CONFIDENTIAL

Grouper: Competitive Landscape andAlternative Growth Strategies

DRAFT

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Distinct Service Categories Formed at the Outset of Digital Video

Store Channel Promotional

• On-demand videos programmed in channels or on a show-by-show basis

• Advertising supported, with some upsell to subscription

• Short video clips promoting the site owner’s content, merchandise, and brand

• May include some advertising and limited commerce capabilities

• Aggregate video across providers for purchase

• Includes sell-thru, rental, and subscription

User Generated Video (UGV)

• Allow audience to watch and share videos created and uploaded by users

• Primarily advertising based revenues

Social Network

• Online communities enabling interactivity between users

• Primarily advertising based revenues

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Players with the Largest Audience are Acquiring to Broaden their Offerings, Blurring the Line Between Service Categories

Service Original Focus Areas of Expansion

• Store

• Social Network

• Channel (e.g., Music Videos on Yahoo! Music)

• UGV – Acquired YouTube for $1.6BN

• UGV – Launched MySpace Videos

• Channel – Fox Full Throttle

• Store – Download-to-own Episodes

• UGV Tools – Acquired JumpCut

• UGV Content – CurrentTV Partnership

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Players with Smaller Online Audiences are Gaining Traction through Increased Focus on Key Service Differentiators

Service Focus Area

• Attract high quality “prosumer” videos by offering cable distribution

• Attract high quality UGV through revenue sharing

• Offer easy-to-use tools for online video creation and editing

• Provide robust video sharing infrastructure and turn-key offering for syndicators

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The Evolution of Digital Video May Follow Other Media Markets

Content / Service Offering

Depth Breadth

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ABCNBCCBSFox

HGTVCourtTV

Speed ChannelHistory Channel

E!A&E

LifetimeCartoon Network

Content / Service Offering

Depth Breadth

Au

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Yahoo!GoogleMSNAOL

CNN.comESPN.com

Weather ChannelConsumer ReportsNew York Times

CNET

TV Networks Online Information

Media Markets Traditionally Support 3 to 5 Broad Offerings with Mass Appeal and a Variety of Targeted Services

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Moving Grouper to Leadership Through Breadth or Focus Dictates Distinct Expansion Priorities

Scale / BreadthMass Traffic

Mass ContentAdjacent areas (e.g., Social Networking)

Focus Targeted Content Offers

Differentiated Technology

• Winning through focus may be more achievable organically through alignment of content and technology

– Build well-programmed, targeted channels

Invest in clearances for SPE content to ensure channel depth

Acquire and / or license rights to targeted content libraries

– Invest in development of differentiated technologies to address needs of core audience

Address needs of prosumers through ties to Madison Media Software’s best-in-class, high-end video editor

Develop or acquire easy-to-use online video editor

• Winning through scale may require a significant investment in distribution and acquisitions

– Exclusive distribution partnerships with leading online destinations

– Large scale acquisitions to acquire audience

– Multiple acquisitions to address adjacent markets (e.g., Social Networking, Video Editing)

– Large, dedicated cross-Sony marketing budget

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Content

College Humor (0.9)

JibJab (0.6)

SingingFool/VideoDetecitve

Broadband Sports (0.1)

RocketBoom(0.04)

Ruckus (0.02)

Revision3 (0.02)

Channel 101 (0.02)

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Audience + Functionality

PhotoBucket (12.0)

Roo Media (N/A)

Six Apart (10.4)

Image Shack (9.3)

Xanga (5.5)

Reunion (4.7)

MetaCafe (3.1)

Digg (2.1)

Friendster (1.0)

Tagged (0.8)

Functionality

Meetup (0.7)

Piczo (0.5)

Text America (0.5)

Imeem (0.2)

VideoEgg (0.2)

eyeSpot (0.2)

MotionBox (0.2)

Famster (N/A)

Potential Acquisition Candidates

Audience

AddictingClips (1.9)

DailyMotion (0.8)

vMix (0.8)

vidiLife (0.8)

ManiaTV (0.6)

Revver (0.5)

Vimeo (0.5)

Audience + Content

Break.com (3.3)

eBaum’s World (3.0)

Bolt.com (2.9)

Heavy.com (2.7)

Content + Functionality

Pure Video (0.9)

Castpost (0.2)

Now Public (0.09)

Bix (0.08)

Blip.tv (0.06)

Dave.tv (N/A)

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