The World Loves To Go To The Movies!

Editors Note: 

In preparing today’s feature on Showintel Networks Inc. (OTCBB: SWNW) it occurred to me that this company is much like those innovative 3-D optical illusion pictures that were so popular a few years back.  They showed up in malls and walls across the country. 
 

They were all the rage - the flat pastel-like montages that, when stared at deeply within, revealed something different; a landscape, a portrait, a detailed image. But you had to look deeply - far beyond the surface in order to see the underlying image.

Showintel Networks is similar in its layers and eventual revelation. On the surface, Showintel appears to be an advertising company entrenched in the enormous Movie Theater marketplace. But on closer inspection another image emerges -- one of a company utilizing its technological foothold in America’s theaters to gather rich and valuable data used to create and inspire brand loyalty, and to market movie-related merchandise. And further yet, beyond the proverbial back of the canvas if you will, lies another facet, a bold stroke aiming for the lucrative hotel market. 

Showintel is garnering the undivided attention of movie theater companies across the country.  They see Showintel's technology as a driver for valuable new revenue streams.  Our profile today gives YOU the chance to look a little deeper too.
 

*** ABOUT SHOWINTEL NETWORKS (OTCBB: SWNW) ***

On-Screen advertising in movie theatres, which is fairly new to U.S. markets, 
generated between $200 million and $300 million last year.

Showintel currently has contracts with two theater chains and one single operator representing a total of 48 theaters under contract in 4 states.  The company projects that each theater should be able to produce revenue of $11,000 per month.  Showintel is in the process of establishing a national network with Systems now operating in Tennessee, Arkansas, Mississippi and Missouri.  Showintel Networks announced on Jan 30, 2003, that it had reached a formal agreement with Channel M that enables Showintel Networks to expand its digital management system to potentially over 325 theater sites nationwide (see revenue growth below). With approval from theater owners, Showintel Networks will begin installation of its equipment immediately and expects completion in 6 to 12 months. This is expected to add nearly $500,000 per month in revenues after full implementation.  Showintel is also in talks and negotiations with numerous other theater chains and independents. 

*Showintel provides movie theaters with large plasma screens or digital projectors in their lobbies that display upcoming movie trailers and advertisements. 

*Showintel has created a system that interacts with the "entertainment life-cycle" of motion picture products released through movie theaters. Showintel installs kiosks in movie theaters that allow customers to earn bonus points towards free move tickets. Combining theater-based advertising, innovative loyalty programs, and video-on-demand (VOD) access to pay-per-view (PPV) and subscription services, Showintel can increase loyalty and revenue to a theater chain.

*Showintel also places on-screen advertisements intermingled with upcoming preview movie trailers shown before the main feature.

*Through its Uniguest acquisition in November of 2002, Showintel is capitalizing on its kiosk technology and developing Internet related guest services for the hotel industry.

1-Showintel Networks has a proprietary digital media management system that can deliver video over a broadband network to multiple distinct theater sites simultaneously. Showintel's system also allows for the display and management of video content in numerous theater locations while being able to change the content of a single location on a moment's notice from a centralized network operations center. 

2-Showintel kiosks are designed with two interactive stay-and-play stations for individuals to access Showintel‘s database and to access numerous e-commerce functions. Each 'Access Station' is also equipped with touchscreen activated color displays. 

3-Showintel kiosks increase the purchase of ancillary products (soundtracks, DVDs, videos, merchandise). 

4-Showintel kiosks collect a wide array of valuable data for sale to the entertainment industry that allows it to better understand the demographics of those attending its movies and other events. 
 

*** The Market for Showintel At The Movies ***

 

--	The market for advertising within movie theaters is phenomenal.  Movie goers present both a captive and targeted group.  The year 2001 saw gross sales of theater tickets cross the $8 billion mark with 1.4 billion tickets sold.

Nationwide, there are 36,448 theaters in 7,031 sites and 2800 of these sites are owned by independents. 

AMC (through its NCN division) is a competitor with 300 theaters and another competitior, Regal Entertainment is installing its Next Generation Network, a parallel technology to Showintel's, in approximately 800 theaters . 

Of the 7,031 sites, Showintel has access to a market of approximately 5500 theaters and the company's current contracts represent approximately 1,200 of those theaters.  Showintel controls nearly one-fourth of the market not controlled by its competitors.

Showintel has conducted extensive research, supported by Forrester Research, that shows for every ticket purchased at a theater, approximately 2.1 sales of the same video was conducted outside the theater at a later date. For example, if 1 million tickets were sold, 2.1 million videos would be sold after the movie is out of the theaters. This revenue is extremely important to motion picture studios and production companies.  Showintel kiosks not only provide valuable marketing data to movie producers they also offer rebates and discounts to consumers to encourage the purchase of  movie-related merchandise, videos and other products.
 

*** Showintel Highlights of  2002 ***

 

--	June 24th, Showintel announces first round of financing.  Launches Marketing phase. July 1st, Showintel announces agreement with Wehrenberg Theaters, a 12 theater chain.  July 30th, Showintel announces it has begun installing its media systems in various theater chains.

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September 25th, Showintel acquires Uniguest. October 3rd, Showintel announces it has completed installations in 14 theaters, out of 48 currently under contract.  October 29th, Showintel announces it has closed on a line of credit in the amount of $1.5 million to be used for operations and growth.  Nov. 19th, Showintel enters an exclusive marketing agreement with Channel M.  Channel M currently provides video content via VHS or DVD presentation to over 400 theater sites nationwide, 5400 retail sites and 130 video arcades

*** On-Screen Advertising at the Movies ***

On-Screen ads, which are relatively new to the U.S., generated between $200 million and $300 million last year. By contrast, marketers spent about $19.4 billion advertising on network TV. 

Advertisers represent a broad spectrum of companies. National advertisers, such as automotive and clothing lines, are frequent advertisers in this space. 

Companies that sell their products at the theater concession stand prefer the lobby promotion over the on-screen promotion. Showintel provides its services in both venues. 
 

*** Two Valued Clients of Showintel ***

Of the 48 theaters Showintel originally started with, 33 belonged to Malco Theater's, a mid-size theater chain, representing over 30 sites in 7 states. Malco is headquartered in Memphis, TN and is currently ranked as the 23rd largest theater chain in America. 

Wehrenberg Theaters is one one of the oldest and most repected theater chains with 15 sites that house dozens and dozens of theaters. In St. Louis, in 1906, Fred Wehreberg decided to rent the space next store to his saloon (the former site of a bakery), bought a piano and 99 kitchen chairs and launched the Cherokee Theatre. Wehrenberg has always been an innovator offering movie-goers Plush "snuggle seat" stadium seating , digital sound enhancements such as Dolby Digital, Sony Dynamic Digital Sound (SDDS) and Digital Theatre Systems (DTS), THX certified auditoriums and wide screens. 
 

*** Showintel Acquires Uniguest ***

The management at Showintel is key on using its core technologies and maximizing its platform strength in as many applications as possible. 

Uniguest of Tennessee, Inc. is a Tennessee-based corporation that markets Internet related services to the hospitality industry. Its initial focus has been on high-speed public Internet access terminals placed in hotels common areas such as lobbies and meeting areas.  Its secondary focus is on providing high-speed Internet access terminals in hotel rooms.
 

*** Showintel Networks Strategy for Growth ***

Showintel has a simple strategy for growth. Having already entered the theater market with some of the most respected names in the theater business, Showintel will continue to seek quality chains, like Malco Theaters, with an immediate goal of capturing approximately 10% of the national market and 24% of the independent market. Showintel plans to expand into the international market in 2004.

Showintel knows the importance of key industry alliances as an avenue of growth. The company recently entered an exclusive agreement with Toolbox Productions, Inc., to sell the advertising space on Showintel displays. Toolbox is a full service company, uniquely qualified to sell, produce, write, edit and mix audio/video promotional campaigns and sales presentations. Toolbox was founded in 1995 as the exclusive on-air promotion facility for the United Paramount Network (UPN). Clients include MGM, ABC, Sony, Paramount and Studios USA.

Showintel currently has 325 theaters and expects that after a 12-month rollout period, its sites will net $11,000 per month (after theater share). 

• [Month 1]   Three advertisers yielding $17,510 each per month for a total of $52,510 per month
• [Month 3]   Six advertisers yielding $28,010 each per month for a total of $168,060 per month
• [Month 6]   Twelve advertisers yielding $37,931 each per month for a total of $455,172 per month

*** Leadership ***

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David Lott is president and CEO of  Showintel Networks, Inc. Mr. Lott has 20 years experience in business development and management. Mr. Lott has an extensive business background including the development of  Daody Management, Inc., a large real estate, storage and management company.  In 1982, Mr. Lott founded Landscapes Unlimited, Inc., a top 50 company in commercial landscape contracting and management. Mr. Lott orchestrated the company’s sale to industry leader Orkin International in 1994.

*** Financial Highlights for SWNW ***

 

*** LINKS ***

Showintel - Multinet SEC Filings
Showintel Corporate Web site
Current Quote on SWNW
 

*** CONTACT ***

Corporate Headquarters

Showintel Networks, Inc., 554 Greentree Cove Suite 102, Collierville, Tn 38017, 901-854-3574, info@showintel.net

INVESTOR RELATIONS: Phil Worack 303-680-3427

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