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STRATEGIC CONSIDERATIONS

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– Differentiated content

– Marketing

Fundamentals

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Acquire Customers Retain/Monetize

Execution

– Goals

– Priorities

– Success on one platform and territory first, then broaden

– Killer UI (competitive with XBOX)

– Each offering is fully competitive (music competitive with Spotify)

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• UI management

– SNEI owns “content, service, platform” but each hardware group (PlayStation in particular) still has control of its UI and each has priorities that compete with SEN’s

• Marketing of the service

– Need to determine how SEN is marketed; inside hardware ads is more valuable than in SPE ads or standalone SEN ads

Notable Issues to Address

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Notable Issues to Address: Organization Today

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ContentMixed: SNEI

licenses in; SPE and SME support

PlatformSNEI

ServiceSNEI

UIMixed: Hardware

groups (e.g., PlayStation) have much

control; SNEI has input not

control

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• Content and Service need to be managed as one; platform may be managed separately

– Ineffective – Content for services becomes a new, standalone organization

– Ineffective – Content expertise moves into SNEI but without oversight of service

– Potentially feasible – Content expertise moved into SNEI with oversight of Content and Service aspect; platform managed by current SNEI leadership

– Potentially feasible – Content and Service responsibilities moved into SPE; platform managed by current SNEI leadership

• UI needs to be a single organization that is “content service” led; not multiple “hardware group” led UIs

– Ineffective – multiple UI groups in various hardware organizations, each with competing priorities

– Potentially feasible – SEN takes direct control over a subset of each hardware group’s UI relating directly to network services

– Potentially feasible – a single UI group is formed (or placed in SEN) that cuts across all hardware organizations

Organizational Considerations

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• Economic goals

– Discuss willingness to accept significant near-term investment to ensure we can create a highly competitive service which will eventually yield:

• Significant service-level profits

• And, provide ancillary benefits to hardware

• Service customer acquisition vs. hardware sales goals

– First: Convert more customers to active, paying SEN customers

• New accounts: Increase % of Sony Hardware customers that have SEN accounts

• Increase % of current accounts that are active / paying

• Increase revenues from current active / paying accounts

– Then: Use the service, content offerings, and customer enthusiasm to drive hardware sales

Recommended Goals

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• Platform prioritization

– First: Establish a superior service with differentiated content on a “hero” platform, namely the PlayStation

– Then: Broaden that service in a uniform fashion across device platforms

• Geographic prioritization

– First: Introduce new offerings in U.S.

– Shortly after (a matter of months): Launch in 2-3 other key markets [Japan, Europe?]

– Then: Roll-out globally at a realistic pace

• Demographic prioritization

– First: The PlayStation demographic; males 18-34

– Then: Broader

Recommended Priorities

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• Without changes in organization and priorities, we may be forced to prioritize improvements as

1. Improve existing services (Music Unlimited, Video Unlimited, PS+)

2. Add additional services and content (Crackle+; exclusive films)

3. Overhaul UI on various hardware platforms

• But to be impactful, all of these need to be handled simultaneously, ensuring a simple, compelling and differentiated service at launch in the fall of CY2012

Prioritization Challenges: Service Improvements

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EXECUTION

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Customer Acquisition

• Free / easy to discover content for customer acquisition through SPE and SME

• Increased marketing spend

– Incorporation in Electronics TV ads

– Increased SNEI budget

– Increased support by SPE, SME, SCE

Monetization

• Improved underlying services to capitalize on and monetize newly acquired customers

• Improved User Interface

– Single promotional “landing page” with clearly highlighted content for Music, Video, Games

• 3rd party services on PlayStation behind a pay wall (in-line with XBOX Live Gold)

Execution Overview

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Why Try (Customer

Acquisition)

Customer Value Proposition – “Why Try / Why Buy”

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Why Buy (Monetization)

Vivo+ (Free)

Compelling Service (Music Unlimited)

Crackle+ (Free)

Heavily Promoted and Exclusive Films

(Early EST, PVOD, UV)

VOD & EST PS+ required to access premium

services

Music Video PS+ (On PlayStation Only)

Cross-Sell Cross-Sell Gateway to Other Services

Gateway to well-known 3rd party

services (e.g., Netflix)

Single, Simple, Unified UI

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Potential Changes

• Vivo (current ad-supported version) on PlayStation immediately

• Build a solution for apps

• On the PlayStation, move the 3rd party services behind the PS+ pay wall; keep Video Unlimited and Music Unlimited as peers to PS+ (not behind the PS+ pay wall); Crackle+ starts in front of pay wall

• Music service switches from 180 day trial of the “light” product, to a 30 day trial of the full product (and service is improved)

• Launch integrated search and UI across Music, Video, Games

• UV support by June

• Security for PVOD by October

Projects that may now be duplicative

• Movie-a-day service (Crackle+ offering has greater volume free to consumer)

• Crunchy roll (incorporate Anime in Crackle+)

Discuss

• SEN TV

Execution – Tactics to discuss

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• February: Announce support for UV

• February : Significant SPE and SME marketing support of existing services in the market

• May: Announce Crackle+ concept and upcoming originals

• June: First “Exclusive and Early” title available; UV support necessary

• Fall: Crackle+ and Vivo+ launch

Biggest “Exclusive and Early” titles; security needed by October

Preliminary Timelines

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