1. CONFIDENTIAL Project Big Fish: Acquisition Opportunity June 2006

2. page 2 Agenda Executive Summary Detailed Analysis: Digital Distribution Landscape Appendix

3. CONFIDENTIAL Executive Summary

4. page 4 Executive Summary Digital video distribution is reaching critical mass and creating new opportunities for Sony Pictures Changes in the distribution landscape will also present challenges as revenue shifts from traditional channels to digital channels Sony Pictures is developing solutions for digital distribution and has three alternatives for market entry –Build an entirely home-grown solution –Partner with technology vendors and online destinations –Acquire technology, management, and user base An appropriately priced acquisition can best address our historical technology challenges and accelerate speed-to-market Grouper is a compelling acquisition target and would enable SPE to secure critical technology, management expertise, and a sizeable user base

5. page 5 Digital Video Distribution is Reaching Critical Mass Infrastructure is nearly in place –Roughly 50% broadband penetration of U.S. households –Compression technologies continue to improve –Content owners digitizing libraries Consumers are engaging with more content, in ways that are unique to a two-way, interactive medium –Over half of Internet users have visited a social networking site –U.S. video downloads exceeded 18 BN in 2005 Traction is being demonstrated by multiple players, large and small, new and old –Leading online destinations extending brands to video –Traditional networks establishing online presence –Start-up video and social networking sites building large audiences

6. page 6 Emerging Digital Models Represent New Challenges for Sony Pictures New Distribution Channels Shift to Ad-supported models Changing Consumer Habits Digital distribution of all packaged media is lowering barriers to entry for content alternatives and changing inter-channel competition Ad dollars are shifting toward online, following growth in consumer interest SPE has limited exposure to ad- supported models, primarily generating revenues on a transactional basis Consumers are shifting time away from studio-produced products and toward games, online, and mobile entertainment Challenges Facing SPE

7. page 7 Digital Distribution Also Creates New Opportunities Downloadable video is expected to drive growth in filmed entertainment –New model (e.g., Pay TV, Rental, DVD) historically create significant value for consumers and content owners alike –Digital distribution is expected to continue the trend Evolving infrastructure represents an opportunity to build direct relationships with end-users and increase control of distribution –Online destinations are becoming an alternative to traditional networks, ownership would decrease SPE’s dependency on third parties –Two-way communication facilitates direct communication with end-users, increasing ability to target and tailor our content offerings Digital distribution provides an opportunity to diversify our revenue streams –Increase SPE exposure to ad-supported models Online distribution enables SPE to distribute a greater breadth of content, including short-form and user-generated content

8. page 8 Digital Video Offerings Can be Divided into Four Main Categories PromotionalChannelStore Social Network Predominantly short video clips that promote the site owner’s content, merchandise, and brand May include some advertising, and minimal commerce capabilities, but is promotional in nature Includes on-demand videos available in programmed micro- channels, on a show- by-show basis, or in a traditional channel lineup Business model primarily includes advertising, with some upsell to subscription Aggregates video across content providers for purchase Uses a range of models including sell-thru, rental, and subscription Generally consists of short video clips from users of the service May also provide tools for creating video clips or interacting with video content Primarily ad-based business models

9. page 9 Competitors See the Potential for Digital Video Distribution and are Investing Heavily in the Space ParentStudioNetwork Online Destinations ABC.com: ad-supported full episode streaming ESPN.com: ad-supported streaming and subscriptions Disneychannelcom: Launching new broadband player today with a dozen free episodes CBS.com: ad-supported and limited download-to-own Innertube: ad-supported broadband channel MTV Overdrive: ad-supported video channel Acquired iFilm for $49 MM Invested over $1BN to acquire online properties (IGN, Scout, and Intermix / MySpace) Will sell episodes of “24” on MySpace Fox.com: primarily clips and previews Launching “NBC 360 Digital” with classic comedy and new previews available online Acquired iVillage for $592MM Promoting content on YouTube Launched AOL In2TV, ad-supported classic TV episodes Acquired Lightningcast to improve video advertising technology Licensed content through BitTorrent (P2P site) and Guba (social network)

10. page 10 Social Networks are Attracting the Largest Audiences Social NetworkStoreChannelPromotional Source: Nielsen NetRatings. Figures as of 6/21/06. * Grouper unique user numbers as provided by company. Number of unique users represents US base of direct and embedded. Worldwide unique users total approximately 8 million.

11. page 11 Studios and traditional networks are validating the benefits of social networks –News Corporation invested $580MM to acquire MySpace –Warner Bros. is licensing content to BitTorrent and Guba –NBC is advertising and promoting network shows on YouTube Social Networks’ large audiences provide a legitimate alternative distribution channel, increasingly supported by advertising revenue Social Networks offer a high degree of interactivity, providing opportunities to create popular derivatives of existing properties –Add interactive elements to existing shows (e.g., story navigation) –Introduce shorter-form content –Explore additional story lines between airing of episodes Social Networks harness users’ creativity to identify and develop new concepts Social Networks Generate Value for Traditional Content Owners

12. page 12 The Right Acquisition Represents SPE’s Best Alternative for our Digital Distribution Initiatives AlternativeConsiderationsDescription Build Partner Acquire Internally developed technology for digital distribution Invest in marketing to drive customer acquisition Requires technology skill-set fundamentally different than our core expertise Slowest time-to-market Partner with leading technology provider and/or online destination to jointly develop a service Capitalizes on third-party expertise Decreased control Limited initial interest from market leaders Acquire company with differentiated technology, demonstrated potential to attract audience, and strong management team Fastest time-to-market Addresses gaps in SPE skill-set Requires reasonable valuation

13. page 13 Acquisition Targets Must Meet the Following Criteria Provide an experienced management team with domain expertise Provide differentiated technology to address gaps in SPE core competencies –Service operation and design –Tool / software development –Consumer data usage Expand SPE revenue streams and content base –Address limited exposure to ad-supported models –Expand offering to new forms of content (e.g. user generated) Accelerate market entry –Demonstrate potential to attract audience –Vehicle for SPE content Reduce overall cost of entry / reasonable valuation –Leverage existing base of knowledge in the marketplace

14. page 14 SPE Target and Competitive Landscape Technology Capabilities LowHigh Low High Existing Service Penetration Google (97.2) Yahoo (105.5) AOL (72.0) YouTube (20.1) MySpace (51.4) Grouper* (2.8) Brightcove (0.2) Veoh (.12) FOX.com (8.5) ABC.com (8.0) MLB.com (9.3) Facebook (7.7) CinemaNow (0.3) Connect (1.2) MovieLink (0.6) iTunes (20.5) Singingfish (0.2) Gather (0.1) Dave.TV (NA) Fleapit (NA) Extend Media (NA) Acquire capabilities to build Focus on complimentary content (e.g. user generated) Look for proprietary or differentiated technology Strong Management CBS.com (5.4) MTV Overdrive (4.4) (Monthly Unique Users in millions) Source: Nielsen NetRatings. Figures as of 6/21/06. Grouper unique user numbers as provided by company. Number of unique users represents US base of direct and embedded. Worldwide unique users total approximately 8 million. Blinkx (0.01) Metacafe (1.6) Friendster (0.8)

15. page 15 Grouper Performance Against Acquisition Criteria CriteriaGrouper Performance Strong Management Technology Expand SPE Revenue and Content Base Experienced team has built other market leading services –Developed Spinner and sold to AOL Internally developed, differentiated technology; platform for growth –Multi-platform download support (iPod, PSP, Mobile Phone) –Portability enabled by proprietary P2P technology –Proprietary desktop software Recent growth in customer base makes Grouper one of the leading video destination and the fastest growing player in the space Accelerate Market Entry Valuation Content base focuses on short-form, user-generated content Diversifies SPE revenue base and increases exposure to advertising Initial valuation guidance of $50MM is at a discount to other social networking sites as Grouper is beginning to build scale

16. page 16 Risks and Mitigation MitigationRisks Retention and continued growth of existing customer base Grouper technology provides a more compelling user experience than competitive sites Grouper leverages strategic partners for growth (i.e., less dependent on “fads” in user taste) Challenges of extending content offerings to commercial content Ensure SPE appropriately programs content for the channel Create new, more interactive content for the Grouper Network Increased competition / low barriers to entryGrouper is currently fastest growing site in its space Network effect reinforces early mover advantage

17. page 17 Distinctions between Grouper and Connect Connect is important to Sony’s strategy and can be a valuable partner for SPE However, Connect offers a fundamentally different value proposition than Grouper The Connect Service is primarily a digital store for Sony devices –Exclusively distributes aggregated commercial content –Requires content protection in Sony-compatible DRM –Current plans for video focus on providing services for specific devices (e.g., Video Walkman and PSP), limiting overall reach Grouper offers market-leading technology for the broadest possible distribution of content –Focused on user generated content today, with infrastructure capable of expanding to commercial content –Distributes content to multiple devices today (iPod, PSP, mobile phones) –Primarily an ad-supported model, with potential to expand to transactional models

18. page 18 Potential for Advertising Revenue There has been high demonstrated demand for advertising revenue associated with digital video –ABC announced that it had received 11MM streams on its new streaming video offering –MySpace expectd to be generating over $100MM in advertising-related revenue this year alone –CBS was extremely successful with its online streaming NCAA March Madness offering this year as compared Grouper has positioned itself to meet the needs of video advertisers –Targeted achievable CPMs of ($15-$30 CPM for video vs. $.50-$5 CPM for banners) –Infrastructure will support ad insertion in both streamed (served in pre-roll) or downloaded (served during download)

19. page 19 Grouper infrastructure can be leveraged across multiple distribution models As the Grouper brand grows, it can expand to new business models –Grouper technology is being built to support ad-based and transactional business models –Grouper has the potential to be the lead brand for Sony’s broadband channels Alternatively, Grouper’s infrastructure can support new Sony-owned brands –Grouper could remain focused on user-generated content –SPE could launch additional broadband channels with new brands powered by Grouper’s technology Grouper as a Platform for Growth

20. page 20 Valuation Based on Grouper’s current 2.8MM US unique users and based on multiples in comparable transactions, initial valuation guidance includes a discount for the company’s pre-revenue status

21. page 21 June 30:Due diligence at Grouper HQ Week of July 3:Present to Michael Lynton Present to SCA Week of July 10:Preliminary term sheet to Grouper Grouper response Week of July 17:Review with Tokyo Begin negotiation of formal terms Deal Process June 30: Week of July 3: Week of July 10: Week of July 17:

22. CONFIDENTIAL Detailed Analysis Digital Distribution Landscape

23. page 23 Broadband Access and Content Availability Are Driving Growth in Digital Video Source: SG Cowen Research dated June 7, 2005, Morgan Stanley Broadband Update, April 2005 30%38%46%52%57%61% 33.2 42.6 51.0 58.9 69.6 65.1 Broadband-enabled U.S. Households (MM)Video Downloads (BN) 0.28 18.0

24. page 24 Downloadable Video Should Drive Growth in Filmed Entertainment Pay TV/ SubscriptionVHS/ RentalDVD/ Sell thru Evolution of Content Distribution & Revenue Growth of Filmed Entertainment Industry in the US* New consumer benefits Introduction drivers Movies without advertising Consumer controlled viewing Ownership, high quality, additional features New cable network entrants Consumer electronics manufacturers Warner Home Video & CE industry 100%=$4Bn 100%=$18Bn Complete library, convenience & control Technology Companies IP Delivery $37Bn $47Bn 2004 2008e $2Bn $9Bn Video /DVD 7% TV 41% Box Office 52% Video /DVD 41% TV 32% Box Office 27% Source: Entertainment Industry Economics Vogel 4 th ed., PricewaterhouseCoopers Global Entertainment & Media Outlook 2004-2008. Models with unique consumer benefits have been consistently adopted by Hollywood Adoption has often been led by outside entrants and new industry players Double digit annual growth has doubled the market approximately every 7 years 1995 1980 * Includes revenue generated by films from major studios across content distribution windows – box office, video (rental, sell thru), television (ppv, pay, network, made for TV), and foreign revenues for each

25. page 25 Evolving Infrastructure Represents an Opportunity to Build Direct Relationship with End-users and Increase Control of Distribution Broadcast Model Cable Model Digital Distribution – Licensing/Syndication Broadcast Network Broadcast TVLocal Affiliate ProductionCustomerDistributionAggregation SPE Cable Network Cable TVCable MSOSPE PortalPC or TV Broadband ISP SPE Customer-facing Service SPE-owned Service PC or TV Broadband ISP SPE

26. page 26 Digital Video Delivery Represents an Opportunity to Reach a Younger Demographic Source: Pew Internet & American Life Project, December 2005 Percent of Each Age Group Downloading Video (18-28)(29-40)(41-50)(51-59)(60-69)

27. page 27 SPE Can Best Reach Younger Demographics with Models that Include Two-way Interactivity and Social Networking Source: Pew Internet & American Life Project, December 2005 Percent of Each Age Group Participating in Online Activity (18-28)(29-40)(41-50)(51-59)(60-69) Instant MessageRead a Blog

28. page 28 Consumers are Shifting Time Away from Traditional Media Toward Online and Interactive Media Note: Consumer Internet includes both dial-up and broadband Source: Veronis Suhler Stevenson, Val Morgan, Harris Interactive, L.E.K. Analysis, Jupiter analyst interview, Corporate Development Analysis Cable and satellite TV hours rise slightly due to increase in channels, VOD and PPV services Consumer time spent on broadcast TV may flatten with emerging technologies (a la TiVo) But the real growth is in Interactive/wireless, home video, internet and games

29. page 29 New Distribution Models are Shifting Consumer Consumption toward “Long-Tail” Titles

30. page 30 Studio Content May not Be as Dominant in Emerging Channels Sources: Nielsen Videoscan data, Wired 2.0, Industry Interviews, select store visits across Los Angeles area Product Mix of Units Books Music Home Video  Surveyed 6 B&N and Borders stores  Calculated number of SKU’s for a sample of fiction titles  Reviewed 8 to 12 stacks  Counted the number of separate SKU’s  Determined which titles were major (including sub-labels)  Amazon figures are units sold in 2005 (source Wired 2.0 and Bain consumer study)  Publishing analysts from First Research conclude that there is a strong correlation between SKU’s and units sold Methodology Niche (All Others) Major (RH, TW, Simon, HC, Pearson) Niche (All Others) Major (Uni, War, Sony/BMG, EMI) Niche (All Others) Major (7 Majors)  Surveyed 5 Borders and Best Buy stores  Calculated number of SKU’s for a sample of new release and catalog titles  Reviewed 6 to10 stacks  Counted the number of separate SKU’s  Determined which titles were major (including sub-labels)  Digital figures are units sold in 2005 (source Wired 2.0 and Bain consumer study)  Units sold figures for music via traditional stores is being researched through Nielsen Musicscan data  Surveyed 7 WalMart, Best Buy and Target stores  Calculated number of SKU’s for a sample of new release/catalog titles  Reviewed 12 to15 racks  Counted the number of separate SKU’s  Backed-up SKU findings with units sold data from Nielsen VideoScan  Digital figures are units sold in 2005 via Amazon & other online retailers

31. page 31 Media spending does not yet reflect consumption Advertising dollars are shifting online to address the current gap 2003-’05 US Advertising CAGR Contribution to Growth Television: TV Stations1.5%2% Cable Networks15.6%19% Cable MSOs8.1%3% CBS Net, FOX Net5.8%9% Total Television7.0%34% Magazines8.9%5% Newspapers3.4%11% Radio0.2%0% Outdoor7.1%5% Online50.4%45% Total8.4%100% SUMMARY Traditional Media5.1%55% Online50.4%45% Total8.4%100% Ad Market is Changing Significantly as Ad Dollars Following Consumers and Two-way Infrastructure Becomes Available 1999 2005

32. page 32 SPE Currently Has Limited Ability to Capitalize on the General Growth in Ad Revenues, Particularly in the Online Space US $ (Billions) Overall ’05 – ’09 Projected CAGR: 10.1% Broadcast ’05 – ’09 Projected CAGR: 4.9% Cable/Sat ’05 – ’09 Projected CAGR: 11.4% Online ’05 – ’09 Projected CAGR: 22.3% TV & Online Advertising Spend Source: Veronis Suhler, 2005 Note: Cable/satellite growth expected to be driven by increasing audience share of prime time ratings, ability to target within specific demographic groups, improved sales system; broadcast growth expected to be driven by sustained ratings and ad rates, continued appeal as optimal means to reach large audiences Online %:12%10%12%13%16%18%21%23%25% 57.9 60.7 63.2 71.7 78.3 87.6 95.1 106.0 114.9

33. CONFIDENTIAL Appendix

34. page 34 Examples of Online Video Destinations by Category CBS.com Fox.com NBC.com Sonypictures.com ABC.com Atomfilms CBS.com / innertube ESPN.com iFilm In2TV MLB.com MTV Overdrive Yahoo Google iTunes Facebook Friendster Google Grouper Metacafe MySpace YouTube Yahoo PromotionalChannelStore Social Network Larger Audience Smaller Audience Blinkx Innertube Multi-media Networks Singingfish CinemaNow Connect MovieLink Dave.TV Fleapit Gather Tag World Varsity World

35. page 35 Categories for Online Video Technology Providers Content Management Interactivity and Social Networking Consumer Tools Content preparation –Ingestion –Metadata / tagging –Ad insertion Content delivery –From content owners to aggregators –Onto P2P networks Content classification and discovery Tools and infrastructure for: –Chat –Instant Messaging –Blogs –Ratings –Recommendations –Clickable Video Video creation Video editing Media mixing software (integrate video, photo, audio) Video publishing (cross-platform) Personal channel creation DVD burning

36. page 36 Examples of Technology Providers by Category Grouper BrightCove Maven / The Platform Veoh Networks MLB Adanced Media Roo Media Grouper Sonic Sony Media Software Veoh Networks Content Management Interactivity and Social Networking Consumer Tools More Established Newer Entrant Extend Media Intent Mediaworks Kontiki Redswoosh Solid State Networks SyncCast Tandberg TV Zetools Avant Interactive Intent Mediaworks Imeem Kozuru vMix Dave.TV (Social Broadcast Network / MyChannels) Fleapit Intercasting / Rabble.com Oddcast Participatory Culture Video Publishing on Demand (vpod.tv) vMix

37. page 37 Key Attributes of Digital Video Services Content Accessibility 1 LowMediumHigh Content Value 2 Range of Content Providers 3 Content Breadth 4 Degree of Interactivity 5 ConnectedPortable Anytime, Anywhere PromotionalUser-Generated Produced Company Owned Aggregated Single GenreMulti Genre On-DemandAncillary (e.g., blogs and ratings) Real-Time (e.g., chat, story navigation) Business Model (Cost to Consumer) 6 FreeAd-Based Pay

38. page 38 Promotional Video Websites Overview Attributes Predominantly consist of short video clips to promote site owner’s content, merchandise, and brand May include some advertising, and minimal commerce capabilities, but is promotional in nature Content Breadth 4 Single GenreMulti Genre LowMediumHigh Content Accessibility 1 ConnectedPortable Anytime, Anywhere Content Value 2 PromotionalUser-Generated Produced Range of Content Providers 3 Company OwnedAggregated Degree of Interactivity 5 On-Demand Ancillary (e.g., blogs and ratings) Real-Time (e.g., chat, story navigation) Business Model (Cost to Consumer) 6 FreeAd-BasedPay

39. page 39 Content Breadth 4 Single GenreMulti Genre Broadband Video Channels Overview Attributes LowMediumHigh Content Accessibility 1 ConnectedPortable Anytime, Anywhere Content Value 2 PromotionalUser-Generated Produced Range of Content Providers 3 Company OwnedAggregated Degree of Interactivity 5 On-Demand Ancillary (e.g., blogs and ratings) Real-Time (e.g., chat, story navigation) Includes on-demand videos available in programmed micro-channels, on a show- by-show basis, or in a traditional channel lineup Business model primarily includes advertising, with upsell to subscription Business Model (Cost to Consumer) 6 FreeAd-BasedPay

40. page 40 Video Store (Content Aggregation) Overview Attributes Aggregates video across content providers for purchase Uses a range of models including sell-thru, rental, and subscription Content Breadth 4 Single GenreMulti Genre LowMediumHigh Content Accessibility 1 ConnectedPortable Anytime, Anywhere Content Value 2 PromotionalUser-Generated Produced Range of Content Providers 3 Company OwnedAggregated Degree of Interactivity 5 On-Demand Ancillary (e.g., blogs and ratings) Real-Time (e.g., chat, story navigation) Business Model (Cost to Consumer) 6 FreeAd-BasedPay

41. page 41 Social Network (User-generated Video Sites) Overview Attributes Consists of short video clips from users of the service May also provide tools for creating video clips or interacting with video content Primarily ad-based business models Content Breadth 4 Single GenreMulti Genre LowMediumHigh Content Accessibility 1 ConnectedPortable Anytime, Anywhere Content Value 2 PromotionalUser-Generated Produced Range of Content Providers 3 Company OwnedAggregated Degree of Interactivity 5 On-Demand Ancillary (e.g., blogs and ratings) Real-Time (e.g., chat, story navigation) Business Model (Cost to Consumer) 6 FreeAd-BasedPay