Digital Services Distribution Budget Presentation Fiscal Year 2008

Digital Services & Distribution Budget Presentation Fiscal Year 2008 February 2007

Agenda 1. Executive Summary 2. Digital Distribution 3. Mobile Entertainment 4. Digital Services / Grouper 5. EBIT Reconciliation 2

Digital Services and Distribution Landscape Content Distribution Programming Online Services A la carte Owned Films and Television Professional Short-form Prosumer User Generated Video Devices Partners Branded Channels DST IPVOD SVOD FOD Digital or MMC Mobile Carriers Partners Mobile Games 3

Competition is Increasing as Demand for Digital Content Grows • Traditional media players are experimenting with new models for digital distribution – Networks are launching branded online channels and streaming ad-supported episodes (ABC. com, CBS. com & Innertube, NBC. com & Dot. Comedy, Turner & Super Deluxe) – Digital sell-through is gaining broad support (i. Tunes is selling films from Disney and Paramount; television episodes from major networks) – Fox / NBC / Viacom exploring concept of a dedicated JV for online content distribution • Historically game-based, mobile is also proving viable for video distribution – Adoption of 3 G handsets continues to grow and is improving viewing experience – Carriers are seeking video content to attract and retain customers • A wide range of players is competing for quality UGV content and audience – Google’s acquisition of You. Tube raised the bar for critical mass – Quality of viral video is increasing as traditional media players enhance their owned services (Fox / My. Space, Viacom / Atom Films) – Online pure-plays (Heavy, Break) are compensating content creators by acquiring videos 4

Success in FY 07 Established Foundation for Growth in FY 08 • Key accomplishments in FY 07 –Launched multiple new business models for digital distribution –Launched mobile video –Significantly expanded distribution relationships across internet services, mobile carriers, and hardware partners –Created and launched first branded cross-platform channels –Acquired and integrated Grouper; grew unique users by 40% • Focus areas for continued growth in FY 08 –Add 21 distribution partners in 2008 –Grow distribution revenue 140% from $16. 5 MM in FY 07 to $39. 7 MM in FY 08; contribute $27. 8 MM to other SPE divisions –Broaden digital content offering, including acquired and produced content –Increase number of branded digital channels and expand distribution –Re-launch “Grouper 3. 0” with differentiated content and service offer –Continue to grow Grouper user base and begin monetizing audience 5

Digital Services & Distribution – Revenue Overview $50. 3 $24. 2 $16. 5 $8. 7 $6. 7 $10. 4 $14. 0 DD – EBIT Grouper - EBIT ($5. 0) ($10. 0) ($5. 1) ($10. 0) ($8. 3) ($10. 1) ($13. 8) ($20. 8) EBIT ($15. 0) ($15. 1) ($18. 4) ($34. 6) DD – Op Income 6

DSD Continues to Provide Support for “Sony United” Launched in 2007 In Progress for 2008 • Memory Card bundles with games and films • Integrating Grouper for online video sharing Digital Imaging • Grouper in firmware • Memory Stick Entertainment Pack • Grouper service and SPE promotional channels on IP Bravia • Licensing content for digital delivery to the Play. Station 3 • Potential metadata R&D project • Grouper video and HOME service • Early discussions for digital delivery of films day-and-date with DVD • All US VAIOs shipping with SPE Movies • Grouper screen saver on VAIOs • Selling mobile products through “Music Box” • Distributing Sony BMG games • Project X 7

Agenda 1. Executive Summary 2. Digital Distribution 3. Mobile Entertainment 4. Digital Services / Grouper 5. EBIT Reconciliation 8

New Business Models and Partners Enable Growth in FY 08 FY 07: $5. 8 MM FY 08: $19. 7 MM Launched a wide range of business models across 20 total partners Expand to 41 partners and broaden relationship with existing accounts Broad Launch of Digital Sell-Through Expanded Digital Rental Expanded Digital Subscription Launched Ad Supported Channels 9

Key FY 07 Successes • Established and launched new business models – Launched download-to-own business – Launched cross-platform digital channels • Expanded distribution relationships – Secured deals with Amazon, Wal-Mart, Movielink, Cinema. NOW, AOL, Click. Star, GUBA, AT&T, Best Buy, and Net. Flix • Supported cross-Sony digital entertainment initiatives – Launched first secure digital content program for the PSP – Provided content bundles for VAIO and Sony Ericsson • Established end-to-end operational processes with SPHE, SPT, WPF and Digi. Pol to operate these emerging digital businesses 10

FY 07 Demonstrated Demand for a Wide Range of Studio Product Top 10 DST Titles • More feature film titles available in the marketplace than any other studio (over 300) 1. The Da Vinci Code 2. Click 3. Talladega Nights • Business to-date is largely new release driven, but there is demonstrated demand for “long tail” product 4. Underworld Evolution 5. Ultraviolet 6. RV 7. Silent Hill • All titles in the program have been purchased by end consumers 8. The Covenant 9. Monster House 10. Memoirs of a Geisha 11

FY 08 Digital Sell-Through / IP-VOD Strategy • Aggressively build on the existing distribution network – Strike partnerships across the complete spectrum of traditional and on-line players – Expand partners to include: Starz, Apple, Microsoft, Best Buy, Transworld, Target (significant opportunity for incremental revenue in an Apple deal) • Expand the overall content offering – Broaden selection of film and TV product – Launch DST of TV product by end of year – Introduce the most compelling short-form/original content • Continue to lead market in innovating digital product offerings and usage models • Continue to operate an industry-leading digital organization – Provide end-to-end asset delivery and digital operations – Create innovative marketing and promotional programs • Grow the business from $5. 7 MM in FY 07 to $18. 1 MM in FY 08 12

FY 08 Digital Channel Strategy • Continue to expand SPE’s digital channel offering – Comedy (Funny Bone) - Who’s The Boss, News. Radio – Action (AXN) - SWAT, Charlie’s Angels – Kids (Bounce) - Jackie Chan, Animated MIB, – International Programming (World Channel) – Anime (Animax) - Samurai X – Movies on Demand (Now Playing/Hollywood Hits) – The Minisode Network – Grouper “Off the Hook” • Introduce additional film and television properties complemented by a blend of original programming and interactive features • Establish relationships with 3 rd party content holders to improve channel offerings – Nelvana for Bounce (e. g. , Rescue Heroes, Rolie Polie Olie, Babar) – Ban Dai for Animax (e. g. , Gundam) • Aggressively expand channel distribution to high-traffic destinations across platforms 13

Digital Distribution – Revenue Overview $19. 7 $14. 0 $5. 8 $0. 1 14

Digital Distribution – Summary P&L 15

Agenda 1. Executive Summary 2. Digital Distribution 3. Mobile Entertainment 4. Digital Services / Grouper 5. EBIT Reconciliation 16

FY 07 was Profitable and Provided Critical Foundation for FY 08 Growth Full Suite of Mobile Content Products + Comprehensive Marketing and Distribution Footprint Carriers Personalization Mobile Video Mobile Applications Mobile Games SMS Interactivity Direct to Consumer Handsets Aggregators New management team put in place to run daily operations 17

Games in FY 07: New Approach Proving Successful • Despite having ½ as many games in the market in FY 07, MEG managed to increase total monthly unit sales • Generated significantly higher unit-sales-pergame through: – Tighter carrier relationships – Strategic handset porting and ops management – Targeted marketing and product rollout – Better product selection Case I: Re-Launch • Drove new sales of popular Play. Station title • Porting, placement and marketing drove re-launch • Sales now exceeding original title launch – not typical in the games industry Ratchet and Clank Re-launch Case II: Re-Fresh • Top-selling mobile brand grew 12% after distribution of a new version of the game • More strategic handset porting, mixed with securing better deck placement Wheel of Fortune – ‘ 07 Case III: New Game Launch • First new title release in nearly 12 months • Strategically planned around movie release • Strategic handset porting, secured deck placement and marketing • Sales exceeding Jeopardy, previous number 2 title for MEG James Bond: Casino Royale Re-fresh Launch 18

Mobile Games in FY 08: More Games, Expanded Distribution Launch New Games (current slate) APR Spider-Man 3 MAY JUNE JULY AUG SEPT Spider-Man 3 Puzzle Jump That Car Bond vs. Bond JEOPARDY – Rock & Roll Ivan Moscovich Puzzle Untold Legends NOV Q*Bert “ 2” DEC Wheel of Fortune JAN JEOPARDY! FEB Bond Driving MAR ’ 08 Strategy Snoop Dogg Cruisin’ God of War OCT • • • Grow Distribution for Catalog (carriers, handset, online) JEOPARDY! 2007 Fish’n Tunes Casino Royale Wheel of Fortune 2007 Ghostbusters Ratchet & Clank Q*Bert Balloon Breaker Elevator Action Snoop Dogg Boxing Launch 1 new game per month; strategically manage the portfolio/roadmap Aggressively optimize carrier deck placement Expand existing Motorola and Sony Ericsson embed programs, and land new OEM deals Utilize consumer product marketing approach Strike relationship with leading publisher (e. g. , Glu) to secure game pipeline Grow revenue from $7. 0 M to $13. 2 M in FY 08 19

FY 08 Will Build on Launch of Video Services Sony “Sneak Peeks” • Promotional channel featuring clips from theatrical, television, Play. Station, Fear. Net and mobile games • Currently at 350 k streams / month on Sprint and Verizon – increased programming to 20% growth monthover-month Movies “Hollywood Hits” (launching in March) Over-the-Air • Sony Pictures is now distributing fulllength movies over-the-air on mobile carriers’ video services • Sprint Movies offers pay-per-view service with DVD features • Offer 7 movies at a time • Average view time ~ 1. 5 hours Sony Pictures • Exclusives • In Theatres • Coming to Theatres • On DVD • Coming to DVD • Game Previews • Fear. Net • Play. Station • Negotiating with other carriers for distribution Memory Cards • Sony Pictures pioneered delivering full-length movies to mobile handsets via memory cards • Successful handset bundle programs launched in the UK, France, Germany, Switzerland, Italy Netherlands, & S. Africa • The only linear looping movie channel within Sprint’s Basic + tier of video • Two looping channels with four classic movies on each channel; movies include comedy, action and drama • One movie on each channel refreshed weekly • Optimizes library value by utilizing unused inventory on a spot basis 20

Premium Video Services Launched into Carriers’ “Basic Tiers” in FY 08 Extend Channel Brands to Mobile SPT Channels …using a range of business models …and consumer experiences Fee-per-sub Sell-through Linear streaming Long-form programs Ad Supported Transactional On-demand Short-form programs ’ 08 Strategy • Concentrate on biggest video distributors (in order)- Sprint, Verizon, Cingular • Launch quality video services in multiple genres, with a breadth of business models, addressing a variety of consumer experiences • Aggressively optimize deck placement and marketing tactics • Draft off marketing for IP-video and other mobile products where possible 21

Large Footprint Secured in FY 07 will Serve as Foundation for Future Growth FY 07: Grew relationships, marketing and tech ops capabilities with partners Carriers Handsets Aggregators D – to - C Online Aggregators: Increase reach by licensing to a select group of top online retailers Direct-to-Consumer: Establish direct-toconsumer distribution, leveraging applications and web ’ 08 Strategy Carriers: Continue to focus aggressively on top 3 players in the market, push T-Mobile and Alltel for growth, and additional strategic players (e. g. , Virgin) Handsets: Continue to push on embed deals with Motorola; secure deals with Nokia and Sony Ericsson 22

Mobile Entertainment – Revenue Overview $20. 0 $17. 7 $16. 2 $10. 7 23

Mobile Entertainment – Summary P&L 24

Digital Distribution & Mobile Entertainment – Consolidated P&L 25

Digital Distribution and Mobile: Requested Increase in Headcount Reconciliation FY 08 Additions 2 Sales • Driving growth in new accounts 4 Account Mgmt. • Expanding to support growth in new accounts 4 Product / Asset Creation • Developing new products; creating marketing and programming assets 26

Agenda 1. Executive Summary 2. Digital Distribution 3. Mobile Entertainment 4. Digital Services / Grouper 5. EBIT Reconciliation 27

Recent Progress and FY 08 Focus Areas 2008 represents an opportunity to address a gap in the market by blending Hollywood quality with the viral nature of UGV FY 07 Accomplishments • Successful integration with Sony Pictures • Developed content and programming strategy • Retained and grew initial user base • Supported “Sony United” by integrating with other divisions FY 08 Focus Areas • Launch 3. 0 to address market gap • Capitalize on market opportunity to grow and monetize the service 28

FY 07: Integrated Grouper and Expanded User Base • Unique SPE content offering -- Screen. Bites Integrated with SPE Integrated Across Sony • DVD promotion for Seinfeld Season 7 • Contests for SPE theatrical releases (Pursuit of Happyness launched, Spider-Man 3 in process) • Grouper in PSP firmware • Integration with IP-enabled Bravia • Working on PS 3 prototype 9. 0 7. 8 6. 4 Expanded User Base • Grew users 40% to 9 MM • Grew daily video streams to 1. 6 MM 29

Grouper 3. 0 Vision Execution • Establish Grouper as a trusted and recognized brand for online video by combining the viral nature of user-generated video with the quality of “Hollywood” content • Build a large base of high quality short-form video – Attract content creators through a “path to recognition” – Identify and invest in the best videos – Produce original short-form content • Offer users a compelling content syndication proposition • Implement a differentiated, channel-based programming strategy • Improve overall user experience through a superior content guide, high-quality playback, easy publishing to other sites Launching Grouper 3. 0 in June 2007 30

Attract Content Leaders to Grouper Example of “Path to Recognition” • Provide incentives to attract quality content and actively engage audience – “Path to recognition” for each channel, with online and offline rewards – Tools for users to create, manage, and promote their own shows – Financial incentives / compensation for content creators • Enable creators to broadly distribute their content through syndication and “path to recognition” partners “The Red Carpet” (Potential Show on “All Access” Channel) Content Featured in “Best of” Show Featured Content (Views, Ratings, Editorial) All Content Uploaded to Channel Guest Host on “Red Carpet” Show Attend premieres and interview celebrities 31

Invest in Differentiated Content Acquired Produced Original Production • Short-form, higher production quality • Shows developed for specific channels • Mix of in-house (60%) and commissioned 3 rd party shows (40%) Prosumer • Quality UGV content with an established online audience • Grouper will acquire or license for a fixed fee or revenue share on an exclusive basis General UGV • Opportunistic acquisition of content with lower production value but proven audience appeal Niche Collections • Fixed fee paid for exclusive distribution rights Investing $3. 9 MM to produce 450 short episodes and acquire roughly 5, 000 videos 32

Program on a Channel Basis Tier Content Focus Tier 1 Branded channels focused on well-defined genres with depth of content and originally produced shows Tier 2 Tier 3 Sample Channel Concepts • Quick Laugh • All Access • Election 2008 • Project X • Instant Karma Broader content categories with breadth of user-uploaded content and hand-picked featured videos • • Sexy Travel Citizen Journalist How-To General UGV, with featured content largely based on user ratings and input • • Pets & Animals Car Culture Video Games Family Friendly • • Holiday / Events Don’t Try at Home Trends / Lifestyle Action Sports • • Blog! Colleges Spirituality Digital Ghetto Launch Grouper 3. 0 with 5 to 6 Channels in June 10 Channels Live by End of Fiscal Year 33

Improve Overall User Experience: Product Roadmap Q 4 FY 07 Q 1 FY 08 Q 2 FY 08 Q 3 FY 08 • 2. 5 Launch • 3. 0 Launch • Enhancements • Continuous playlists • Re-branding • Talent show • Mobile sharing 2. 0 • Multi-file upload • New content strategy implemented • Content creator self promotion tools • Hardware integration • Path to recognition in place • Web-based groups • Enhanced external player • New home page • Advertising • 1 -click to new distribution partners • Syndicate Grouper to network partners • Channel home pages with shows • Multi-site publishing • “My Show” • Enhanced external player with ads and sponsor support • Recommendation engine • Web-based IM integration – Cameras – PCs – Devices • Client re-launch • Geo sharing • Update advertising technology • Family filter • Mobile sharing 1. 0 • Updated advertising technology • Sony Ericsson syndication 34

Extending Audience Reach Through Marketing & Distribution Attract New Users through Marketing Online Marketing Project X Prizes Leverage SPE Cross-Sony Support Extend Reach through 3 rd Party Distribution Partners Social Networks Online Portals Path to Recognition Partners Verticals Hardware / Embed deals $2. 5 MM investment in Grouper Marketing and Distribution $3. 0 MM in Prizes for Project X 35

Revenue Strategy Advertising and sponsorships forecast to deliver $10. 6 MM in FY 08 revenue Advertising Revenue Video Interstitials • Run-of-Site video advertising inventory (max ad ratio 1: 3 videos) Banners • 1 banner page; 2 impressions per stream Channel-Based Sponsorship Revenue Non-Channel-Based Sponsorship Revenue Channel Sponsorships Branded Channels • Advertiser pays fees for persistent branding, enticements, and sponsored downloads from a channel • Custom Channels dedicated to a single brand (i. e. ‘Mini Cooper’ channel) User Initiated Video Interstitials • Ad placement against sponsored terms • Sponsor receives dedicated portion of video interstitial inventory w/ companion rich media ad at a premium CPM Remnant • Domestic and Int’l banner and domestic video interstitial inventory sold at a discount $4 MM $2. 8 MM • 20 total in FY 08 at average price of $20 k - $30 k each Project X • Competitions within Project X talent categories • Talent-based sponsorships $3. 8 MM 36

Growth in Audience and Traffic Growing domestic, on-site user base increases user activity, generates additional inventory, and ultimately drives more revenue Domestic / International Mix On-Site / Off-Site Mix MRP 37. 2 26. 0 MRP 16. 9 9. 0 33% % Domestic 60% 30% % On-Site 50% 37

Audience Benchmarks Ending FY 08 Grouper Audience (domestic, on-site) vs. Current Competitor Audience Sizes (1) MM My. Space 55. 3 You. Tube 38. 0 Break (2) 9. 8 Heavy 7. 8 Grouper FY 08 Budget 7. 8 Pure. Video (2) 5. 5 American Idol (3) (1) (2) (3) (4) 4 -5 Daily Motion 3. 9 e. Baum’s World 3. 8 Addicting Clips / Atom Films (4) 3. 0 i. Film 2. 3 Most recent available unique user numbers per Nielsen and Comscore unless otherwise noted, domestic on-site users only Per the company At peak months of April and May Combined 1. 8 MM Addicting Clips & 1. 2 MM Atom Films 38

Factors Impacting FY 08 Revenues • Addressed disruption caused by litigation to ensure continued growth –Disabled Grouper client and downloads as a precaution –Although growth was dampened, grew audience 40% since acquisition • Delayed launch of advertising to remain competitive and solidify customer base –Key competitors, including You. Tube, waiting to roll-out advertising –Launching full advertising initiative in conjunction with Grouper 3. 0 service • Adjusting business model to mitigate impact on revenues –Launching Grouper 3. 0 to differentiate service and ensure continued user growth –Increasing proportion of domestic traffic; more easily monetized –Increasing proportion of on-site traffic; drives greater usage and ad inventory –Expanding revenue models to include sponsorships 39

Grouper – Revenue Overview $18. 6 $10. 6 $3. 0 $0. 1 40

Grouper – Summary P&L 41

Headcount / Org Chart End of FY 07 Grouper 49 End of FY 08 Grouper 66 Project X 10 Sales / Collections 5 Total 81 MRP/Acq. Model 67 Incremental 14 Headcount vs. MRP / Acquisition Model Grouper Content 4 Project X Talent Mgmt Judge Staff Editorial 4 4 2 Total 14 42

Agenda 1. Executive Summary 2. Digital Distribution 3. Mobile Entertainment 4. Digital Services / Grouper 5. EBIT Reconciliation 43

EBIT Reconciliation Digital Distribution Grouper 44