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L3 Video Content Protection, Distribution & Monetization

L3 Video Content Protection, Distribution & Monetization. “L3”. Scenario Today. MPAA (Motion Picture Association of America ) says Hollywood loses 40% of revenue ($4 billion) to Piracy And Piracy is on the rise – a rock-solid solution is required

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L3 Video Content Protection, Distribution & Monetization

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  1. L3 Video Content Protection, Distribution & Monetization

  2. “L3”

  3. Scenario Today • MPAA (Motion Picture Association of America) says Hollywood loses 40% of revenue ($4 billion) to Piracy • And Piracy is on the rise – a rock-solid solution is required • Content-Owners give their content to intermediaries losing up to 80% of potential revenue • Most try YouTube distribution – sometimes coupled with physicalDVD shipping • Premium content (e.g. new movies and eLearning) limited to Ad-supported streaming sites (including YouTube) – No Pricing Power • Those who try to self-distribute spend significant amounts on bandwidth, servers and custom DRM solutions

  4. Market Friction

  5. Market Friction In simple terms • Video rights owners have to either • Accept piracy of their content (from DVDs, YouTube, Tivo etc.) • Spend lots of money on Servers, CDNs, and eCommerce (> $5,000 per month) • Sell out to Netflix, Hulu and other such aggregators (and sacrifice their own brand) OR • Use “L3”

  6. The L3 Solution L3 Content • The mission of Layer 3 Media’s (L3) is to smoothen the movie/video distribution chain through disruptive innovation • Protect content owner’s interest • Piracy-proof the content • Enable content monetization • Easy Content Accessibility to audiences globally • “Viral”/”Social” distribution (Build on current eco-system) • Computers, tablets, Mobile phones, TV – All devices • Enable value added services such as sub-titles to enable intermediaries • Watch content free with relevant ads • Address ground realities of infrastructure • Download & Play orStreaming orTorrent orPhysical distribution L3 is the world’s first LEGAL TORRENT system Other Devices Desktop Software Cable TV/DTH Cellular Network ePVR (Enhanced Personal Video Recorder) Enhanced Cell Phone

  7. More on L3 • Viral distribution/Content Marketing • Rock solid copy-protection • Easy Payment methods for end customers (including “free-with-ads”) • A Cross-platform solution • Scalable platform to address Global demand of content • Control for Content Owners

  8. + How it works + L3 = or Owner L3 Mobile TV Desktop

  9. Customers • Market Segments in order of focus • Independent Film and documentary makers • Small Studios and distribution companies in India and other countries • How-To video makers (Cooking, Musical Instruments, Exercise videos etc.) • Other Semi-Professional content (migrate from YouTube) • Music Videos • Large Film Distribution companies (including Netflix, Hulu…) • Formal eLearning distributors/creators • Large Studios (Sony, Disney...)

  10. Industry/Market • Global market estimated at almost $1 trillion (TAM) and can be grown by this platform • Video creation and consumption rising due to lowered technology barriers • Recent SOPA and PIPA bills in the US Congress attest to how seriously business and government are taking threat of Piracy • Without protection, unfettered distribution cannot happen

  11. Addressable Market • Entertainment Piracy alone accounts for at least $6 billion worldwide ($4B Hollywood) • We can reduce this by 25% over 5-7 years giving us… • Expected share of market in 5-7 years of $2 billion (top-line collections) giving $200MM in revenue with margins over 75% • Long term, as this platform becomes mainstream, we can capture much more • Growth can only be explosive as adoption will be viral

  12. Management Background • Anil Gupte • IIT Kharagpur alumnus • Ran a Computer Aided Design Training and Consulting business from 1989 to 1993 with Fortune 100 clients • Founded iCinema – one of the first streaming video sites ever (1997) • Morphed above into maxNetwork – a service oriented business model with better revenue/profit • Grew above business 680% from 2000 to 2004 then sold it • Introduced the first Personal Video Recorder in India (2006) • 4 US Patents received + 1 more in pipeline

  13. Management Background • Amit Abhyankar • IIM Lucknow Alumnus • 12 years of experience in Media and Entertainment • As MD of Outreach Motion Pictures has experience of distribution across all platforms - Theatrical, Digital, Satellite and Home Video • Has worked as Executive Producer/Director and many other roles in all aspects of Film-making • As Founder/Director Outreach Media Services specialized in Management of Brands for Companies and Image for Individuals • Most recent film – “Jana GanaMana” (Producer/Director) received Best Director and Best Film (Rural) in India (Maharashtra)

  14. L3 – External validation • Wipro Wharton Global Innovation Challenge – Category Winner • DST-Lockheed Martin India Innovation Growth – Winner • Economic Times Power of Ideas Competition – Winner (~$40,000 seed investment by CIIE, IIM Ahmedabad) • 4 US Patents issued, 1 pending

  15. Competition (Direct)

  16. L3 – Competitive Advantage • L3 is the only secure, multi-pricing, download-cum-streaming-cum-torrent distribution model for video • Almost all our competitors can also become our customers • Fundamental differentiation – L3 content is protected before it leaves the content-owner’s hands • L3 is the only platform where ads can be dynamically inserted into content in online as well as offline mode

  17. Projected Financials

  18. Projected Financials (Summary)

  19. Deal Summary • Equity funding of ~$1.1 Million needed • 20% equity offered • Estimated Year 5 PAT~$45 Million • Estimated Company valuation in year 5 $900 Million (PE = 20) or higher • Investors ROI estimated to be 180X in five years (earlier exit possible)

  20. Contact: Anil Gupte ag@layer3media.com +91 9370131365 Thank You!

  21. Appendix (Additional Details)

  22. L3 Technology L3 Video File • Distribution on DVD, Internet and other media in a single format • No need for separate process or format for Internet distribution, Broadcast or DVD/CD • “Morphing” copy-protection • A unique key & algorithm required on each machine, so that even if one “pirate” cracks the encryption, the “crack” cannot be reused • Also, algorithms and keys keep changing to create a moving target for pirates • Patented technology Peers Physical Media Cable TV/DTH Internet ePVR (Enhanced Personal Video Recorder) Servers

  23. Value added services • Content owners or anyone else can add value to the L3 content • Example: Subtitles in any language can be added to the L3 file • Expands the market exponentially • Incremental revenue for such value added service is tracked separately and goes back to the entity that built the value-added feature = Opportunity + And we will have a little house with big windows

  24. Benefit to the content owner… 1/3 • Monetize content • Extra revenue with not much incremental cost • Significantly lower risk of piracy • Global customer reach • Access established, new and uncharted geographies • A vibrant distribution channel • More efficient than all existing distribution networks • Most cost efficient • Peer to peer virally distributable • Through any media • Can also be hosted on L3 owned sites

  25. Benefit to the content owner… 2/3 • Content ownership remains with owner • Don’t have to sell the internet rights • Owner can place it on any medium and send it anywhere • Secure the content before its distributed • Superior encryption with L3 patented technology • Gives complete pricing flexibility to content owners • Maximize returns through dynamic pricing • Content not selling well in one market can be re-priced to make more attractive • Complete control on pricing • Expands the market by creative pricing • Can block any geography

  26. Benefit to the content owner… 3/3 • Assured collection • Payments received through Credit Cards, Net Banking, PayPal • L3 is no extra cost for content owners • Owner uses the “free” L3 software to encrypt and distribute content from any source • Users/audience pay a transaction fee to L3 • “Not new” content can also be monetized • If broadcast rights sold, one can still earn money from Internet or DVD distribution • No lawyers and accountants involved • Save cost and time

  27. Benefit to the consumers • Increased availability and access to content • End customer finally has the ability to decide what kind of experience he/she wants • Choice of watching on computer or TV • Internet downloaded content can be watched on TV or computer • Choice of watching with ads or without ads • Choice of paying or not paying • No ads or with ads • Choice of how much violence/sex to be shown • Choice of passing on the download to others without piracy guilt • Torrent, USB, CD, DVD etc.

  28. Benefit to advertisers • Pay only if Ads play • Micro-targeted advertisements • Age • Sex • Geography • Time of the year/day • New ads on re-runs • Detailed reporting

  29. Benefit to the industry • Wider distribution and quicker break-even • Encourages Content-creators to experiment • Good content once produced will continue to accrue rewards perpetually • More expression of art • Reduced dependence on distribution channels

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