BCG-高盛投资苏宁文化PPTV体育传媒项目商业尽职调查报告-201801.pptx

1、Project Lion Third readout Jan 2018 10.SC 1 Draftfor discussion only Copyright 2016 by The Boston Consulting Group,Inc.All rights reserved.Targets sports business has four lines,sports media is the core business,thus mainly evaluated in this project Sports media is the core business,thus mainly inve

2、stigated in this case:Monetization of football IP by media is essential to Targets profitability Smart device sales serves to expand user base for media business Retail business to further monetize football IP and expand business scale Youth training has minimal commercial value,only complimentary t

3、o media business A C B D Sports Media Youth training A D A multi-platform football media revolving around core football IP Covering all devices:PC,pad,mobile,OTT On-campus football education and football schools Already covered 13 cities,17k students Smart device B Smart TV and boxes sales Self-deve

4、loped hardware and dual-brand cooperation with leading mfrs Sports retail C O2O retail platform Online:S and PP online shops Offline:comprehensive sports malls 10.SC 2 Draftfor discussion only Copyright 2016 by The Boston Consulting Group,Inc.All rights reserved.Summary of key investment thesis(1/3)

5、A well developed sports media market can generate sufficient revenue stream for IP owners and can also provide hedging benefit under economic downturn Mature sports media markets like US and UK are large in size with leading IPs concentrated in a few top player US:ESPN holds IP of a series of most p

6、opular sports like NFL and generates revenue of USDX bn in 2016 UK:Sky is the key IP holder of Premier League with revenue amounting to USDX bn in 2016 ESPN and Sky achieve gross margin of X%and X%respectively,despite incurring high IP cost(X%price increasing during the past X IP cycles)Sports is an

7、 anti cyclical industry,evidenced by the stable performance of European football clubs along the years Global benchmarking suggests four factors are key to bolster a robust sports media market,i.e.affordability,convenience of payment,popularity of sports content and mature league operation China spo

8、rts media is rapidly catching up with their global counterparts and is expected to reach an inflection point in the next 2-3 years as major challenges impeding the development of the industry fades away Previously IPs are still quite scattered especially on new media platform;however,major sports ne

9、w media players like Target and Tencent gathered large amount of top IPs to attract sufficient traffic IP protection become increasingly strict,leaving limited room for pirated content Consumers become more willing to pay for online content after online video players like iQIYi spending significant

10、amount of resources for consumer education in the past 3 years Marketers also realize the importance of new media channel and allocate increasingly amount of budget Facing market potential,Target have three key strategic advantages to win in the market Holder of nearly all new media rights of top fo

11、otball IPs and well positioned to build a large user base First mover advantage to define market rules and build sustainable business model Presence in adjacent areas like device and retail,to further extend value chain and obtain additional commercialization benefit 10.SC 3 Draftfor discussion only

12、 Copyright 2016 by The Boston Consulting Group,Inc.All rights reserved.Summary of key investment thesis(2/3)1.User base:Target strategically focuses on football and it is well positioned to build a large user base Football has the largest viewer base among all sports in China(120 million),#of viewer

13、s and their watching frequency are increasing at 4%and 5%,Consumers are shifting from traditional linear TV to new media channels,which will capture 66%of matches watched in 2021 from 40%in 2017 Target purchased exclusive rights for xx of top 10 football IPs,locking 60-65%of football audience curren

14、tly,which will increase to 90+%in 2021 2.Business model:Target is in the process to develop a profitable and sustainable sport new media business model Target has the first-mover advantage to capture the monetization benefit and define market rules to educate consumers how sports should be broadcast

15、 in new media channel Advertisement revenue expected to increase from RMB100 mn in 2017 to RMBx million in 2021#of members to reach XX in 2021,generating revenue of RMBx million Target is top of the pack in terms of football new media operation,with most experienced team in the industry;going forwar

16、d,with continuous operation enhancement,Target will have the opportunity to build its platform stickiness 3.Further monetization:Leveraging the halo effect of top football IP ownership,Target will extends its competitive advantage by building presence in adjacent areas,which enable Target to increase commercial ratio from xx to xx OTT device:expected to generate revenue of RMBX million in 2021,with X%and Y%share in smart TV and smart box market,which will also accelerate consumer adoption of pay