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CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

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Page 1: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

CONFIDENTIAL

Project Big Fish: Acquisition Opportunity

July 2006

CHANGED TO JULY

Page 2: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

page 2

Agenda

• Executive Summary

• Detailed Analysis: Digital Distribution Landscape

• Appendix

Page 3: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

CONFIDENTIAL

Executive Summary

Page 4: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

page 4

Executive Summary

• Digital distribution is critical to SPE– Digital video distribution is reaching critical mass, changing the distribution

landscape and creating new opportunities for Sony Pictures– Other studios are investing heavily to capitalize on these opportunities

• 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 for technology, management, and/or user base

• An acquisition would best address technology challenges and accelerate speed-to-market by providing a platform

– “Big Fish”, a leading destination for user-generated content, is a target which could be a cornerstone for SPE

– Acquisition criteria include access to technology, management expertise, content and revenue potential

– Potential risks relate to retaining and growing customer base and incorporating commercial content

Page 5: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

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

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Changing Distribution Landscape and User Behavior Create Opportunities for Sony Pictures

• IP-delivery is decreasing control exerted by traditional distribution partners and increasing the importance of two-way communications

– Consumer time spent watching cable and network TV forecast to remain roughly flat while time spent with interactive media (online, games, mobile) will grow 10%-30% annually

• Unlimited shelf space is increasing the importance of niche content– Major studio content composes 95% of volume for brick-and-mortar retailers but only 80%

for online retailers

• Advertising is becoming increasingly important in the online space– Online advertising grew 30% in 2005 (compared with 6% for traditional media)– Online advertising expected to reach 25% of the $115 BN domestic advertising market

• SPE is creating digital video services to capitalize on these trends and strengthen our position in the market

– Increase control of distribution and build direct, two-way relationships with consumers– Broaden base of content to include user generated and short-form– Increase ownership of ad-supported content

FIXED TYPO IN TITLE, TWEAKED WORDING

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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

Production CustomerDistributionAggregation

SPE

Cable Network

Cable TVCable MSOSPE

Portal PC or TVBroadband ISPSPE

Customer-facing Service

SPE-owned Service

PC or TVBroadband ISPSPE

Page 8: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

page 8

Sony’s Efforts to Date Demonstrate the Challenges in Building Core Technology and the Need to Invest Appropriately

Learning and ImplicationsSony Efforts to Dates

• Nanofilms• Chat Cinema• Broadband Channels• Sony Connect• Marketing partnerships

–“When a Stranger Calls” on MySpace• Bundling films on digital media

–Memory Sticks–Flash Memory–Computer Hard Drives

• Initial efforts were ahead of market appetite; current efforts demonstrate market readiness

• Social Networking and User Generated Video sites are effective marketing platforms

–“When a Stranger Calls” has 115K friends on MySpace

• Success requires a significant investment in marketing and infrastructure

• Sony faces challenges in developing differentiated technologies in-house

• Acquiring established brands and technology can be more cost efficient

• Screen Blast• SoapCity• iFilm (early investor)• MovieLink

Current

Previous

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page 9

Competitors See Value in User Generated Video Sites and are Investing Heavily in the Space

Online Destinations

• Acquired iFilm for $49 MM

• Acquired Intermix / MySpace for $580MM

• Acquired IGN and Scout for $X

• Acquired iVillage for $592MM

• Promoting new series on YouTube

• Acquired Lightningcast for video advertising technology

• Licensing content through BitTorrent and Guba (social network)

Social Networks Generate Value for Traditional Content Owners

Social Networks Generate Value for Traditional Content Owners

Large audiences provide a legitimate alternative distribution channel

Increasingly supported by advertising revenue

Two-way medium with high degree of interactivity, customer engagement and feedback

Provide opportunities to create popular derivatives of existing properties

Harness users’ creativity to identify and develop new concepts

Large audiences provide a legitimate alternative distribution channel

Increasingly supported by advertising revenue

Two-way medium with high degree of interactivity, customer engagement and feedback

Provide opportunities to create popular derivatives of existing properties

Harness users’ creativity to identify and develop new concepts

Fixed typo (extra space in WB section)

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page 10

51.4

20.1

7.7

2.8 2.0 0.8

20.5

7.0

13.9

9.3 9.3 8.04.4 3.2 3.2

8.5 8.05.4 4.7

User Generated Content Sites are Attracting Large Audiences

Social Network Store Channel Promotional

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.

• 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

Monthly Unique Users (mm)

Changed title

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page 11

Acquisition Targets Must Meet the Following Criteria

Focus on these criteria and reasonable valuation to:

Focus on these criteria and reasonable valuation to:

Accelerate time-to-market

Decrease cost of entry

Gain access to new content

Create potential for growth in advertising revenue

Accelerate time-to-market

Decrease cost of entry

Gain access to new content

Create potential for growth in advertising revenue

• Proven track record

• Domain expertiseStrong Management

• Service operation and design

• Tools / software development

• Consumer data usage

Differentiated Technology

• Large and growing base of user-generated content

Breadth of Complimentary Content

Page 12: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

page 12

SPE Target and Competitive Landscape

Technology Capabilities

Low High

Lo

w (

< 3

mm

)H

igh

(>

3m

m)

Exi

stin

g S

ervi

ce P

enet

rati

on

Google (97.2)

Yahoo (105.5)

AOL (72.0)

YouTube (20.1)

MySpace (51.4)

Grouper* (2.8)

Brightcove (0.2)Veoh (0.1)

FOX.com (8.5)ABC.com (8.0)

MLB.com (9.3)

Facebook (7.7)

Connect (1.2)

iTunes (20.5)

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)

AddictingClips (1.7)

iFilm (3.2)

Revver (0.1)

Dailymotion (0.4)

vidiLife (0.7)

VideoEgg (NA)

vimeo (0.4)

MovieLink (0.6)

CinemaNow (0.3)

vSocial (0.5)

Guba (0.9)

Roo Media (0.6)

Moved movielink and cinema now higher

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Big Fish Company Overview

• Multi-platform Video Network dedicated to watching, sharing, and creating user generated video

• #2 independent video community (Hitwise May report)Service Summary

Technology Differentiators

Current Status

Partners and Affiliates

• Video distribution technology enables video portability to multiple devices (iPod, PSP, mobile phones)

• Proprietary software client with P2P file sharing

• Supports all major video formats and encodes to Flash Video 8, WMV9, MP4

• Desktop video creation technology featuring video editor, video optimizer, webcam recorder, miniDV transfers and client-side Video

• Plug-and-play rich video functionality on partner sites that enable users to watch, search, upload and share video

• Affiliate agreements with MTV, Friendster, Buy.com, Everyone’s Connected, Logitech, and Pure Digital

• Launched beta version of site and attracted 7MM global UU’s (2.8MM US)

• Pre-revenue; developing version 3 of the service

• Received [quang verify $5M?] of funding to date

• Received a competitive acquisition bid and provided valuation guidance of $50MM

• Currently employees [28] full-time; [X] contractors

tweaked

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page 14

Big Fish Service Highlights

WatchWatch

• Home page with “video wall” of user generated content; 80% click-through

• Content can be discovered through:– Rotation in video wall– Search– Channels

• Ability to download content to multiple devices in appropiate format

– iPod– PSP

ShareShare CreateCreate

• Easy upload of user videos

• Add video comments to video from other users

• One click publishing to other sites, including MySpace

• Import address from MSN, Hotmail, and Yahoo to create email groups

• P2P client enables download of original, high quality files (not just streams)

• Real-time recording and upload from web cams and mobile phones

• Proprietary client with easy-to-use editing tools

– Select video– Select photos and tracking /

panning effects– Select music

UPDATEUPDATE

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Big Fish Management Team

• Josh Felser, CEO & Co-founder– President & Co-founder Spinner (Sold to AOL for $320M); GM AOL’s music brands;

Business development at News Corp

• Dave Samuel, President & Co-founder– CEO and Co-founder Spinner; VP Technology AOL, MIT

• Aviv Eyal, CTO & Co-founder– CTO and Co-founder Friskit; Lead engineer Microsoft Multimedia

• Mike Sitrin, VP Revenue & Co-founder– Director Marketing and Commerce AOL, Director of Sales Spinner

• Jonathan Shambroom, VP Product– VP Product Jumpstart, Director Product: Evite (Sold to IAC), When.com (Sold to AOL),

PF.Magic (Sold to Learning Co)

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Big Fish Performance Against Competitors

Ease of UseCommunity

ConnectionsFeaturesQuality of Content P2P Client

TechnologyTechnology ContentContent ManagementManagement

Strength of Leadership

MonthlyUnique

Users (mm)

2.8

1.7

0.4

0.9

3.2

1.6

NA

0.1

0.1

0.7

0.4

0.5

20.1

• Strong, experienced team

• Unknown

• Unknown

• Weak team

• Strong (but captive to Viacom)

• Unknown

• Unknown

• Average

• Unknown

• Unknown

• Unknown

• Unknown

• Young, limited experience

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page 17

Cross-Sony Opportunities for Big Fish

• Connect service primarily acts as a digital store, aggregating commercial content for Sony devices

• Big Fish expands service capabilities, adding user-generated content and distributing across all device types

• Big Fish technology built to support ad-based and transactional business models

• Big Fish can expand to become the lead brand for Sony’s broadband channels or support additional channels with new brands

• Big Fish has positioned itself to meet the high demand for online video advertising (supports ad insertion in both streamed and downloaded content)

• SPE ad sales team could sell ad space

Technology As A Platform for Growth

SPE Ad Sales Opportunities

Complementary to Connect

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Risks and Mitigation

MitigationRisks

• Customer retention / increased competition • Differentiated technology provides a better user experience than competitors

• Leverage strategic partners for growth (less dependent on “fads” in user taste)

• Inability to offer commercial content • Ensure SPE appropriately programs content for the channel

• Create new, more interactive content for the Big Fish

• Integration challenges • Structure incentives for acquired management• Allow new management to retain decision-making

authority

• Lack of interest by advertisers • Big Fish struck first deal with MTV• AOL and Google report sold-out ad inventory

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Valuation Based on Multiple of Unique Users for Comparable Companies

• Based on Big Fish’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

REVENUE GENERATING COMPARABLES

Transation Purchase Number of EV / Implied (dollars in millions) Date Price Unique Users Unique Users Valuation

Comcast Interactive - thePlatform Jun-06 $80.0 N/A N/A $80.0

Friendster (post-money valuation) Oct-03 $53.0 1.70 $31.2 $87.7

NewsCorp - MySpace / Intermix Jul-05 $580.0 17.00 $34.1 $96.0

NBC Universal - iVillage Mar-06 $600.0 14.00 $42.9 $120.6

Source: Company press releases, VentureSource.com. * Unique user data from Nielsen NetRatings and ComScore MediaMetrix, representing US Unique Users as of Paril 2006.

Median $91.8

Grouper Guidance on Required First Bid $50.0

Implied Discount for Pre-Revenue / Early Stage Company45.6%

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Valuation Based on Venture Funding of Comparable Companies

• Venture funding in this space has also been extremely active, and can provide an implied valuation range considering the percentage of the company given (ranging from 10% to 40%)

VENTURE FUNDING VALUATIONS

# of Monthly Round of(dollars in millions) Unique Users Date Funding Amount Raised 40.0% 30.0% 20.0% 10.0%

BitTorrent 0.4 9/27/2005 1 $8.75 $21.88 $29.17 $43.75 $87.50

YouTube 20.1 3/31/2006 2 8.00 20.00 26.67 40.00 80.00

Brightcove 0.2 11/22/2005 2 16.20 40.50 54.00 81.00 162.00

CinemaNow 0.2 7/27/2004 1 11.25 28.13 37.50 56.25 112.50

Veoh Networks 0.1 4/18/2006 1 12.50 31.25 41.67 62.50 125.00

DivX* 1.1 5/5/2006 4 17.00 167.00 167.00 167.00 167.00

Friendster** 0.8 11/6/2003 1 13.00 53.00 53.00 53.00 53.00

MySpace*** 51.4 7/18/2005 ACQ 146.80 146.80 146.80 146.80 146.80

Source: Funding information provided by VentureSoruce.com. Unique user data from Nielsen NetRatings and ComScore MediaMetrix.* Post money valuation for DivX provided at $167.0 million** Post money valuation for Friendster provided at $53.0 million.*** The remaining 47% of MySpace was acquired by Intermix Media for $69 million - implied valuation stands at $146.8 million.

Mean $63.57 $69.48 $81.29 $116.73

Median 35.88 47.33 59.38 118.75

Low 20.00 26.67 40.00 53.00

High 167.00 167.00 167.00 167.00

Implied Valuation Range

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page 21

Deal Memorandum to SCA and Tokyo• Submit non-binding term sheet• Initial feedback on status of bids• Tokyo approval to negotiate binding terms• Initiate negotiations of binding terms

Deal Memorandum to SCA and Tokyo• Submit non-binding term sheet• Initial feedback on status of bids• Tokyo approval to negotiate binding terms• Initiate negotiations of binding terms

Due Diligence• Analyze due diligence materials• Meet with Company• Finalize acquisition valuation

Due Diligence• Analyze due diligence materials• Meet with Company• Finalize acquisition valuation

Process Timeline

Activities/WorkstepsActivities/Worksteps

TimelineTimeline

Acquisition Rationale• Review drafts with Calkins and Carey• Present to Feingold• Present to Lynton and Hendler• Present to SCA (Wiesenthal and Kanagawa)

Acquisition Rationale• Review drafts with Calkins and Carey• Present to Feingold• Present to Lynton and Hendler• Present to SCA (Wiesenthal and Kanagawa)

6/266/26 6/276/27 6/286/28 6/296/29 6/306/30 7/37/3 7/47/4 7/57/5 7/67/6 7/77/7 7/107/10 7/117/11 7/127/12 7/137/13 7/147/14 7/177/17 7/187/18 7/197/19 7/207/20 7/217/21

Page 22: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

CONFIDENTIAL

Detailed Analysis

Digital Distribution Landscape

Page 23: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

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

20.125.0

29.433.5 36.6 38.8

13.1

17.6

21.6

25.428.5

30.8

2004 2005 2006 2007 2008 2009

Cable DSL

30% 38% 46% 52% 57% 61%

33.2

42.6

51.0

58.9

69.665.1

1998 2005

Broadband-enabled U.S. Households (MM) Video Downloads (BN)

0.28

18.0

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Downloadable Video Should Drive Growth in Filmed Entertainment

$0

$5

$10

$15

$20

$25

$30

1973 1975 1977 1979 1981 1983 1985 1987 1989 1991 1993 1995

Rev

enu

e ($

Bill

ion

s)

Pay TV/ Subscription VHS/ Rental DVD/ 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%TV41%

Box Office52%

Video/DVD41%

TV32%

Box Office27%

Source: Entertainment Industry Economics Vogel 4th 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

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Digital Video Delivery Represents an Opportunity to Reach a Younger Demographic

Source: Pew Internet & American Life Project, December 2005

27%

22%

14%

8% 8%

Gen Y Gen X Trailing Boomers Leading Boomers Matures

Percent of Each Age Group Downloading Video

(18-28) (29-40) (41-50) (51-59) (60-69)

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SPE Can Best Reach Younger Demographics with Models that Include Two-way Interactivity and Social Networking

Source: Pew Internet & American Life Project, December 2005

66%

52%

38%42%

33%

41%

30%

20% 21%19%

Gen Y Gen X Trailing Boomers Leading Boomers Matures

Percent of Each Age Group Participating in Online Activity

(18-28) (29-40) (41-50) (51-59) (60-69)

Instant Message Read a Blog

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Changein Hours %

1990 2000 2005 2006 2007 2008 2009 ('05-'09) Change

Box Office 12 12 12 12 12 11 11 (1) (8.3%)

Interactive TV/Wireless Content - - 15 19 26 32 42 27 180.0%

Cable & Satellite TV 674 869 871 877 891 881 12 1.4%Broadcast TV 793 679 684 678 675 681 2 0.3%

Consumer Internet 1 104 183 190 195 200 203 20 10.9%Home Video 38 43 76 84 91 95 99 23 30.3%Video Games 12 64 78 82 86 93 96 18 23.1%

Radio 1,135 942 978 975 974 984 984 6 0.6%Recorded Music 235 258 179 175 175 169 165 (14) (7.8%)Daily Newspapers 175 201 183 179 175 170 165 (18) (9.8%)Consumer Magazine 90 135 124 122 122 122 121 (3) (2.4%)Consumer Books 95 107 106 106 106 106 106 0 0.0%

TOTAL MEDIA CONSUMPTION 3,263 3,333 3,482 3,499 3,517 3,548 3,554 72 2.1%

1,470

Consumer Time Shifts in MediaHours Per Person Per Year

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

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

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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

85%70%

30%15%

Bookstore Amazon

Books

98%78%

22%2%

Music Stores Digital

Music

80%

95%

20%5%

"Mart" Retailers Online Retailers

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

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Media spending does not yetreflect consumption

Advertising dollars are shifting online to address the current gap

2003-’05 US Advertising CAGR

Contribution to Growth

Television:

TV Stations 1.5% 2%

Cable Networks 15.6% 19%

Cable MSOs 8.1% 3%

CBS Net, FOX Net 5.8% 9%

Total Television 7.0% 34%

Magazines 8.9% 5%

Newspapers 3.4% 11%

Radio 0.2% 0%

Outdoor 7.1% 5%

Online 50.4% 45%

Total 8.4% 100%

SUMMARY

Traditional Media 5.1% 55%

Online 50.4% 45%

Total 8.4% 100%

Ad Market is Changing Significantly as Ad Dollars Following Consumers and Two-way Infrastructure Becomes Available

Network TV20%

Cable TV25%

Radio27%

Other11%

Magazines4%

Newspaper5%

Games2%

Internet6%

Network TV24%

Cable TV19%

Radio29%

Newspaper6%

Magazines4%

Other14%

Internet2%

Games2%

1999

2005

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SPE Currently Has Limited Ability to Capitalize on the General Growth in Ad Revenues, Particularly in the Online Space

36.6 40.0 39.6 43.2 44.0 47.2 48.2 52.2 53.3

14.214.7 16.3

18.9 21.724.3 26.9

29.733.4

7.16.0 7.3

9.612.6

16.120.0

24.128.2

$0

$20

$40

$60

$80

$100

$120

$140

2001 2002 2003 2004 2005 2006 2007 2008 2009

Broadcast Netw orks Cable Netw orks Online

US

$ (

Bil

lio

ns

)

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

& O

nli

ne

Ad

ve

rtis

ing

Sp

en

d

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 63.271.7

78.3

87.695.1

106.0114.9

Page 32: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

CONFIDENTIAL

Appendix

Page 33: CONFIDENTIAL Project Big Fish: Acquisition Opportunity July 2006 CHANGED TO JULY

page 33

Digital Video Offerings Can be Divided into Four Main Categories

Promotional Channel StoreSocial

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

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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

Promotional Channel StoreSocial

Network

LargerAudience

SmallerAudience

• Blinkx• Innertube• Multi-media

Networks• Singingfish

• CinemaNow• Connect• MovieLink

• Dave.TV• Fleapit• Gather• Tag World• Varsity World

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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

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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

MoreEstablished

NewerEntrant

• 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

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Key Attributes of Digital Video Services

Content AccessibilityContent Accessibility1

Low Medium High

Content ValueContent Value2

Range of Content ProvidersRange of Content Providers3

Content BreadthContent Breadth4

Degree of InteractivityDegree of Interactivity5

Connected Portable Anytime, Anywhere

Promotional User-Generated Produced

Company Owned Aggregated

Single Genre Multi Genre

On-Demand Ancillary(e.g., blogs and ratings)

Real-Time(e.g., chat, story navigation)

Business Model(Cost to Consumer)Business Model(Cost to Consumer)

6Free Ad-Based Pay

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Promotional Video Websites

OverviewOverview AttributesAttributes

• 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 BreadthContent Breadth4 Single Genre Multi Genre

Low Medium High

Content AccessibilityContent Accessibility1 Connected Portable Anytime, Anywhere

Content ValueContent Value2 Promotional User-Generated Produced

Range of Content ProvidersRange of Content Providers

3 Company Owned Aggregated

Degree of InteractivityDegree of Interactivity5 On-Demand Ancillary

(e.g., blogs and ratings)

Real-Time(e.g., chat, story

navigation)

Business Model(Cost to Consumer)Business Model(Cost to Consumer)

6 Free Ad-Based Pay

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Content BreadthContent Breadth4 Single Genre Multi Genre

Broadband Video Channels

OverviewOverview AttributesAttributes

Low Medium High

Content AccessibilityContent Accessibility1 Connected Portable Anytime, Anywhere

Content ValueContent Value2 Promotional User-Generated Produced

Range of Content ProvidersRange of Content Providers

3 Company Owned Aggregated

Degree of InteractivityDegree of Interactivity5 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)Business Model(Cost to Consumer)

6 Free Ad-Based Pay

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Video Store (Content Aggregation)

OverviewOverview AttributesAttributes

• Aggregates video across content providers for purchase

• Uses a range of models including sell-thru, rental, and subscription

Content BreadthContent Breadth4 Single Genre Multi Genre

Low Medium High

Content AccessibilityContent Accessibility1 Connected Portable Anytime, Anywhere

Content ValueContent Value2 Promotional User-Generated Produced

Range of Content ProvidersRange of Content Providers

3 Company Owned Aggregated

Degree of InteractivityDegree of Interactivity5 On-Demand Ancillary

(e.g., blogs and ratings)

Real-Time(e.g., chat, story

navigation)

Business Model(Cost to Consumer)Business Model(Cost to Consumer)

6 Free Ad-Based Pay

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Social Network (User-generated Video Sites)

OverviewOverview AttributesAttributes

• 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 BreadthContent Breadth4 Single Genre Multi Genre

Low Medium High

Content AccessibilityContent Accessibility1 Connected Portable Anytime, Anywhere

Content ValueContent Value2 Promotional User-Generated Produced

Range of Content ProvidersRange of Content Providers

3 Company Owned Aggregated

Degree of InteractivityDegree of Interactivity5 On-Demand Ancillary

(e.g., blogs and ratings)

Real-Time(e.g., chat, story

navigation)

Business Model(Cost to Consumer)Business Model(Cost to Consumer)

6 Free Ad-Based Pay