Opportunities to Differentiate Sony’s Network Services

October 18, 2011

competitive snapshot /digital entertainment services

Select Services

ad-supp

a la carte

sub

# films / TV episodes

# games/add-ons

devices available brands available # countries

Video Unlimited

6,500+ / 40,000+

TVs, home theater systems, Blu-ray players, PSP, PS3, mobile devices

Sony, Sony Ericsson, all PCs via software

9

PlayStation Network

10,000+ / 40,000+

1,000+ / 4,000+

PS3, PSP, mobile devices Sony, Sony Ericsson 59

Xbox Live (Zune)

2,500+ / 23,000+ 2,800+ /

2,000+

Xbox, mobile devices, computer Xbox, Windows Phone, PCs via software

35

iTunes 10,000+ / 50,000+

100,000 game and ent apps

TVs, computers, iPhone, iPad, iPod Apple, PCs via software 25

Vudu10,000+ / 7,000+

TV, consoles, tablets, Blu-ray players, set-top boxes, computers, home theater systems

Sony, LG, Mitsubishi, Samsung, Sanyo, Toshiba, Vizio, Sharp, Panasonic, Philips, Sylvania, Magnavox, Oppo, Boxee, Apple

1

CinemaNow 15,000+(film+TV)

TV, Blu-ray players, home theater systems

LG, Insignia, Panasonic 1

Netflix 20,000+(film+TV)

by mail soon

700+ devices: computers, set top boxes, game consoles, streaming players, Blu-ray players, TVs, DVRs, mobile devices

Sony, LG, Samsung, Insignia, Philips, Panasonic, Vizio, Apple, Android, Windows, Roku, TiVo, Nintendo, Xbox, PS3, PCs via software

45

Blockbuster 4,000+ / 4,000+ by mail

only

TVs, PCs, Blu-ray players, mobile phones

Samsung, Philips, Sharp, Toshiba, Vizio, Magnavox, Funai, Yamaha, Integra, Onkyo, Oppo, Memorex, TiVo, Verizon, HTC, Motorola, Dell, WD TV, 2Wire, PCs via software

1

Amazon & Amazon Prime

11,000*(film+TV)

computers, TVs, Blu-ray players, set-top-boxes, Kindle Fire (Nov. 15)

Sony, Samsung, Vizio, LG, Panasonic, Roku, Logitech, TiVo, Amazon Kindle Fire

1

Hulu & Hulu Plus

1,450+ /25,000+

Computers, game consoles, streaming players, Blu-ray players, set top boxes, TVs, DVRs, mobile devices

Xbox, PS3, Roku, Apple, Android, Samsung, TiVo, Vizio, LG, Panasonic, WD TV, Haier, PCs via software

2

prevailing digital entertainment services are not highly differentiated; most offer similar content and are available on many of the same devices

•this is the figure for Amazon Prime. Amazon Instant Video only provides a SKU count of 100,000Note: figures may include clips in film count

competitive snapshot /digital music services

3

Select Servicesfree/ad-supported

a la carte

subscription #

songs

devices available brands available # countries

Music Unlimited 10mm+

PS3, PSP, Sony TVs, computers, Blu-ray players, Android phones

Sony, Sony Ericsson, non-Sony Android

9

Rhapsody 13mm+

TV, phones, computers, speakers, home entertainment, MP3 players

Sonos, Logitech, Linksys, Yamaha, Control4, Russound, Philips, Denon, Vizio, HP, TiVo, Pioneer, Onkyo, Android, Apple, Windows, Blackberry, SanDisk, all PCs

1

iTunes 19mm+

Apple TV, iPad, iPhone, iPod, computers

Apple, PCs 32

Spotify 13mm+

phones, tablets, computers

Apple, Android, PC 9

Pandora 800K+ TV, phones, tablets, Blu-ray players, computers, radios, speakers, Dash/Chumby, set top boxes, home theater systems

Panasonic, Sony, Verizon FIOS, Samsung, Logitech, Chumby, HP, Cambridge Audio, Boxee, Roku, Sonos, TiVo, Vudu, LG

1

among the prevailing digital music services, the differentiator is access model and user experience rather than content

4

opportunities for differentiation /

• Sony has a unique opportunity to differentiate its services:

• other service providers:

• face the challenge of integrating with multiple third party electronics manufacturers

• must license content that is freely available to all competitors from the major film studios and music companies

• meanwhile Sony can differentiate its services by:

• tightly integrating its services with its devices in order to provide the best user experience

• offering unique, high quality experiences on a consistent basis that are only available to Sony customers

opportunities for differentiation /leading edge services optimized for Sony’s products

5

if Sony makes changes to the rights embedded on digital copies of its films within Sony Entertainment Network, it can create the same interaction between connected TVs and tablets, without requiring the user to purchase a separate set-top box, by

using existing DLNA technology

• tablets and mobile devices are becoming the “steering wheel” of the living room• when combined with a connected TV, a tablet becomes the living room’s CPU, user

interface, and connection to the consumers’ cloud-based services. A consumer can create an over-the-top experience without an expensive TV

• Apple’s AirPlay, a proprietary wireless protocol, enables digital services accessed on the iPad or iPhone to be beamed to unconnected, inexpensive TVs tethered to Apple TV set top boxes with the touch of a button

an example of a leading edge service Sony is uniquely positioned to provide:

examples of differentiation and innovation /experimentation with film distribution windows

6

Nov 2008 Dec 2009

• First time a major film available for streaming before DVD/Blu-ray

• Streamed directly to the TV

• Available to BRAVIA owners one month before DVD release

• $9.99 for 24-hour rental (users also sent a Blu-ray copy)

• Available to BRAVIA owners one month before DVD release

• Streamed directly to the TV

• $24.95 for a 24-hour rental (free to new BRAVIA owners)

• First multi-channel TV provider to offer premium VOD titles

• Available on cable, rather than directly to TV or PS3

• Available 2 months after theatrical debut for 2 weeks

• $29.99 for 48-hour rental

• Sony Pictures, Warner Brothers, Universal Pictures, 20th Century Fox participating

April 2011 Nov 2011

• Available via VOD three weeks after theatrical debut Nov. 4

• Available in two test markets: Atlanta and Portland (~500K subscribers)

• $60 for rental

• Test canceled due to pressure from studio after theatrical exhibitors threatened to not play film

recent examples of differentiation and innovation /experimentation with distribution and original content

7

June 2011

Activision announced that it had engaged “Hollywood talent” to develop a linear web series inspired by “Call of Duty” that will be released exclusively to subscribers of Activision’s “Call of Duty Elite” service

April 2011

Paramount premiered Jackass 3.5 globally on Joost.com via weekly installments prior to the release of the full-length feature on VOD, download-to-own, DVD, and TV

September 2011

Fox premiered the first episode of its new show, “New Girl”, on iTunes, Hulu, and Fox.com 2 weeks before its Sept 20 broadcast debut

8

opportunities for differentiation /unique content experiences exclusive to Sony customers

8

• unique content experiences are:

• content that is available nowhere else

• content that is available earlier than elsewhere

• enhanced content: content that has more than you would have gotten elsewhere

9

opportunities for differentiation /unique content experiences exclusive to Sony customers

9

• examples of possible unique content experiences include:– Leverage SPT team (including Networks teams / Crackle teams) for programming

expertise– SPE to create exclusive original content for Sony Networks– Carry SPT networks on SNEI services– PlayStation as the exclusive game console to retail Sony UltraViolet titles– Some exclusivity amongst over-the-top players for re-launch of PVOD, including a

sell-through component– A subscription club where every member has the ability to stream one new release

prior to DVD each month (may requires a significant investment given Starz rights)– A subscription X-Factor club where members would have exclusive access to intra-

episode footage of contestants, judges, performances, and auditions as well as free MP3 downloads of weekly artist performances

– Offer exclusive live streaming of certain Sony Music artists’ concerts or other performances on a monthly basis

– Create highly immersive and social second-screen content that would be available exclusively on Sony tablets, and would use Automatic Content Recognition to synch to Sony TV shows, films, and music

– Work with the Academy of Motion Picture Arts and Sciences to allow the public to stream certain Oscar nominees during awards season to build excitement for films and the Oscar race