L3 Video Content Protection, Distribution & Monetization.
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Transcript of L3 Video Content Protection, Distribution & Monetization.
L3Video Content Protection, Distribution & Monetization
“L3”
2
“We help video content owners make more money and make it faster, by enabling secure, viral distribution worldwide.”
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Scenario Today
MPAA (Motion Picture Association of America) says Hollywood loses 40% of revenue ($4 billion) to Piracy
And Piracy is on the rise – a rock-solid solution is required
Content-Owners give their content to intermediaries losing up to 80% of potential revenue
Most try YouTube distribution – sometimes coupled with physical DVD shipping
Premium content (e.g. new movies and eLearning) limited to Ad-supported streaming sites (including YouTube) – No Pricing Power
Those who try to self-distribute spend significant amounts on bandwidth, servers and custom DRM solutions
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Market Friction
Content Owners Friction
Large
Small
Revenue loss due to Piracy (at each step of distribution)
Internet distribution is limited to streaming customers with robust bandwidth
Giving up their rights in various geographies to distributors
Inability to self-distribute and market content
Inability to price variably in various geographies, thus limiting reach
Cost of repurposing content for various devices and platforms
Censorship requirements in different markets
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Market Friction
In simple terms Video rights owners have to either
Accept piracy of their content (from DVDs, YouTube, Tivo etc.)
Spend lots of money on Servers, CDNs, and eCommerce (> $5,000 per month)
Sell out to Netflix, Hulu and other such aggregators (and sacrifice their own brand)
OR
Use “L3”
The L3 Solution
The mission of Layer 3 Media’s (L3) is to smoothen the movie/video distribution chain through disruptive innovation Protect content owner’s interest
▪ Piracy-proof the content▪ Enable content monetization
Easy Content Accessibility to audiences globally▪ “Viral”/”Social” distribution (Build on current eco-system)▪ Computers, tablets, Mobile phones, TV – All devices▪ Enable value added services such as sub-titles to enable
intermediaries▪ Watch content free with relevant ads
Address ground realities of infrastructure▪ Download & Play or Streaming or Torrent or Physical distribution
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Cable TV/DTH
ePVR (Enhanced Personal Video Recorder)Enhanced Cell Phone
Cellular Network
Other Devices
L3 Content
Desktop Software
L3 is the world’s first
LEGAL TORRENT system
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More on L3
Viral distribution/Content Marketing
Rock solid copy-protection Easy Payment methods for
end customers (including “free-with-ads”)
A Cross-platform solution Scalable platform to address
Global demand of content Control for Content Owners
How it works
+ L3 =
+ or
L3Mobile TV Desktop
Owner
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Customers
Market Segments in order of focus Independent Film and documentary makers Small Studios and distribution companies in India and
other countries How-To video makers (Cooking, Musical Instruments,
Exercise videos etc.) Other Semi-Professional content (migrate from YouTube) Music Videos Large Film Distribution companies (including Netflix,
Hulu…) Formal eLearning distributors/creators Large Studios (Sony, Disney...)
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Industry/Market
Global market estimated at almost $1 trillion (TAM) and can be grown by this platform
Video creation and consumption rising due to lowered technology barriers
Recent SOPA and PIPA bills in the US Congress attest to how seriously business and government are taking threat of Piracy
Without protection, unfettered distribution cannot happen
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Addressable Market
Entertainment Piracy alone accounts for at least $6 billion worldwide ($4B Hollywood)
We can reduce this by 25% over 5-7 years giving us…
Expected share of market in 5-7 years of $2 billion (top-line collections) giving $200MM in revenue with margins over 75%
Long term, as this platform becomes mainstream, we can capture much more
Growth can only be explosive as adoption will be viral
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Management Background Anil Gupte
IIT Kharagpur alumnus Ran a Computer Aided Design Training and
Consulting business from 1989 to 1993 with Fortune 100 clients
Founded iCinema – one of the first streaming video sites ever (1997)
Morphed above into maxNetwork – a service oriented business model with better revenue/profit
Grew above business 680% from 2000 to 2004 then sold it
Introduced the first Personal Video Recorder in India (2006)
4 US Patents received + 1 more in pipeline
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Management Background Amit Abhyankar
IIM Lucknow Alumnus 12 years of experience in Media and Entertainment As MD of Outreach Motion Pictures has experience
of distribution across all platforms - Theatrical, Digital, Satellite and Home Video
Has worked as Executive Producer/Director and many other roles in all aspects of Film-making
As Founder/Director Outreach Media Services specialized in Management of Brands for Companies and Image for Individuals
Most recent film – “Jana Gana Mana” (Producer/Director) received Best Director and Best Film (Rural) in India (Maharashtra)
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L3 – External validation
Wipro Wharton Global Innovation Challenge – Category Winner
DST-Lockheed Martin India Innovation Growth – Winner
Economic Times Power of Ideas Competition – Winner (~$40,000 seed investment by CIIE, IIM Ahmedabad)
4 US Patents issued, 1 pending
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Competition (Direct)
STREAMING
DOWNLOAD
ADS IN OFFLINE MODE
DRM VIRAL
SOCIAL DISTRIBUTI
ON
MARKETING COMPONENT
PRICING FLEXIBILI
TY
L3 Y Y Y Y Y Y Y Y
YouTube Y Y
Amazon Plus
Y Y Y
Netflix Y
Distrify Y Y Y
Hulu Y
iTunes Y Y Y
Roku Y
Ooyala Y Y
DTH (Satellite)
Y
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L3 – Competitive Advantage
L3 is the only secure, multi-pricing, download-cum-streaming-cum-torrent distribution model for video
Almost all our competitors can also become our customers
Fundamental differentiation – L3 content is protected before it leaves the content-owner’s hands
L3 is the only platform where ads can be dynamically inserted into content in online as well as offline mode
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Projected FinancialsYear 1 Year 2 Year 3 Year 4 Year 5
TOTAL COLLECTIONS $ 1,403,764 10,450,755 63,729,440 191,188,321 382,376,642 Business Growth % 644% 510% 200% 100%
Costs
Q/Q Growth% 100% 100%Technology
Outsourced Development Tech Salaries $ 114,480 $ 576,630 $ 1,443,600 $ 2,196,000 $ 2,824,800 Recruitment Cost $ 67,294 $ 238,501 $ 391,507 $ 783,014 $ 1,566,029 Overheads $ 57,240 $ 208,315 $ 721,800 $ 1,443,600 $ 2,887,200
Professional Services IP/Patents $ 45,000 $ 20,000 $ 20,000 $ 40,000 $ 80,000 Regulatory Compliance/Advice $ 7,000 $ 16,216 $ 31,544 $ 63,088 $ 126,175 Legal/Copyright/Compliance $ 32,000 $ 57,656 $ 112,156 $ 224,312 $ 448,624
Infrastructure Servers/Hardware $ 8,000 $ 14,414 $ 28,039 $ 56,078 $ 112,156
Marketing Content Sourcing $ 41,364 $ 205,636 $ 1,138,723 $ 2,277,447 $ 3,036,596 Viewers $ 349,230 $ 1,512,331 $ 1,134,602 $ 2,269,204 $ 5,673,010 Commission to Mktg Partners $ 35,094 $ 130,634 $ 318,647 $ 637,294 $ 1,274,589 Sponsorships/Promotions $ 138,000 $ 10,000 $ 80,000 $ 160,000 $ 320,000
Other Transaction Fees $ 52,641 $ 391,903 $ 2,389,854 $ 4,779,708 $ 9,559,416 Contingency (FX and others) $ 47,367 $ 179,112 $ 390,524 $ 781,047 $ 1,562,094 Management cost $ 96,000 $ 172,969 $ 867,750 $ 1,735,500 $ 3,471,000
TOTAL COSTS $ 1,130,710 $ 3,934,317 $ 9,068,746 $ 17,446,292 $ 32,941,688
L3 REVENUE $ 348,302 $ 2,593,044 $ 15,812,568 $ 47,437,704 $ 94,875,407 Profit/Loss $ (788,152) $ (128,801) $ 6,749,454 $ 30,042,676 $ 62,001,544 Taxes - - 1,737,042 8,997,423 18,580,116 PAT 4,648,704 21,029,873 43,401,081
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Projected Financials (Summary)
Year 1 Year 2 Year 3 Year 4 Year 5
Collections 1,403,764
10,450,755
63,729,440
191,188,321
382,376,642
L3 Revenue 348,302
2,593,044
15,812,568
47,437,704
94,875,407
Marketing Costs 360,658
935,345
2,975,614
5,951,228
11,553,463
Personnel Costs 471,024
1,035,082
2,458,275
4,225,350
6,883,501
Other Costs** 104,772
500,613
2,647,872
5,295,745
10,591,490
Profit/Loss $
(788,152) $
(128,801) $
6,749,454 $
30,042,676 $
62,001,544
** Primarily Transaction Fees
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Deal Summary
Equity funding of ~$1.1 Million needed
20% equity offeredEstimated Year 5 PAT~$45 Million Estimated Company valuation in
year 5 $900 Million (PE = 20) or higher
Investors ROI estimated to be 180X in five years (earlier exit possible)
Thank You!
Contact:Anil [email protected]+91 9370131365
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Appendix(Additional Details)
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L3 Technology
Distribution on DVD, Internet and other media in a single format
No need for separate process or format for Internet distribution, Broadcast or DVD/CD
“Morphing” copy-protection A unique key & algorithm required on each machine, so
that even if one “pirate” cracks the encryption, the “crack” cannot be reused
Also, algorithms and keys keep changing to create a moving target for pirates
Patented technology
L3 Video File
Cable TV/DTH
ePVR (Enhanced Personal Video Recorder) Internet
Internet
Peers
Physical Media
Servers
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Value added services
Content owners or anyone else can add value to the L3 content Example: Subtitles in any language can be added to the
L3 file ▪ Expands the market exponentially▪ Incremental revenue for such value added service is tracked
separately and goes back to the entity that built the value-added feature
And we will have a little house with big windows
+ = Opportunity
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Benefit to the content owner… 1/3
Monetize content Extra revenue with not much incremental cost Significantly lower risk of piracy
Global customer reach Access established, new and uncharted geographies
A vibrant distribution channel More efficient than all existing distribution networks Most cost efficient Peer to peer virally distributable Through any media Can also be hosted on L3 owned sites
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Benefit to the content owner… 2/3
Content ownership remains with owner Don’t have to sell the internet rights Owner can place it on any medium and send it
anywhere Secure the content before its distributed
Superior encryption with L3 patented technology
Gives complete pricing flexibility to content owners Maximize returns through dynamic pricing
▪ Content not selling well in one market can be re-priced to make more attractive
Complete control on pricing ▪ Expands the market by creative pricing
Can block any geography
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Benefit to the content owner… 3/3
Assured collection Payments received through Credit
Cards, Net Banking, PayPal L3 is no extra cost for content owners
Owner uses the “free” L3 software to encrypt and distribute content from any source
Users/audience pay a transaction fee to L3 “Not new” content can also be
monetized If broadcast rights sold, one can still earn
money from Internet or DVD distribution No lawyers and accountants involved Save cost and time
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Benefit to the consumers Increased availability and access to content End customer finally has the ability to decide
what kind of experience he/she wants Choice of watching on computer or TV
▪ Internet downloaded content can be watched on TV or computer
Choice of watching with ads or without ads Choice of paying or not paying
▪ No ads or with ads Choice of how much violence/sex to be shown Choice of passing on the download to others without
piracy guilt▪ Torrent, USB, CD, DVD etc.
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Benefit to advertisers
Pay only if Ads play Micro-targeted advertisements
Age Sex Geography Time of the year/day
New ads on re-runs Detailed reporting
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Benefit to the industry
Wider distribution and quicker break-even Encourages Content-creators to experiment
Good content once produced will continue to accrue rewards perpetually
More expression of art Reduced dependence on distribution channels