MSN

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MSN

• Yusuf Mehdi
• Vice President MSN
• Microsoft Corporation

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MSN Highlights

• FY02 Revenue Increase by 20
• Strong improvement on contribution margin
• Expect continued strong growth in FY 03

FY01
FY02
FY03
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Gained Revenue Share in Down Ad Market
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Strong growth of user base growth
Reach Messenger Users(M)
Share of Minutes Subscribers(M)
Reach, Share of Minutes, Messenger - Media
Metrix
Subscription Internal Data
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Key Challenges

• Profitable customer acquisitions
• High portal costs
• Profitably deploying broadband
• Overall advertising market pressure
• Plan to win in international market

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The Internet Opportunity
FY 2002 (US) 28.9 billion
FY 2005 (US) 48.7 billion
Emerging Markets 0.2 billion
Emerging Markets 1 billion
Online marketplace 1.6 billion
Online marketplace 5.2 billion
Online Adv/Digital Mktg 11.7 billion
Online Adv/Digital Mktg 5.5 billion
Online Subscriptions/ISP 21.6 billion
Online Subscriptions/ISP 30.8 billion

• FY 02 Share of US Consumer Internet revenues
• AOL 30
• MSN 5

• MSN Revenue Scenarios
• 10 share 4.9B
• 20 share 9.4B
• 30 share 14.6B

( NB price _at_20/mo BB _at_ 50/mo)
Data Source Internal Estimates
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MSN Vision

• Empower people through innovative and useful
  communications, creativity, and content services
  for their everyday life. In other words Make
  the Web more Useful Everyday.

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Business Strategy
MSN Subscription Services
Kicks off with MSN8 Targeted to Internet Enthusia
sts Software Service Based Access Independent

Focused on Improved Communications
Portal WW Ad Ecommerce
ISP Access Only Subscription
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Key Priorities and Efforts

• Deliver world class online service with MSN 8
• Build a compelling software subscription
  business, without relying on Internet access
  
• Improve customer and partner loyalty
• Increase ARPU with a la carte subscriptions and
  merchant revenue
  
• Control costs to efficiently scale business
• Partnering increases for content

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What to Expect This Year

• MSN 8 Leapfrog and break the bundle
• Nationwide broadband now available
• New brand advertising tools and products
• Global subscription service expansion
• Significant distribution and media partnerships

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