Sony Pictures Digital Productions MidRange Plan September 3

Sony Pictures Digital Productions Mid-Range Plan September 3, 2013

FY 14 Mid-Range Plan § Strategy Overview o SPA Strategic Priorities o SPA Development Slate & Release Schedule o Imageworks Strategic Priorities o Colorworks & Post Strategic Priorities o Interactive Strategic Priorities § MRP Financial Projections § Financial Appendix § Strategy Appendix

Strategy Overview

Sony Pictures Animation Strategic Priorities n Produce up to two family films per year (either CG animated or liveaction hybrid) while reducing production budgets to compensate for eroding video and TV markets o Cloudy 2 production budget was reduced by 20% to $79. 9 MM o Smurfs 3 budget will be a maximum of $90 MM but could be less if the P&L indicates n Identify high concept pre-existing or original properties that can be developed into strong franchises with global appeal o The strong performance internationally of the Smurfs franchise is due in part to high pre-existing awareness via the 80’s TV series, comic books and licensing o Popeye is a widely recognized global icon (via a longstanding licensing program) that will bring built-in awareness when the property is successfully modernized for today’s audience o As a sequel, Cloudy 2 leverages the brand awareness generated by the first film o Kazorn & the Unicorn is an original take on the buddy comedy in the popular barbarian/fantasy genre

Sony Pictures Animation Strategic Priorities (cont. ) n Plan to execute sequels with no more than a three year lapse to maximize brand potential o Identify sequel ideas as early as possible to ensure this turn-around (e. g. , executed on two-year turnaround for Smurfs 2; working on script for Smurfs 3) n Have films greenlit and in production two years ahead of theatrical release o Use the lead-time to develop strategic marketing plan and solicit high quality co-promotional and licensing partners who will deliver media value and sustained awareness o Provide SPE Marketing with required assets as early as possible in the timeline to ensure all milestones are successfully hit o Work closely with Consumer Marketing to make our characters “licensing and promotional friendly”

Sony Pictures Animation Despicable Me 2 vs. Cloudy 2 Marketing/Promotions Timeline* DBO: $351. 7 MM (+40%) IBO: $455. 1 MM (+56%) WWBO: $806. 8 MM (+50%)** 3 years since prior film Promotional partner meetings occur (partners will deliver over $254 MM in media value) 24 months 18 months First TV integration (Kid’s Choice Awards) Minion Madness Ride @ Universal Florida opens Teaser – Minions Short 16 months Cinemark Short First Trailer 12 months 9 months Promotional partner meetings occur Despicablimp travels the U. S. Online video spots begin 6 months NCM Spot*** Viral Video First Trailer DBO (target): $125. 0 MM (+0%) IBO (target): $200. 0 MM (+70%) WWBO (target): $325. 0 MM (+34%) 4 years since prior film 3 months TV spots begin (Mother’s Day) AMC Short Second Trailer 2 months 1 month TV spots begin Second Trailer Online video spots begin Foodmobile Tour begins * For comparison, most dates are based on digital releases for trailers/TV spots (where applicable) ** Despicable Me 2 as of 8/29/13 ***NCM spot for Cloudy 2 updated during summer

Sony Pictures Animation Strategic Priorities (cont. ) n Maintain ongoing relevance of the brand by producing additional content at low cost o 22 minute CG/2 D blend Smurfy Hollow will broadcast and sold globally prior to home video release of Smurfs 2, expanding on a promotional strategy tested successfully with Smurfs A Christmas Carol v Smurfy Hollow cost $3. 2 MM (15% reduction from Smurfs A Christmas Carol) and will be paired with Christmas Carol for later sale in a separate holiday bundle v The Christmas Carol premiere on Cartoon Network was the number one show on cable in its 730 p time slot last year and has sold well as an independent title* o Opportunistically produce shorter duration, lower cost shorts that can be used flexibly to promote the brand monetized during home video release v The four Cloudy 2 shorts (production cost: $350 K each /$1. 4 MM total) will not only be used in second wave marketing for the film but in the “white space” between theatrical and home video release to maintain awareness *Note: P 2+: 3. 0 MM. Rating excludes local programming

Sony Pictures Animation Strategic Priorities (cont. ) n Attract top-tier talent to lead our films while also building talent from within o Genndy Tartakovsky (Dexter’s Laboratory, Samurai Jack, Clone Wars, and Hotel T), is attached to direct Hotel Transylvania 2, Popeye and write/direct his own project Imagine This! v Genndy brings a rabid fanbase and his own unique style that is perfectly suited to our emerging cartoony brand. He is the ideal talent to continue the Hotel T franchise and revive Popeye as a modern, global brand o Kelly Asbury, attached to direct Kazorn, is a perfect fit for the sensibility of the project having helmed the most successful animated film of all time (Shrek 2), in addition to Disney’s 2011 surprise hit Gnomeo and Juliet v Kelly is teamed with Troy Quane, who directed A Smurfs Christmas Carol o Cloudy 2 executive producers Phil Lord and Chris Miller provided the central creative idea for the film and supported directors Cody Cameron and Kris Pearn throughout production. Cody & Kris were part of Chris and Phil’s story team for Cloudy 1

Sony Pictures Animation Strategic Priorities (cont. ) § Exploring TV series based on our properties as an additional line of business o o o Currently negotiating with production partners to license our properties for TV series based on our properties, emulating DWA model for Penguins of Madagascar show on Nick (Nick produces the show and handles licensing) EBIT potential from new licensing opportunities Potential for incremental profits from rights fees and a share of TV revenue with no cash investment risk Maintains high awareness in off-film years, supporting the overall franchise (Madagascar 3 outperformed the prior film with the support of the Penguins show) Provides theatrical spin-off opportunities (like Penguins)

To realize this potential, SPA is currently focused on sequels and franchise-worthy originals from these established brands § Priority Development: o Hotel Transylvania 2: CG animated v Director: Genndy Tartakovsky v Writers: Robert Smigel, Adam Sandler o Smurfs 3: CG animated/live-action hybrid v Writers: Karey Kirkpatrick, Chris Poche; Jay Sherick, David Ronn o Popeye: CG animated v Director: Genndy Tartakovsky v Executive producer: Avi Arad; Writers: Jay Sherick & David Ronn o Kazorn and the Unicorn: CG animated v Directors: Kelly Asbury (Shrek 2, Gnomeo and Juliet) and Troy Quane (Smurfs A Christmas Carol), Writer: Lloyd Taylor v Executive Producers: Sam Raimi, Josh Donen o Raised by Ghosts: Live-action hybrid v Producer: Chuck Gordon; Writer: Peter Baynham o Cloudy with a Chance of Meatballs 3: CG animated v Executive Producers: Phil Lord, Chris Miller

Development (cont. ) o Alf: Live-action hybrid (based on the popular character from the 80’s TV show) v Producers: Jordan Kerner, Tom Patchett & Paul Fusco o Ninja v. Samurai: CG animated v Writers: Greg Erb, Jason Oremland (Disney’s Princess & The Frog) v Executive Producer: Avi & Ari Arad

Release Schedule FY 14 Q 2 § Q 4 Smurfs 2 (Hybrid) (7/31/13) Q 3 § FY 15 § TBD Animation FY 15 (February 2015) FY 16 Q 2 § Smurfs 3 (Animation/Hybrid) (7/24/15) Cloudy 2 (9/27/13) Q 3 § FY 17 Q 3 § TBD Animation (Sep 2016) Q 4 § TBD Animation (Feb. 2017) Hotel Transylvania 2 (9/25/15)

SPA films drive profitability across Digital Productions

Imageworks A lean, flexible business model generates EBIT while offering competitive pricing for SPA/Columbia n Imageworks continues to perform in a dynamic market by focusing on growing Vancouver, efficiencies in LA and securing 3 rd party VFX work FY 08 -FY 14 Imageworks Revenues vs. EBIT $ 60, 000 $ 200, 000 $ 183, 400 $ 50, 000 $ 40, 000 164, 823 $ 146, 324 $ 30, 000 $ 160, 000 $107, 000* $ 140, 000 25, 123 $ 137, 491 $ 20, 000 $ 128, 747 $ 9, 020 $ 10, 000 $ 180, 000 $ 159, 551 $ 15, 687 $ 120, 000 $6, 500* $ 5, 826 $$ (10, 000) $ 80, 000 FY 08 FY 09 FY 10 FY 11 FY 12 $ (20, 000) FY 13 FY 14 $ 60, 000 $ 40, 000 $ (30, 000) $ (40, 000) $ 100, 000 $ 20, 000 $ (30, 548) $ (35, 227) $Consolidated EBIT *Note: Q 2 Forecast Gross Revenue

Imageworks Strategy n Overall business environment features strong price competition, increasing volatility o o n Imageworks is well-positioned on price relative to competitors because the Vancouver studio now accounts for more than 50% of work (and 90% of animation work)* o o o n Reduction in studio slates but also a decrease in the number of VFX players Imageworks has maintained leadership in creature animation, making it in demand for these projects (ex. The Amazing Spider-Man 2; Warner Bros. ’ Edge of Tomorrow, starring Tom Cruise) Continue to move personnel to Vancouver, including appropriate overhead and technology positions, from LA Run LA studio as leanly and efficiently as possible to fulfill its role as a hub for talent, innovation and business development At its latest peak, more than 300 artists worked from Vancouver, a 200% increase in just 18 months Imageworks has re-shaped cost structure to hit EBIT targets should revenue dip to $110 MM (FY 14) o Because of a flexible production hire model, Imageworks is still able to readily expand its artists, although most of that growth will occur in Vancouver rather than LA * Excludes Imageworks India

Imageworks Strategy n Given proliferation of more cost –effective outsource options for labor intensive work, evaluate strategic options with the India facility, including sale or winding business down

Post Production Services

Colorworks & Post Near Term Actions n General: o o o n Colorworks: o o o n Target $2. 5 -$3 MM in savings per year Centralize and consolidate support functions Longer term, explore moving some services off lot Move colorists from guaranteed weekly minimums to day players with no gap costs – eliminate one colorist to improve utilization Explore supporting Colorworks VFX needs out of Imageworks Insource Colorworks “dirt & scratch” work from third party to Imageworks India Post: o o Integrate relevant departments into PMC – Creative Editorial, Colorworks QC & Tape Ops, Sound Transfer, Sound Archive Consolidate Sound & Sound Editorial leadership 20

Colorworks & Post Strategy n General: SPDP is committed to managing both businesses proactively o o o n Colorworks: o n Services must be profitable when priced competitively with market, otherwise we will exit Departments will be sized in line with projected SPE needs, not historic precedent Growth will be limited to our existing physical capacity, assuming attractive margins and the ability to ramp down rapidly if conditions change Evaluate strategic value of remaining in DI/restoration business, primarily for TV – Deluxe or Technicolor may be interested in acquiring Colorworks Post: o Explore alternative uses for less utilized stages – premier screening room, studio museum, additional TV stages, editorial rooms, office space, etc. 21

Interactive Strategy n Considering the enormous pressure on marketing budgets, re-think the efficacy of maintaining an in-house digital marketing production capability versus relying entirely on outsourcing to meet studio needs n In the meantime, these near term actions have been taken: o o o n Reduced the size of Interactive’s break-even business by $4 MM due to smaller marketing budget Implemented per project price visibility so competitiveness can be more accurately measured Increasing focus on developing 3 rd party business to further reduce overall costs for internal clients (like Imageworks’ model) While increasing price competiveness, continue to focus on providing industry leading support in the following areas: o o o Full service production supporting SPE digital campaigns Brand manager for Sony. Pictures. com Web governance, partnering with Corporate Communications, Information Security, Legal Compliance and IT

MRP Financial Projections

25

26

27

28

Financial Appendix

30

31

32

33

34

35

36

37

38

39

Strategy Appendix

Family franchises help create stability for an overall film slate; animated sequels typically outperform originals, particularly internationally $ 1, 000. 0 500% $ 900. 0 450% $ 800. 0 400% $ 700. 0 350% $ 600. 0 300% $ 500. 0 250% $ 400. 0 200% $ 300. 0 150% $ 200. 0 100% $ 100. 0 50% DBO IBO %IBO/DBO *Note: Data as of 8/27/13, Despicable Me 2 and Monsters University still in release Despicable Me 2 #2, Monsters U #4 and Croods #6 for the top grossing films worldwide in 2013 r 2 (2 st e r 1 on st e M (2 00 1 ) 01 3) 3) M on 1 (2 01 0) DM DM 2 (2 01 2) 01 9) Ice 4 (2 00 6) Ice 3 (2 00 2) (2 00 2 (2 Ice 1 Ice nd a 1 ( Pa nd 200 a 2 9) (2 01 1) Pa M ad 3 (2 01 2) 8) 00 ) 2 ad 1( 2 M ad M (2 00 5 0) 7) re k 4 (2 01 4) (2 00 k 3 re Sh 1) (2 00 Sh re k 1 Sh re Sh k 2 (2 00 01 1 2 (2 00 6 (2 rs 1 Ca rs Ca ) 0% ) $-