Psychic Friends Network (PFNI) Readies ‘Freemium’ Mobile Apps in Bid to Re-Dominate the Nearly $2.5B Psychic Entertainment Market

NEWARK, Delaware, December 12, 2012 /PRNewswire/ –

Psychic Friends Network, the company that single-handedly created the psychic
entertainment market in the 1990s and generated over $1 billion in revenue, is developing
a mobile smartphone/tablet application (mobile app), a first for the psychic service
industry.

“This is a major breakthrough not just for the Psychic Friends Network, but for the
entire psychic service industry,” said Marc Lasky, CEO of Psychic Friends Network. “Our
research indicates that among the under-40 customer base, the new mobile app could quickly
become the primary means for seeking psychic services. And among our more traditional
customer base, the new app could broadly increase usage with its ease of accessibility.”

Make Money by Giving Something Away

According to information and analysis provider IHS
[http://www.isuppli.com/Media-Research/News/Pages/In-App-Purchases-Will-Dominate-the-Smartphone-App-Business.aspx ]
, “…the best way to make money in the smartphone apps market is
to give away apps for free-and to generate revenue on subsequent sales of in-app
purchases.” This model of offering apps for free, then charging for content, is known as
“freemium.” This strategy represents the fastest-growing segment of the global smartphone
apps business, and will soon dominate the market.

IHS notes that a whopping 96 percent of all smartphone apps downloaded in 2011 were
free and, predicts that in-app purchases will account for 64 percent of total market
revenue by 2015, compared to 39 percent in 2011. They further reveal that well over 50
percent of the top-grossing apps on Android and half the top games for iOS are free. It is
notable that this trend is largely limited to games, but then again, games are by far the
most popular category of all apps.

The company with the greatest success to date with freemium games and who helped to
popularize them is Zynga, which rode the popular FarmVille and its other Facebook games to
an initial public offering of almost $1 billion. FarmVille is free to play, but players
can purchase “farm cash,” which can be used to make crops immediately available for
harvest. Other top public companies using this strategy with mobile games include
Electronic Arts (NASDAQ:EA) with a market cap of $4.5B, Glu Mobile with a cap of $181M,
Vringo at $272M, and Renren at $1.2B.

Mobile Growth

The growth of mobile games, paid or freemium, is linked directly to the explosive
growth of smartphone use worldwide. A Gartner study states
[http://www.gartner.com/it/page.jsp?id=2237315 ] that in the third quarter 2012,
smartphones represented almost 40 percent of all mobile units sold worldwide, a 47 percent
increase from one year earlier.

The smartphone market is dominated by Apple and Samsung, with both companies together
controlling 46.5 percent of the smartphone market. Samsung’s mobile phones sales in
particular continued to accelerate, totaling almost 98 million units in the third quarter
of 2012, up 18.6 percent year-on-year. Nokia continues to sell enough units worldwide to
garner attention, but its overall market share has slipped to 19 percent compared to 24
percent for the same period last year.

Adapting the Freemium Strategy to the Psychic Industry

Psychic Friends Network may not produce games, but they are in the entertainment
content business. In the past, the company’s sizable content offering could only be
consumed by customers calling 1-900 numbers and speaking live to psychic readers. In
today’s mobile-connected world, customers want to enjoy their horoscopes and personalized
psychic consultations from anywhere, on the device of their choice and in many forms
(text, audio chat, video chat and more).

To address this new reality, the company plans to offer its new branded mobile apps
free for download with a special free text psychic reading introductory offer.

“I expect that the new PFN mobile app will rival, and perhaps even surpass, PFNI TV
and more conventional online revenues within a very short order,” Lasky said. “And our
free-message offers will jumpstart that success.”

In addition to branded mobile apps offering daily horoscopes and live connections to
psychic readers, PFNI will also offer other mobile services that do not require an app:

        - Premium SMS text services. Through this type of paid service, the company
          will offer a daily horoscope sent to a customer's mobile phone.
        - Live psychic advice. Customers can send a SMS text to a live psychic, such as,
          "What do you think about my new job?" They will instantly receive a text reply (at
          $.99 per text).

These premium SMS services can be directly added to the customer’s mobile phone bill
(also known as carrier billing). This lowers the barrier to purchase, as the customer does
not have to key in a credit card on their phone.

Freemium Is Not for Every Company

Dropbox, LinkedIn, Pandora and Skype are notable companies that gained success by
giving away their products and services free to build a customer base. Skype was acquired
by Microsoft for $8.5B, LinkedIn was worth over $9B after its first day of trading,
Pandora debuted with a $3B IPO, and pre-IPO Dropbox raised a whopping $250 million on a $4
billion valuation.

According to Simon Hill at Digital Trends
[http://www.digitaltrends.com/features/how-the-freemium-app-model-will-pave-the-way-to-profits ]
, the big freemium successes have managed to combine good conversion rates with high
retention, so that people continue to play and purchase content for weeks, months or even
longer.

The freemium approach, however, doesn’t make sense for any business that can’t
eventually reach millions of users. Typically only 1% or 2% of users will upgrade to a
paid product, according to David Cohen
[http://online.wsj.com/article/SB10000872396390443713704577603782317318996.html ], founder
and CEO of TechStars, a start-up accelerator since 2007.

Psychic Friends Network is no stranger to large customer volumes with high conversion
and customer retention rates. At the peak in the 1990s, PFNI had more than 10 million
unique customers, with an impressive 25% conversion rate over 1-900 phone numbers and an
even more impressive 75% retention. The average PFNI customer spent $350 per year, with
80% spent in the first six months.

PFNI is about to re-launch with a newly developed “version 2.0″ technology platform.
The centerpiece of this re-launch are the company’s new mobile apps, which combine the
best of PFNI’s past proven conversion methods with the latest freemium revenue strategy.
Given their past track record, the company is fully expecting to re-dominate the nearly
$2.5B psychic market.

About the Psychic Friends Network, Inc.

The Psychic Friends Network, Inc. (PFNI) is a marketing and entertainment company
providing on-demand psychic advice as well as daily and weekly horoscopes. PFNI connects
professional live psychic readers with customers via telephone (mobile and landline) and
through their newly developed state-of-the-art online platform enabling interaction with
video chat, voice or text chat. During the 1990s, PFNI pioneered the psychic industry with
memorable television/radio marketing and infomercials. PFNI is re-launching the original
brand on a new technology platform that will capitalize on the latest social media and
video technologies to connect psychics with consumers.

To learn more about PFNI, visit PsychicFriendsNetwork.com
[http://www.psychicfriendsnetwork.com ]

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Forward Looking Statements

This press release may be deemed to contain forward-looking statements, which may be
subject to the safe harbor provisions of the Private Securities Litigation Reform Act of
1995, including statements regarding the re-launch of the Psychic Friends Network brand,
PFNI’s business plan, website and mobile applications. Readers are cautioned that these
forward-looking statements are only predictions and may differ materially from actual
future events or results due to a variety of factors, including, among other things,
PFNI’s ability to successfully re-launch its brand and operations and other risk factors
set forth in PFNI’s current report on Form 8-K dated March 30, 2012. Any forward-looking
statements in this release are based on limited information currently available to PFNI,
which is subject to change, and PFNI will not necessarily update the information.

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