EXECUTIVE SUMMARY

Assumptions:
Item description Constant Unit Reading guide for colors:
1 Subscription price per viewer per month $ 4.99 US$ Assumptions/ Input
Ad revenue share % with streamer 50% Formulas/Calculation
Subscription revenue share % with streamer 50% Input from another sheet
Licensing cost per 1000 viewership hour $ 1.000 US$
QoQ total HW average growth rate 7%

2 No sign on bonus was given to creator for the past

3 Average quarterly hw growth rate from 2017 to 2019 was 0%. The average rate
increased to 14% if Q1 2020 data was included.Hence, an average growth rate of 7%
was used as the base case scenario.

Findings:
1 Based on data given,as viewership increases, revenue earned for ads increase as
well. However, there are months when viewership hours have increased much, but
ad revenue decreased instead. (Eg.Jan 2020, Jan 2019).This is most probably due to
creator inserting less mid-roll ads in between the streamings.

2 Game Title creator streams Release date

Fortnite 25-Jul-17
Apex Legends 4-Feb-19
Valorant 2-Jun-20

The hypergrowth seen in April 2020 is caused by the influx of viewers for the hours
streamed . Number of hours streamed by creator only increased by 6% vs prior
month.

Since Valorant is only officially released in Jun 2020, but the case study mentioned
that the creator has streamed Valorant upon its release, it could be a beta version
the streamer was streaming.It is very likely that viewers were curious and attracted
by the streaming of Valorant in April.

The phenomenal growth in April may not repeat again for future periods as more
streamers started streaming Valorant when the game is officially released.Hence,
the outperformance in April 2020 is excluded from the historical data for forecast of
revenue.

3 Accv and Hw is highly correlated with ad revenue and subscription revenue.

Hence, a linear regression function was used to forecast ad
revenue and subscription revenue based on total hw.
The past contribution margin % ( without sign on bonus) was around 39%.

Recommendations
1 To increase ad revenue, we recommend creator to use tools to auto-run ads
consistently and free up the concentration to manually manage ad running.We
suggest running multiple, shorter ad breaks throughout the course of the stream,
rather than loading them up at the beginning or end - viewership tends to be
highest in the middle, maximizing ad earnings.

2 Recommend a sign on bonus of US$500K per year to be paid to creator. Creator will
be earning 62% of total gross revenue after inclusion of sign on bonus.
We should maintain CM% of at least 20% for future headroom negotiation. Giving
away too much of the profit as sign on bonus right now will cause problem in the
future as creator tend to ask for more bonus once the contract is due for the next
renewal.
This contract should be exclusive where creator can only stream their work on
Twitch and not on other platform under the contractual period.
NDA agreement should be signed too to prevent disclosure of any revenue share %
and sign on bonus given.
The creator will only qualify for the sign on bonus for subsequent year if revenue
exceeds US$2.7mil(break even level) for the current year.