Copyright © 2007 Consumer Electronics Association The State of Consumer Tech Key drivers, disrupters and developments 2008 Hollywood Post Alliance Technology Retreat (or How Today’s Technology is Shaping Tomorrow’s Content)

Copyright © 2007 Consumer Electronics Association

Consumer Research 30 studies per year 300+ study archive Sales Data & Forecasts Sell-in data program 5-year forecasts Economic Analysis Econometric modeling Quarterly webcasts CEA Market Research

Copyright © 2007 Consumer Electronics Association It “Goes to Eleven” Phenomenon Alive and Well Faster, smaller, clearer, greater capacity, cheaper, etc. 1 Distribution Evolves New methods, ideas and models better connect consumers & content 3 Mobility Redefined Speed, range, coverage, content and product diversity receive a boost 4 360° Solutions Further integration of device, accessories, content, service, network and community 2 Trends to Watch Heading Into 2008

Copyright © 2007 Consumer Electronics Association For a number of reasons, it is tough to predict exactly what products and services will emerge, but it is safe to assume there will be plenty of product improvements and innovations at the margin. “It Goes to Eleven” Phenomenon As usual, consumer electronics products will get smaller, faster, clearer, lighter, more efficient, increased capacity, longer runtime, higher resolution, more reliable and larger screens, while getting less expensive. 1 "We tend to overestimate the effect of a technology in the short run and underestimate the effect in the long run." - Amara’s Law

Copyright © 2007 Consumer Electronics Association A Brief History of Time CE products per household 25 CE products per household Year when product reached ~25% household penetration

Copyright © 2007 Consumer Electronics Association A Closer Look at Television e – estimated, p - projected 20% of DTV Sets in 2007 were 1080P. By 2011, nearly 80% of sets will be 1080P. Digital Displays | Millions of units DTV penetration ~50% HDTV penetration rate ~39%

Copyright © 2007 Consumer Electronics Association The Next Generation of DVD e – estimated, p - projected Next Gen DVD could approach 30% HH penetration over the next 4 years. Next Gen DVD | Thousands of units

Copyright © 2007 Consumer Electronics Association 14% 39% 65% 75% 82% 88% Household penetration will exceed 50% by year’s end and continue to rise to 70% Digital Media Players: More than just Audio

Copyright © 2007 Consumer Electronics Association 360° Solutions 2

Copyright © 2007 Consumer Electronics Association Device ServiceContent 360° Solutions Accessories Peripherals User generated content Community Platforms Demo | Setup

Copyright © 2007 Consumer Electronics Association Services Redefining the Experience del.icio.us

Copyright © 2007 Consumer Electronics Association And Shaping the Technologies

Copyright © 2007 Consumer Electronics Association Empowerment | Personalization 9% 25% DVR Penetration January 2005 January 2008

Copyright © 2007 Consumer Electronics Association Watch the Partnerships Macrovision & CinemaNow Netflix & LG NBCU & SanDisk SanDisk & Yahoo Samsung & CinemaNow Xohm Alliance Long Term Evolution (LTE) Android Alliance Samsung & USA Today Blackberry & Sling Media Project Canoe Today’s Rumors MSFT & Netflix

Copyright © 2007 Consumer Electronics Association Distribution Evolves 3

Copyright © 2007 Consumer Electronics Association Broadband = 51%, but many newbies 30% have a wired or wireless home network Home Theater = 26% Wide area connections (WiMax, WiFi/Hotspots, Cell, Broadband, SlingMedia) Local area connections (Ethernet, WiFi, HDMI) Personal networks (RF, Bluetooth, OE integration) Connecting services (VOIP, vlogs, blogs, social networks) Distribution Evolves

Copyright © 2007 Consumer Electronics Association Bridging Gaps in the Home

Copyright © 2007 Consumer Electronics Association Desired Activities Using Home TV Share Interact Personalize Explore Connect Control

Copyright © 2007 Consumer Electronics Association Seeking a Change? Content Distribution MethodCurrentPreferredDifference Physically move content50%25%-25% Centrally stored content5%23%18% Place shifting device5%13%8% Move copies of content10%5%-5% Use network9%5%-4% Physically move device21%4%-17% Remotely stored contentNA1%NA Other2%1%-1% None31%24%-7%

Copyright © 2007 Consumer Electronics Association Present Future Desktop PC Laptop PC Television DVR Media Server Appliances Security System The Networked Home Products Connected to the Internet

Copyright © 2007 Consumer Electronics Association Signs of the Time In the last 18 months Nielson has bought all or part of: –Telephia (mobile analytics) –Buzzmetrics (user generated content analytics) –Neurofocus (neuroscience applied to advertising and messaging) –Audience Analytics (TV analytics and software to analyze interactive television data and VOD transactions)

Copyright © 2007 Consumer Electronics Association Mobility Redefined 4

Copyright © 2007 Consumer Electronics Association More Devices, More Options 44%32%36%28%7%7%3% all | 19% DM17%-1%1%1% 2008 $ Growth Rate Ownership Rate

Copyright © 2007 Consumer Electronics Association 1.Listen to Music94%75% 2.Listen to other audio content21%39% 3.Listen to Podcasts20%29% 4.View Digital Photos20%39% 5.Watch Movies18%40% 6.Play Games12% 24% 7.Watch Music Videos13%31% 8.Watch TV Programming 8%38% 9.Watch Home Movies 8%26% Currently Doing Wanting to Do And Redefining Mobile Content

Copyright © 2007 Consumer Electronics Association Content Dominating in the End Share of Time Spent Online 35% just 18 months ago Source: OPA, CEA

Copyright © 2007 Consumer Electronics Association Multi-faceted Life = Multi-faceted Device The line between the professional life and personal life is increasingly blurring Source: CEA Sales and Forecast Smartphones unit grow exceeds 30% in 2008 Millions of units

Copyright © 2007 Consumer Electronics Association Wireless Subscription Lengths More than 1 year Less than 1 year Texting Internet PTT Video Music Gaming Rings Navigation Pictures Info Alerts Base: Cell Phone Owners

Copyright © 2007 Consumer Electronics Association “Hyper Local” Emerges 33% of Online Consumers are Interested In a Cell Phone with GPS Capabilities Hyper local search and advertising makes mobile Internet more personal and compelling Information further empowers consumers leading to even stronger demand for mobile devices 47% of consumers are interested in using a GPS device to find restaurants and gas stations. 43% are interested in being about to see their kids’ or pets’ location on a computer

Copyright © 2007 Consumer Electronics Association We Trust our “Friends” Wisdom of the Crowds is enlarging the circle of trust

Copyright © 2007 Consumer Electronics Association #1Mobile phone #2Digital Camera #3Laptop/notebook PC #4Web enabled mobile #5Desktop Computer #6Television #7Portable MP3 #1Mobile phone #2Television #3Laptop/notebook PC #4Web enabled mobile #5Digital Camera #6Portable MP3 #7Cordless home ph. #1Web enabled mobile #2Mobile phone #3Desktop Computer #4Laptop/notebook PC #5Digital Camera #6Television #7In-dash car stereo #1Television #2Mobile phone #3Laptop/notebook PC #4Digital Camera #5Desktop Computer #6DVD Player #7Portable MP3 USA CHINA INDIA RUSSIA Intent to buy over next three years by online consumers in each country Mobility in the U.S. and Abroad Global CE Expenditures Top $600 Billion 1 Billion Mobile Phones Sold to be 2008

Copyright © 2007 Consumer Electronics Association Industry Insider View Moving into 2008

Copyright © 2007 Consumer Electronics Association Connectivity + Distribution

Copyright © 2007 Consumer Electronics Association Advertising Expectations Over Next 5 Years Web content advertising, e.g. ad before YouTube video Guerrilla and other forms of non traditional advertising Search paid listings Advertising in video games Product placements Advertising on cell phones Advertising in virtual worlds like Second Life Radio commercials Television commercials Display/banner ads Social networking sites Event sponsorships Print ads in newspapers/magazines

Copyright © 2007 Consumer Electronics Association Expectations for Using Social Networking to Reach Customers in 2008 Video sites Niche social networking sites Mainstream social networking sites Twenty-five percent of CEAP members are currently using social networking sites to sell/market to consumers, while 17% are using these applications to reach business customers. Social news sites Virtual worlds Photo sites None of the above Music sites

Copyright © 2007 Consumer Electronics Association It “Goes to Eleven” Phenomenon Alive and Well Faster, smaller, clearer, greater capacity, cheaper, etc. 1 Distribution Evolves New methods, ideas and models better connect consumers & content 3 Mobility Redefined Speed, range, coverage, content and product diversity receive a boost Degree Solutions Further integration of device, accessories, content, service, network and community 2 Trends to Watch Heading Into 2008

Copyright © 2007 Consumer Electronics Association Shawn DuBravac Chief Economist Consumer Electronics Association Thank You See you in Vegas – January 8 th -11 th