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Mentura, Inc.
Progress Since Mentura Presented to Keiretsu Forum
The Company presented to Keiretsu forum in June 2003. Mentura’s fundamentals remain strong, no direct competition, additional barriers to entry have been created, and the national adoption of the DVD subscription model continues to accelerate. The company entered into its first DVD Lease Fund to facilitate the acquisition of DVDs for the library. The DVD Lease Fund allows the company to rent its DVDs thereby avoiding the capital outlay of having to purchase them. This allows Mentura to conserve capital while at the same time increase customer satisfaction through expanding our library. The DVD Lease Fund should carry the company through Q2 of 04 at which time a DVD Lease Fund II will be created.
Vertical market opportunities continue to present themselves to Mentura. Two of the largest Christian Ecommerce Sites in the U.S. are scheduled to launch their Private Label, Co-Registration sites in Q1. In addition, a major media company is exploring the possibility of partnering with Mentura to develop a “Themed Store Front” for their custom DVD rental store, which will be powered by Mentura. The potential to enter related vertical markets is high and the economics of capturing these partners will be significant including increased revenues, content aggregation and building additional barriers to entry.
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In Q4 of 2003 Mentura appointed Lisa Whelchel as our celebrity spokesperson to the Homeschool and Christian markets. Ms. Whelchel who played Blair Warner from TV’s The Facts of Life, joined the company because of her belief that parents need to supplement their children’s education and that too many children are exposed to the content generated by traditional media sources. Since becoming our celebrity spokesperson, Ms. Whelchel has appeared on the Wayne Brady Show and CNNfn on behalf of Mentura. In addition, Newsweek and Parenting Magazine are considering running articles on Mentura.
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The company closed its Seed B round of funding and opened its Seed C round of $1.0 million, which is 50% subscribed.
Mentura has entered into several “Content Royalty Agreements” with major educational content providers and producers. Content Royalty Agreements allow Mentura to reproduce (replicate) DVDs from DVD Masters provided by the content producers. Content Royalty Agreements differ from Revenue Sharing Agreements in that they allow Mentura to scale its DVD library to subscriber demand at the cost of replicating the disc, which saves significant capital. In addition, Revenue Sharing Agreements charge a percentage of the rental revenue as a royalty. Mentura’s Content Royalty Agreements pay a fixed royalty for each time the disc is rented.
2004 will be the year that Mentura will accelerates its growth and revenues, adding new verticals, and building additional barriers to entry.
Company Overview
Mentura enjoys a rich legacy and is carrying on the tradition of providing the highest quality educational, edutainment (documentaries, docu dramas, and mine series) and family friendly content. Mentura was founded in September 2002 and was the successor to Classroom Visuals, a VHS video subscription service that focused upon educational and family friendly content. Classroom Visuals was founded in 1998 and sprang from family adversity. The founder of Classroom Visuals’ son suffers from multiple learning disabilities including an inability to read, write and speak but he would closely watch television interacting with the characters. Not wanting their child to be brought up watching the content offerings from commercial television, the family began acquiring educational, knowledge based and family friendly videos for their son to view. Soon the VHS library was several hundred titles. It was at this point that the founder of Classroom Visuals began to offer the VHS library for rent on a subscription basis to educational institutions and families. Classroom Visuals grew quickly but mailing VHS tapes proved difficult, expensive and not economically feasible. During this same time period the DVD was introduced and this technology experienced the fastest adoption rates of any technology in history where today approximately 65% of US households have DVD players.
Riding the wave of explosive growth in DVD subscription services, Mentura has quickly become the world’s leading provider of family friendly, educational and knowledge-based content. Whether it is a specific educational title, a documentary on the Civil War or family friendly entertainment title consumers throughout America have come to recognize Mentura as the provider of high quality, innovative DVD content. Mentura balances its broad content portfolio between traditional educational DVDs, what’s new, and knowledge based content offerings.
Market
Consumers spent $ 4.5 billion renting DVDs during 2003. DVD played the lead role in driving consumers to spend $22.5 billion renting and buying home videos in 2003, a growth of more than 18% percent from 2002, according to the Digital Entertainment Group (DEG), which released its findings January 8, 2004 during the International Consumer Electronics Show in Las Vegas. On the hardware front, DEG estimates based on figures it compiled from the Consumer Electronics Association, retailers and manufacturers, that nearly 34 million DVD players were sold in the United States last year, an increase of 34% percent from 2002.
Mentura forecasts a $12.1 billion market for rental subscriptions within its target markets. With 6.2 billion spent on supplemental educational materials in 2002, 4.5 billion by Christians on products, and 1.4 billion by Homeschool families. Mentura’s markets are well defined - educational (institutional and individual), Christian families and families seeking an alternative to mass media offerings. With an average yearly subscription rate of $240 for consumers and $1,000 for institutions, the start up year of 2003 revenue is projected to exceed $400,000. Revenues in 2005 are projected to be $32 million.
Unique Differentiators and Company Strategy
Mentura’s reoccurring revenue model generates both prepaid and annuity revenues. Subscribers choose monthly or annual membership plans. Mentura’s monthly membership plans generate reoccurring revenues that are devoid of additional customer acquisition costs. Each month, customers pay $19.95 on a reoccurring basis with annual subscriptions ranging from $199.95 to $499.95.
Mentura’s Private Label and Co-Registration Program is leveraging partners’ Website traffic to achieve rapid market penetration. Driving qualified traffic to a website and adding barriers to entry are the two core problems facing most Internet start-ups. By creating Private Label and Co-Registration Programs, Mentura has ingenuously solved these issues.
Mentura creates custom storefronts for the Private Label Program. To date, Mentura provides DVD rentals for some of the world’s largest websites including Discovery Channel, Family Christian, Education Planet, Parable, and Crosswalk to name a few.
Mentura’s Co-Registration Program gives Private Label partners the ability to offer a “30 Day” free trial as a “Thank You Free Gift” for their customers. When customers make a purchase through a partner’s website, the Co-Registration Program allows Mentura to insert a “Free Gift” as an opt-in item in the partner’s shopping cart. If the customer chooses the “Free Gift,” they are automatically enrolled in a Free Trial membership.
In addition to our existing target markets, Mentura has the ability to enter into other vertical markets as opportunities present themselves. Mentura has developed an engine that powers the process so adding new verticals does not require expending significant capital on infrastructure and fulfillment facilities.
Mentura is the first and so far only DVD subscription service focusing on vertical markets such as education, Christian family entertainment, and Themed Storefronts for leading media companies and content providers.
Contact Information
Lloyd P Chartrand, CEO
Tel: (707) 577-1412
Lloyd@Mentura.com
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