1. Digital Distribution – Competitor Landscape October 2007 CONFIDENTIAL DRAFT

2. 2 Digital Business Models Overview Models with Traction Paid delivery to the PC for both movies and TV content via: –A sell-through model which is either transactional or subscription based such as iTunes or Wal-Mart Online –A rental model such as Movielink or Vongo Delivery to the TV set: –Broadband linked devices such as Apple TV, Amazon Unbox through TiVo, and Xbox Live that are connected to the TV and wirelessly sync to online content providers Online channels: –Owned channels like MySpace, Crackle, ABC.com, and Hulu that tend to utilize the ad-supported model –3 rd party channels like Joost Newly Emerging Models Social virtual worlds like Gaia Online, Second Life, and Habbo Hotel are increasing in popularity Experimentation with software to allow DVD burning capabilities of online content to bridge the gap between the TV and PC has received some preliminary support from studios

3. 3 Film Content Available for Digital Delivery * Note: Figures only represent the number of titles currently available in Home Entertainment format (DVD, VHS, etc.) that have not been made available digitally. Figures do not represent the total number of titles a studio may have in its library. SPE Leads in Titles Made Available on DigitalSPE is a Leader in % of Titles Available NBCU has the Largest Base of Applicable Titles that have Not Yet Been Released on Digital *

4. 4 iTunes dominates TV, but studios are leery of creating a single distributor for film product Sell-through of TV content has proven more appealing than rental of films to date Paid Film Content to PC – Market Share by Distributor The success of Apple’s marriage of the iPod device to the iTunes online distribution store has boosted the success of the platform Other new market entrants such as Wal-Mart’s Online Video platform, AOL Movies, or News Corp’s Direct2Drive hope they will be able to capture market share from Apple. iTunes: 82% Other: 5% Amazon Unbox: 8.4% Movielink: 4.6% TiVo connectivity to TV set has helped to grow Amazon’s market share Continues to retain market share, but possibly will lose ground to new entrants like Wal-Mart Market share source: Screen Digest research. √√√√√√√ √√√√ √√√√√(only TV)√√ √√√√ √√ √√√√ √√ √√√√√ Distributors Used for Film to PC

5. 5 TV Content to the PC 3 rd Party Streaming In discussions for expanded ad- supported distribution using ABC branded player Hulu will extend ad-supported distribution Discontinuing iTunes in Dec (betting on Hulu) Developing broad distribution for TV shows using 3 rd party players Leveraging wide distribution of owned (Viacom) and non-owned sites 3 rd Party Downloads CommentsAsset Owned Sites [Coming Soon] Hulu Full control of Library Limited control of on-net content Networks are distributing first-run content broadly for promotional value and to maximize profits until owned sites reach greater scale Hulu will extend ad-supported distribution Hulu

6. 6 Owned Ad-Supported Digital Channels Supported Digital Channels Both ABC.com and ESPN.com are strong channels with scale Sub brand ‘dotcomedy’ failed Launching JV with Fox Sub brand ‘Inner tube’ failed Switching to CBS.com Strong focus on MySpace (master brand) Launching JV with NBCU Last holdout for “multi brands”; consolidating multiple web native brands (e.g., iFilm) under Spike.com Comments Hulu Parent Failed / Consolidated Digital Channels Working on building out depth and scale of existing brands (vs. launching wide variety of new brands) Emerging trend toward fewer channels with a more concentrated marketing effort While smaller channels are consolidating, new “mega channels”, like Hulu, are looming In2TV Struggling, but AOL investing further

7. 7 Current Events: Hulu (Existing Business Model) Features Hulu is NBC Universal and News Corporation’s online video joint venture. The site is set to launch in the Fall of 2007 and will focus on professional content. Initial distribution partners include AOL, Comcast, MSN, MySpace and Yahoo. Programming will also appear on sites owned by the distribution partners. Hulu videos will be played in their own embeddable branded player. Besides the content of NBC Universal and Fox, Hulu will offer content from at least 12 other channels including: Comcast, including shows on the Style and Golf channels, as well as shows from small networks including the Oxygen network, Sundance Channel, TV Guide, and National Geographic. Other major networks such as CBS, Disney ABC, and Viacom have not signed on. Ownership/ Management Team Company Overview JV between NBC Universal and News Corp CEO: Jason Kilar (former Amazon Executive)

8. 8 Delivery to the TV Set Installed TV-Connected Broadband Capable Devices Europe ‘Big 5’USA PS3 timing of market entry is uncertain Success of Bravia too soon to tell Xbox is already experiencing early success in this area –Xbox Live has already inked deals with Paramount, Warner Brothers, and Disney –Content is only being offered on a rental basis Apple TV has also begun to establish a presence in the market –It is rumored that iTunes might begin to offer some titles on a download-to-burn basis Disney and NBCU have voiced their support of DVD burning but a legal method for this has yet to be put in place Fiber services receiving positive reviews, but will this lead to exceeding forecast targets? Source: Screen Digest research. Trends

9. 9 Emerging Models: Virtual Worlds Virtual worlds have proven highly appealing as general entertainment sites –Club Penguin sold to Disney for up to $700MM ($350MM at close + $350MM of earn-outs) –Second Life has become a well-known “sand box” for advertisers to experiment Virtual worlds offer a unique opportunity for TV and Film distribution –Sites can offer a truly immersive and social viewing experience –Viewing becomes interactive and more engaging Studios are beginning to invest in the space –Turner struck a one-year deal with Kaneva to build virtual worlds for its properties –Warner Brothers announced plans to launch “T-Works” in Spring 2008 Sony is uniquely positioned to capitalize on opportunities in Virtual Worlds –Negotiating investment and distribution relationship with Gaia; expected to be the first Virtual World to stream movies and TV in virtual theaters –Coordinating plans with PlayStation to provide video content in PS HOME

10. 10 Case Study: Gaia Online An online virtual “hangout” with a targeted demographic –65% of demo are 18 years old or younger –85% of audience is domestic Gaia has built an attractive and passionate community –7MM register users and ~2MM monthly unique users –Average 2-3 hours per day on the site (more than MySpace or Second Life) An early stage company with significant upside potential –Previous focus on building audience, now beginning to monetize user base ($1.8MM in Q1 ‘07) –Raised ~$21MM to date; last round at $120MM valuation –Extremely interested in Sony as a strategic partner Fees from films and TV product aired in virtual theaters Ad inventory from branded digital channels (e.g. Minisodes) Sale of virtual SPE products (and possibly digital goods) Promote properties through immersive experience Company Overview Opportunities for SPE

11. 11 Gaia’s Unique Characteristics Engagement Matrix Gaia Cash = Incentive Based Featured Activity = Curated

12. 12 Gaia Cinemas

13. 13 DVD Burning Software To Come