Using e-commerce to connect Buyers and Sellers in Film, TV and

Commercial Production

Q1 2013

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New York Production Guide

1.  Very large “connected” community of CUSTOMERS

2.  Freelance and fragmented

3.  Word of mouth and “Yellow pages”

Led to the creation of NYPG which has been around for 30 years

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History of Film, TV and Commercial Production

Below the Line Costs - Film

3  

40% ($16B)

is below

the line

$38.6B N. American Market Film, TV and Commercials

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Information Available Today

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Slow Process Today I  need  some  props  for  TV  in  one  week  I  need  some  props  for  TV  in  one  week  I  need  some  props  for  TV  in  one  week  

I  missed  out  on  a  sale  

I  have  it  at  this  price  –OK!  

I  can  email  you  a  picture  

Sorry,  we  don’t  have  

that  

 Technology is changing the way buyers and sellers interact

 Smartphone  Tablet  e-commerce

 Evolving our proven revenue MODEL  Directory  Web presence  To build an e-commerce platform for the industry

 There is no targeted e-commerce platform for the film, TV and commercial industry today

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Opportunity

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 Adding e-commerce to NYPG.com

 Allowing buyers to make direct purchases

 Allows sellers a shot to bid

 NYPG collects a fee for facilitating the sale

NYPG  e-­‐commerce  PlaLorm  

Our Vision

Rick Babchak •  Founder and CEO of the

New York Production Guide for 30 years

•  Well connected member in the Association of Independent Commercial Producers – 30 years

Gary Kazmer •  30 years of experience in

operational and customer contact roles with the last 16 at the executive table

•  14 years focused on e-commerce growth designing new platforms and new customer facing applications

•  High growth background with QVC and Shop NBC ($30M to $1.4B)

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Management Team

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Transaction Flow Seller input

Pictures and descriptions are entered into our database so the buyer can search for the item she/he needs

The buyer uses the AICP form to create an order by searching the database and creating a shopping cart. There is a free form section for items not found.

The items in the shopping cart are split into separate requests and sent to multiple sellers for bids. Bids and seller questions are sent back to the buyer. The buyer responds to the bids on price, availability etc.

Multiple suppliers bid on items on the list

Buyer accepts bids, sellers notified Seller revealed and bills buyer directly Database updated with sales and rentals The buyer pays each seller for the rental of the products

A   B   C  

Buyer negotiates

price

Database  Shopping  

Cart  Search  Engine  

Reverse  AucWon  Format  

 Initial beta test group will include both buyers and sellers  Our plan requires an investment of $1.5m

Q1                    Q2                    Q3                    Q4                    Q5                    Q6                    Q7                    Q8                  Q9                    Q10  

Build Roll out NY Expand to LA

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Test

Initial Funding Break even at $1.5m burn

Timing

$500k   $450k   $550k  

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Financial Summary – NY and LA

-­‐$10,000,000  

$0  

$10,000,000  

$20,000,000  

$30,000,000  

$40,000,000  

$50,000,000  

$60,000,000  

$70,000,000  

2012   2013   2014   2015   2016   2017   2018   2019   2020  

Total NYPG Revenue Base (dollars) Net Income

Positive cash flow

in 2014

 Engage 30 years of relationships

 Allow buyers to utilize real time bidding to make direct purchases

 Sellers have an opportunity to competitively bid on more projects

 Easy DISTRIBUTION beyond New York

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Marketing Strategy

 $16B addressable USA/Can MARKET  Big and accepted PROBLEM  Clear and marketable SOLUTION  Highly defined CUSTOMER  Easy path to DISTRIBUTION  Proven e-commerce MODEL  SCALABLE  Access to the right TEAM

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Summary

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Appendix NYPG Digital Operating Plan

2012 2013 2014 2015 2016 2017 2018 2019 2020

New York Media Sector Spend ($M)

Annual Growth (3 YR) $7,100 $7,143 $7,185 $7,229 $7,272 $7,316 $7,359 $7,404 $7,448

Los Angeles Media Sector Spend ($M) $27,500 $27,500 $27,665 $27,831 $27,998 $28,166 $28,335USA total (95% of all markets) $7,100 $7,143 $34,685 $34,729 $34,937 $35,147 $35,357 $35,570 $35,783

70% increase since 2002 12.7% growth 2010-2011 Assume future growth of .6% per year for each sector

Future annual growth rate per channel 0.6%Television 1.0% $3,144 $3,163 $3,182 $3,201 $3,220 $3,239 $3,259 $3,278 $3,298

News 1.0% $2,006 $2,018 $2,030 $2,042 $2,055 $2,067 $2,079 $2,092 $2,104Film 21.9% $1,402 $1,410 $1,419 $1,427 $1,436 $1,445 $1,453 $1,462 $1,471

TV Commercials -1.0% $416 $418 $421 $424 $426 $429 $431 $434 $436Music Video and Documentaries -1.0% $132 $133 $134 $134 $135 $136 $137 $138 $138

Total Below the Line Expenses NYC ($M) 40% $2,840 $2,857 $2,874 $2,891 $2,909 $2,926 $2,944 $2,961 $2,979Total Below the Line Expenses LA ($M) 40% $0 $0 $11,000 $11,000 $11,066 $11,132 $11,199 $11,266 $11,334

Platform adoption New York 0.40% 0.70% 1.00% 1.60% 2.00% 3.00% 4.00% 5.00%Platform adoption Los Angeles 0.25% 0.35% 0.60% 1.00% 2.00% 3.00% 4.00%Spend thru the platform ($M) $0.00 $11.43 $47.62 $67.41 $112.94 $169.85 $312.30 $456.45 $602.32

Platform Fee Percent 10% 10% 10% 10% 10% 10% 10% 10% 10%

NYPG Revenue Base (dollars)e-commerce Platform $0 $571,408 $4,761,928 $6,741,427 $11,293,641 $16,984,853 $31,229,739 $45,644,951 $60,232,022

Digital Set Up $30,000 $40,000 $50,000 $50,000 $100,000 $100,000 $100,000 $100,000Subscriptions $20,000 $40,000 $75,000 $100,000 $150,000 $150,000 $150,000 $150,000

Advertising - banners $20,000 $40,000 $60,000 $100,000 $150,000 $150,000 $150,000 $150,000Affiliates $10,000 $40,000 $75,000 $100,000 $125,000 $150,000 $175,000 $200,000

Total NYPG Revenue Base (dollars) $0 $651,408 $4,921,928 $7,001,427 $11,643,641 $17,509,853 $31,779,739 $46,219,951 $60,832,022

Summary of Operating ExpensesTotal Staffing Salaries $0 $972,000 $1,584,000 $1,911,360 $2,298,854 $2,390,809 $2,486,441 $2,585,899 $2,689,334Total Outsourcing Expense $0 $780,000 $1,030,000 $530,000 $540,000 $540,000 $540,000 $540,000 $540,000Total Additional Revenue Expense $0 $60,000 $120,000 $195,000 $262,500 $393,750 $412,500 $431,250 $450,000Advertising and Marketing $0 $150,000 $150,000 $150,000 $300,000 $150,000 $150,000 $150,000 $150,000Total G&A Expense $0 $175,000 $276,600 $284,898 $293,445 $302,248 $311,316 $320,655 $330,275

EBITDA $0 -$1,485,592 $1,761,328 $3,930,169 $7,948,842 $13,733,046 $27,879,482 $42,192,147 $56,672,413

Taxes 40% $1,572,068 $3,179,537 $5,493,218 $11,151,793 $16,876,859 $22,668,965Depreciation

Net Income $0 -$1,485,592 $1,761,328 $2,358,102 $4,769,305 $8,239,828 $16,727,689 $25,315,288 $34,003,448

Capital 0 50000 50000 25000 25000 25000 25000 25000 25000Max Outlay

Cash Flow $0 -$1,535,592 $175,736 $2,508,837 $7,253,142 $15,467,970 $32,170,659 $57,460,948 $91,439,395

Michael Wheeler   Mr. Wheeler is the managing partner in Westerly Partners, LLC, an

investor advisory that provides strategic, financial and technology solutions to early stage companies focused on the new media and technology industries. He has more than 25 years of senior management experience at NBC, MTV, Showtime, FNN, Meredith Broadcasting and CBS.

Jesse Fink   Jesse Fink is an entrepreneur. His professional career involved

developing innovative business models including co-founding Priceline.com, and serving as its founding Chief Operating Officer

Open   We have vetted the business plan with several buyers and sellers

and upon an initial investment plan to add 2-4 buyers and sellers to the Advisory Board. 15  

Advisory Board

BCG –Evaluating NYC media sector development and setting the stage for future growth – Final Report May 8, 2012

www.nyc.gov/film

Tracking the Trends: A Comparison of Above-the-Line & Below-the-Line Expenditure Trends A Sponsored Report from V12 Group and Winterberry Group January 2006

TV INDUSTRY PERSONNEL by Dr. George Vinovich ABOVE-THE-LINE vs BELOW-THE-LINE

Report to The New York Film, Television and Commercial Initiative From Cornell University New York State School of Industrial and Labor Relations, New York City Department of City and Regional Planning, Ithaca Fiscal Policy Institute, New York NEW YORK’S BIG PICTURE ASSESSING NEW YORK’S POSITION IN FILM, TELEVISION AND COMMERCIAL PRODUCTION August 2006

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Appendix

The Economic Contribution of the Motion Picture & Television Industry to the United States The American Motion Picture and Television Industry: Creating Jobs, Trading Around the World 2010 Mpaa.org

Mpaa.org Policy and Research State by State Statistics State-by-State Film and Television Economic Contribution

B.C.’s overall ranking drops despite rise in 2011 film and TV spending An interview with Peter Leitch, chair of Motion Picture Production Industry Association of British Colombia

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Appendix