CONFIDENTIAL Digital Services and Distribution Acquisition Strategy -- Appendices

CONFIDENTIAL

Digital Services and DistributionAcquisition Strategy -- Appendices

CONFIDENTIAL

APPENDIX AAdditional Strategy Pages

page 3

Market Leaders Consolidating to Expand Brand and Capture Audience

Deeper OfferingsInception Tipping Point Consolidation

• Multiple market entrants grow at similar rates

Market Dynamic

Minimum Requirements

to Compete

Areas of Differentiation

Examples

(2004 – 2005) (Early 2006) (Late ’06 / Early ‘07) (Late ’07 / Early ‘08)

• Content and features on-par with competitors

• Limited differentiation

• Dozens of pure-play UGV sites struggle to reach a million unique users

• Leaders break-out from the pack

• Single compelling characteristic

• Unique piece of content

• Ease-of-use

• YouTube explodes with “Lazy Sundays”

• MySpace users flock to improved community features

• Leaders invest to expand audience and address priority content segments

• Large audience• Large content base• Relationships with

advertisers

• Content that appeals to high-value customer segments

• Site syndication

• Google/YouTube• Yahoo/JumpCut/Bix• Viacom/Atom• NewsCorp/MySpace

• Leaders add niche content and features for heavy users

• Supplement broad offering with depth in specific verticals

• Growing audience for niche offerings

– Askaninja– Loneleygirl

• Large audience• Brand known for an

area of expertise

page 4

Approach to Specific Service Features

Content

Audience

Functionality

GrouperIn-place Build / Grouper

• Small base of UGV content

• Original, low cost short-form• Prosumer content/services• SPE TV library, clips,

minisodes

Break / Heavy• Owned content for male

youth

Roo• Aggregated, topical content

Licensors• Licensed premium,

niche video to fill out portfolio

Buy

Phase 1 Growth

• Mid-sized audience

• Skews toward males, 18-35

• Embedded player

• P2P sharing

• Downloadable video editor

• Web cam upload

• 1 click publishing

DoubleClick• Ad insertion

Audible Magic• Filtering

TBD• Search

Partner

Licensors• Niche audiences

through content licenses

Break / Heavy• Large on-site audience

Roo• Audience through syndication

• Expand embedded player• Mobile uploads / downloads• Online editor• Branded channel template

• On-site audience (aspiring content creators)

• Syndicate to 3rd party sites with embedded player

Roo• Ad insertion• Syndication• Real-time content ingestion

page 5

Content Pureplay

Audience Pureplay

Content With Audience

Acquisition Priorities

Description

Valuations

Speed

Priority

Moderate

Targeted / niche content with small

audience

Moderate

Content with large audience in high-value

demographics

FastGain critical mass

quickly

SlowRequires multiple

acquisitions

High Medium Low

Expensive

Sites with audience but no differentiated

content

SlowRequires content

and deals to supplement

page 6

Potential Cross-Sony Approach to UGC Services

Store & Publish

Online Video Social Networking / Communities

Leader Others

Sony Approach

Leader Others

Sony Approach

Leader Others

Sony Approach

• Acquire to reach scale; continue to build on Grouper

• Enhance Grouper embedded player; form syndication partnerships with leading sites

• Potential Cross-Sony opportunity to acquire leading player (e.g., PhotoBucket); integrate with Sony digital cameras and handi-cams

CONFIDENTIAL

APPENDIX BProfiles for Tier 1 Acquisition Targets

page 8

Break.com

Content OfferingContent Offering

• Online entertainment network and community powered by traditional user-generated content

• Content base skews heavily toward 15-35 year old male-oriented humor, sports and other categories

• Majority of the content is original and created by users specifically for Break.com (Break owns much of its content. Takes an exclusive license to content it doesn’t own)

• Pays $250/ video for videos it wants to feature, incentivizing users to create high-quality videos

PartnershipsPartnerships

Strategic ProfileStrategic Profile

• Established in 1998 as, a video-sharing site

• Purchased in May 2004 by Keith Richman, co-founder of Billpoint

• 100% owned by Richman and a few business partners – has never taken any venture financing

• Generate revenue through custom advertising deals, PPC content plugs, banners and text links

• Based in Beverly Hills, CA with 33 employees

• Leverages AdBrite to sell its banner and text ads

• Established partnerhsip with Amp’d Mobile in Nov. 2005 to distribute videos through mobile, charging $2.99/ month for unlimited access

User MetricsUser Metrics

2.6 2.53.5

2.6 2.9 3.3

Jul-06 Aug-06 Sep-06

MM NR

Web page views (MM)

Time/ person(min.)

141.2 189.2 135.4

16.1 21.5 15.3

Internal Break.com sources estimate uniques of approx 14.7MM.

Unique Users (MM)Note:

estimated to generate ~100MM streams/ month

Source: Nielsen//NetRating used for page view, time data, AdBrite; BambiBlogs.com; Break.com; Multichannel News; Amp’d Mobile; PureVideo; ComScore Video Matrix

page 9

Break.com

Advertising:

• Banner ads – no pre-rolls or text

Content

• User-generated

• Share it with friends (viae-mail)

• Embed & blog it

Interactivity:

• Promote to home page

• Rate It

• Recommend

• Comment

page 10

ROO Group Business Overview

Content (100+ Partners) Sites

Advertisers

Entertainment

News

Lifestyle and Family

200+ Partner Sites

Owned and Managed

Ingestion Engine

Ad Network and Insertion

Program Channels

Video Player

Licensing fees, payment-per-stream

and ad revenue share

page 11

ROO Group, Inc. (NASDAQ: RGRP)

Technology and Service OverviewTechnology and Service Overview

Core Services provided include:

• ROO Video Solutions - Customized video solutions for specific customers or industry segments; platform accommodates video broadcast over the Internet and to emerging technologies such as wireless devices and set top boxes

• ROO Syndication of Licensed Video Content - Provides a turnkey, global solution for customers to incorporate licensed, topical, programmed video channels into their web sites

• Current customers for this service include Verizon in the United States, Bulldog Broadband in the United Kingdom and News Interactive a subsidiary of News Corp

• ROO’s Online Advertising Network - Through syndication clients, ROO has developed a network of web sites across which the company can sell advertising inventory

• Advertising includes traditional banner ads and television-style 15 second and 30 second commercials, which can be programmed to play before and after video clips that are targeted toward advertisers' chosen demographic

• Syndication clients receive a percentage of the advertising revenue generated on their websites

• Recent advertisers include Microsoft, Apple, Honda, Hyundai, Target, Proctor & Gamble and Pfizer

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NASDAQ Yearly Performance (as of 11/10/2006)NASDAQ Yearly Performance (as of 11/10/2006)Financial OverviewFinancial Overview

ROO Group, Inc. (NASDAQ: RGRP)

Recent DevelopmentsRecent Developments

• On August 18, 2006, the Company entered into a Common Stock Purchase Agreement pursuant to which the Company sold an aggregate of $5,506,250 of shares of common stock and warrants; each investor will be issued warrants to purchase a number of shares of common stock equal to 50% of the number of shares of common stock purchased

Management TeamManagement Team

• Robert Petty, CEO and Chairman of the Board, ROO Group• Robin Smyth, CFO and Executive Director, ROO Group• Steve Quinn, COO• Tristan Place, VP Sales/Strategic Partnerships• Max Moore, VP Business Development

page 13

ROO Group Video Stream Comparison

Roo Group Inc. 5,841 186 31.3

page 14

8.3 7.5 6.8

3.0 3.5 2.7


MM NR

Heavy.com


• Broadband entertainment network focused on providing high-quality content

• Content base skews toward 18-34 year old male-oriented humor and racy categories

• Takes full and exclusive ownership of a range of content (mix of video, animation, and games) created by Heavy and/or its partners, e.g., NBC delivered through distinct channels

• Generates revenue through banner ads, pre-rolls, and branded production, e.g., Burger King videos



• Established in 1999 as a P2P digital content sharing site by Simon Asaad & David Carson

• Polaris venture capital holds a 25% stake in Heavy; Polaris lead a $10MM round in January 2006

• Expected to generate ~$20MM adv. revenues in 2006, a 300% increase over 2005

• Ad sales and marketing conducted internally

• Based in New York, NY with 20 employees

• Recently announced partnership with TiVo to provide content for TiVo’s VoD service

• Established partnership with Verizon Wireless in April 2006 and created a channel on V-Cast subscription mobile offering

• Parnter with Sony PSP, video iPod, and Virgin Mobile to distribute non-wireless mobile content


Web page views (MM)

Time/ person(min.)

9.3 10.4 6.6

1.5 1.2 1.0


estimated to

generate 80-90MM streams/ month

Source: Nielsen//NetRating used for page view, time data, Heavy.com; Multichannel News; PureVideo; ComScore Video Matrix; paidContent.org; FT.com; VCMike’s Blog

page 15

Heavy.com

Advertising:

• Banner ads

• Pre-rolls

Content sharing:

• Heavy/ partner produced channels

• Share it with friends (via e-mail)

• Blog it

Interactivity:

• Rate It

• Comment

page 16

1.2 1.2 1.31.6 1.8

2.1


MM NR

digg.com


• Online user-driven news/ information community providing direct links to stories and video sites

• Target IT professionals, developers, professional “geeks” and news junkies

• Content is a mix of categorized text (primary) and video (secondary) postings from blogs, professional news sites and random Web sites

• Users tag news stories they like (dig) and dislike, driving what content appears on the home page



• Established in Nov. 2004 as an information and news sharing site by Kevin Rose

• Closely held (Rose owns ~30-40%) with minimal venture financing – received $2.8MM round in Oct. 2005 to support initial growth

• Expects ~$3MM in advertising revenues in 2006 (recently valued at $200MM – source: BusinessWeek, 8/2006)

• Generate revenue through banner and text ads only – focused on growing audience with minimally invasive ads

• Based in San Francisco, CA with ~20 employees

• Leverages Federated Media to sell its banner ads

• Digg.com founders started a video production company, Revision3, in Sept. 2006

– Focused on high-end humor and tech content targeted at young, tech-oriented people

– Advertising model is 1950s throwback – based on sponsors named in advance of ‘shows’ by hosts


Web page views (MM)

Time/ person(min.)

6.1 4.9 11.7

2.2 2.1 2.5


estimated to

generate 20-30MM streams/ month

Source: Nielsen//NetRating used for page view, time data, Digg.com; Multichannel News; PureVideo; ComScore Video Matrix; Federated Media; HowStuffWorks.com; BusinessWeek (8/06); Red Herring

page 17

digg.com

Advertising:

• Limited banner and text ads

• No pre-rolls (link directly to other video sites, e.g., YouTube)

Content

• User-posted and recommended

• Share it (viae-mail)

• Blog it

Interactivity:

• Edit It

• Rate (Digg) It

• Comment

page 18

Bolt Media


• Online entertainment network and community powered by social network aspects where creative users can upload and submit content for competition

• Content base skews toward 18-34 year olds with focus on “prosumer” content

• Encourages interaction/feedback through the user's content – facilitating comments and blogs



• Established in 1996 as a teen community, Bolt has relaunched as an online network and community focused on posting creative content and network

• Focus on 18-34 year old audience

• Bolt Media has also launched Bolt2.com, enabling kids, tweens, and younger teens to create content, meet people, and play games in a safe and age-appropriate environment

• Based in New York, NY

• Currently leveraging creative relationships with the Hip Hop Theater Festival

• Developed significant advertising partnerships with companies such as Toyota, Coke P&G and Nike where users can enter immersive environments


3.54.3

3.4


MM NR

Web page views (MM)

Time/ person(min.)

20.9 25.0 82.4

2.3 1.5 6.2



NA NA NA

Source: Nielsen//NetRating used for page view, time data, Bolt.com; ComScore Video Matrix; BusinessWeek (8/06); TechCrunch.

page 19

Advertising:

• Banner ads – no pre-rolls or text

Content

• User-generated

• Embed & blog it

Interactivity:

• Community

• Rate It

• Recommend

• Comment

Bolt Media

Advertising:

• Banner Ads

• Video Ads

page 20

Metacafe


• Online entertainment network and community powered by traditional user-generated content and high-end produced content that is licensed in

• Utilizes VideoRank™ technology, allowing the site to mine and filter content

• Filtering system focuses Metacafe on a smaller number of high-quality selected videos to drive a large amount of traffic

• Developing revenue share with posters based on CPMs



• Founded in 2004, Metacafe boasts a global audience of 17 million unique visitors (comScore Media Metrix)

• A desktop client is used to upload and download the videos only about two dozen of which are newly approved each day

• Revenue model based on advertising (banner ads)

• Original round of funding yielded $5 MM from Benchmark Capital; Significant backing from Accel Partners and Benchmark Capital in second round, receiving $15MM in venture funding in July 2006

• Based in Tel Aviv, Israel and Palo Alto, CA

• Currently seeking significant partners for licensing content


3.54.3

3.4


MM NR

Web page views (MM)

Time/ person(min.)

84.6 78.8 101.4

31.4 23.0 25.5



NA NA NA

Source: Nielsen//NetRating used for page view, time data, Metacafe.com; ComScore Video Matrix; BusinessWeek (8/06); TechCrunch.

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Content

• User-generated

• Embed & blog it

Interactivity:

• Community

• Rate It

• Recommend

• Comment

Advertising:

• Banner Ads

• Video Ads

Metacafe

page 22

0.2

0.5

0.8

1.0

0.03

Aug-06 Sep-06 Oct-06 Nov-06 Dec-06

bix.com

Recent InvestorsRecent Investors • Enables consumers to create their Web-based talent competitions and enter existing competitions

• “Bix is a platform for creating contests online much in the mold of American Idol … The company plans to allow end-users to download their own audio clips and use them as ringtones for a small charge. Eventually the same content could be sold to others, and at that point the company is going to split the proceeds with the creators … Bix is hoping to cash in on the shift of ad-dollars to the online medium … these contests will be ideal vehicles for brand advertising.” (gigaOm)



• Formerly known as 900Seconds.com, bix.com was recently launched and operates a user-generated contest site

• Mike Speiser, Co-Founder and CEO was also the Co-Founder of ePinions

• Currently, the website is ad-free, depending solely on corporate-sponsored contests for revenue

• Bix.com is seeking alternative revenue sources, including advertisements on its site and user-generated ringtones

• Based in Palo Alto, California

• Workforce of 16 employees, mostly engineers from eBay


Unique Users (MM)

* Bix was launched on August 8th, 2006. Forward estimates provided by Citigroup.

Number of Rounds: 1

Total Amount Raised ($ in mm): $6.77

Investors:

Geoff Ralston

Source: Motngomery & Co.

page 23

bix.com

Advertising:

• Sponsored Contests

Content

• Contest featuring user-generated content

page 24

Photobucket

Ranking Among Photo SitesRanking Among Photo Sites

• Popular sites offers subscriber based services for uploading and sharing photos

• Reliable service that enables efficient sharing and publishing of visual digital content online

• Images and videos can be directly linked form Photobucket to an site, including MySpace, eBay, LiveJournal, Xanga, Friendster, and Neopets



• Founded in 2003 and managed by Alex Welch

• Named fasting growing site of 2005 by Nielsen/Netratings and now has over 25 million users

• The site features free sharing and publishing of online images, graphic art and videos that can be directly linked from Photobucket to any site

• Revenues based on subscription for premiere products and banner advertising

• Based in Palo Alto, California and has workforce of 25


Unique Users (MM)15.9 14.6 15.0

10.4 11.4 11.9


MM NR

Web page views (MM)

Time/ person(min.)

453.8 522.3 375.8

12.1 11.6 8.4

Source: Citigorup Corporate and Investment Bank.1. ComScore MediaMetric. September 2006.

page 25

Advertising:

• Banner Ads

Content

• Slideshows and sharing

• Premiere product bundles

Photobucket

Documents

CONFIDENTIAL Digital Services and Distribution Acquisition Strategy -- Appendices