Venture capital investment proposal for EbonyLife ON streaming service

Investment Proposal

EbonyLife ON is seeking to raise $20 million in venture capital for 30% equity stake in the enterprise.

EbonyLife ON, a subscription on demand (SVoD) website and app, which will be released in July 2017, is the next great thing to come to the Nigerian Entertainment industry. But don't be fooled -- this industry stretches well beyond the country's borders, as digitalization and globalization have taken EbonyLife worldwide in recent years!

The venture capital funds will be used to develop, implement, support and grow the EbonyLife ON network, including website and apps. The network's infrastructure requires capital that will cover design, production, technical (server, streaming) maintenance (staffing), protection (against hacking, system failure, blackouts), and operation (managing uploads, files, data storage, etc.) costs.

EbonyLife ON will enable users to:

• Watch from any device, Android app, and iOS app

• Gain unlimited access to TV shows and movies

• Enjoy Current Season Episodes

• View HD Available content

• Switch plans at any time

• Stream Live TV

The expected ROI is provided for 3-5-year investments and is based on revenue streams from subscriber growth, revenue from ads on videos (similar to the Hulu model), and revenue from subscriber payments:

Monthly Basic: $4.99

Monthly Premium: $6/99 (access to live feed)

Yearly: $34.99

Yearly Premium: $36.99 (access to live fee)

The planned outcome of this investment is that VC investors will obtain an ROI of 20% per annum, equal to 60% over 3 years, 80% over 4 years, and 100% over 5 years.

The Exit Strategies for this investment include the following:

1. Merger and Acquisition

2. Initial Public Offering

3. Sell to a friendly buyer (non-hostile takeover)

4. Maintain investment for steady, stable returns

5. Private offerings

2. History of the Company, Its Products/Services and Its Founders

Launched in 2013, EbonyLife TV is ranked as one of the most watched channels on the DStv Network and distributed to 49 African countries, including South Africa and Southern African countries. The channel also continues to expand exponentially across the globe. In the Caribbean, EbonyLife TV is on FLOW TV and available to viewers in Antigua, Barbados, Curacao, Grenada, Jamaica, St. Lucia, St. Vincent & the Grenadines and Trinidad & Tobago, Cayman Islands and The Bahamas. The channel continues to grow exponentially across the globe with premium scripted programmes available on Amazon and Roku. EbonyLife TV annually produces over 1000 hours of premium, original, and homegrown Anglo-African entertainment programming of which 80% belongs exclusively to us. This makes us the largest self-owned library on the continent and appeals to Africans and African-Americans in the Diaspora.

EbonyLife Films ushers in a movement that revolutionizes the trends in the African entertainment industry as it fixes its gaze on becoming one of the world's s most influential film powerhouses -- one blockbuster at a time. EbonyLife Films' first feature length film FIFTY in December 2015. It has been critically acclaimed as the #1 film for 2015 in Nigeria. FIFTY was also the only Nigerian film selected to screen at the 59th BFI London Film Festival of 2015. FIFTY currently commands impressive viewing hits on Netflix, which has a global audience of over 70 million subscribers. The second feature film The Wedding Party successfully premiered at The Toronto International Film Festival and is the highest grossing Nigerian movie with total box office takings in excess of N450 million. More information is available at: www.ebonylifetv.com and www.ebonylifefilms.com.

Founded by Mo Abudu, a philanthropist, entrepreneur, media personality, management consultant, and talk show host identified by Forbes as "Africa's Most Successful Woman," EbonyLife TV has aimed from its beginning to be Africa's first Global Black Multi-Broadcast Entertainment Network. To facilitate that goal, it has a seasoned team of veterans guiding the way, including:

• Chairman and Chief Executive: Mo Abudu (founder of Vic Lawrence & Associates, Project Facilitator and Director of the Protea Hotel, Oakwood Park, hostess of Moments with Mo -- the first-ever syndicated daily talk show on African regional television)

• Executive Director: Lanre Olusola (Nigeria's foremost Peak Performance Catalyst and Life, Mind and Health Coach; alumnus of Harvard Business School, and an ASET, UK certified Life Coach)

• Commercial Director: Uzoma Onwuchekwa (commercial strategist with over 25 years in the marketing and marketing communications industry)

• Director of Technical Operations: Zac Almeida (30+ years in the Television Broadcast Industry)

• Head of Channel Consultant, Programming: Mark Sonnenberg (25+ years in the entertainment industry across multiple platforms)

• Head of Channel Consultant, Operations: Howard Bolter (former President and Chief Operating Officer for LATV Networks and former Vice-President of Network and Production Operations for E! Networks)

This highly-skilled and highly-valued team contains many more members, whose profiles can be read at http://ebonylifetv.com/about-us-3/.

The head office of EbonyLife TV is located in Studio Tinapa in Calabar, Cross River State of Nigeria, where numerous shows of all varieties are produced, from dramas to lifestyle show, to daily entertainment. The goal of EbonyLife is tell Africans new stories that they have never yet been told.

Annually, EbonyLife TV produces 1000 hours of premium content with the express purpose of promoting the idea that Africa is changing -- and changing for the better.

The type of content that viewers in Africa want is based on the universal dynamic of entertainment categorization, which includes comedy, music, drama, action, fashion, news, and sports.

Dramas and talk shows include The Spot, Moments, Life of a Nigerian Couple, Paradise Way; Hush, Shuga, Tinsel, DHA, and Before 30. In the comedy category, original programming consists of content such as Jenifa's Diary; talk shows such as Moments, Highlights with Ik, and The Spot are popular for cultural, opinion, news, and talk; for reality shows, there is Big Brother Africa (same as in the UK, US and elsewhere with Big Brother shows for every nationality -- another indication of the universality of programming).

EbonyLife's core brand value will be maintained throughout as a result of its commitment to quality content, productions and distribution deals that secure the rights to in demand products. Its original content will help to drive the market and its leadership in the industry will attract other film and television producers to want to work with the channel in order to secure exposure for their own products. In this win-win environment, a working relationship with several producers, agencies, and centers will be reflected in an ever-expanding and diverse range of products that appeals to a widening demographic, which will in turn secure the status of EbonyLife. Its universal appeal will extend beyond the borders of African nations will giving countries like Nigeria greater recognition and meeting the local needs of viewers who come to identify with the programming of the channel and develop a sense of brand loyalty for the products that Ebony offers through its wide range of programming. By giving audiences what they want, Ebony ultimately is ensured of success in the television industry and its expansion into film ensures it of having wider appeal down the road, whether in reality or original content.

As part of the mission to change the African narrative and continuously provide viewers with top-notch, new content, EbonyLife TV is excited to offer an opportunity to invest in the development of EbonyLife ON, a subscription video on-demand service for Africans in the Diaspora.

Previously known as ELTV-VOD, EbonyLife ON is for anyone outside Africa who wants to access authentic, well-made programs that showcase positive and dynamic stories from the continent. Thanks to this service accessible on mobile application (Apple Store, Google Play Store) and online platform (ebonylifeon.com), features include such as live streaming, ratings, favourites, and more.

Some of the programs that viewers can look forward to are the gripping, glossy dramas the channel is known for, like The Governor, which chronicles the struggles of the first female governor of Nigeria, and Sons of the Caliphate, a drama about feuding families in northern Nigeria. Also, viewers get to see Africa's biggest celebrities on the red carpet with VVIP Events, enjoy the latest celebrity buzz with EL NOW and enjoy heartwarming and inspirational stories of ordinary people in the continent, shaking things up, with Hello Africa and Moments with versions filmed in Kenya, South Africa, Ghana and Nigeria.

The EbonyLife ON service provides a fresh, on-demand viewing experience that can be enjoyed on ebonylifeon.com or via its mobile app. For a monthly fee of only $4.99, viewers can get access to a range of content from riveting Nollywood movies to unique documentaries. New subscribers get to enjoy a month programs for free.

With this SVOD platform, Ebonylife TV expands its range of services and mobile applications and provides subscribers, outside of Africa, an innovative offering of premium quality content made in Nigeria for the World.

3. Products/Services Offered

The products and services to be offered by EbonyLife ON include the following features:

• Watch from any device, Android app, and iOS app

• Unlimited access to TV shows and movies

• Current Season Episodes

• HD Available

• Switch plans at any time

• Unlimited Live TV Streaming

These features will provide users with instant access to quality EbonyLife TV and Films programming and content. This is on-the-go access that is unrivaled by other African Networks and that ranks among the most efficient services on the planet (Netflix, Amazon, Hulu).

The development of the products and services begins in the design and production stage, overseen by Stephan Le Roux, Head of Creatives and Strategy, and Mark Sonnnenberg, Head of Channel Consultant (Programming), along with Zac Almeida, Director of Technical Operations, and Howard Bolter, Head of Channel Consultant (Operations). Their teams have designed and developed websites, layouts, apps, data systems, streaming opportunities and libraries for users to access content. The marketing division has created subscription plans to go along with this roll-out, and the plans have been developed to appeal to a variety of customers -- some who will immediately purchase the year-long subscription, others who will take the intermediate option, and others who will purchase a trial-basis month-long subscription.

EbonyLife ON will set itself apart from other online streaming services by its offering of original content which is and will always be EbonyLife's biggest selling point to consumers.

4. Target Market

EbonyLife ON aims to reach target audiences in Nigeria and beyond. This is possible because of the African Diaspora. Thanks to the Diaspora, the target audience is actually quite large for EbonyLife ON. Indeed, just in Africa alone it is not unthinkable to estimate a target audience of 60+ million subscribers. Adding to the African audience is the Diaspora audience. The numbers for African Diaspora can be assessed by region. In North America, the number is 39 million; in Latin America, the number is 112 million; in the Caribbean, the number is 13.56 million, and in Europe the number is 3.5 million (World Bank, 2015). These numbers indicate that for Africans around the world there is some interest in having access to African television. Thus, the target audience worldwide is 100+ million -- a figure comparable to that of Netflix.

Nigerians are also dispersed throughout the world and will be a core target as well. The numbers for Nigerian Diaspora in the U.S. show that 376,000 Nigerian immigrants currently live in the U.S. (Migration Policy Institute, 2015). These Nigerians abroad also have an interest in accessing Nigerian television.

Mobile subscriber numbers in Africa were in 2014 up to 329 million, which is 38% penetration, according to GSMA (2015). By 2020 it is expected that more than one billion mobile subscribers will be in the world (GSMA, 2016). Overall the mobile phone industry contributes over $100 billion to the country's economy (Winsor, 2015). This is a substantial contribution to the economy of several nations in Africa, although the biggest are Nigeria and South Africa. Using apps on a mobile device is a popular trend and EbonyLife ON can easily penetrate this market with its SVoD apps.

Market trends for SVoD throughout Africa are growing as well: this growth is based on the concept of TV content providers authorizing content through pay-for-service outlets like Hulu, Netflix, and Amazon. These providers essentially offer SVoD deals for clients that make regularly scheduled programming a relatively old form of viewing content, utilized mainly by low-income families that cannot afford on Demand access. Thus the trend not only in Africa but all over the world for SVoD is growing. In Africa, the trends show that across Africa, SVoD users also go to Hollywood films, with nearly 50% more Africans going to Hollywood films than to African films (63% vs. 17%), a trend which indicates that with SVoD comes a demand for more Western/Hollywood type of entertainment (Harrison, 2015). This trend is also global, as more Hollywood films are finding more success at the overseas box office and as Video on Demand providers break into non-Western markets (Ovum, 2015; Bond, Garrahan, 2015). In Europe for example, there are over 3000 on-demand services in the EU, with 1000 catch-up TV services and nearly 700 on-demand TV services for the continent (Balancing Act, 2015).

The target audience will be reached the same way that Netflix and Hulu and Amazon appeal to their audiences -- by offering original content. EbonyLife is devoted to producing original content that appeals to Africans and has won worldwide recognition and awards for its productions.

Since, as Bond and Garrahan (2015) have shown, VoD is now drawing more viewers than traditional broadcasters are drawing, EbonyLife can capitalize on this market trend to introduce more viewers to its content through easy access SVoD apps. With younger populations skewing towards on-demand access, broadcasters are seeing less revenue because of their inability to draw from the younger generations, who want more choice which VoD offers. In Africa, the biggest media company is Naspers, and it recently acquired ShowMax, a video-on-demand service, which shows that broadcasters are recognizing the need to shift into this market. Naspers is admitting that it must offer SVoD in order to secure market share in Africa, just like must be done in the rest of the world (Joseph, 2015). In Africa, there is also Trace TV, Buni.tv, DITV, RT, SABC, MultiChoice, which is facing stiff competition from Netflix for SVoD viewers; there is also StarSat, and e.tv sister company Platco Digital; Siyaya is also available for broadcasting, as well as other ventures -- CloseTV, Kagiso TV, Mobile TV and Mindset Media Enterprises (Gedye, 2015). These are located in Africa while throughout the rest of the world, the major players continue to be Netflix and Amazon in the West, with Apple making a play in regions in the East as well.

The growth of the market in Africa has been phenomenal, as more people tune into SVoD services, following the competition from new players and the need to supply original content to attract viewers. As Joseph (2015) points out, there is the potential to have 60 million + subscribers of SVoD in Africa alone, which ShowMax is looking to target for its market share. EbonyLife plans to meet this target number in Africa by using its own original content to draw subscribers.

The marketing plan for EbonyLife ON is to promote the service on its websites, on commercials during its network programming and in web advertising. It will also use outdoor advertising, such as billboards and signs to promote the concept so that all of Africa is made aware of the service. For the Diaspora, a similar approach will be taken, but advertising will be selective, with Big Data used to locate and identify audiences in other regions of the world who would be attracted to this service and email campaigns along with selective, personalized e-banners and e-advertising used to catch their attention.

EbonyLife ON will also sponsor events that draw attention to the creation of the new service, which is in line with EbonyLife's time-tested practice of sponsoring events to bolster its reputation in the African and global community. Indeed, one event that is completely controlled by EbonyLife is Create Nigeria. EbonyLife TV's Create Nigeria is an annual event that promotes the best of Nigeria's creative industries and drives global recognition, appreciation and investment in African Film, Fashion, Food, Music and Art. Create Nigeria will deliver creative and engaging programs that encourage and facilitate learning, partnership, investment and growth for Nigeria's creative industries. This exciting 3-day event provides a platform for engagement, which will consist of exhibitions, conference, demonstrations, entertainment and media briefings.

Create Nigeria has set out the following key objectives: to identify environmental and business constraints to the growth and development of target creative sectors; to develop plans, strategies and opportunities for resolving identified growth constraints; to forge, build and nurture local and international relationships and partnerships across the value chain per target sector for the purposes of resolving growth constraints; to create platform for engagement, knowledge sharing, trade and investment for target creative sectors; and to use and deploy up to date technologies for driving engagement with the entire scope of activities of Create Nigeria. Using events such as these to draw attention to EbonyLife ON will ensure that subscriber growth is achieved. Coupled with the award-winning original content developed by EbonyLife, the success of this venture is positively certain.

5. Financial Data

Historic, current financial data, profit/loss, cash flow, and forecasted financial data is available in the tables below:

The capital requirements are to further develop the website and apps with the initial venture capital investment. Technical costs (i.e. server, live stream, staffing, manage uploads, etc.) are estimated to be $20 million. With the expected revenue streams from subscriber growth, ads, subscriber payments and premiums, the ROI for venture capital investment is anticipated to be 20% per annum.

This return is calculated by numbers available from SVoD services available throughout Africa and public companies' records. With the basic subscription rates set below:

Monthly Basic: $4.99

Monthly Premium: $6/99 (access to live feed)

Yearly: $34.99

Yearly Premium: $36.99 (access to live fee)

It is expected that viewership and subscription rates will increase over the next five years 3x per annum.

EbonyLife ON spends money on creating original content just as Netflix, Hulu and Amazon do. We also use money on licensing third party content (just as these companies also do). We spend money on marketing (outdoor, online, non-traditional, etc.). All of this is geared towards boosting visibility.

The projected growth rate of EbonyLife ON is 3x per annum with the expected market penetration being 38%, which is in line with analysts' expectations. The breakeven for the company is 3.9 million subscribers, which the firm anticipates collecting within the first month of operation.

6. SWOT Analysis

Strengths:

• EbonyLife creates strong, award-winning original content like FIFTY, which has already made millions at the box office and has been adapted into a television series for millions more viewers

• EbonyLife is overseen by "Africa's Most Succesful Woman," according to Forbes and has a leading cast of talented individuals working behind the scenes to ensure EbonyLife's continued success

• EbonyLife ON is calculated to appeal to SVoD users, which is the rising young demographic of viewers in today's VOD world

• EbonyLife has a built-in audience around the world

Weaknesses

• EbonyLife ON is a new service and the upcoming months will be a trial period in which bugs are worked out during the roll-out phase

• EbonyLife subscribers will likely gravitate towards the initial trial period (monthly) subscription at first

Opportunities

• SVoD is a great opportunity to enhance EbonyLife's platforms and further expand its reach

• SVoD is the new market of the future

Threats

• Other SVoD providers and competitors in Africa include IROKO TV, which is also positioning itself to grab market share

• To counter this threat, EbonyLife has secured licensing rights to more than just Nollywood movies. EbonyLife has also has a deep list of entertainment shows, talk shows, drama series, etc. In shourt, our content is a lot better.

7. Key Customers and Suppliers

Key SVoD customers will be the young generation, who has access to mobile phone services, tablets, laptops, etc. The younger generation is more tech-savvy than the older generation and will be the market audience of the future. Appealing to the Digital Era's youth is the first step in securing market share for tomorrow.

Key suppliers include MTN, AirTel, Glo Mobile or Etisalat. These companies are mobile providers and have the ability to offer the technology needed for streaming TV on demand in Africa. MTN has 62.5 million subscribers, Airtel has 31.1 million subscribers, Glo Mobile has 31.3 mobile subscribers, and Etisalat has 23.5 million subscribers. These companies make themselves very attractive for a television company looking to break into the market by capturing their market share and portion of mobile data subscribers who might use VoD services (NCC, 2015). These suppliers have so many subscribers who could be used to build EbonyLife's viewership. They are also well-known and would allow for our broadcasting service to become well-known and more visible as a result. They each have significant footprints in the African market place and are recognized as leaders that can be trusted for delivering dependable service. Their reputation makes them a good pick to partner with for a television company looking to attract subscribers, and their rates are affordable which also makes them attractive.

8. Key Regulatory and Compliance Framework

As World Bank Group notes the following in terms of regulatory and compliance framework for telecommunications in Nigeria:

Nigeria Communications Act - This law sets out the general legal framework for telecommunications in Nigeria. It contains a detailed institutional framework, including the creation of the telecommunications regulatory authority (NCC). It includes licensing, competition policy, quality service, interconnection, scarce resources management, infrastructure sharing, universal service, tariffs regulation, penalties and sanctions and dispute resolution.

Licensing Process: The licensing process is described in the Nigerian Communications Commission website (NCC does not contain a licensing regulation; they only establish the licensing requirements on the internet).

9. Exit Strategy and Likely Routes

Merger and Acquisition: The merger and acquisition strategy is a possible way for investors to exit their investment but it would depend on EbonyLife being bought out by a larger company, which is not something that the firm is looking to do at this point, though it may be an option in 3-5 years time should the right offer be made. So while this strategy is a possibility, it is not the most likely option.

Initial Public Offering (IPO): An IPO is a more likely possibility, as this would allow investors to cash out their positions to new investors when the company goes public. This can be a quite lucrative way to exit.

Sell to a friendly buyer (non-hostile takeover): Investors may also exit by selling their investment to another party.

Maintain investment for steady, stable returns: Investors may also be satisfied with their ROI and continue to keep it with EbonyLife and maintain their equity stake in EbonyLife ON.

Private offerings: Private offerings may be another strategy that can be used to shift investments into new hands.

The most likely route for exit is the IPO, which EbonyLife is looking forward to achieving in the coming years and which could create an appropriate and rewarding route for investors to exit their positions.

10. Timetable

The timetable envisioned for the project preparation and completion/rollout schedule is soon. With rollout anticipated by July 2017, preparations are already well underway. Site construction and app development is already planned and ready to implement. The next two months of operations will be critical for raising the necessary funding and initiating the implementation of the project.

Rollout will begin in July and last through the end of the month, with feedback received from customers and bugs and errors in the site and app fixed as they become apparent. Engineers will standby ready to address any issue in the site's maintenance and streaming service customer service representatives will be available in double-time to ensure that hiccups in the rollout are kept to a minimum.

11. Conclusion

In conclusion, this project aims to be a great benefit to EbonyLife TV and to Nigeria as well as the African community around the world. It is a celebration of life, culture and ethnicity that combines entertainment with technology to help transform the world of tomorrow into a brighter and better place. Investors interested in such a goal can rest assured that their investment will be amply rewarded. EbonyLife ON would be proud to partner with investors whose goals are to achieve a strong ROI of 20% per annum while also promoting ethnic entertainment for the global population.

References

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GSMA. (2015). Mobile Economy Africa. Retrieved from http://www.gsmamobileeconomyafrica.com/GSMA_ME_SubSaharanAfrica_Web_Singles.pdf

Gedye, L. (2015). Competition breaks TV hegemony. Retrieved from http://mg.co.za/article/2015-01-29-competition-breaks-tv-hegemony

Harrison, C. (2015). Video on Demand trends in Africa. Retrieved from http://www.contadorharrison.com/video-on-demand-trends-in-africa/

Joseph, R. (2015). Battle lines for streaming Africa eyeballs drawn. FIPP. Retrieved

from http://www.fipp.com/news/opinion/battle-lines-for-streaming-africa-eyeballs-drawn

Migration Policy Institute. (2015). Nigerian Diaspora in the U.S. Retrieved from www.migrationpolicy.org/sites/default/.../RAD-Nigeria.pdf

Ovum. (2015). Telecoms, Media & Entertainment Outlook 2015. Retrieved from http://info.ovum.com/uploads/files/Ovum_Telecoms_Media_and_Entertainment_Outlook_2015.pdf

Winsor, M. (2015). Mobile phones in Africa. Retrieved from http://www.ibtimes.com/mobile-phones-africa-subscriber-growth-slow-sharply-companies-struggle-reach-rural-2140044

World Bank. (2015). African Diaspora. Retrieved from http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:22141991~menuPK:34480~pagePK:64257043~piPK:437376~theSitePK:4607,00.html