Deciding the Future of Tracking Panels September 7, 2005

Background Started International Tracking 3 years ago Use dedicated consumer panels in each territory to conduct the interviews The panels are used almost exclusively for Tracking Sony owns panels and panelist data

Background The territories and panel sizes: UK – 46,075 Australia – 43,127 Germany – 43,773 France – 27,524 Spain – 33,460 Mexico – 28,768 Italy – 21,544

Background All panels degrade over time through attrition  Transience of addresses  Cultural connectivity issues  Chronological aging So to keep panels going, we need to reinvest in them to replace people who are lost The question, then, is: Do we want to keep the panels and if so, what are our options for reinvesting in them?

Background There are lots of questions, like: What is the cost of just continuing as we have been and replenishing the panels? Can we use the panels for anything besides Tracking to generate money? Do we even need the panels to keep Tracking?

Background There are many questions and possible scenarios In fact, there are 9 different options! So we’ve put together a Decision Tree to help sort it all out [HANDOUT]

The Options 1. Replenish weak demo groups with additional ongoing recruiting Pros  Simplest option, no change of course  Would allow for some additional non-Tracking surveys (where awareness of films is not an issue) Cons  Might not be maximizing the potential of the panels, since they could be participating in other surveys in addition to Tracking (which they can do only once every 6-8 weeks) Cost: Approximately $50,000 per territory per year. Complexity: Very Easy

The Options 2. Increase the size of the panels to allow for additional surveys and also replenish weak demo groups to support Tracking Pros  Gets the most out of the panels and research infrastructure that is in place  Saves money by moving research already being done in other ways to the web and allows new research to be done that currently isn’t possible Cons  Potential issues convincing other departments to contribute funds and/or to change what they have done previously Cost: Approximately $75,000 per territory per year (some of which could come from the other Sony Pictures departments that are conducting the additional surveys) Complexity: Easy (recruiting is Very Easy, but there is some added complexity working with the other Sony Pictures departments developing and deploying additional survey projects)

The Options 3. Use outside sample for weak demo groups Pros  Quick solution to fill challenging quotas Cons  Panels will continue to atrophy, so that eventually just about all of the interviews from Tracking will come from other company’s panels.  We will rely on other outside companies to keep their panels healthy enough to provide the interviews we need for Tracking. Cost: Starting at approximately $30,000 per year per territory, growing to $100,000 per territory as our current panels continue to atrophy. Complexity: Easy (assuming we can find outside companies to supply what we need in each territory)

The Options 4. Switch to 100% outside sample to fill Tracking in all territories Pros  No more worries about maintaining panels Cons  Reliant on outside panel companies to be able to fill the survey quotas each week  At the mercy of outside companies on pricing Cost: Approximately $100,000 per territory per year. Complexity: Easy (assuming we can find outside companies to supply what we need in each territory)

The Options 5. Syndicate Tracking to other studios Pros  Maximizes the panel and Tracking data assets by generating revenue from them  Heads off other potential competitive Tracking products in the marketplace Cons  Shares results that are currently “secret” with competitors  Potential distraction of being in the research business rather than just being a customer Cost: Initially, same cost to recruit panelists to fill difficult quotas ($50,000 per year per territory), but declining and possible eventually turning positive (profit- generating) as more other studios buy it. Complexity: Complex (would need to structure relationship between us and the other studios that is comfortable with everyone, plus there may be political issues between the studios)

The Options 6. Sell access to the panel to other research firms and non-entertainment companies Pros  Generates some revenue to help offset the cost of maintaining the panels Cons  Reliant on the other research firms to treat our panelists “right” with good surveys and rewards  Unknown amount of potential revenue Cost: Initially, same cost to recruit panelists to fill difficult quotas ($50,000 per year per territory), but declining as other research firms begin to use the panel. Our best estimate is that we could offset about half of the yearly recruitment costs (so the $50,000 per year per territory would eventually drop to about $25,000 per territory per year). Complexity: Extremely complex (negotiating price on each individual research project, collecting/reporting/delivering revenue from many different projects and research firms)

The Options 7. Use panels for Ad Testing and other Sony projects, but not Tracking Pros  No need to maintain strict quotas/cells in current panels  Frees panels up to be used for other projects like ad testing Cons  Reliant on outside panel companies to be able to fill the survey quotas each week  At the mercy of outside companies on pricing Cost: Approximately $100,000 per territory per year. Complexity: Easy (assuming we can find outside companies to supply what we need in each territory)

The Options 8. Shut down panels and buy Tracking from OTX or NRG Pros  Continues to give you Tracking data with no panel management challenges (turnkey) Cons  No customization of movie lists, reporting or other options  Data not available in all 7 of the markets where we are currently doing Tracking Cost: Approximately $200,000+ per territory per year. Complexity: Easy

The Options 9. Go without Tracking Pros  The ultimate cost-saving option Cons  No more Tracking data Cost: None Complexity: Easy (current contract ends in May, so termination could happen then)

Our recommendations Option 1: Stay the course and replenish panels to keep your own proprietary Tracking Option 2: Invest a bit more in panels to allow other Sony Pictures research (ad testing, home video, etc.) Option 5: Syndicate Tracking to other studios and turn it into a revenue center