Media Consumption Trends and Opportunities for Networked Entertainment Solutions Sony Corporate Development September 30, 2010

agenda / key entertainment industry MRP topics analyze the key trends impacting the profitability and growth of Sony’s entertainment businesses – shift from ownership to rental business models and from bundled content to disaggregated content – new business models emerging due to proliferation of new access methods and the availability of cloud storage – continued vulnerability of content to piracy Sony’s opportunity address Sony’s opportunity to provide consumers with a complete networked entertainment solution across a family of home and mobile connected products need to treat consumer base as network of users 2

2010 global media revenue mix and growth forecast / Global media 1 revenues by segment segment, percent of total TV licensing fees 2 Internet adv. Video games TV adv. Out-of-home adv. Filmed entertainment Total media Music publishing Radio Book publishing Newspaper publishing Magazine publishing Recorded music Global media CAGR by segment percent (1) Market definition does not include internet access, B2B, or TV subscriptions and public TV segments (2) TV licensing fees include mobile tv, ppv, and video on demand Source: PwC, Global entertainment and media outlook: 2010 – 2014, Enders Music Publishing Forecast Total Revenue approx. $800B 3

Key entertainment industry MRP topics / 4

entertainment industry trends impacting Sony / 5 there are three key trends that are impacting the profitability and growth of Sony’s entertainment businesses shift from ownership to rental and from bundled content to disaggregated content new business models emerging due to proliferation of new access methods and the availability of cloud storage continued vulnerability of content to piracy

evolution of filmed entertainment consumption / as digital consumption increasingly displaces physical… 6 content bundles are being disaggregated ownership is shifting to rental

evolution of music consumption / as digital consumption increasingly displaces physical… 7 albums have been disaggregated to single tracks shift from ownership to access

evolution of the changing economics of entertainment / CDs MP3 downloads of singles (iTunes) local storage: load from PC to player subscription music 1 digital lockers 1 streaming music on demand (Spotify) continuum of music consumption new physical business models: Redbox & Netflix VOD and SVOD VHS / DVD PPV in limited window and show times continuum of filmed entertainment consumption 2 digital sell through local storage: load from PC to player $19.95 / album$0.99 / single $9.95 / month “freemium” mostly free content with a charge for premium content VHS & DVD: $19.95 / $4.75 purchase/rental PPV: $7.95 Redbox: $1.00/night Netflix: $8.99+/month iTunes: $3.99 (TV), $ (Film) Amazon: $2.99 (TV), $ $14.99 (Film) VOD: $3.95 / 24h iTunes: $0.99 (TV) $3.99 / 24h (Film) Netflix: $8.99+ / month Hulu Plus: $9.99 / month digital rental internet radio (Pandora) (1) Subscription music and digital lockers, while introduced a number of years ago, has yet to achieve widespread consumer acceptance (2) This evolution relates primarily to the home entertainment portion of filmed entertainment 8

in the U.S. Home Entertainment market, while there was an overall increase in transactional demand, consumers continued to “trade down” to lower-margin rentals Source: Screen Digest Aug 2010, Morgan Stanley Research growing demand for low cost views is being met by new, more convenient rental options (e.g. Netflix and Redbox), driving consumer spending out of the category Note:Netflix does not include digital streaming as Netflix licenses that content from the pay window consumers are shifting to lower-margin rentals / 9 % Growth 0% +3% -8% 2009 – 2010E home video sell-through and rental transactions average studio new release gross profit per transaction 8 Rental Transactions = 1 Sell-Through Transaction Physical STPhysical RentalESTVOD +17% +10% +15% +2%

shifts in the consumption of music are challenging conventional digital economics / for the first time since their inception, the number of single-track digital downloads has decreased in the United States US single-track digital downloads growth rate percent growth rate Source: Nielsen Soundscan Report 10

the shift from ownership to access has continued to impact recorded music margins / Sony Music Sony/ATV Sony Music revenues $B Sony Music EBIT margins % Sony/ATV revenues $M Sony/ATV EBIT margins % MRP 11 (1) Revenues and EBIT adjusted by removing revenue/contribution from settlements

new access models address piracy while adding potential vulnerabilities / 12 digital lockers (music) issues potentially exist with the uploading of illegitimate music content in exchange for legitimate copies in the digital locker digital cinema distribution of digital copies of feature films to exhibitors creates new vulnerability, but digital distribution has not resulted in increased piracy the market for content in developing countries is growing but is often made unattractive by the high level of piracy early window prior to DVD release, consumers can create a camcorder recording of a feature film in their own homes; forensic watermarking may mitigate this type of piracy while new access models promote legitimate consumption, thereby reducing incentives for piracy, these new access models may also create new risks

Sony’s opportunity / 13

Sony’s opportunity / for the first time, we now have the hardware functionality and service offerings to generate revenue from our home electronics consumer beyond the point of purchase 14

Sony’s IPTV services are already in the living room / 15 must convince consumers, who already face box exhaustion, to buy another box to bring internet-based entertainment experiences to TV rich IPTV services are already embedded in the Sony products that consumers use every day in their homes Competition Sony

Sony’s IPTV services are already in the living room / 16 must convince consumers, who already face box exhaustion, to buy another box to bring internet-based entertainment experiences to TV rich IPTV services are already embedded in the Sony products that consumers use every day in their homes Competition Sony

Sony’s services are optimized for its products / 17 other service providers (e.g. Netflix, Amazon) face the challenge of integrating with multiple third party electronics manufacturers services are optimized for its products to create the best consumer experience Competition Sony

only Sony can utilize its own content to create unique viewing experiences for its consumers / 18 Competition Sony other services must license content that is freely available to all competitors from the major film studios and music companies can offer unique, high quality experiences on a consistent basis that are only available to Sony customers 2008 one-time special event 2011

competitive snapshot / 19 already in consumers’ living rooms can offer unique viewing experiences utilizing its own content offer leading edge services optimized for its products and ecosystem

Sony needs to assess “snap-on” acquisitions to remain competitive / 20 offer leading edge services optimized for its products and ecosystem In order to remain competitive and to rapidly enhance Qriocity’s capabilities, we need to evaluate acquisitions Potential candidates

the evolution of the TV viewing experience / 21 True IPTV Conventional TV Google TV (browser experience) Evolution of Internet-Connected TV Future Cable Bill: $100 (video) + internet access Cable Bill: $85 (video) + internet access Cable Bill: internet access + $? (video) 100% of entertainment services provided by conventional distributors most entertainment provided by conventional distributors some incremental revenue from apps or content provided using IP even larger percentage of entertainment provided using IP, not by conventional distributors bulk of conventional distributor revenue from providing internet access

the future of TV is interactive and social / 22 uses the internet to deliver video entertainment outside of conventional operators sorting of content choices based on popularity among friends and previous behavior deep integration with social networking (on- screen chat and recommendations, etc) targeted marketing a true IPTV experience is not simply an internet browsing experience on a television: over time consumers will migrate from cable / satellite to IPTV solutions because of greater choice, interactivity, community, and value

customer profitability enhanced by continuing transactional relationship after hardware purchase / 23 potential incremental revenue- generating services – access to films in various windows – channel subscriptions – games / PS2 emulation – advertising / placement – monetization of consumer data – applications / e-retail / peripherals – music related purchases (video purchasing, concerts) – extended warranty potential incremental annual revenue from above services: $50 illustrative potential profit from services note: assumes MSRP for TV is $1,000 and profit margin is 5%; for services, assumes annual revenue of $50 at a 20% margin Today Future

Sony’s opportunity / Sony needs to treat its consumer base as a connected network of addressable users – across its consumers’ network of enabled devices, Sony maintains relationships with more than 59MM connected users worldwide – as consumer electronic products become commoditized, Sony now has a significant revenue source in networked products even after sale of hardware – if we are able to position our consumer base as a network, licensing non-Sony AAA entertainment content will become easier 24 Company Number of Subscribers (MM) Comcast23.4 DirecTV18.7 Dish Network14.3 Time Warner Cable12.8 BSkyB9.9 Beijing Gehua5.0 Oriental Cable Network4.0 Jupiter Communications2.6 Sky Deutschland2.5 Selection of largest cable & satellite operators across the world

it’s time that we leverage our strategic advantages / through aggressive marketing activities (backed by adequate resources), Sony must educate consumers that its Blu-ray players, PS3s and connected TVs have IPTV capabilities leverage its content companies to provide unique experiences and preferential windows of content for its Sony consumers 25 over time, consumers will learn that Sony can liberate them from conventional cable and satellite operators while providing them greater choice, interactivity, and value in home entertainment