MARCH 2014 NEULION INVESTOR PRESENTATION Powering the global transformation to Interactive TV anywhere
FORWARD-LOOKING STATEMENTS Certain statements herein are forward-looking statements and represent NeuLion's current intentions in respect of future activities. Forward-looking statements can be identified by the use of the words will, expect, seek, anticipate, believe, plan, estimate, expect, and intend and statements that an event or result may, will, can, should, could, or might occur or be achieved and other similar expressions. Forward-looking statements involve significant risks, uncertainties and assumptions. Although the forward-looking statements contained in this presentation are based upon what management believes to be reasonable assumptions, we cannot assure readers that actual results will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and we assume no obligation to update or revise them to reflect new events or circumstances, except as required by law. Many factors could cause our actual results, performance or achievements to be materially different from any anticipated results, performance or achievements that may be expressed or implied by such forward-looking statements, including: our ability to develop and execute on our business plan, including further diversifying our customer base; continuing to invest in and expand our sports-related business; our ability to integrate the operations of acquired businesses with our own; our ability to increase revenue; general economic and market segment conditions; our customers subscriber levels; the financial health of our customers; our ability to pursue and consummate acquisitions in a timely manner; our continued relationships with our customers; our ability to negotiate favorable terms for contract renewals; competitor activity; product capability and acceptance rates; technology changes; regulatory changes; foreign exchange risk; interest rate risk; and credit risk. These factors should be considered carefully and readers should not place undue reliance on the forward-looking statements. A more detailed assessment of the risks that could cause actual results to materially differ from current expectations is contained in Item 1A, Risk Factors, in our Annual Report on Form 10-K for the fiscal year ended December 31, 2012, which is available on www.sec.gov and filed on www.sedar.com.
Leading Enabler and Provider of Live and On- Demand Content to Internet-Connected Devices
NEULION GLOBAL MARKETPLACE LEADER NeuLion specializes in digital content management, distribution and monetization Our leading cloud-based technology provides a scalable suite of digital services; lowering the barrier and time needed to get your content into consumers hands. Fast to market. NeuLion s software platform supports content delivery to any device, empowering unique device-specific applications. Connecting on any device. We create digital destinations delivering interactive, personal, live and ondemand video proven to build meaningful experiences that engage, retain and grow your digital media business. Drive new and expanded revenue. 4
NEULION S MARKET LEADING TECHNOLOGY AND SERVICES Reduces complexities for content rights holders Speeds time to market Multi-dimensional monetization 5
NEULION PROPRIETARY SOFTWARE PLATFORM 6
NEULION DELIVERS TO ALL CONSUMER DEVICES SMARTPHONES & TABLETS SMART TVS GAMING DEVICES & 3 RD PARTY STB 7
Strengths in three verticals; Professional, College and TV Everywhere with industry leading customers in each
NEULION MARKETS PRO SPORTS COLLEGE SPORTS TV EVERYWHERE 9
PROFESSIONAL SPORTS LEADER Pro College TV Everywhere We are the leader in delivering live sports events for the top professional sports leagues, teams and rights holders 10
COLLEGE SPORTS LEADER Pro College TV Everywhere We are the leader in delivering live events for the top players in College Athletics across colleges, universities and conferences 11
TV EVERYWHERE LEADER Pro College TV Everywhere We are the leader in delivering live TV experiences for the top broadcasters, networks, operators and content rights holders 12
NeuLion is positioned to break out as interactive TV takes off
NEULION BY THE NUMBERS Over 300% increase in video streamed since 2011 measured in petabytes 1 200PB 2 154PB 35PB 82PB 2011 2012 2013 2014 47,000+ live events 300+ live linear channels 80,000-hrs VOD 8 million downloads of applications 2.3 million consumer transactions (1) A petabyte is 10 15 bytes of digital information. One petabyte is equivalent to 1000 terabytes. (2) Forecasted number of petabytes streamed 14
Pay TV Revenues (US $bn) (Billions USD) OTT Share of Pay TV Revenues (%) LIVE SPORTS MARKETPLACE RISING Pro College TV Everywhere Global Pay TV Revenues (US $bn) and OTT Share (%) OTT + Subscription Revenues OTT Share of OTT + TV Subs (%) Global sports market revenues are projected to rise at a compound annual growth rate of 3.7% from US$121.4 billion in 2010 to US$145.3 billion in 2015 Global sports market by region* (US$ Millions) *At 2010 average exchange rates p=provisional Source: PricewaterhouseCoopers LLP (PwC) - global entertainment and media outlook for 2013-2017 15
COLLEGE MARKETPLACE GROWING Pro College TV Everywhere SIGNIFICANT GROWTH OPPORTUNITY WITH NEW COLLEGE CUSTOMERS NeuLion customers account for 39% of the Division I marketplace 1 Source: http://web1.ncaa.org/onlinedir/exec/divisionlisting 16
TVE MARKETPLACE EXPANDING Pro College TV Everywhere Content Owners Cable Networks LARGE OPPORTUNITY TO DELIVER TV EVERYWHERE FOR CONTENT OWNERS, PROGRAMMERS, MVPDS AND RIGHTS HOLDERS INTERNET Broadcast Networks MVPDs 17
MODEL SCALABILITY Variable revenue model allows for margin expansion as data streaming grows Video Streamed in Petabytes (PB) (1) Video Streamed Gross Margin (%) Increased Data Usage = Increased Revenue & Margins 71% RECENT OPPORTUNITIES TO DRIVE DATA USAGE 65% 59% Q1 Q2 Q3 Q4 57% 65% 69% 69% 82 75 PB Q1 Q2 Q3 Q4 71% 71% 74% 154 100 PB Q1 Q2 Q3 Q4 60% 60% 57% 58% 35 23 PB 2011 2012 2013 (1) A petabyte is 10 15 bytes of digital information. One petabyte is equivalent to 1000 terabytes. (2) TDG Consumer Report (November 2013) Main direct cost is bandwidth, which is declining rapidly 18
NEULION REVENUE FACTS OVER 90% OF NEULION S REVENUE WAS RECURRING IN NATURE DURING THE 12-MONTH PERIOD ENDING Q3 2013 35% attributed to fixed payments over the term of a customer s service agreement for the NeuLion Software Platform 60% attributed to variable revenue generated from the joint success between NeuLion and its customer NEULION S VARIABLE REVENUE IS GENERATED THROUGH Revenue Sharing Usage based - Fixed fees for videos delivered Advertising Subscriptions Ecommerce Other 19
NEULION S FINANCIAL EXPANSION $50.0 $40.0 Total revenue Adjusted gross margin Adjusted EBITDA $39.7 $39.0 $43.5 (in Millions $) $30.0 $28.1 $33.2 $23.3 $25.3 $31.0 $20.0 $13.7 $18.8 $10.0 $2.1 $0.0 -$10.0 -$20.0 $(3.3) $(6.9) $(11.0) $(13.9) 2009 2010 2011 2012 LTM Q3 2013 (3) (1) Non-GAAP Adjusted Gross Margin is exclusive of depreciation and amortization. (2) Non-GAAP Adjusted EBITDA represents net loss before interest, income taxes, depreciation and amortization, stock-based compensation, discounts on convertible note, unrealized gain / loss on derivatives, non-controlling interests and foreign exchange gain / loss. (3) Last 12 months figures from Q4 2012 to Q3 2013 20
WHY INVEST IN NEULION SUCCESSFUL COMPANY TRACK RECORD We develop digital media strategies that grow exponentially each year for the biggest names in sports, entertainment and universities and operate as a profitable business STATE-OF-THE-ART TECHNOLOGY Our digital products are constantly on the edge of innovation and deliver content in the highest quality to all market leading consumer devices SPEED TO MARKET NeuLion customers can launch their digital products quickly on multiple consumer devices, with multiple monetization options including pay-perview, subscription and affiliate authentication STRONG CUSTOMER LOYALTY We have established well-built relationships that meet the needs of every customer and drive revenue successes for their businesses 21
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