1. “Byting” into a Paper World Zinio Case Study

2. Questions I have… …for you:…for you: –What is Zinio? What is Zinio?What is Zinio? –How attractive is ‘the market’? How attractive is ‘the market’?How attractive is ‘the market’? –How can we segment the market? How can we segment the market?How can we segment the market? –What is the value Zinio offers to these customer segments? What is the value Zinio offers to these customer segments?What is the value Zinio offers to these customer segments? –What are the main drivers of profitability? What are the main drivers of profitability?What are the main drivers of profitability? –What are the major barriers for Zinio’s adoption? What are the major barriers for Zinio’s adoption?What are the major barriers for Zinio’s adoption? –Does Zinio have a play? (Your recommendation) Does Zinio have a play? Does Zinio have a play?

3. Questions What is Zinio?

4. Piece of software to read printed materials digitally… Readers? Magazines? Retailers? Advertisers? Back

5. How attractive is the market?

6. Market Attractiveness POWER OF SUPPLIERS (Publishers) SUBSTITUTES (Paper magazines) BARRIERS TO ENTRY DEGREE OF RIVALRY (Digital magazine distribution) POWER OF BUYERS Back

7. Question: How can we segment the market?

8. Segmentation B2B and B2CB2B and B2C Users and ReadersUsers and Readers Back

9. USERS:USERS: – –Professional – –Academic – –Super Professional/Content Management – –Advertisers?

10. READERS:READERS: – –Subscribers – –Readers who purchase at newsstands – –Professional/scientific

11. Question What is the value Zinio offers to each customer segment?What is the value Zinio offers to each customer segment?

12. VALUE CREATION FOR EACH PLAYER? ReadersReaders PublishersPublishers etc.?etc.? Back

13. Value of Online Format Convenience to reader?Convenience to reader? Speed of delivery Price Breadth of selection Integration of other media into the reading experience Environmental benefit

14. Question Can the Zinio model be profitable? What are the main drivers of profitability?What are the main drivers of profitability?

15. Determines Profitability Digital magazine penetrationDigital magazine penetration Digital reading device penetrationDigital reading device penetration Extend to which it becomes standard (capture value in the ecosystem)Extend to which it becomes standard (capture value in the ecosystem) Cost of acquisitionCost of acquisition Cost of retentionCost of retention Cross-sellingCross-selling Back

16. Question What do you think about alternative uses of Zinio such as the catalogue business?

17. Factors Affecting Rate of Adoption Perceived Advantage for CustomerPerceived Advantage for Customer CompatibilityCompatibility ComplexityComplexity Ability to communicate product benefitsAbility to communicate product benefits ObservabilityObservability

18. Supply Side Barriers Supply side:Supply side: –Lack of content –Suppliers become competitors –Others? Back

19. DOES ZINO HAVE A PLAY? As what?As what? –Why should it play? –How should it play? –Where should it play? Are there any models out there it could emulate?Are there any models out there it could emulate? Will Zino work?Will Zino work? Back

20. ALL PROS AND CONS ProsPros –Savings Printing, distribution, retailingPrinting, distribution, retailing –Deep customer knowledge acquisition –Richer product –Probably more impulse buying –More cross-selling opportunities –Probably lower costs of customer acquisition –Publishers could economically test new magazines –Produces value to users who want to use Zinio for lower cost, speed of delivery, archiving, etc.

21. Cons:Cons: – –Low barriers to entry (Newsstand Inc., QMags and anyone can distribute magazines) – –Publishers may prefer to deal with several retailers to have more power over the channel (e.g., iTunes vs. the traditional music model) – –Publishers may decide to vertically integrate and deliver directly to the end consumer – –Still not counted in official circulation counts for advertising purposes – –No advertising revenues go towards digital magazine distribution – –Some companies in the value chain may retaliate against Zinio (e.g., powerful printing companies such as Quebecor and printing machine companies like Heidelberg)

22. Final Thoughts ‘Market stabilization’ under way but uncertain‘Market stabilization’ under way but uncertain ‘Product qualification’ under way but uncertain‘Product qualification’ under way but uncertain Network Effects!Network Effects! Success of Zinio highly dependent on suppliersSuccess of Zinio highly dependent on suppliers Success of Zinio highly dependent on tech developments in other areasSuccess of Zinio highly dependent on tech developments in other areas Success of Zinio highly dependent on transformation of (entrenched) customer preferencesSuccess of Zinio highly dependent on transformation of (entrenched) customer preferences Likely a ‘winner-takes-all’ marketLikely a ‘winner-takes-all’ market