1. Advanced Access Content System (AACS) Industry Briefing July 14, 2004

2. 7/14/2004 2 Founders drawn from 3 key industry sectors: studios, consumer electronics and IT industry Founders:IBMIntelMicrosoftPanasonic AACS LA Structure SonyToshiba The Walt Disney Company Warner Bros.

3. 7/14/2004 3 Create a seamless, robust and interoperable environment for the distribution and use of next-generation content Develop, promote and license technologies designed to enhance digital entertainment experiences for consumers Exciting, flexible new entertainment options for consumers in stand alone, networked home and portable environments Solution is format-neutral and designed for next-generation optical media formats for use with PCs and other consumer electronics devices Create opportunities for new business models for content providers, distributors, content aggregators and device manufacturers Makes possible e-commerce enhanced content while accelerating the legitimate flow of next generation content, including high definition content Gives providers new distribution management options for consumer-friendly authorized use Provide a core entity to license the technology Strong partnership among the IT, Entertainment, and CE industries Objectives

4. 7/14/2004 4 Expanded Usage Scenarios Local Playback Home Media Server Electronic Distribution with Secure Copy Portable Device DRM

5. 7/14/2004 5 Benefits: Expanded Business Opportunities Virtual Inventory – vast library of content can be downloaded, copied or burned to media, interoperable with: Online services Retail kiosks and stores Premium access – unlock prerecorded content and access stream content via online transaction or authorization Additional content Alternate versions Advanced playback options: Customized content (e.g. additional interactivity) Customized usage (e.g. prerelease distribution)

6. 7/14/2004 6 AACS Ecosystem The key players: AACS LA Develops and maintains the spec Manages licensing activities Issues encryption keys Content Providers Create/own/distribute the copyrighted materials Determine usage conditions Replicators Mass produce media Encrypt and bind with usage conditions and key management information Adopters Build licensed software/hardware products End result - consumers have new ways of enjoying content

7. 7/14/2004 7 *Prerecorded and writable AACS: Advanced, format-neutral protection for next generation audiovisual content for a variety of underlying formats AACSCSS DVD-9HD DVD Other formats Standard Def High Definition Legacy Format Advanced Format Blu-ray Disc AACS Framework

8. 7/14/2004 8 AACS Technology Strong cryptography Advanced Encryption Standard with 128-bit keys Next-generation media key block Revocation of compromised devices Precise – affects only compromised key Efficient tree-based, broadcast encryption Enhanced drive authentication Support for advanced operations such as “ move ” Use of network connectivity to enable enhanced uses New approaches to enhance robustness of implementations Combination of proactive software renewal with revocation Reviewing potential solutions to thwart professional mass distribution of unauthorized recordings (e.g. theatrical camcorder piracy)

9. 7/14/2004 9 Advantages of AACS Approach Major benefits for Consumers Supports delivery of next-generation content, including high definition Provides increased flexibility, while remaining transparent to legitimate users Enables new entertainment experiences across multiple devices Major benefits for Studios Enables new entertainment business models Protects copyrighted works on next generation media Encourages legitimate use of content Major benefits for Technology providers Accelerates next-generation content flow including high definition Increases demand for infrastructure services Provides even playing field for technology companies to compete for solutions and services Low implementation costs Participation from industry leaders across the value chain Content, Information Technology, Consumer Electronics

10. 7/14/2004 10 Status and Outlook Specification under Development Three specification documents: Common cryptographic elements: revision 0.9 General prerecorded optical media protection: revision 0.7 General recordable optical media protection: revision 0.6 Additional media-format adaptations required, in consultation with format proponents DVD-9 HD DVD Blu-ray Disc Other media formats Licenses Available in ‘04 Evaluator, Implementer, Content Participant, Others Terms and conditions (including fees) designed to facilitate broad adoption of technology and enable new lines of business for the affected industries

11. 7/14/2004 11 Summary Unprecedented cross industry collaboration to facilitate next generation content distribution Enables new, flexible ways to enjoy content, while protecting copyrighted works Technical specifications and license arrangements anticipated later this year Developments and updates available at WWW.AACSLA.COM