from custom sites to infrastructure type elements (e.g., digital asset management, universal registration, etc.)

• Market sizes, gross margins, and average deal size for each of these products vary greatly


PAGE 7

Publishing sports vertical - market sizing

$400

$200

$300

$100

$0

20% 40% 60%50%30%

Anticipated Gross Margin (per deal)

Avera

ge D

eal Siz

e (

000’s

)

Custom Publishing ($10 mm)

Sports-Editor

($13 mm)

Team-Connect ($3 mm)

Ticket-Window ($1 mm)

= $1 mm in market size

Estimated Sports Publishing Market (2004)


PAGE 8

Publishing sports vertical – additional issues

•Besides core product offerings, there are a number of other tools/capabilities Ignite maintains and develops to deliver publishing solutions>UDS, XPS, MemCache, JSLib, MST>NFL, NHL, MLB Toolkit>FuseTalk, eShare, etc.

•Current costs/resources required to manage these tools not very visible or well understood>No formal product managers or “roadmaps”>Requirements primarily driven by customers, frequently at the

11th hour

Cumulatively these products represent a heavy, recurring maintenance burden


PAGE 9

Publishing strategy – core products

Product

Potential Ignite

Revenue Current Dynamics Go-forward Strategy

Custom Publishing

$2.5 mm • Several large opportunities looming (NFL DCE/UR, USOC)

• Promising partner strategy - IBM• Custom nature means we don’t heavily

invest in product development until we are awarded work

• High margins, but long sales cycle

• Increase Bus Dev focus on large opportunities with leagues and gov. bodies

• Identify additional targets for joint IBM/Ignite offering

• Dig deeper into portability issues

Sports- Editor

$3.5 mm • Product relatively immature; should be very scalable once fully developed

• High margins, but long sales cycle• Target customer base (teams) very

difficult to work with & limited $$ • Heavy product development effort

required over the next 12-18 months• Limited response from market so far

• Dig deeper into both portability and flat publishing

• Continue to pursue NFL/NHL teams, but limit Bus Dev time

• Continue to execute roadmap, but slow pace (differential in resources will be applied to iTV projects)

Team- Connect


• Medium product development effort required over the next 12 months

• Medium margins and long sales cycle –cannot support standalone sales

• Viable as a component to complete publishing offering

• Push forward on Q2 roadmap to meet market need

• Slow development roadmap, shift delta to iTV

Ticket-Window


• Medium product development effort required over the next 12 months

• Low margins and long sales cycle –cannot support standalone sales

• Pursue distribution strategy with TicketMaster, Paciolan, and FansOnly

• Roadmap/additional development on hold pending

partnership


PAGE 10

Publishing strategy - summary

• Interactive publishing business is still an integral part of the original Ignite vision of exploiting the relationship between sports properties, fans, and sponsors>As adoption of new technologies advances, our focus shifting from PC

to iTV

• Publishing market very important to Ignite in near-term>75% of Ignite current revenue

• Significant long-term revenue growth constrained by several factors>Size of Ignite relevant market>Financial resources of customer base

• Resource allocation for Publishing is currently at 70% of Ignite total resources, higher than it should be given long-term strategy


PAGE 11

Interactive television – market position• Ignite competitive position is low-to-

moderate> Publishing strengths translate well> Unique IP – real-time> Cross-platform approach> Good relationships, need more> Unbranded> Award-winning experience - MSG/Cablevision> Getting “known”> Others already playing with our clients have

more deals– MetaTV – Cox, Comcast– Extend – Cablevision, ESPN

• Market attractive> 58M iTV subs in 2005> DTV revenue $20+B in 2003> iTV ad revenue $20+B in 2005

Gut Check:> Need to focus on investment, prepare for

growth> Mindshare before marketshare> Customer-centric before profit-centric> $ / Sub is the ultimate goal, but we won’t get

there this year LOW

HIGH

LOW

HIGH

Mar

ket A

ttra

ctiv

enes

s

Competitive Position

Build / Invest

Harvest / Resegment

Avoid / Exit

Grow / Harvest


PAGE 12

Interactive television - market sizing

$2,000

$1,000

$1,500

$500

$0

20% 50% 80%65%35%

Anticipated Gross Margin

Avera

ge D

eal Siz

e (

000’s

)

Virtual Channel

($35 mm)

Co-Pilot ($45 mm)

Broad- cast Events

($15 mm)


Estimated iTV Market (2004)


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iTV & Publishing - market sizing

$2,000

$1,000

$1,500

$500

$0

20% 50% 80%65%35%

Anticipated Gross Margin

Avera

ge D

eal Siz

e (

000’s

)

Virtual Channel

($35 mm)

Co-Pilot ($45 mm)

Broad- cast Events

($15 mm)


Estimated Market (2004)

Custom Pub

($10mm)Sports-Editor

($13 mm)

Team-Connect ($3 mm)

Ticket-Window ($1 mm)


PAGE 14

Ignite iTV assets: Products, Intellectual Property, & Intellectual Capital• Ignite’s real-time publishing system

> Cross platform now and cross-genre capable> 3 Products built on system that manage and enhance live programming> Customization engine> Alert capabilities

• Patent development> System and Method for event-driven programming > Others in development

• Relationships and/or prototypes for all significant middleware players:> Liberate Compact and Liberate Standard, MSNTV, MSTV, UltimateTV

programs, OpenTV, Spyglass, Sony, PowerTV, Seachange VOD, Wink, Canal+ Media Highway, Motorola

• Strategic Partnerships> Have: Teams, Leagues, Media Co’s (many); MSO (Cablevision);

Content (TMS, SportsTicker, AP, IDS, etc.); Middleware> Need: MSO’s, broadcasters, tech companies (Motorola, Intel, MetaTV,

etc.)

• “Bandie” award for best virtual channel.


PAGE 15

Ignite iTV solution: managing the “live TV experience”Ignite solutions uniquely allow consumers to create a better TV experience. Sports is the leading category for live content. Architecture is extensible to cross-genre.


PAGE 16

Customers and CompetitionIgnite has developed relationships with individual companies in each client category; has not fully penetrated categories. Ignite’s value proposition is unique versus the competition• Customers:

>MSO’s (Cablevision, Comcast) Note 100’s of potential clients>Broadcast Nets (NBC, CBS)>Cable Nets (ESPN, MSG)>DBS (DirecTV, Echostar)>Leagues (NFL, NASCAR, WWE)>Middleware providers (Liberate, Microsoft)>Platforms (Motorola, S-A)>E-commerce & Services (Ticketmaster on Cablevision)

• Competition>Developers: Extend, Gold Pocket>Tools: MetaTV (portal), Intellocity/ACTV (ad insertion), Watchpoint

(post production tools)>MSO’s or middleware providers themselves

Competition has no experience in live event management


PAGE 17

Ignite In the ITV Market Strategic Position Analysis

What do we do to BUILD / INVEST?– Hire / Train – More people working on ITV products– Gain additional experience; build products – Focus on sports first, then cross-genre.

– Infrastructure– Prove out application services model– Integrate TMS data

– Build prototypes– DCT2000, Fantasy Alerts, Copilot, Cast products

– Do trials with key partners – Gain additional broadcast experience through these partnerships– Establish relationships with key sponsors– Need to build barriers to entry – Core IP, File more patents

What do we prepare to GROW the business?– Increase Mindshare – more PR– Leverage existing relationships with Leagues, Teams (i.e Consulting opportunities)– Get involved in trials – S-A, Comcast, Digeo– Demonstrate thought leadership – paint picture of the future – Alerts, PVRs, PIP,

cross-platform, etc. Trade show speaking engagements, other PR.– Take prototypes to key industry shows and demonstrate to key potential clients –

Core IP, multiple platforms, multiple STBs, multiple infrastructures– Close revenue gap – TicketMaster, HITS, etc.


PAGE 18

Ignite’s iTV Model will evolve with the industry

Today: Product & Service Future: Subscription/Licensing

The proxy for Ignite’s approach is Gemstar. Ignite wants to become the “Gemstar of live programming”


PAGE 19

Gemstar-TV Guide International, Inc. (GMST)

Interactive7%

Media Services70%

Technology & Licensing

23%

• 2001 Total Revenue: $1.4bn; $327mm in Tech and Licensing• Current Market Cap: $4.7 billion • 52 week high-low: $49.95-$8.88• Gemstar installations: 30,000 per day• Gemstar IPG subscribers: 15.1mm in ‘02; projected 27.2mm in ‘05

Per sub licensing fees and HW mfg fees: $327 mm

Advertising, interactive services, e-commerce

TV Guide magazine, TV Guide Channel, Sky Mall


PAGE 20

iTV Market in households and digital TV revenues (U.S. only)

22.1

33.4

45.7

58.2

0

10

20

30

40

50

60

2002 2003 2004 2005

iTV Households (in millions)

14.3

21.1

29.0

41.9

0

5

10

15

20

25

30

35

40

45

2002 2003 2004 2005

Digital TV Revenues (in billions)


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Interactive television is projected to have the highest media growth over a 5 year

window

$16.8

$19.2

$10

$23.8

$.66

$20.7

$0

$5

$10

$15

$20

$25

Re

ve

nu

es in

Billio

ns

Network Ad Revenues(17% increase)

Cable Ad Revenues(136% increase)

iTV Ad Revenues* (30x increase)

2000

2005

Source: Forrester, eMarketer

*iTV’s revenues include advertising revenues and consumer generated revenue streams (VOD and t-commerce).


PAGE 22

Current Ignite personnel allocation

0

2

4

6

8

10

12

14

16

Fulltime Equivalents

NFL Clubs

NHL Clubs

League/ O

ther

Media Sites

Pub New Build iTV

Marketing

Pub Products

Pub Bus Dev

Admin

Staffing by Area


PAGE 23

Future Ignite personnel allocation (draft)

0

2

4

6

8

10

12

14

16

Fulltime Equivalents

NFL Clubs

NHL Club

s

League/ Other

Media Sites

Pub New Build iTV

Marketing

Pub Products

Pub Bus DevAdmin

Staffing by Area

CurrentFuture

IGNITE SPORTS -- CONFIDENTIALPAGE 1 Ignite Sports Publishing & iTV Market Strategy.

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Transcript of IGNITE SPORTS -- CONFIDENTIALPAGE 1 Ignite Sports Publishing & iTV Market Strategy.