Siemer & Associates Digital Video Report 2013

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Specialized

Accomplished

Digital Video Report
Fall 2013

Table of Contents
Section I

Industry Trends and Dynamics

Section II

Multi-Channel Networks

Section III

Social Video

Section IV

OTT Video Platforms

Appendix

Transaction Case Studies
Public and Transaction Comparables

2

Summer 2013

Online & Mobile Video Overview
Video content spans all connected devices – smartphones, tablets, connected TVs and OTT platforms,
and even including wearable technologies – delivering a perpetually always-on digital video audience
Digital video – with its comparatively small production budgets and unlimited distribution – has
democratized content creation and turned audiences global, allowing upstarts to scale rapidly and
compete with traditional incumbents for audience engagement and advertising spend
Multi-channel networks in particular have sought to capitalize on the proliferation of content creators,
leveraging YouTube as a distribution platform and attempting to differentiate via defined verticals and
ancillary services (advertising, analytics tools, etc.)
With users increasingly accessing their chosen content across multiple platforms, digital video adtech
companies have been responding accordingly by expanding their product and service suite to support
cross-platform functionality and programmatic media buying / selling

4

Summer 2013

The way customers access video content continues to change as the functionality in both mobile
applications and gaming consoles are further developed
― Non-Desktop video views, a combination of both mobile applications and game consoles, accounted for 19.0%
of all views in Q1 2013 in the US, up from only 3.0% in Q1 2012
― As a result, desktop video minutes per viewer is down 5% in YoY growth as consumers increasingly use nondesktop devices to stream content

The industry is characterized by various subsectors and unique monetization strategies
― YouTube and other destination sites (e.g., DailyMotion) aside, multi-channel networks (MCNs), social video
and over-the-top (OTT) video platforms have all emerged as prominent players
― Prominent MCNs Fullscreen and Maker Studios recently received $30.0 million and $26.0 million in investment
led by the Chernin Group and Canal+ / SingTel Innov8, respectively
Total US Video Views by Platform
Q1 2012

Q1 2013

3%

19%

81%

97%

Desktop videos

Desktop videos

Non-desktop videos*

Non-desktop videos*

*Non-desktop videos includes game consoles in the calculation
Source: Wells Fargo Securities, LLC, ComScore, FreeWheel

5

Summer 2013

Domestic Penetration
The US stabilizes as a mature market with steady growth and penetration projections
Internet Users Who Download or Stream Video Online at least Once per Month
200

187.6
178.7

Viewers (in mm)

120

90.0%

169.3
158.1

160

80.0%

145.6
130.8
65.0%

68.2%

100.0%

70.8%

72.9%

74.7%

76.0%

70.0%
60.0%

60.5%

100

50.0%

80

40.0%

60

30.0%

40

20.0%

20

10.0%

0

% of Internet Users

180

140

195.5

0.0%
2009A

2010A

2011A
2012A
Online video viewers

2013P
2014P
% of Internet users

2015P

Source: Wall Street Research, eMarketer

6

Summer 2013

Current Market Trends
Online video audiences are expected to double by 2016, reaching 1.5 billion globally, as the
penetration and affordability of computers and mobile devices continues to expand
As the market matures, US mobile video revenues are projected to nearly triple to $4.0 billion in 2013,
up from $1.3 billion in 2012
US Mobile Video Revenues (By Type, in $000s)
$4,500

$4,015

$4,000
$3,463
$3,500
$2,838

$3,000
$2,298

$2,500

$1,316

$1,500
$1,000
$500

$208

$1,730

$2,000

$650

$316
$1,611
$1,274

$903

$583

$148
$331

$735
$1,051

$270

$349

$1,508

2014 E

$1,251

$1,665

2015 E

$1,874

$2,054

$0
2011 A

2012 A

2013 E
Subscription-based*

Ad-supported

2016 E

2017 E

Pay-per-view download

*Subscription-based revenues include mobile-only subscription revenues and a portion of revenues from cross-device subscription bundles

7

Summer 2013

The online video industry posted strong growth through the first part of the year as indicated by May’s
YoY 22.0% increase from 46.7 billion total IP-video streams to 57.0 billion
― Total viewers grew to 178.0 million, a 2.0% YoY growth, suggesting an increase in per capital consumption as
the primary driver for industry growth

Consumers are willing to accept higher advertisement loads per content segment in return for more
viewing convenience
― Long-form ad loads grew 28.0% from Q1 2012 to Q1 2013, an increase from 7.4 ad units per content segment
to 9.5 units
Ad Completion Rate by Site Type
100.0%
80.0%

Video Ads Per Video Viewed (Long-Form Content)
12

91.0%

10.2

76.0%

10

68.0%

8

60.0%

9.2

Q2 2013

Q3 2012

9.5

8.9

7.4

6

40.0%

4
20.0%
2
0.0%
Ad Networks /
Exchanges

Internet Brands

Major Media Brands

0
Q1 2012

Q4 2012

Q1 2013

Source: Wells Fargo Securities, LLC, ComScore

8

Summer 2013

The average US viewer watches almost 100,000 minutes of television each year. Viewing habits are
changing as 229 million viewers are expected to be connected to over-the-top services on devices by
2016
― 35% of these viewers will watch TV on these devices

Almost 25% of television viewing time is dedicated to ads and content providers are taking advantage
of viewers’ acceptance of ads tied to TV as they look to increase their digital ad spending
US Digital Video Ad Spending, 2011-2017

2016 Projected Share of TV Viewing by Device (US)
$10

$9

$9

56.5%

$8

$8
Tablet, 16%

$ bn

Computer, 14%
Television, 65%

50.0%

$7

$7
$6

60.0%

$6
41.4%

40.8%

$5

40.0%

38.9%
30.0%

$4

$4
$3
$2

Smartphone, 5%

$3

20.0%

21.4%

$2

15.1%

$1

12.8%

$-

10.0%
0.0%

2011 A

2012 A

2013 E

2014 E

Digital video ad spending

2015 E

2016 E

2017 E

% Change

Source: IAB, Multiscreen Marketer; TDG, TV Everywhere Update; mDialog; eMarketer

9

Summer 2013

This ultimately creates a potential linear video ad market of 4 trillion ads by 2016
― 50,000 ads x 229 million viewers x 35% of total devices

Consumption of digital video ads is increasing – 23% of the 39 billion content videos viewed in
December included video ads, up from 14% the prior year
Increasing sophistication of brand engagement via new methods such as interactive content or longform advertorials versus traditional TV advertisements are capitalizing on the advantage that online
video provides
― Chipotle’s new branded video generated almost 4 million views on YouTube in its first five days
Impact of Made-for-Web vs. Repurposed TV Advertisement by Age Group
7
5.9

6

4.6 4.7

5
4
3

3.3
2.5

3.4

3

3.7
2.8

2

2

4.6

1.2

1.7

1.5

1

2
1

1.4

1.3

0.4

1.1

0.7 0.7

0.6 0.5

TV

Web

0
TV

Web

Aided Brand Awareness

TV

Web

TV

Online Ad Awareness

Web
Brand Favorability

18-34

35-49

Purchase Intent / Consideration

50+

Source: TDG, TV Everywhere Update; mDialog; Tubefilter; Wall Street Journal

10

Summer 2013

Larger supply inventory coupled with the increased use of programmatic buying of ads is reducing the
average price per CPM in the near term as the advantage shifts to the buyers
― Publishers who provide access to distinct and high value market will remain more resistant to this
commoditized pricing
US Online Video Ad CPM, by Inventory Tier, 2010-2017

Total Spending on RTB Video (in $mm)

$50

$1,200

$1,141

$45
$45

$41

$40

$33

$35
$30

$1,000

$37

$27

$26

$25

$25

$25

$31
$24

$31

$31

$31

$25

$25

$26

$800

$686

$600
$20
$15

$16

$17

$18

$19

$20

$21

$23

$22

$402
$400

$10
$5

$200

$190

$2010

2011
Indirect

2012
Midtier

2013

2014
Premium

2015

2016

2017

$-

Average CPM

2011

2012

2013

2014

Source: Credit Suisse, Google – Doubleclick, Wall Street Journal, Forrester, Tubefilter

11

Summer 2013

Video ad networks are exploring ways to capitalize on growth of video ads and their higher level of
engagement
― YuMe launched its new Household Targeting system to deliver in-stream, interactive ads across all connected
screens in a household
― Tremor Video announced they would move from serving in-banner video advertising and focus on in-stream
video ad content

Technologies such as mDialog’s Smart Stream platform, which allows for uniquely addressable
advertising within linear, live and VOD, are being launched to maximize the potential of video ads
Interactive Online Video Advertising’s Effect on Brand
Metrics in the US, Q2, 2012

Completion Rate by Spot Position
100%

0.4
0.5

Brand favorability

90%

70%
1

Message association

1.3

50%
40%
2.3

Online ad awareness
0

59%

60%

1.4
1.3

Aided brand awareness

76%

80%

0.7
0.8

Purchase intent

88%

30%
3

1
2
3
% Increase over Control Group (TV ads)
Noninteractive
Interactive

20%
10%

4

0%
Mid-Roll

Pre-Roll

Post-Roll

Source: eMarketre.com, Milward Brown, Dynamic Logic & Yume, Adobe

12

Summer 2013

Online & Mobile Video Trends
Despite early concerns that consumers would resist utilizing mobile devices for long-form video, both
mobile and tablet video users spent more than half of their total online viewing time watching videos
longer than 10 minutes
― Previously, analytics focused on the number of views a piece of video content had accumulated, yet recent
studies indicate that the number of minutes watched per view is a more relevant metric
― The growing popularity of long-form viewing on online and mobile devices allows for more opportunities to
include mid-roll ads within this content

As mobile screens proliferate globally, we expect that consumer video consumption will continue to
evolve as a more mobile, multi-platform experience
Proportions of Videos Watched by Length
80.0%

71.0%

60.0%

53.0%

52.0%
38.0%

40.0%
21.0%
20.0%

14.0%
3.0%

7.0% 5.0%

25.0%

22.0%
15.0%
6.0%

4.0%

22.0%

15.0%
6.0%

5.0%

8.0%

7.0%

0.0%
Connected TVs / Gaming Consoles

Mobile
< 1 min

1-3 min

Tablet
3-6 min

6-10 min

Desktop

> 10 min


13

Summer 2013

Multi-Channel Network Overview
MCNs provide the production, marketing and technology infrastructure to original content channels for
a percentage of the revenues generated
― By joining MCNs, video content creators can expand their audience through cross-promotion executed across
the massive group of channels aggregated by each firm
― MCN’s scale allows for revenue and cost synergies, as well as removing a lot of the challenges small content
creators face

MCN’s distinct business model is attracting interest from both large corporations and notable VC firms
Milestone Fundings for MCNs
Fullscreen raised $30.0 million in Series A funding
led by the Chernin Group in June 2013

In July 2013, Base79 secured a multi-million dollar
funding, actual amount undisclosed, led by
Evolution Media Growth Partners

YouTube renewed its contract with VEVO and has
taken a 7% stake in the company for a $40-50
million investment

Maker Studios turned down a nine-figure
acquisition offer to close a $36.0 million investment
led by Time Warner Investments in 2012 and
raised an additional $26.0 million in August 2013

Tastemade raised $10.0 million in Series B funding
led by Raine Venture Partners in August 2013

Machinima closed $35.0 million in venture round
funding led by Google in May 2012 and is rumored
to be seeking another $80.0 million from large
studios (e.g., WB and Paramount)

StyleHaul raised an additional $6 million in Series B
funding from RTL Group, bringing the total Series B
funding to $12.5 million

theAudience raised $20.0 million in 2012 from
investors including Founders Fund, Guggenheim,
Participant Media and Intertainment Media
Source: Variety, TechCrunch, Wall Street Research, CrunchBase

15

Summer 2013

Top YouTube Partner Channels as of June 2013
VEVO leads in total unique visitors and number of views
MCNs Total Unique Visitors and Number of Views
50.0

47.5

600.0

533.9

500.0

45.0

35.0

34.3

400.0
28.8

30.0
25.0

476.8
28.4

389.5

26.5
22.6

309.2

20.0

300.0
20.4
16.8

200.0

15.0
10.0

160.2

137.2

127.0

5.0

Videos (in Thousands)

Unique Visitors (in mm)

40.0

100.0

85.3

0.0

0.0

Total Unique Visitors

Views*

*Views are defined as any streamed segment of audiovisual content, including both progressive downloads and live streams. For long-form content, each segment of content is counted as a
distinct video stream. Video views are inclusive of both user-initiated and auto-played videos that are viewed for longer then 3 seconds.
Source: comScore.com

16

Summer 2013

Industry Challenges for Multi-Channel Networks
Because music makes up the largest share of the MCN market, developers must consider legal
obstacles to maintain unique visitors and earnings
― Fullscreen was sued in August 2013 by the National Music Publishers’ Association (NMPA) for copyright
infringement of videos
― Maker Studios also settled a lawsuit with the NMPA and will pay music publishers for past and future
infringements

Utilizing MCNs requires a trade-off on behalf of the content publisher
― Ad revenue is often deferred to network providers in exchange for greater exposure and marketing

Primary Benefits / Concerns for Content Creators Joining an MCN

Access to high-end equipment and resources allowing for better quality video production
Significantly increased marketing support and endorsement
Opportunity for cross-promotion between channels within the network
Forgo advertising revenue generated from channel content
Forfeit merchandise revenue due to profit split with MCN
Potential loss of freedom in producing original content
Source: TechCrunch, Wall Street Research

17

Summer 2013

Networks poaching other networks’ clients is proving to be dangerous to the industry
― Some MCNs are beginning to prioritize poaching big-name channels and popular YouTube personalities over
developing the quality of their current talent

Poaching talent and co-opting material from other networks has the potential to drive up the percent of
revenue share that MCNs split with talent, which limits long term financial benefits of acquiring new
talent
― MCNs currently have a net revenue margin of around 16.5% (after profit splits with both YouTube and Talent)
and further compression could prove challenging to achieving both profitability and future growth prospects

Percentage Revenue Splits

Net Revenue Margin
16.5%

45%

45.0%

30%

55%

38.5%

70%

MCN

YouTube

MCN

Talent

MCN

Talent

YouTube

Source: Wall Street Research, TubeFilter, Upfront Ventures

18

Summer 2013

MCNs may become less advantageous as different applications emerge offering similar analytics
― Google Chrome’s free extension, VidIQ, offers video analytics to help content producers maximize audiences
― For each video, VidIQ tracks and displays watch time, social media shares and VidIQ score, which determines how
likely a video is to show up in YouTube’s related, recommended and search categories
― This may prove threatening to Fullscreen, which has a differentiated product among MCNs, offering key data analytics,
tools and support

― Optimizing videos through third-party applications may deliver increases in a video’s exposure comparable with
what MCNs provide

While incumbent MCNs have their own challenges, new or aspiring MCNs face enormous hurdles and
barriers to enter the market, including the scale already achieved by incumbents, as well as large
funding disadvantages
― The first MCNs were able to capitalize on YouTube’s Partner Grants program which allocated an initial $5.0
million to help spur the creation of original content
― Many feel the “land grab” is largely complete – so new networks have to attract talent away from the large
players – which will prove costly

Source: Wall Street Research, TubeFilter

19

Summer 2013

Multi-Channel Networks Reduce Dependency on YouTube
Both Youtube creators and MCNs feel that YouTube’s ad revenue splits are overbearing, curtailing the
industry’s growth potential and causing MCNs to seek strategic alternatives
― Fullscreen and VEVO remain the only MCNs rumored to be profitable

Although YouTube is currently the foundation for all MCNs, leading networks are seeking ways of
diversifying their content onto other platforms
― Maker Studios recently acquired Blip Networks and will integrate it into their multi-media platform as an
independent destination site (Fullscreen is also exploring this possibility)
― Machinima announced in July 2013 that it wants to raise $80.0 million to launch its own online video platform
subscription service with Leading MCNs Delve into Original Content Production
premium original content

This gaming and comic-oriented MCN
originated as a YouTube channel
producing original content
Having already partnered with Lionsgate
to produce an original web series in
2012, Machinima recently teamed up
with Ridley Scott to produce 12 original
Sci-Fi short films
If able to secure funding, the company is
earmarked to launch Machinima Plus, a
premium subscription product similar to
Hulu Plus

Founded in 2009, VEVO
operates as an online
music video platform
In March 2013, VEVO
announced the release of a
24-hour programmed
channel, called VEVO TV,
consisting of music-themed
original shows
supplementing blocks of
videos grouped by genre

Although Maker Studios represents
a wide range of channels, they
established themselves as a top
network in the gaming vertical in
August 2013 with a re-launch of
their gaming channel, Polaris
Maker Studios, unhappy with
YouTube’s revenue share
agreement, acquired Blip Networks
which will serve as an independent
destination site

Fullscreen differentiates itself from
other MCNs by providing its
creators with technical tools
After Fullscreen secured $30.0
million in a round of Series A
funding led by the Chernin Group,
co-founder George Strompolos
confirmed that while Fullscreen is
currently known as a network of
YouTube creators, they are on the
path of evolving into a studio

Source: Variety, Pandodaily, The Wrap

20

Summer 2013

Emergence of the Social Video Platform
Viddy, Socialcam, Chill, and Loopcam, launched in 2011, were the first mobile applications to introduce
the concept of viewing and sharing video content in a social media setting
― Between December 2011 and March 2012, mobile video app usage jumped 52.0% from 152.0 minutes per
month to 231.0 minutes per month
― During the same period, video usage from Google’s sites, primarily consisting of YouTube, fell 10.0%

Twitter, a platform based on shortened and straightforward content, launched Vine in January 2013
― Vine places control in users’ hands to customize and share brief videos with followers
― In August 2013 Vine hit 40 million users, up 207% from its reported 13 million users just two months prior
― Vine has succeeded where previous mobile video sharing apps have faltered by capitalizing on Twitter’s
customer base and market share

As the battle ensues for which platform will become the “Instagram of videos,” Instagram announced in
late June 2013 that it would allow for users to film and post videos
― Instagram reported it has reached 150 million monthly users in September 2013
July 2011 - Loopcam launches as a
platform that allows users to create
and loop gif-animations

2011

April 2011 - Viddy launches as a
social video platform and
becomes #1 in iOS App Store

2012

Source: TechCrunch, CrunchBase, Wall Street Research, LA Times

July 2012 – Autodesk acquires Socialcam,
a mobile video application, just 18 months
after its launch for $60.0 million

April 2012 - Viddy secures $30.0
million in Series B funding after
reporting 5.5 million new users in 11
days

22

2013

June 2013 – Instagram
announces it will launch a
15-second video feature

January 2013 – Twitter introduces
Vine, which allows users to film 6
seconds of video through
punctuated recording

Summer 2013

Online Social Media as a Marketing Tool
In the US alone, video advertisements receive 13.2 billion views
monthly
Social video advertising relies heavily on shared content through social
channels
Companies aim to leverage “earned media,” or publicity gained through
social media
― Popular viral videos may deliver businesses publicity for no extra cost

• Better tailor campaigns to
customer base

Targeting Consumers
• Marketing relevancy
• Efficient ad placement

Social Media Sharing
• Expand reach to similar
consumers

Online video advertising has overtaken traditional TV commercials in
terms of customer recall and likability

Brand Recognition

Effectiveness Metrics: TV vs. Online Video Ads
70.0%

Analytics

• Potential virality may
expand audience

64.0%

60.0%
50.0%

49.0%

46.0%

50.0%

40.0%

40.0%
32.0%
27.0%

30.0%

24.0%

20.0%

28.0%
20.0%

17.0%

15.0%

10.0%
0.0%
General Recall
Video ads in TV shows online
Source: Business Insider

Brand Recall

Message Recall
Video ads in short-form video online

23

Likability
TV commercials

Summer 2013

YouTube Demands High Premium for Content Distribution
With over 1.0 billion monthly users and 1.0 million content creators, YouTube reigns as the world’s
largest online video destination
― YouTube is expected to generate $5.0 billion in revenue in 2013, comprising nearly 11.0% of Google’s total
revenue

Content creators have the option to join the YouTube Partner Program, which allows them to monetize
their videos through automatically-targeted ad formats
With increasing digital video ad spend, YouTube’s revenue sharing model has been challenged as it
gives content suppliers only 55% of ad revenue generated against their content, while keeping 45%
― YouTube asserts that bandwidth, video hosting, video players, user analytics, ad serving, geo-blocking, content
filtering and other large infrastructure costs justify its collecting 45.0%

A challenge for YouTube is that premium content providers such as traditional media companies and
pure play digital studios could shift toward alternative distributors in an effort to retain more profit
Leading Online Video Monetization Platforms (May 2013)
Company Name
1
2
3
4
5
6
7
8
9
10

Google Sites
Bright Roll platform
Hulu
LIVERAIL.COM
ADAP.TV
AOL, Inc.
Specific Media
TubeMogul Video Ad Platform
NDN
Tremor Video

Total Videos (bn)
16.51
2.62
2.40
2.13
2.10
1.47
1.41
1.23
1.08
0.88

YoY
-13%
132%
-6%
N/A
117%
155%
88%
37%
89%
22%

Videos with In-stream ad
units (bn)
2.55
2.62
1.67
2.13
2.10
0.63
1.41
1.23
0.58
0.88

Company Name

YoY
84%
132%
0%
N/A
117%
66%
88%
37%
102%
22%

11
12
13
14
15
16
17
18
19
20

Microsoft Sites
CBS Interactive
Facebook
VEVO
Videology
Viacom Digital
NETFLIX.COM
Yahoo! Sites
ESPN
SpotXchange Video Ad Marketplace

Total Videos (bn)
0.81
0.79
0.73
0.66
0.63
0.63
0.62
0.59
0.52
0.48

YoY
0%
33%
N/A
-7%
58%
-8%
47%
-39%
-31%
22%

Videos with In-stream ad
units (bn)
0.27
0.49
0.00093
0.072
0.63
0.21
0.00004
0.25
0.34
0.48

YoY
-16%
27%
N/A
24%
58%
-16%
-67%
106%
-31%
-22%

Source: Variety, Wall Street Research, Wells Fargo Securities, LLC, comScore.com

24

Summer 2013

Social Video Advertising Opportunities
Most online video can be monetized via pre-roll insertion, banner overlays or interactive in-stream ads, among
others, but how can a platform consisting solely of 6 or 15-second videos be monetized?

The 6-second Vine or 15-second Instagram video IS the ad
Vine can easily add geo-location data to post, a comparative advantage over other video platforms
(most notably YouTube)
― This allows local restaurants and vendors to better target their specific, location based, customers

Short form video content also naturally lends itself to teaser segments
― Longer form video content could be released in 6 or 15-second segments where the next video is only unlockable after certain follower and retweet thresholds are met
― Ideally suited to ramp up fan engagement for marquee (i.e., sports, movie/TV premieres) events

Finally, short, how-to videos can be created to either showcase the product itself, or show off creative
uses for a product
― Additionally, customers could be asked to submit Vine or Instagram videos of themselves using the product

Source: AdAge

25

Summer 2013

Social Video Viral Advertising
Sharing of branded content grew in Q2 2013 by 7.0% across all verticals to 33.3 million video shares
― However, sharing in Q2 was highly concentrated with the top 10 videos accounting for 45.0% of total sharing

FMCG / CPG brands put in an excellent social video performance, growing shares by 10.3% from the
previous quarter, which had been boosted by a strong Super Bowl performance
Entertainment (including movie, videogame and TV trailers, but excluding music videos) remained the
strongest social vertical, with a 33.1% share of total video shares
― Entertainment sharing remains highly hit-driven, with Man of Steel and Call of Duty driving much of the activity

Social Video Sharing by Vertical: Q2 2013

Market Share Performance by Vertical: Q1 2013 vs. Q2 2013
12,000,000

+12.0%
+10.3%

3.1%

8.6%

8.7%

Quarterly Shares

10,000,000
33.1%

17.8%
28.7%

8,000,000

+1.6%

6,000,000

+218.6%

4,000,000

-67.3%

2,000,000
0
Entertainment

FMCG

Tech

Retail

Autos

Entertainment

Other

FMCG
Q1 2013

Tech
Q2 2013

Retail

Autos

Source: Wall Street Research

26

Summer 2013

Social Video Advertising Overview
Popular social media platforms such as Twitter and Facebook now have over 200.0 million and 1.1
billion monthly users, respectively
― As of July 2013, 76.0% of Twitter and Facebook users log in at least once each day

Simultaneously the growth of online video “snacking,” or viewing short, easily accessed clips has
served to increase social video sharing
To capitalize on the organic growth in users sharing their favorite videos, an ecosystem of video
seeding companies distribute branded videos for their agency or direct clients has developed
― Optimum content placement, or “seeding,” is achieved by providing means for the advertiser to segment and
target their intended audience by geo-location, interest vertical, etc., across as large a publisher base as
possible, with additional sequential ads, vendor or in-network re-targeting capabilities provided

These companies such as Giant Media, Unruly Media and Feed Company, among others, seek to
maximize outreach and optimize content placement
― Outreach is designed to target both social media communities, influential online personalities and followers of
niche interest blogs and forums across the web and get people talking about and sharing a campaign

Source: Wall Street Research,

27

Summer 2013

Social Video Advertising Overview
To ensure that consumers are truly engaging with the brand, and to effectively measure a campaign’s
ROI, social video campaigns are generally priced on a CPV model
However, video views are just one important consideration when trying to effectively measure brand
engagement, with other metrics arguably providing deeper insight:
― Time spent viewing the ad, even if not to completion
― Interactivity, such as starting the ad, or intentionally mousing over it
― Dwell rate, or the proportion of impressions that were intentionally engaged with by touch, interaction or click
― Sharing or commenting on ads – the foundation of the social, word-of-mouth or viral aspects of brand
engagement
― Visiting a brand’s website as a result, even if not directly, of viewing the video ad
― Simply paying attention to ads and being aware of the brand – which are, in many ways, the core
engagement metrics

Source: eMarketer

28

Summer 2013

Social Video Advertising Opportunities
Making branded videos shareable can dramatically increase a brand’s reach, generate recommendations among
peer groups, increase brand uplift, and trigger purchases / conversions

While video views are primarily an indication of media spend (“paid media”), video shares on platforms
such as Facebook, Twitter and across the blogosphere, demonstrate that the consumer has engaged
much more deeply with the content
― These shares are an indication that the product or promotional video has gained genuine social traction and
organic consumer demand (“earned media”)
― As word-of-mouth is the primary factor behind 20%-50% of purchasing decisions, peer-to-peer
recommendations are one of the most powerful marketing tactics available to move buyers down the purchase
funnel
Survey: User Behavior Within Three Days of Video Viewing
40.0%
30.0%

12.0%
9.0%

20.0%
10.0%

26.0%

6.0%
9.0%

21.0%

20.0%

3.0%
8.0%

1.0%
7.0%

Commented on
video

Shared link of
video

11.0%
0.0%
Talked to someone Went brand's site
about it
Source: Unruly Media, McKinsey

Searched for
brand online

Searched for
similar products

Immediate

29

2.0%
5.0%

2.0%
4.0%

Visited/followed Sent video directly
brand on social
to someone
media

2.0%
2.0%
Purchased
product

Delayed

Summer 2013

Social Video Seeding Opportunities
Added competition in social video has fueled the need for the leading companies to go beyond seeding
to stand out from the crowd and stay ahead through various initiatives including:
1.

Emotional measurement
— Take a more scientific approach to work out what makes someone decide to share a piece of content
— Calculate the amount of “earned media” a video is likely to attract across the social web and how much
paid investment (“paid media”), will need to be deployed
— Partner with companies who measure how users are likely to respond to advertising

2.

Exchange-based seeding
— Create an ad format that can be served into standard MPU (300x250) and into Facebook by buying on
the exchanges
— Focus more on presenting the media as content, rather than as an ad

3.

Self-service platform
— Develop a platform through which smaller advertisers can set up their own campaigns in a simple way
and can choose from a variety of geo and audience targeting options

Source: Videoadnews.com

30

Summer 2013

OTT Overview and Trends
Bonus Add-on

Advertisements

VOD

SVOD

The global OTT video market is estimated to be worth over $20.0 billion as of February 2013, with
opportunities for extensive growth in upcoming years
― Much of this growth potential lies abroad, as approximately 510.0 million (excluding current developed markets,
India and China) international homes are expected to have broadband by 2021

Subscription video-on-demand (SVOD) represents a key market opportunity in the sector while the highly
fragmented global marketplace allows for potential consolidation
― SVOD platforms are expected to spend between $9.2 billion and $13.8 billion on content rights by 2021, with
content producers expected to earn up to $10.0 billion annually from OTT digital rights sales

Apart from SVOD, OTT providers focus on three other principal monetization strategies: bonus add-ons,
advertisements and VOD
Concerns arise with certain research suggesting that the growth in SVOD rights sales may eat into
revenues of the much more pervasive advertising strategy
― SVOD inherently promotes the avoidance of ads and a shift away from traditional television ratings metrics

Major players, such as Netflix, will gain the most from global SVOD growth if they can leverage their
market position to wisely expand their content offerings and geographic distribution

32

Summer 2013

Original Content
The industry leaders in online television expand to include original programming

Netflix leads in original content
programming with critically
acclaimed offerings such as
Arrested Development, House of
Cards and most recently, Orange
is the New Black
In late July 2013, Netflix
announced it will expand its
lineup into additional content
verticals including feature films,
documentaries, stand-up comedy
specials, news programs and talk
shows
Netflix executives attributed their
YoY subscriber growth for Q2
2013 to their original programs

Hulu began launching original
series as early as 2011, with its
most recent offerings featuring
stars such as Seth Meyers and Eva
Longoria
In April 2013, with content costs
rising, Hulu lost the exclusive rights
to old SNL clips to Yahoo; this may
lead to a need for increased focus
on original programming
Hulu retracted its for-sale status for
a second time in July 2013, with
owners Disney, NBCUniversal and
21st Century Fox instead investing
$750.0 million into the company to
compete more directly with Netflix
and Amazon Prime

Although it remains in last
place in terms of original
content production, Amazon
created buzz in the industry
earlier this year when it put
out 14 pilots at once and
invited user feedback,
disrupting traditional pilot
season in favor of
crowdsourcing
After airing its original pilots
in April 2013 and allowing
for viewers to vote on their
favorites, Amazon
announced in May that it will
produce five original series

Source: TechCrunch, Vulture.com, Wall Street Research

33

Summer 2013

Internet-to-TV Devices
The compatibility of Internet-to-TV devices with an increasing number of content delivery channels
signifies the high growth potential for the OTT market in coming years
― The cost to convert a single film for ten Internet delivery channels is in the range of $6,000-$8,000
― Content providers have proven willing to assume the expenditure due to the growing popularity of the OTT
Internet video platform
― Greater compatibility opens the market for more competing OTT content delivery channels
― Rumors suggest HBO is considering unbundling HBO Go and offering it as a broadband package
Growing Compatibility of Internet-to-TV Devices
OTT Content Channels

Chromecast

Apple TV

Roku

Xbox

Samsung Smart TV

$35

$100

$50-$100

$200-$500

$800-$3,699

Yes

Yes

Yes

Yes

Yes

Hulu Plus

Via Laptop

Yes

Yes

Yes

Yes

HBO Go

Via Laptop

Yes

Yes

Yes

Yes

Amazon Prime

Via Laptop

Via AirPlay

Yes

Yes

Yes

Google Play

Yes

Via AirPlay

No

No

Yes

Apple iTunes

No

Yes

No

No

Yes

Amazon

Via Laptop

Via AirPlay

Yes

No

Yes

Vudu

Via Laptop

Via AirPlay

Yes

Yes

Yes

No

No

No

Yes

No

Netflix

Subscription
Options

Rental &
Purchase
Options

Xbox Video

34

Summer 2013

Internet-to-TV Device Market
Although game consoles are currently the preferred method for Internet-to-TV connection, emerging
devices such as smart TVs are on the rise
― Smart TV adoption has steadily increased in China due to aggressive promotions by manufacturers
― Historical usage of smart TVs had been limited by high prices and the widespread availability of other devices
― However, in a survey conducted by Digitalsmiths, the increasing convenience, and relative cheapness, of OTT
platforms is driving more consumers to 3rd party rental and subscription services that are delivered over-the-top
Internet-to-TV Connection Type
(US, Japan, China, France, Germany, Italy and UK)
Connected TV,
6.3%
Desktop PC, 9.0%

Survey: Why Use OTT Services?
0.0%

Others, 1.0%

Convenience

Game console,
19.3%

Cable / satellite,
10.7%

30.8%

Better selection
Easier to find content

DVD / blu-ray
player, 16.3%

Ability to watch on iPad/tablet

60.0%

48.3%

Ability to watch certain content

Media center box,
17.1%

40.0%
53.1%

Cheaper

Smart TV, 10.2%
Notebook PC,
10.3%

20.0%

27.2%
23.1%
18.3%

Ability to watch on smartphone

14.4%

Other

14.7%

Source: Wall Street Research, Fierce Telecom, Digitalsmiths

35

Summer 2013

Trends for Global Smart TV Adoption
Smart TV adoption is slated to grow exponentially due to:
― Consumers experiencing device fatigue as they look to eliminate devices which perform overlapping tasks
― The smart TV covers the work of the landline, TV, DVD player, entertainment system, and game station all in one

― The continued move from the old broadcast model to on-demand and OTT video
― Smart TVs offer a more curated viewing experience for the consumer at a lower cost structure than broadcasting

― The ability to use social networking services in conjunction with television services
― The next evolution of TV enables viewers to access and share media content via Facebook and Twitter
― Establishes the possibility of setting up “virtual living rooms” where friends can watch videos at the same time through
social networks, enabling a shared viewing experience

Countries will see a rise in smart TV adoption as consumers become more comfortable using the connectivity
features, and as navigation and search capabilities become more intuitive and user friendly
Leading Countries for Smart TV Penetration
50.0%
42.0%
% of Households

40.0%

40.0%

40.0%
34.0%
28.0%

30.0%

26.0%

26.0%

25.0%

Spain

Netherlands

US

20.0%
10.0%
0.0%
France

Turkey

Poland

Germany

Italy

Source: MediaTel

36

Summer 2013

OTT Industry Challenges
OTT content is the largest driver of network capacity upgrades
― In a survey conducted by Rapid TV News, 82.0% of operators
upgraded network infrastructure due to increased usage
― 75.0% of operators attribute these changes to popularity of
streaming video

OTT growth may be hindered by Internet providers
― Video streaming quality on OTT platforms are trending upward,
requiring more bandwidth
― Broadband service providers are opting for bandwidth caps to limit
traffic caused by video streaming

Tiered
Pricing
Plans

Caching
Networks

Scalable
Video
Coding
(SVC)

Consumer Frustrations with Internet OTT Video
60.0%

53.0%

50.0%

HEVC
Video
Codec
Increased
Mobile
Capabilities

Increasing
OTT
Bandwidth

Greater
Storage
Density

Multicast

Peer
Assisted
Delivery

51.0%
45.0%

40.0%
30.0%
19.0%

20.0%

19.0%

17.0%

12.0%

10.0%
0.0%
Advertising during the Time required to buffer / Video quality (i.e., poor
program
download the video
definition)

Cost of the video
content


37

Broadband / High-speed
cost of downloading the
video

Range of programs
available

Navigation experience
(i.e., search / epg)

Summer 2013

Traditional Networks vs. OTT
Despite the growing popularity of OTT, traditional television networks are having some success in
competing with this new sector of OTT providers
― Comcast has implemented competitive on-demand services in response, and some traditional networks have
quickly developed multi-platform accessibility on desktops, tablets and smartphones
― Other traditional TV operators are looking to partner with OTT providers to provide more flexible, on-demand
services

In terms of VOD rentals, managed networks still top the market compared to newer OTT players
― VOD rentals, however, do not appear to be nullifying the losses in physical DVD sales
Share of Paid VOD Movie Rentals
25.0%

23.0%

% Share

20.0%
14.0%

15.0%

9.0%

10.0%

8.0%

7.0%

7.0%

Verizon

DISH

5.0%
0.0%
Comcast

DirecTV

Time Warner Cable

Apple iTunes


38

Summer 2013

Case Study: Video Advertising (8/7/2013)
ACQUIRES

Acquirer: AOL

Target: Adap.tv

Bus. Description: Offers a suite of online
content, products and services to consumers,
advertisers, publishers and subscribers
worldwide

Bus. Description: Builds technology to
connect video advertising buyers to sellers
on a single platform

Implied EV: $405.0mm
Deal Commentary
― Demonstrates AOL’s increasing focus on two of the fastest-growing sectors of online advertising:
video and programmatic ad buying
― Combination of AOL On video network and Adap.tv will give AOL an end-to-end solution and video
stack for publishers and advertisers, including premium original production, content aggregation
and syndication, robust video CMS technology and a leading video advertising platform
Source: Capital IQ, Wall Street Research

41

Summer 2013

Case Study: Video Advertising (8/5/2013)
ACQUIRES

Acquirer: Blinkx

Target: Grab Media

Bus. Description: Provides video search and
advertising services on the Internet worldwide

Bus. Description: A video distribution
company that connects video content from
a collection of professional sources and
brand-name advertisers to ideal viewers

Implied EV: Not Disclosed
Deal Commentary
― The deal should help Blinkx to accelerate its syndication drive, including the introduction of Blinkx
VideoAdvantage, designed to expand distribution of premium video content across the web
― Enables Blinkx to add incremental audience and augment its relationships with advertisers,
publishers and content providers
Source: Capital IQ, Wall Street Research

42

Summer 2013

Case Study: Multi-Channel Networks (8/21/2013)
ACQUIRES

Acquirer: Maker Studios

Target: Blip Networks

Bus. Description: Leading MCN generating
over 2.0 billion monthly video views that
specializes in production and promotion
services for its channels

Bus. Description: Blip Networks is a
digital media company that develops,
produces, and distributes Web content

Implied EV: N/A
Deal Commentary
― Blip Networks will serve as a content distribution resource for Maker Studios
― The acquisition will reduce Maker Studios reliance on YouTube for content distribution

Source: LA Times

43

Summer 2013

FUNDED BY

Target: Maker Studios

Investors: Canal+, Astro, SingTel Innov8,
Lakestar, and Northgate Capital

Bus. Description: Leading MCN generating
over 2.0 billion monthly video views that
specializes in production and promotion
services for its channels
Investment Size: $26.0mm

Investment Commentary:
― The $26.0 million comes in addition to the $36.0 million Maker Studios raised in December 2012
― The December 2012 capital raise was lead by Time Warner Cable and a 25.0% stake was acquired
― Maker Studios acquired Blip Networks to help facilitate original programming and to make content
more ad-friendly
Source: Wall Street Research, TechCrunch

44

Summer 2013

ACQUIRES

Acquirer: DreamWorks Animation (“DWA”)

Target: Awesomeness TV

Bus. Description: Leading animation
production company for film and television

Bus. Description: MCN of 55,000
YouTube channels comprised of sketch
comedy, scripted and reality/ talk shows for
teens

Implied EV: $150.5mm
Deal Commentary
― AwesomenessTV makes DWA a player in the online content creation space
― AwesomenessTV will serve as a promotional platform for DWA’s animated properties
― As part of the deal, AwesomenessTV CEO Brian Robbins will help develop a branded digital
channel aimed at family audiences for DWA

45

Summer 2013

ACQUIRES

Acquirer: Discovery Communications

Target: Revision3

Bus. Description: Largest nonfiction media
company reaching more than 1.5 billion
cumulative subscribers

Bus. Description: MCN with more than
23.0 million monthly unique viewers across
27 digital channels

Implied EV: $35.0mm
Deal Commentary
― Strengthens Discovery’s online presence
― Revision3’s cost-effective online video content allows Discovery to remain the nonfiction media
industry leader on multiple platforms
― Revision3 had raised $10.0 million in two rounds from Greylock Partners with additional funding
from Marc Andreessen and Mark Cuban

46

Summer 2013

FUNDED BY

Target: Fullscreen

Investors: The Chernin Group, Comcast
Ventures, WPP Digital

Bus. Description: Leading MCN of over
10,000 YouTube channels generating over 2.5
billion monthly video views
Investment Size: $30.0mm

Investment Commentary:
― Fullscreen is looking to focus on video production and investing in the creation of owned and
operated content
― Fullscreen further plans to expand the number of platforms it can reach as well as its international
presence into overseas markets
Source: Wall Street Research, TechCrunch

47

Summer 2013

Case Study: OTT Video Platforms (7/3/2013)
ACQUIRES

Acquirer: Samsung Electronics

Target: Boxee

Bus. Description: Develops, manufactures
and sells consumer electronics

Bus. Description: Offers set top box
devices for live TV broadcasts, DVR and
more

Implied EV: $30.0mm
Deal Commentary
― Samsung is now a more direct competitor in the OTT video streaming space with Apple, Roku and
Intel
― Samsung shut down Boxee’s signature cloud DVR service, upsetting Boxee’s existing customers
― Although Boxee has had its focus on TV hardware, speculation suggests Samsung will utilize
Boxee’s software technology to boost their smart TV’s capabilities
Source: BroadCastEngineering, VentureBeat, Israel21c

48

Summer 2013

PUBLIC AND TRANSACTION COMPARABLES

Select Digital Media Public Comparables
(figures in millions of $USD, except per share)

Company Name
Online Media
Akamai Technologies, Inc.
Amazon.com Inc.
AOL Inc.
Apple Inc.
Baidu, Inc.
Blinkx plc
Brightcove, Inc.
Diamond Foods, Inc.
Digital Generation, Inc.
Facebook, Inc.
Google Inc.
IAC/InterActiveCorp
Microsoft Corporation
Netflix, Inc.
Pandora Media, Inc.
Phoenix New Media Limited
RealNetworks Inc.
SINA Corporation
SIRIUS XM Radio Inc.
Tremor Video, Inc.
Yahoo! Inc.
Yandex N.V.
Youku Tudou Inc.
YuMe, Inc.

Share Price as of:
10/18/2013
$51.89
310.89
33.95
492.81
154.90
2.42
12.69
21.80
12.88
49.11
871.99
55.63
34.13
300.85
24.90
11.87
8.55
86.58
3.88
10.64
34.15
38.33
29.55
9.92
Mean
Median

Market
Cap (mm)
$9,244.7
142,040.2
2,611.8
447,718.2
54,180.1
892.0
359.4
487.0
359.5
119,598.6
290,391.0
4,615.9
285,352.2
17,726.7
4,710.0
914.4
305.0
5,779.5
24,091.9
527.2
34,844.0
12,511.3
4,900.9
317.1

Enterprise
Value (EV)

EV / LTM
Revenue
EBITDA

EV / CY 2013E
Revenue
EBITDA

LTM Annual
Revenue Growth

$8,714.0
137,619.2
2,244.8
422,001.2
50,763.0
833.2
328.9
1,072.0
698.3
111,513.6
244,159.0
4,624.8
225,428.2
17,146.6
4,651.1
727.1
68.3
5,023.6
26,690.0
664.6
32,314.0
12,295.0
4,359.0
370.4

5.9x
2.1x
1.0x
2.5x
11.9x
4.0x
3.4x
1.2x
1.8x
18.2x
4.4x
1.5x
2.9x
4.3x
8.8x
3.6x
0.3x
8.7x
7.4x
5.4x
6.7x
12.1x
11.1x
2.8x

16.0x
NA
4.5x
7.6x
23.9x
29.5x
NA
17.2x
6.8x
40.4x
14.4x
9.7x
7.5x
NA
NA
29.7x
NA
NM
21.7x
NM
15.8x
27.4x
NA
47.0x

4.9x
1.5x
0.9x
2.3x
7.6x
3.2x
2.6x
1.2x
1.7x
11.3x
3.6x
1.3x
2.6x
3.4x
5.2x
2.6x
NA
6.2x
6.4x
3.8x
7.0x
8.0x
5.9x
1.8x

11.3x
20.3x
4.5x
7.0x
18.1x
17.4x
NA
9.1x
5.5x
20.6x
9.6x
6.1x
6.8x
33.8x
NA
13.5x
NA
31.9x
18.4x
126.8x
19.3x
17.8x
NA
35.0x

17.0%
23.0%
1.9%
13.8%
42.2%
73.0%
27.7%
-12.0%
1.0%
41.4%
30.5%
24.1%
5.6%
14.1%
56.0%
14.9%
-21.6%
14.7%
12.8%
0.0%
-3.1%
37.1%
95.8%
0.0%

$54,762.9
$4,837.4

5.5x
4.2x

19.9x
16.6x

4.1x
3.4x

21.6x
17.6x

21.3%
14.8%

Source: CapitalIQ and Siemer Proprietary Research

50

Summer 2013

Select Traditional Media Public Comparables
(figures in millions of $USD, except per share)

Company Name
Traditional Content and Cable
AMC Networks Inc.
Axel Springer AG
CBS Corporation
Crown Media Holdings Inc.
Discovery Communications, Inc.
The Walt Disney Company
Liberty Media Corporation
Lions Gate Entertainment Corp.
Scripps Networks Interactive, Inc.
Starz
Time Warner Inc.
Twenty-First Century Fox, Inc.
Viacom, Inc.

Share Price as of:
10/18/2013
$65.95
59.12
56.25
3.23
80.54
66.21
149.23
34.77
77.72
29.05
67.92
33.23
82.00

Market
Cap (mm)
$4,766.5
5,840.8
35,740.6
1,161.8
28,208.6
118,280.3
17,032.9
4,742.2
11,337.5
3,394.2
62,486.8
75,993.5
39,126.6

$34.20
16.27
136.23
46.06
15.45
60.65
47.88
15.98
2.98
115.79
47.09

Mean
Median

EV / LTM
Revenue
EBITDA

EV / CY 2013E
Revenue
EBITDA

LTM Annual
Revenue Growth

$181,636.2
4,350.6
14,133.0
120,213.3
68,433.8
33,296.5
21,865.1
66,275.6
47,478.5
33,090.7
134,759.0

$6,502.7
6,920.4
41,881.6
1,586.9
34,231.6
131,722.3
30,395.9
6,038.9
12,784.6
4,368.7
79,870.8
89,438.5
47,066.6

4.5x
1.5x
2.8x
4.5x
7.0x
3.0x
8.2x
2.2x
5.3x
2.5x
2.7x
3.2x
3.5x

13.0x
8.8x
11.6x
5.9x
16.9x
10.8x
30.5x
18.4x
11.1x
9.9x
10.4x
13.2x
11.6x

3.9x
NA
2.7x
NA
5.5x
2.7x
6.2x
2.0x
4.7x
2.6x
2.6x
2.9x
3.2x

10.3x
NA
10.4x
NA
12.4x
9.6x
20.8x
14.1x
10.5x
10.1x
9.8x
12.0x
10.0x

14.4%
1.1%
7.6%
3.0%
11.4%
5.6%
119.6%
56.1%
10.8%
6.8%
1.4%
10.5%
-7.4%

$37,908.4
$30,395.9

Mean
Median
MVPDs / Aggregators
AT&T, Inc.
Cablevision Systems Corporation
Charter Communications, Inc.
Comcast Corporation
Deutsche Telekom AG
DIRECTV
Dish Network Corp.
NTT DOCOMO, Inc.
Singapore Telecommunications Limited
Time Warner Cable Inc.
Verizon Communications Inc.

Enterprise
Value (EV)

3.9x
3.2x

13.2x
11.6x

3.5x
2.9x

11.8x
10.4x

18.5%
7.6%

$253,355.2
14,099.0
26,930.0
162,956.3
136,294.4
50,144.5
26,532.6
64,945.3
52,567.1
56,604.7
235,200.0

2.0x
2.1x
3.5x
2.5x
1.7x
1.6x
1.9x
1.4x
3.6x
2.6x
2.0x

8.7x
8.2x
10.1x
7.5x
6.6x
6.6x
9.1x
4.2x
9.8x
7.0x
7.2x

1.9x
2.2x
3.0x
2.4x
NA
1.5x
1.8x
1.4x
NA
2.5x
1.9x

5.9x
8.2x
8.3x
7.2x
NA
6.0x
8.7x
4.0x
NA
6.8x
5.4x

0.1%
4.3%
4.5%
7.7%
-0.2%
7.6%
-0.8%
5.8%
-4.3%
7.0%
4.5%

$98,148.1
$56,604.7

2.3x
2.0x

7.7x
7.5x

2.1x
1.9x

6.7x
6.8x

3.3%
4.5%

51

Summer 2013

Select Precedent Online Video Transactions
EV / LTM

(figures in millions of $USD)

Date Announced
10/8/2013
9/1/2013
8/21/2013
8/21/2013
8/12/2013
8/7/2013
8/5/2013
7/9/2013
7/1/2013
6/28/2013
5/30/2013
5/29/2013
5/6/2013
5/1/2013
4/26/2013
4/8/2013
2/11/2013
1/7/2013
12/12/2012
11/14/2012
11/13/2012
11/2/2012
9/19/2012
8/10/2012
7/18/2012
7/17/2012

Target
Break Media
ViKi
Blip Networks, Inc.
Orb Networks, Inc.
Stringwire
Adap.tv
Grab Media
Greenhouse Studio, Inc.
Red Bee Media Limited
Virtual Nerd, LLC
DeFranco Creative
Zubox Limited
PPStream, Inc.
AwesomenessTV, Inc.
E-surfing Media Co., Ltd.
Microsoft, Mediaroom IPTV Business
Preview Networks Aps
Pipewave, Inc.
KickApps Corporation
Russer Communications
Verivue, Inc.
iQIYI.com, Inc.
Zui.com, Inc.
15miles Inc.
Castfire, Inc.
Socialcam Inc.

Acquirer
Alloy Digital, LLC
Rakuten, Inc.
Maker Studios, Inc.
Qualcomm
NBC News Digital LLC
AOL
Blinkx
Burdette Ketchum
Ericsson
Pearson
Revision3 Corporation
Digimania, Ltd.
iQIYI.com, Inc.
DreamWorks Animation SKG
China Telecommunications Corporation
Ericsson
Rightster Ltd.
ZEFR, Inc.
Perfect Sense Digital, LLC
Corcoran Consulting & Coaching Inc.
Akamai Technologies, Inc.
Baidu, Inc.
Saban Brands LLC
GearyLSF Group
AlphaBird, Inc.
Autodesk, Inc.

Implied EV
NA
$200.0
NA
NA
NA
405.0
NA
NA
NA
NA
NA
NA
370.0
150.5
244.9
NA
NA
NA
NA
NA
32.1
NA
NA
NA
NA
60.0

Revenue
NA
NA
NA
NA
NA
3.5x
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA

EBITDA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA


52

Summer 2013

Select Precedent Online Video Transactions
EV / LTM


Date Announced
6/18/2012
6/17/2012
6/13/2012
5/21/2012
5/15/2012
5/14/2012
3/12/2012
2/8/2012
1/23/2012
1/17/2012
1/10/2012
1/6/2012
12/14/2011
11/29/2011
10/31/2011
9/26/2011
9/21/2011
8/24/2011
3/29/2011
3/25/2011
3/24/2011
2/22/2011
2/9/2011
1/31/2011
1/11/2011

Target
Clevver Media LLC
Metacafe, Inc.
Wuaki.TV, S.L.
On Demand Group, Ltd.
Cull TV, Inc.
Splat Interactive, Inc.
Tudou Holdings Limited
DirectBrand
Live Matrix, Inc.
WebVisible, Inc.
SBDS Active, SAS
ChannelFlip Media Limited
Quadia Web TV B.V.
Genesis Media LLC
Auditude, Inc.
QianJun, Inc.
Remixation, Inc., Vodpod.com
FilmRookie
The Web TV Enterprise Ltd.
Global Inspiration s.r.o.
Camtenna Oy
Fliqz, Inc.
Shine Limited
KickApps Corporation
BitGravity, Inc.


Acquirer

Implied EV

Revenue

EBITDA

Alloy Digital, LLC
Collective Digital Studio, LLC
Rakuten, Inc.
Vubiquity, Inc.
EatLime, Inc.
UIEvolution, Inc.
Youku Tudou Inc
Image Now Design and Film Consultants
OVGuide.com, Inc.
The Berry Company, LLC
Lagardere Active SAS
Shine Limited
Van den Ende; Deitmers Venture Capital
TVGenesis LLC
Adobe Systems Inc.
Renren Inc.
Lockerz, LLC
Eurotech, Ltd.
Collective Media, Inc.
Seznam.cz, a.s.
Qbrick AB
VBrick Systems, Inc.
Twenty-First Century Fox, Inc.
KIT digital, Inc.
Tata Communications

NA
NA
$18.7
27.0
NA
NA
$721.8
NA
NA
NA
NA
NA
NA
NA
NA
80.0
NA
NA
NA
NA
NA
NA
615.0
43.2
10.7

NA
NA
NA
NA
NA
NA
7.3x
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
3.9x
NA
NA

NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA

Mean
Median

$213.8
$80.0

5.6x
5.6x

NA
NA

53

Summer 2013

Select Precedent Online Video Financings
Amount
Raised ($mm)
$26.0

Date
Company
9/13/2013 Maker Studios, Inc.

Description
Operates a digital video studio that engages in digital
content production and distribution

Investors
Canal+; SingTel Innov8; Astrolabe
Ventures; Lakestar; Northgate Capital

Round
C

8/16/2013 Open Road Integrated
Media, Inc.

Operates as a digital publisher and multimedia content
company that publishes ebooks and produces video
content
Food-focused online video network

Azure Capital Partners; Golden Seeds
LLC; Kohlberg Ventures; NewSpring
Capital
Raine Ventures; Redpoint Ventures

NA

11.0

B

10.0

Provides video management, delivery, and measurement
solutions on a cloud-based platform that enables
advertisers to manage, deliver, and measure video
Develops video technology solutions that help carriers to
identify, monitor, store, and deliver Internet video to their
subscribers
Provides an online video service that offers a selection of
hit shows, clips, movies, and more

Digital Generation, Inc.

NA

40.0

Accel Management Co, Inc; Bessemer
Venture Partners; Redpoint Ventures

C

16.0

NBCUniversal Media, LLC; The Walt
Disney Company; Twenty-First Century
Fox
Provides audience targeting and optimization solutions for Accel Management Co, Inc.; Samsung
publishers and advertisers in the U.S.
Venture Investment Corporation; Cox
Media Group, Inc.
Provides online video advertising solutions to connect
New Enterprise Associates; Comcast
brands with consumers
Ventures; Valhalla Partners; Catalyst
Investors; Pinnacle Ventures
Fashion-focused online video network
RTL Group
Provides digital advertising solutions for advertisers and
Redpoint Ventures; CBC Capital; WPP
agencies
Digital; KPCB China

NA

750.0

C

20.0

D

68.3

B
C

6.0
10.0

8/15/2013 Tastemade

8/12/2013 Extreme Reach, Inc.

7/30/2013 Qwilt Inc.

7/12/2013 Hulu, LLC

5/23/2013 Collective Media, Inc.

5/15/2013 Videology, Inc.

5/14/2013 StyleHaul
4/8/2013 Moment Systems


54

Summer 2013

Date
4/4/2013

Company
Fullscreen

3/28/2013 Pixability, Inc.

3/26/2013 LearnZillion, Inc.

Description
Operates as a digital media company that builds nextgeneration channels and networks on the YouTube
platform
Provides cloud-based online video marketing software
and consulting solutions geared toward small and mediumsized businesses
Provides online video lessons for teachers, children and
parents

3/6/2013

Innovid, Inc.

Operates as an interactive video advertisement
development company

3/5/2013

Epoxy.tv

Provides professional tools for video channel
management

2/28/2013 VEVO LLC

Owns and operates an online syndication network and
platform for entertainment content
1/31/2013 FreeWheel Media, Inc. Provides online video advertising solutions for global
media companies
1/29/2013 Magnify Networks, Inc. Provides cloud-based video curation solutions to online
publishing, non / profits, communities, brands and
advertising networks
1/25/2013 StyleHaul Inc.
Owns and operates an online video community through
which it provides makeup and style tutorial videos

Investors
Comcast Ventures; The Chernin Group,
LLC; WPP plc
Quad / Graphics, Inc.

Round
A

Amount
Raised ($mm)
$30.0

NA

6.6

A

7.0

C

11.0

Calvert Investment Management, Inc.;
DCM; NewSchools Venture Fund,
Investment Arm; O'Reilly AlphaTech
Ventures, LLC; Calvert Social Investment
Fund - Calvert Balanced Portfolio; DC
Community Ventures LLC
Sequoia Capital; TNAVenture Holding
GmbH; Genesis Partners Ltd.; Vintage
Investment Partners
Upfront Ventures; Greycroft Partners;
Bertelsmann Digital Media Investments;
Advancit Capital
YouTube, LLC

NA

2.0

NA

50.0

DIRECTV

NA

NA

WS Investments

NA

7.0

B

12.5

Siemer Ventures; RezVen Partners LLC


55

Summer 2013

Date
Company
12/3/2012 Vdopia Inc.
11/20/2012 Kaltura Inc.

11/7/2012 ClipClock
10/19/2012 LongTail Ad
Solutions, Inc.
10/15/2012 Tvinci Ltd.
6/27/2012 Namesake, Inc.

6/14/2012 Ooyala, Inc.

6/7/2012

Visible Measures
Corporation

5/7/2012

Machinima, Inc.

Investors
Description
Provides online video advertising network and technology NA
services to brands and advertisers
Designs and develops online video solutions
Intel Capital; Mitsui & Co. Global
Investment, Inc.; Avalon Ventures; ORIX
Venture Finance, LLC; Nexus Venture
Partners; .406 Ventures, LLC
Owns and operates a digital video studio that engages in Greycroft Partners LLC; Upfront Ventures;
digital content production and distribution
Time Warner Investments; Daher Capital
Develops and operates an online video editing and
Runa Capital
sharing platform
Provides online video solutions
Greycroft Partners LLC; The Cue Ball
Group, LLC
Operates an over-the-top television platform for pay TV
Trellas Enterprises Limited; Kaedan
Owns and operates an online community for video sharing Atlas Venture L.P.; Kleiner, Perkins,
Caufield & Byers; William Morris
Endeavor Entertainment, LLC;
Offers online video management, publishing, analytics and Sierra Ventures; Rembrandt Venture
monetization solutions
Partners; EDB Investments Pte. Ltd.; The
CID Group; Telstra Applications and
Ventures Group
Operates as an independent third-party media
Mohr Davidow Ventures; Advance
measurement firm for online video advertisers and
Publications, Inc.; General Catalyst
publishers
Partners; Northgate Capital Group,
L.L.C.; DAG Ventures, LLC
Operates a video entertainment network for video gamers Google Inc.; MK Capital; Redpoint
Ventures

Round
B

Amount
Raised ($mm)
$7.4

D

25.0

NA

36.0

A

2.5

B

5.0

NA
A

4.5
8.0

E

35.0

NA

21.5

D

36.0


56

Summer 2013

Date
Company
3/21/2012 NicePeopleAtWork SL

3/2/2012

DramaFever Corp.

2/8/2012

Unicorn Media, Inc.

2/1/2012

Videoplaza AB

2/1/2012

Conviva, Inc.

1/26/2012 StyleHaul Inc.

Description
Develops and provides high definition Internet video
distribution software solutions to Web, mobile devices, set
top boxes and connected televisions
Operates DramaFever.com, an online video platform for
entertainment on the Web

Investors
Axón Capital e Inversiones, SGECR,
S.A.

AMC Networks Inc.; MK Capital;
NALA Investments, LLC
Owns and operates a digital video studio that engages in Greycroft Partners LLC; Upfront Ventures;
digital content production and distribution
YouTube, LLC
Provides Internet video solutions that enable companies to Nexeven AB
maximize IP video profitability
Develops advertising solutions for publishers of online
Innovacom Gestion; QUALCOMM
video
Ventures; Northzone Ventures;
Creandum AB
Provides a media platform to companies for managing the Time Warner Investments
distribution of live media and programming online
Owns and operates an online video community through
RezVen Partners LLC
which it provides makeup and style tutorial videos
Mean
Median

Round
NA

Amount
Raised ($mm)
$1.3

B

6.0

NA

NA

A

NA

B

12.0

NA

15.0

A

4.4
$39.5
$11.0

*Mean and Median calculation excludes Hulu, LLC


57

Summer 2013

Select Precedent Mobile Video Transactions
EV / LTM


Date Announced
9/4/2013
5/19/2013
4/17/2013
3/14/2013
10/9/2012
9/25/2012
7/17/2012
6/7/2012
6/6/2012
8/1/2012
5/1/2012
4/9/2012
12/9/2011
10/17/2011
10/10/2011
4/13/2011
6/15/2011
2/4/2011
2/4/2011
1/31/2011
1/18/2011
1/6/2011

Target
Saffron Digital Ltd
Mogreet, Inc.
Digital Broadcasting Group, Inc.
Clk2c.com
Vine
All Night Media
Socialcam Inc.
Bytemobile, Inc.
ESPN STAR Sports
PixSense Inc.
Ortiva Wireless, Inc.
Instagram, Inc.
Mobiclip
Livecam Mobile
Qumu, Inc.
Commobility Inc.
YuMe Europe Limited
Transpera, Inc.
Inlet Technologies LLC
decentral tv Corp.
Yospace Technologies Ltd., EyeVibe
Qik, Inc.

Acquirer

Mean
Median

Revenue
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
3.9x
NA
NA
NA
NA
1.8x
NA
NA

EBITDA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NA
NM
NA
NA
NA
NA
NA
NA
NA

$232.1
$60.0

Cinram Group, Inc.
payvia, Inc.
Alloy Digital, LLC
ValueFirst Messaging
Twitter, Inc.
MOKO.mobi
Autodesk, Inc.
Citrix Systems International GmbH
STAR Group
FunSpot Corp.
Allot Communications Ltd.
Facebook, Inc.
Nintendo Co.
AppTech Corp.
Rimage Corporation
Intertainment Media Inc.
YuMe, Inc.
Tremor Video, Inc.
Cisco Systems, Inc.
KIT digital, Inc.
MOKO.mobi Limited
Skype Technologies, S.A.

Implied EV
$47.0
32.0
NA
NA
NA
NA
60.0
435.0
670.0
NA
NA
1,000.0
NA
NA
52.8
4.5
NA
NA
95.0
6.7
NA
150.0

2.9x
2.9x

NA
NA


58

Summer 2013

Select Mobile Video Precedent Financings
Company
Date
4/23/2013 Apalya Technologies
Pvt. Ltd.
3/27/2013 Vantrix Inc
1/17/2013 Keek Inc.

12/31/2012 Streamweaver, Inc.

12/31/2012 Streamweaver, Inc.
9/18/2012 Keek Inc.
8/22/2012 XinLab, Inc.

NA

4.5

Pinetree Capital Ltd.; AGF Investments
Inc; Plazacorp Ventures; Cranson Capital
Solutions Inc

C

18.0

Tennessee Community Venture Fund
LLC; Mountain Group Capital LLC; The
INCITE Co-Investment Fund
NA

A

1.8

Description
Operates as a content aggregation, provisioning and
distribution platform in the mobile video delivery space in
India
Provides mobile video mediation and delivery solutions
for streaming, browsing and messaging worldwide
Operates a social networking platform enabling users to
create and watch videos using Webcam, iPhone, Android
or BlackBerry devices, as well as tablets and laptops

Investors
Cisco Systems, Inc.; QUALCOMM
Ventures; IDG Ventures India; Kalaari
Capital
NXT Capital Venture Finance

Provides a multi-angle mobile video app that connects a
client with client’s friends

12/14/2012 Spot411 Technologies, Operates as a social technology company that delivers
Inc.
and licenses interactive social television programs for the
second screen
12/6/2012 Vantrix Inc
Provides mobile video mediation and delivery solutions
for streaming, browsing and messaging worldwide

10/11/2012 Skyfire Labs, Inc.

Round
C

Amount
Raised ($mm)
$10.0

Develops and creates a compression-as-a-service based
mobile video optimization browser / platform for wireless
carriers and device makers
Provides a multi-angle mobile video app that connects a
Provides mobile video services that work on videoenabled mobile phones with an Internet access. Its
services index various videos from the Web; and enables
users to watch videos on PCs

Summerhill Venture Partners; Innovacom
Gestion; JK&B Capital; BDC Venture
Capital; Tudor Growth Equity; Entrepia
Ventures
Matrix Partners; Trinity Ventures;
Lightspeed Venture Partners; Panorama
Capital; Verizon Ventures
Tennessee Community Venture Fund
Whitecap Venture Partners; Pinetree
New Enterprise Associates; SingTel
Ventures (Pte) Ltd.; JAFCO Ventures

NA

2.0

D

13.5

D

10.0

A
B
D

1.8
7.0
15.0


59

Summer 2013

Select Mobile Video Precedent Financings
Date
Company
4/26/2012 Viddy

2/3/2012

Viddy

1/31/2012 Socialcam Inc.
1/25/2012 Skyfire Labs, Inc.

11/29/2011 Reality Mobile LLC
10/5/2011 Keek Inc.

8/22/2011 Mogreet, Inc.

7/21/2011 Vringo, Inc.
4/27/2011 Viddy
3/31/2011 XinLab, Inc.

Description
Offers a social mobile application that helps in capturing,
producing and sharing bite-size videos with the world

Investors
New Enterprise Associates, Khosla
Ventures, Goldman Sachs Group,
Merchant Banking Division
Bessemer Venture
Partners, QUALCOMM
Ventures, Greycroft Partners LLC
Develops a video sharing application for capturing, editing Y Combinator
and sharing videos from smartphones
Develops and creates a compression-as-a-service based Matrix Partners; Trinity Ventures;
Lightspeed Venture Partners; Verizon
mobile video optimization browser / platform for wireless
Ventures
carriers and device makers
Develops enterprise-class real-time mobile video visual
NA
data collaboration solutions
AlphaNorth Asset Management;
create and watch videos using Webcam, iPhone, Android Plazacorp Ventures
or BlackBerry devices, as well as tablets and laptops
Operates Mogreet Messaging System (MoMS), a mobile Draper Fisher Jurvetson; Ascend
video messaging platform that delivers and monetizes rich Venture Group, LLC; DFJ Frontier; Black
Diamond Ventures, LLC; Bryant Park
media to mobile devices
Ventures, LLC
Provides software products for mobile video entertainment Benchmark Capital; Alpha Capital AG;
Bessemer Venture
Partners, QUALCOMM Ventures
Provides mobile video services that work on videoNew Enterprise Associates; JAFCO
enabled mobile phones with an Internet access
Ventures
Mean
Median


60

Round
B

Amount
Raised ($mm)
$30.1

A

6.4

NA

1.5

C

8.0

NA

5.8

NA

5.5

NA

4.1

NA
NA

2.5
$1.6

C

8.0
$7.9
$6.1

Summer 2013

Contact Information

61

Summer 2013

Siemer & Associates Digital Video Report 2013

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