• 10 years of YouTube – winners and losers • The digital “tax” – is it too high? • Cross platform content – does it exist? • Digital platforms – friend or foe? Matt Heiman, CEO and Founder, Diagonal View

1. Digital Profits-
Are we there yet?

2. The big winner
Clearly- YouTube, an $80 Billion Company
“The deal of the decade”
- The FT, December 12, 2015
Bear in mind, Netflix is “only” a $50B company, as is Time Warner

3. Other opportunities:
The value chain
The value chain is collapsing- but not before a lot of money was made…
Content Creator
(YouTube Star, IP Owner)
Agent
(Merchandise, books, tours)
MCN
(ad-sales, TV sales, branded
content)
YouTube/Platform (ad-sales,
branded content)

4. Where has the money gone?
Timing is everything-
MCNs-
$150-160MM invested, $1B+ out
The Sum of;
Awesomeness- investment capital= $3.5MM, exit $33-117MM (2013)
Broadband TV- investment capital= exit $36MM (for 51%, 2013)
Maker Studios- investment capital= $70MM, exit $450MM (2014)
Fullscreen- investment capital= $30MM, exit $200-300MM (2014)
StyleHaul- investment capital= $17MM, exit $150-200MM (2014)
Broadband TV- investment capital= exit $36MM (for 51%, 2013)
CDS- merged in to a $240MM entity with ProSieben Digital (now called Studio71)
Is there another YouTube type return in this pack?
Likely not…:
$150MM >$1B exit

5. Indeed- where HAS the
money gone?
Rightster share price, since IPO:
This is the only public market MCN indicator but likely this is the norm rather than the
exception
A 90% decrease in share price

6. So- is the aggregation
model dead?
In a word- yes.
But why?
1) YT is no longer a spotty adolescent- it has grown up and grown in to a large part of
the value chain.
Ie: every MCN said- we will sell higher-priced pre-roll, today they rarely do
2) Emperors new clothes- MCNs really added little value, that has now been found-out
1) The internet is super-efficient, the speed of collapse in the value chain has been
incredibly quick

7. And now what?
Facebook is coming- in earnest:
1) Viewcount is now on-par with YouTube,
engagement is rapidly increasing (FB
controls your feed so “Good” content is
promoted
1) All users are logged-in, this is hugely
significant for a bespoke viewing experience
and much better targeted advertising/yields
2) Click-through from Facebook to
website/advertiser is very powerful

8. And now what? (Part 2)
IP Owners/Producers are profitable (or re-investing for growth)
In addition to YouTube revenue, incremental revenue streams are substantial-
1. Branded content campaigns are contributing to a 100-150% increase in revenue
2. YouTube Red (subscription service) is contributing new revenue (in just the first
45-days)
3. Facebook and other competing platforms are adding significant incremental
revenue
Selected examples of businesses valued at >$500MM:

9. And a quick set of predictions
More digital producers/IP owners will enter the market-
• At the moment, there are only 4-5 companies of reasonable size (over 200M
views per month of owned IP)
• MCNs are transforming into producers (not sure how that will go)
Brands/agencies will aggressively target the space (this is already happening with an
dramatic increase in branded content and branded merchandise)
And…
VR just might blow all of us and all of this away

10. END_