Crackle and Digital Channels OTT Infrastructure

Crackle and Digital Channels OTT Infrastructure
June 27, 2013 11/7/2018 Sony Pictures Entertainment Confidential

Sony Pictures Entertainment Confidential
Agenda Recap Findings Recommendations 11/7/2018 Sony Pictures Entertainment Confidential

Recap Objective “Provide a three or four year vision around potential common architecture and/or processes, at a high level view, for MRP” Methodology Business Model/Process Analysis Tools and Architecture Analysis Document Pain Points (Current and Forward Looking) Deliverables As-Is Process Analysis Reference Architecture Short-Term MRP Cost Analysis and Implementation Timeline Recommendations and Potential Future Roadmap 11/7/2018 Sony Pictures Entertainment Confidential

Conceptual Architecture
Digital Networks Crackle 11/7/2018 Sony Pictures Entertainment Confidential

Findings Initial Recommendations Common Spec for Source Delivery Common Process for Content Acquisition Common Asset Repository Package Archive Manage Asset Preparation Further Recommendations Technical Operations “Content Librarians” Non-Linear scheduling Rights Management and Metadata Leverage Architectural Investments Ad Coordination Common CMS Common Delivery 11/7/2018 Sony Pictures Entertainment Confidential

Considerations Rapid Change The business and technology landscape is changing rapidly Must be agile to meet changing consumer preferences Distributed International Business DigiNetworks’ business is very regional due to ties with linear networks Crackle is moving towards greater regionality; three instances in use today Process change is difficult to introduce due to distributed workforce Centralized vs. Decentralized Organization and Infrastructure Benefits: Economies of scale, Consistent processes Challenges: Less regional specialization, regional business requirements missed 11/7/2018 Sony Pictures Entertainment Confidential

Initial Recommendations
11/7/2018 Sony Pictures Entertainment Confidential

The Challenge The process of gathering content is inconsistent Content is received from many sources Source materials vary in format and quality Files are received through a number of transfer mechanisms Processes vary by region Work is difficult to track Assets are difficult to locate, identify, and track Work is repeated to re-create or re-gather content 11/7/2018 Sony Pictures Entertainment Confidential

Recommendation #1: Content And Workflow
A common package specification should be defined Published standards for Video, Audio, Images, Metadata Used by both source material vendors and in-region normalization Tools for creation/validation of package should be created A common delivery platform to receive content Aids in asset tracking and consistency of process Provides a central area for receiving and packaging content as well as moving to a single reliable transfer method Aspera Shares can be implemented quickly and transparently to user workflows Allows for region-to-region transfers without change of interface Allows seamless access to cloud storage as necessary 11/7/2018 Sony Pictures Entertainment Confidential

Recommendation #2: Common Asset Repository
A common area for both centralized working storage and long-term archive would streamline processes A volume and pricing model is available to guide sizing Two-Phased Recommendation Short Term – Central Storage – Managed Manually, Aided with Tools Long Term – Full DAM System – Integrated with metadata and workflow tools An evaluation of needs after implementation of short term solution should be conducted A DMG or MCS based approach may be a cost effective option Estimated ~$3 million cost over 3 years 11/7/2018 Sony Pictures Entertainment Confidential

Conservative Timeline
Quarters from Project Start 1 2 3 4 5 6 7 Common Repository Gather Requirements Define Package Specification Central Working Storage Package Creation and Data Entry Tools Update Procedures for Central Storage Central Archive Utilization By Crackle Evaluate Needs Asset Management System Update Procedures To Account For DAM Integration with OVP & CMS Key Process Technology 11/7/2018 Sony Pictures Entertainment Confidential

Pricing Model Total Cost (On Premise) Year 1 Year 2 Year 3 Total Hardware Cost $ ,006,317 $ ,000 $ ,000 $ ,126,317 Software Cost $ ,000 $ ,500 $ ,500 $ ,000 Hardware Maintenance $ $ ,063 $ ,583 $ ,647 Software Maintenance $ ,000 $ ,500 $ ,500 Tape Cost $ ,230 $ ,003 $ ,944 $ ,178 Total Cost $ ,299,546 $ ,567 $ ,528 $ ,617,641 Total Cost with Contingency $ ,559,456 $ ,680 $ ,033 $ ,141,169 Total Cost (AWS) Service Cost $ ,179 $ ,808 $ ,302 $ ,736,289 $ ,400 $ ,400 $ ,400 $ ,200 $ ,280 $ ,560 $ ,840 $ ,579 $ ,488 $ ,262 $ ,499,329 $ ,895 $ ,198,186 $ ,193,114 $ ,999,195 11/7/2018 Sony Pictures Entertainment Confidential

Further Recommendations

Shared Operations Technical Operations Crackle current uses WPF and external vendors to receive and prepare content DigiNetworks leverages Linear Networks staff to receive and prepare content As more content is licensed from distributors that do not flow through WPF or the Linear networks, demand for content preparation will grow A joint video operations group would help standardize processes and library DigiNetworks should continue to leverage linear networks in territory with defined procedures “Content Librarians” A group dedicated to ensuring the library is clean and complete Package consistency and readiness Content normalization Metadata entry and upkeep Regional responsibilities across channels in support of various languages Guide creation of library curation tools 11/7/2018 Sony Pictures Entertainment Confidential

Non-Linear Scheduling (1/2)
There is no single system managing non-linear scheduling across the digital properties Managed using documents, spreadsheets, and This has implications for: Work tracking Ensuring rights are fully utilized Fulfilling contractual obligations Aggregation of non-linear scheduling data for global visibility Integration with rights, metadata, repository, CMS, and MAM systems 11/7/2018 Sony Pictures Entertainment Confidential

Non-Linear Scheduling (2/2)
Catch-up service scheduling can be derived from Linear schedules Common interface with Linear systems facilitates easier integration of new regions Non-linear properties (e.g. Animax, Crackle) require a different system approach SPTN IT is taking initial steps to address the problem for linear-attached digital channels In parallel, SPTN IT should be looking at the option of a dedicated non-linear scheduling platform 11/7/2018 Sony Pictures Entertainment Confidential

Upcoming IT Systems – Rights Management
Currently rights are identified and managed through s and PDFs of contracts IT is in the process of selecting a new rights management solution Complex business rules for non-linear must be addressed Correctly structured data can be utilized to feed non-linear scheduling Requires data entry of rights information from contracts into system 11/7/2018 Sony Pictures Entertainment Confidential

Upcoming IT Systems – Title Metadata
Title Metadata Management Metadata arrives inconsistently and is massaged to fit needs Complete Title metadata in GPMS (Global Product Management System) flows to other systems Responsibility for data entry and management of title metadata needs to be determined Need to weigh benefit of a central group vs. regional needs. A hybrid approach may be best 11/7/2018 Sony Pictures Entertainment Confidential

Ad Coordination FreeWheel Utilized by Crackle FreeWheel not interested in supporting DigiNetworks FreeWheel allows for improved tracking and reporting, access to networks Business advantage for SVOD and future VOD services should use FreeWheel Rich Media Ads Collaborative development, sales, and usage across sites/platforms Ad Sales for DigiNetworks SVOD Current model bundles non-linear, linear deals Unbundling sales of ads to non-linear channels may be beneficial 11/7/2018 Sony Pictures Entertainment Confidential

Technical Coordination
Technical Sharing Group Monthly engineering discussion Knowledge exchange Awareness of new developments in technology or requirements Format Testing Leveraging Investments Mobile/Platform Apps Internal Tools (e.g. Analytics Tools, Data Entry) Identify opportunities for shared development 11/7/2018 Sony Pictures Entertainment Confidential

Common Platform (1/4) There are three main functions of the business after the content package has been created and scheduled OVP Transcode to user formats Handling of Content Protection Distribution to CDN CMS Web site layout and management Content discovery CDN Edge Content Distribution to end users Common Services Social tools, Apps, Analytics, etc. 11/7/2018 Sony Pictures Entertainment Confidential

Common Platform (2/4) These functions overlap and differ in solutions between the groups. Commonality could provide benefits such as: Focused investment Fewer required integrations Reduced support expenses Considerations Ability to adapt to rapidly changing technology e.g. Brightcove  MPX Modular design is key There is no single perfect product or service over the long-term Generic interfaces between the modules allows for swappable technologies Common platform needs to support all business models 11/7/2018 Sony Pictures Entertainment Confidential

Common Platform (3/4) How do we decide if we should move to a common platform? Evaluate longevity of existing investments May be able to fill individual functions within a forward looking architecture Focus on near term business needs and developing modularity Weigh costs of building/maintaining vs. contracting SaaS vendors at projected volumes It makes sense at a low volume to use a SaaS provider and pay per-unit There is likely an inflection point where fixed in-house investment beats SaaS Model on business volume and complexity Evaluate timing of inflection point against the implicit costs/inertia of entrenchment Cost and effort of migration from existing systems must be considered There’s also an opportunity cost to migration as resources are tied up on activities other than adding new functionality 11/7/2018 Sony Pictures Entertainment Confidential

Common Platform (4/4) Assess Crackle Platform Work together to create agreed-upon standard interfaces and build towards them Work to promote modularity and build services and tools upon the interfaces Determine core feature and technology set Combine learnings from Crackle/MPX/Brightcove to inform efficient build Determine timing of build/buy tradeoff Fill functionality gaps with modular custom build or “best-of-breed” services/technologies Wrap third-party software to utilize the standard interfaces 11/7/2018 Sony Pictures Entertainment Confidential

Digital Networks OTT + Crackle
QC & Prep Repository Title Metadata Content from Linear Content from SPE Content from Distributors Promo Crackle Platform Consumer 3rd Party Platforms External post houses Contractual Rights Crackle Scheduling Crackle Have Proposed Will Need IT Services Key Digital Networks OTT + Crackle QC & Prep Repository Title Metadata Content from Linear Content from SPE Content from Distributors Promo Common Platform Consumer 3rd Party Platforms (incl. MVPD) Contractual Rights Scheduling from Linear Crackle Scheduling Digital Networks Scheduling QC & Prep Repository MPX Contractual Rights Scheduling from Linear Digital Networks Scheduling Title Metadata Content from Linear Content from Distributors Promo Web CMS (Drupal) Consumer MVPD

Appendix 11/7/2018 Sony Pictures Entertainment Confidential

Strawman Architecture

Agreed “Business Models”
Promotional MVPD Access AVOD SVOD Second Screen TVOD Currently rental Could move into EST in the future 11/7/2018 Sony Pictures Entertainment Confidential

Common Asset Repository
As-Is Proposed 11/7/2018 Sony Pictures Entertainment Confidential

Crackle and Digital Channels OTT Infrastructure

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