Macrovision Corp MVSN Matthew Thompson Shengdong Stanley

Macrovision Corp. (MVSN) Matthew Thompson & Shengdong (Stanley) Zhu Presented April 26, 2007

Presentation n n “The Business” Industry Background n n Risk Factors RCMP position n. Stock Performance n. Portfolio “fit” n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

Presentation n n “The Business” Industry Background n n Risk Factors RCMP position n. Stock Performance n. Portfolio “fit” n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

“The Business” n Macrovision enables businesses that are reliant on the deployment of software or content to protect, enhance, or distribute their offering among digital distribution channels and destination devices. MACROVISION CORP, 10 -K, Feb. 28, 2007, p. 1

In simple terms… n Macrovision has two key segments: n A entertainment technology unit that develops and licenses copy protection and digital rights management technology for CDs, DVDs, pay-perview/video-on-demand programs, and PC games n A software technology unit provides solutions to help software vendors and end users manage licensing

Sources of Revenue Entertainment Technologies Content protection and rights management solutions for CD/DVD/VHS/PPV/etc Digital Distribution services for games and P 2 P networks Macrovision Software Technologies MACROVISION CORP, 10 -K, Feb. 28, 2007, p. 44 Software products and services to independent software vendors and enterprise IT dept’s

ET Revenues n Content owners (VHS/DVD/CD) n n Cable & Satellite operators (PPV/VOD) n n Per unit royalties based upon # of copy-protected units produced Royalties on digital set top boxes One-time and annual license fees from manufacturer Transaction fees from PPV/VOD upon activation CD-ROM/PC games/P 2 P n Service-based fee for right to use p 2 p file sharing content management technologies ¨ Future revenues expected to increase with new contracts and business from Hawkeye, Rip. Guard DVD, and Active. MARK products MACROVISION CORP, 10 -K, Feb. 28, 2007, p. 45

Customers Solutions offered to 3 distinct customer groups: 1. Entertainment and Content Producers and Distributors 2. Software Publishers 3. Enterprise End-Users ¨ Customers include major Hollywood studios; independent video producers; game producers and distributors, hardware and software vendors; information publishers; consumer electronic, PC and digital set−top box manufacturers; PPV and VOD network operators; online retailers and portal and enterprise IT organizations MACROVISION CORP, 10 -K, Feb. 28, 2007, p. 2

1. E&C Producers and Distributors Solutions Continued n PC Games Technology ¨ 1 Safe. Disc, 2 Active. MARK n n unique digital signature designed to prevent pirated copies; if burned, signature won’t be found, decryption won’t take place and copy won’t run 2 provides ease for digital distribution of game content online 1 § Current network has over 300 partners offering over 1600 games ¨ Enable an entirely new revenue channel with online merchandising and digital distribution of games

1. E&C Producers and Distributors Solutions n Video Technology n Packaged Media Solutions (Rip. Guard DVD): Protect packaged media (CDs, DVDS, etc. ) from being copied without authorization ¨ ¨ n Motion Pictures generate approx 2/3 of revenue from PM Majority of MPAA studios use MVSN security technology § Declining dvd sales should be offset by increase in next 2 PPV/VOD Solutions (ACP-VOD, ACP-WMDRM): used by content owners to control how long PPV/VOD content may be stored on compliant digital units or home media centers § DVR, extremely important to E&C owners b/c of ease of DVD replication n P 2 P File Sharing Solutions (Hawkeye P 2 P Anti-Piracy service): Global network solution that allows content owners to prevent illegal file sharing over the internet MACROVISION CORP, 10 -K, Feb. 28, 2007, p. 3

2. Software Publishers n FLEXnet Publisher offered to software publishers and hardware manufacturers n Enables customer to electronically track, enforce, and update their software licenses and guard against unauthorized use by implementing product activation or content security § Simplify product marketing strategies § Reduce unpaid usage and lower costs associates with product development, distribution, and delivery

Software as a service n Rights Products (Right. Access 1, Right. Commerce 2): n available to: media, publishing, entertainment, and software companies *helps customer generate revenue and improve customer relationships by controlling and commercializing digital rights and services 1 -access control application providing advanced authentication, authorization, product segmentation, and delegated administration ¨ 2 -billing application allows customers to implement a myriad of pricing models ¨ *Advantages- put control in hands of business users

3. Enterprise End-Users n FLEXnet Manager captures and analyzes software usage data to help enterprises determine where to allocate their software purchases and related costs n n Also helps administer software access rights over global networks Reputable Brands using MVSN technology: n HBO, NBC, Netflix, Ti. VO, Microsoft, Disney, Yahoo!, Adobe, Cisco Sytems, IBM, etc

Presentation n n “The Business” Industry Background n Company Position Risk Factors n n RCMP position n. Stock Performance n. Portfolio “fit” Firm Strategy and Development Valuation n n DCF Analysis Recommendation

Industry Background n Experiencing unprecedented amount of change n Inexpensive, easy to use in-home copying devices enable consumers to make unauthorized copies of video, audio and software content. n publishers have become more concerned with protecting their intellectual property

Company Position n Security solutions are proprietary and have broad U. S. and international patent coverage. The only analog content security solution that has been widely deployed on commercial products. n Currently, video content security technology is embedded in nearly 100% of all DVD players and most digital set-top boxes worldwide. n Take years for the competitive technology to be accepted by hardware manufacturers or embedded into the consumer electronic devices. n Sole player in the market, no comparable companies

Risk Factors Business Risk n Market Risk n Additional Risk n

Business Risk n Depends on the continued use by major movie studios n n Depend on a few key customers for a high percentage Limited control over customers’ decision to include services If customers decide to focus on other methods to inhibit piracy, the business would be harmed Customers try to minimize costs by decreasing their content protection usage.

Quantitative and Qualitative Market Risk n n n Fixed Income Investment Foreign Currency Exchange Rates Strategic Investment

Additional Risk n n n Seasonality affect the price of common stock A significant portion of sales are derive from international sales. customers decide to focus on other methods to inhibit piracy, the demand for products may decrease and business would be harmed.

Presentation n n “The Business” Industry Background n n n Company Position Risk Factors RCMP position n n Stock Performance Portfolio “fit” n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

RCMP position Bought 200 share on April 3 rd 2000 @ $75. 00 n Current price @ 25. 25 n Losing $9, 944. 00, 66. 29% of the initial investment n

Performance n n 52 wk Range: 18. 84 - 29. 20 Market Cap: 1. 32 B P/E (ttm): 40. 33 EPS (ttm): 0. 63

Correlation with other stocks n Highly 　 correlated with some stocks in portfolio

Portfolio Fit The initial purchasing decision is proved to be wrong

Current Distribution

New Portfolio Fit

The new distribution

Presentation n n “The Business” Industry Background n n n Company Position Risk Factors RCMP position n n Stock Performance Portfolio “fit” n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

Firm Strategy and Development n Growth Strategy: ¨ Build ¨ upon key customer relationships Intend to target these customers for delivery of future digital and distribution management technologies ¨ Introduce new product applications and technologies ¨ Expand Protect Patent Position ¨ Continue to make strategic acquisitions § Next Slide

Strategic Acquisitions August 2003 -Net. PD July 2004 -Install. Shield Software Corporation June 2005 -Zero G Software Inc July 2005 -Trymedia Systems, Inc February 2006 -e. Meta Corporation January 2007 -Mediabolic, Inc

Presentation n n “The Business” Industry Background n n Risk Factors RCMP position n. Stock Performance n. Portfolio “fit n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

Valuation n Basic Assumptions Total revenue will increase by 30% in 2007 due to success of newly integrated recent acquisitions and expanded product range, followed by volatile growth in the following years n Net income will continue to grow at very conservative rate n WACC of 11. 36%, sustainable growth rate of 5% n

Valuation Du. Pont Analysis

Valuation Step 1: Free Cash Flow Step 2: WACC § WACC = 11. 36%, gterminal = 5% § Also, see sensitivity analysis

Valuation Step 3, 4, 5, 6: PV of FCF, and PV of TV

Valuation Step 7: Firm Intrinsic Value (Price per share)

Valuation Sensitivity Analysis 52 week range: $18. 84 -$29. 20

Presentation n n “The Business” Industry Background n n n Company Position Risk Factors RCMP position n n Stock Performance Portfolio “fit” n n Firm Strategy and Development Valuation n n DCF Analysis Recommendation

Recommendation Buy 300 shares @ Market! n Reasons Supporting Decision: DCF shows price undervalued in market with conservative assumptions ¨ Recent strategic acquisitions and future possibilities really expand product range ¨ Strong and experienced management team ¨ Growing need for new technologies in future ¨ Content owners lose $billions per year, continued need for MVSN technology ¨ Online industries rapid expansion will create large market for MVSN products and solutions lead to adoption of new technologies ¨ n n Worldwide broadband penetration to reach 364 MM households by 20101 n MVSN providing customers with easier access to broad variety of distribution hannels Microsoft Vista, internet gaming, etc Press Release. “Macrovision Announces Online Games Distribution Agreement with Activision. ” Business Wire. 7 March 2007 . 1