Market research

1. Channeling You® Market research

2. Overview • Channeling You® is a SAAS (software as a service) product. • Channeling You® provides the ability to create, produce and distribute content for internet based tv. • Potential customers for Channeling You® include: • TV networks and local stations • Midsized independent content producers • Small independent content producers • Audio/Video Podcasters • Charity organizations • Schools/training organizations • Channeling You® is a cost efficient way to provide your own content over the internet in order to reach a larger audience. • Channeling You® would be available in the Channel Store.

3. Roku Although Roku does not disclose sales figures, in March 2012 Roku’s CEO claimed the company was experiencing 132 percent year-on-year growth. Roku is a small box that connects to your home Wi-Fi signal and streams over 300 channels to your television set. You connect the Roku to your TV through the included AV cables or HDMI cable. The only other connection you’ll need to make is plugging the Roku unit into a wall outlet.

4. Reports had put total sales at that time at around 2.5 million units. About 1.5 million of those sales were reportedly during 2011.

5. The Roku Channel Store currently has well over 600 channel apps in it , as of fall 2012. • This does not include a large number of "private channels" that are not available in the Roku Channel Store. • Roku is adding over a channel a day, in addition to channels with a variety of premium and niche video content . • There are also channels for music services (e.g. Pandora, MOG), photo services and popular casual games.

6. Podcasts According to Edison Research: • The percentage of Americans who have ever listened to an audio podcast is 29%. • 26% of Americans 12+ have ever viewed a video podcast. • The podcast audience is significantly more likely to have viewed television programming through non-traditional means. • One in four podcast consumers plug their MP3 players or smartphones into their car audio system “nearly every day.”

7. Potential Customer Segments TV Networks and Stations • Although some networks and stations already have channels on Roku, the vast majority don’t, so that seems like a wide open market. Here, however, we discovered that things were a bit deceiving. • An Emmy-winning executive producer of a currently airing hit sitcom (who asked not to be identified) told us that when it comes to the Internet and other alternate distribution models, most people in the entertainment industry “are in complete denial. They are clinging to an outdated business model and don’t want to believe that it could go away.” • This viewpoint seemed to be borne out when we spoke to the publicity department of WBNX, the CW affiliate in Central Ohio. Our contact rebuffed the entire idea of offering content online, believing that it viewership wasn’t quantifiable and explaining that they couldn’t air any of their content over Roku because it was all network and syndicated. • It’s possible that the vast number of local stations that still have locally-produced content (such as the news) would be interested, but only if they don’t have these same attitudes. Confirmation one way or the other wasn’t available before deadline, but these results seem to indicate that we should focus on the amount of local content, and not the size of the market.

8. Mid-sized independent content producers In this category, we spoke to David Foster, the executive producer of The Midnight Movie, which airs on TV in Cleveland, Ohio and Salem, Oregon, and Son of Ghoul, which airs on TV in Lake Tahoe, California.

9. Continued – Mid-sized independent content producers • David Foster liked the idea, and felt that it would provide additional exposure for not just his shows (such as the Midnight Movie) but also shows that they were producing for others, such as a kids matinee show, a polka show (this is Cleveland) or Jungle Bob. • To him, the most important benefit was exposure outside the markets in which they’re currently seen on television. He was less concerned about the channel as an actual distribution method, but thought that while he would start off with a free channel, he could see them ultimately moving to a subscription model after the channel gained traction. • Mr. Foster was uncertain of how much he would be willing to pay for the creation of a channel – his financial partner was unavailable before deadline – but he felt that they would prefer a full-service, package deal that included bandwidth. (Currently the small amount of content they have online is available on YouTube, where they do not pay separate bandwidth charges.) Their current budget is approximately $2000/mo. • This tells us that for these producers the idea is viable if we can find the right service offering at the right price point.

10. Continued – Mid-sized independent content producers • Son of Ghoul was a bit more skeptical, but mostly, it seemed, because he didn’t quite understand it. He felt that there wouldn’t be any interest in a channel for his content because his live show is available on the web, and he sells DVDs of past shows. He did not, however, completely dismiss it. • This tells us that any marketing campaign will have to clearly explain what Roku channels are, how they work, and how they provide a way to reach viewers who are not currently on the web.

11. Small independent content producers • In this category, we spoke to Erik Williams of “The Phil and Erik Show”, which only airs on the web. They are enthusiastic about the idea, and understood it immediately. They felt it would offer them the exposure that they want, and potentially advertising income. • They felt that for very small independent producers such as themselves, the “magic number” for an initial fee for channel creation is $100; anything below is considered negligible, anything above is something that has to be carefully considered. Their hosting fees are currently not very high, but they are concerned about the video quality and restrictions they have to work around. They were open to the idea of including hosting in their package. • This tells us that while small producers don’t want to spend a lot up front, they are open to smaller recurring charges, which opens up an additional revenue stream.

12. Video aggregators • We also spoke to Skip Walton, CEO of AviewTV.com, a video aggregation site that focuses on machinima (electronically created video, such as that created within video games or virtual worlds such as Second Life). Mr. Walton also felt that the primary benefit to both AviewTV and its artists would be the expanded reach provided by having their content available on television. • Like all of the other potential customers we talked to, Mr. Walton felt that it was important to make sure that any ongoing costs were balanced by revenue. He also felt that there was an additional wrinkle of needing to use the subscription model, where viewers pay a monthly fee, with part of that monthly fee being passed on to the artists.

13. Other potential customer segments • Other potential customer segments we were unable to reach before deadline include: • Audio/Video podcasters • Schools/training organizations • Clubs/organizations • We also have the opportunity to create innovative channels that do more than just show video, providing additional value for our clients.