1. Group Strategy Division | 2010 MRP Business Strategy Department Group Strategy Division January 24, 2011 1 Fact Finding: Netflix has acquired 20 million DVD rental and streaming subscribers through 2010, invested over $400MM in streaming rights in 2010, and committed to spend over $1BN on additional streaming rights in the future in order to become a major platform in the U.S. –17% of the estimated 116 million U.S. TV households –Not far from surpassing Comcast, the largest U.S. cable provider, subscriber base of 23 million cable subscribers –Becoming a U.S. leader in “subscription video services”, with more subscribers than other providers such as Dish, DirecTV, Time Warner Cable, etc. –Netflix provides content to multiple-devices, enabling one-content/multi-device UX Qriocity online video service puts strategic focus on transactional models (EST, VOD) in new release windows, while Netflix offers subscription via an online service (different windows, different business models) However, Netflix’s DVD-by-mail service offers films available in the new release window (Qriocity and Netflix compete in the same window, but with different models) Bounty fees from HE Devices contributes positively but its volume is limited Key Implications: Unlimited expansion of Netflix to take price control power is unfavorable Qriocity video service alone is unlikely to compete head-to-head against Netflix in terms of scale given Netflix’s first mover advantage, brand recognition and required investment Need to further clarify unique value proposition of Qriocity video service Fact-findings Summary & Key Implications H/W Device Network Service ContentContent Pros Cons Drive H/W sales through improved brand and ease of use with Netflix More bounty fees (limited) Enrich 3 rd party offerings on Qriocity platform Cannibalize in catalog sales Shift customers to 3 rd party services within Qriocity Potential to earn sizable licensing fees from Starz if Starz extends Netflix relationship with acceptable terms Netflix may acquire dominant platform position in industry

2. Group Strategy Division | 2010 MRP Business Strategy Department Group Strategy Division January 24, 2011 2 page 2 Current and Potential Windows for U.S. Film Content (1) Pay 1 commences the earlier of 10 months from general theatrical, 4.5 months from initial home entertainment street, and 3.5 from PPV/VOD. It is feasible for Pay 1 to commence as early as 6.5 months post theatrical (assuming day-and-date VOD at 3 months post theatrical), but this is still an infrequent scenario. Confirmed in the meeting: Netflix does not provide streaming content in “Broadcast/Cable” window; from 2-2.5 years to 8-8.5 years Qriocity service can offer EST starting with the new release window and continuing indefinitely with the exception of films from HBO studios (Time Warner, Fox and Universal) blocked out in Pay 1 and Pay 2. All VOD is blocked out during Pay 1 and Pay 2 Windows for TV series differ from windows for feature films

3. Group Strategy Division | 2010 MRP Business Strategy Department Group Strategy Division January 24, 2011 3 page 3 To be Quantified by M. Aragon 1. Compete against Netflix with subscription service in the U.S. a) Originals - Create unique content with Crackle, SPE and other producers - Subscription b) Buy carve-out from Starz [NOTE: exercising these carve-outs would allow Sony to exhibit 2 titles per year on a FOD basis at any time including prior to the end of Pay 1 if bundled with a Sony consumer electronics product priced ≥ $100 in a single transaction. Promotion can be up to 2 months per title at a cost of roughly $1–$4MM per title due to a reduced rate card for SPE] c) Bid against Netflix with Starz for Starz window rights [NOTE: Netflix paid EPIX $180MM per year for these types of rights] d) Acquire content 2. Change domain a)“cable lite” b)Change geography - Outside US -> UK, France, JPN - Differentiated services > 50 selected titles refreshed every month > leverage PSN Plus c) Differentiate in transaction (Early window) d) Create a unique user experience across multiple services - inter-operability (cross-contents) - single ID with 3 rd party (cable lite partners) e) Engage in user interface To be Quantified by J. Underwood Fill capability gap if necessary including M&A options. Align GPU Processor between PS and CE devices Discussion scope in the next meeting #3 Strategic Options Summary