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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
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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
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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
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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)
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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
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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
$0.2 mm • Product relatively immature; should be very scalable once fully developed
• 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
$0.1 mm • Product relatively immature; should be very scalable once fully developed
• 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
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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
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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
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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)
= $5 mm in market size
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)
= $5 mm in market size
Estimated Market (2004)
Custom Pub
($10mm)Sports-Editor
($13 mm)
Team-Connect ($3 mm)
Ticket-Window ($1 mm)
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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.
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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.
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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
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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.
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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”
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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
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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).
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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
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