group strategy division

Group Strategy Division | 2010 MRP 1Sony Corporation

DRAFT

Changing TV Landscape

June 2013


Changing Television Landscape

• TV distribution and consumption are changing all over the world

• In the U.S. and other developed markets, new devices and platforms are leading increased programming consumption

• In other territories, more traditional pay television services continue to grow, adding new channels and viewers

• Hit shows and formats created in the U.S. are finding a more global audience; at the same time, the market for local programming is thriving

The result is an increased demand for new and library content, and programmed channel experiences


SPT Distribution


Connected Devices such as Tablets, Smartphones, Consoles, & Smart TV’s are Enabling Ubiquitous Consumer Access to Content

7 10 13 16 19 2259

1316

1819

2

7

16

26

36

48

6

8

10

11

12

13

20

35

52

70

85

102

2010 2011 2012 2013 2014 2015

Game Console Stand Alone Set-Top Box Internet Connected TVs and Blu-Ray Player PCs/Home Media Server

Source: SNL Kagan. Number of devices in millions.(1) Applies to Internet-connected video game consoles used to access professionally produced content. Excludes multiple video game consoles per HH. (2) Stand-alone set-top boxes including, but not limited to, Apple TV, Roku, Boxee and TiVo. Excludes set-tops integrated with multichannel service (3) Internet capable TVs and blu-ray units that are connected and used for OTT video. Excludes overlap of devices. (4) Applies to households using a PC or media server to transfer OTT delivered content to the TV. Excludes households viewing content directly on PC screen.

(1) (2) (3) (4)

Over the next 4 years, device ownership is expected to grow at a 13% CAGR


Connectivity and Devices are Driving Online Viewing

U.S. TV and Online Viewing Households (MM)

(1) Does not represent cord cutters but applies to households regularly viewing television shows or movies using Internet or over-the-top (OTT) delivery, most online/OTT video HHs in the above graph also subscribe to multichannel services. Source: SNL Kagan, September 2012.

(1)

115 117 119 120 122 123

42 47 53 58 63 68

'11 '12 '13 '14 '15 '16

Total TV Households Online/OTT Video Viewing HHs


The Emergence of Online Viewing has Created New Players as Consumers Seek Flexibility

Traditional MSOs (i.e., cable & satellite) and networks are adapting their services to accommodate online viewing

TV Everywhere OTT

New digital networks have emerged taking advantage of the ability to go directly to the viewer without an MSO middleman


By Adding Digital Networks to the Traditional “Linear” Channels, There is Greater Demand for Content

Broadcast

Internet Services

Basic/Premium Cable

Digital networks also create demand for programming that is discontinued on traditional linear networks


Global Growth in Television Consumption is Increasing Worldwide Demand for US Content

Chart to be updated


Both Traditional Networks and Digital Networks are Spending More on Programming

Est. Annual Content Spend

$2Bn+

$500MM

$500MM – $1Bn

Traditional Linear Networks New Digital Networks


SPT Distribution: Growing Buyer Pool

Source: SPT analysis.Note: Domestic count does not include local affiliates of national networks already included.

41

76

136

1990s 2000s Current

300

509

780

1990s 2000s Current

Domestic International

International distribution continues to grow given new buyers and opportunities with SVOD and a strong global Pay TV market. The team has continued to build relationships with content buyers both domestically and internationally which is directly reflected in the growing number of SPT customers we sell to


SPT Distribution: Shift in our Revenue Mix

U.S. Revenue Mix International Revenue Mix

86% 83% 78% 76%63%

1% 1% 2% 4%10%

12% 11% 14% 14% 18%

1% 5% 6% 6% 8%

FY08 FY09 FY10 FY11 FY12EST/iVOD PPV/VODSVOD Free/Pay

94% 93% 92% 90% 85%

1% 1% 2% 7%6% 6% 7% 6% 6%

1% 2%

FY08 FY09 FY10 FY11 FY12EST/iVOD PPV/VODSVOD Free/Pay

Source: SPT and SPHE finance.

SPT has capitalized on the shift in consumer consumptions patterns. This is directly reflected in our shifting sources of distribution revenue as well as our new deal structures and partners (ex. Community on Netflix)


SPT Production


Originals

Exclusive licensed content

Non-exclusive library product

Networks are Under Greater Pressure to Distinguish Themselves and Attract Viewers

Poten

tial for e

mphasis

to sh

ift

Original programming has become a critical tool


SPT: U.S. Production

Note: Excludes Wheel of Fortune, Jeopardy!, The Young and the Restless, and Days of Our Lives.

SPT has had the most successful production slate in a decade with SPT receiving orders for seven new scripted series. SPT’s increased production slate reflects our success creating original television content to satisfy a greater demand for our product

69

128

1418

16

11

10 8

5 9

8

6 10

11

1617 17 17

2224

26

2005 -2006 2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013

New Series Returning Series


Miami (Latin America/USH)

Bogota

Sao Paolo

Rome

Cologne MoscowBeijing

Hong KongDubai

BeirutCairo

ParisLondon

Amsterdam

AMERICAS EMEA (Europe, Middle East, Africa)

ASIA

Culver City

SPT: International ProductionBuilding a Worldwide Presence

Companies in 13 countries around the world covering multiple regions;Programs aired in 88 countries, 73 languages and counting…

Tuvalu


SPT Networks


Continued Growth of International Pay TV Universe

International Pay TV Subscribers & Penetration

Note: Subscribers in millions.Source: Morgan Stanley research as of January 2013. SPT Networks FY16 sourced from FY 2013 MRP.

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

0

100

200

300

400

500

600

700

800

900

2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E 2015E 2016E

Subscribers Int'l Penetration US Penetration CAGR TBD, remove US line

Tremendous growth opportunities internationally where Pay TV penetration is expected to grow to 61% by 2016


AUSTRALIALATIN AMERICA

AFRICA

ASIA

JAPAN

EUROPE & RUSSIA KOREA

159 COUNTRIES

804 MILLION HOMES

124 FEEDS 22 LANGUAGES

NORTH AMERICA

SPT is capturing the subscriber growth trend by continuing to expand our channel presence internationally through new channel launches and targeted acquisitions in key growth areas

SPT Networks: Global Expansion


SPT Networks: Adapt or Die

SPE already owns a premium content OTT digital network with Crackle• Top ad-supported premium content service that is available across all platforms; broader audience reach than several

top paid services, including Hulu+ and Amazon• Top ad-supported channel on key platforms (Top 5 channel on Bravia, Blu-ray, and Roku)• Crackle expanding device and territory footprint to capitalize on growth in alternative consumption models

Expanding Reach of Linear Networks• Evaluating direct-to-consumer apps (e.g., AXN Go in LATAM) with cable/sat partners• Participating in existing local TV Everywhere offerings of cable/sat partners (e.g., Singapore)

SPT’s broader network strategy also recognizes new distribution platforms and consumer behavior


Conclusion


Sony Pictures Television: Highlights SPT is well positioned to take advantage of the changing TV landscape

Global Pay TV Growth

Increased Demand for

Content

New Distribution Opportunities

• Networks projected to have an EBIT CAGR of 23% across the plan, coming from all regions across the world as newer channels mature to profitability and more mature channels grow or maintain their margins

• Most successful production slate in a decade with SPT receiving orders for seven new scripted series

• Currently producing 32 programs for 17 US networks

• International distribution continues to grow given new buyers and opportunities with SVOD and a strong global Pay TV market

• Increasing buyers for content as new SVOD (i.e., Netflix) and AVOD (Crackle) services continue to proliferate

• Crackle breaking new ground with original production and continue distribution across platforms and global expansion


SPT Embraces Changes

TV Networks4%

Motion Pictures

63%

TV Pro-duction & Distribu-

tion33%

Profit – FYE03

TV Net-

works33%

Motion Pictures40%

TV Pro-duction & Dis-tribu-tion27%

Profit – FYE13Total TV = 37% Total TV = 60%

An industry leader constantly shaping and adapting to new trends, SPT has experienced significant growth and has become the largest contributor of profitability to SPE


Q&A

group strategy division | 2010 mrp 1 sony corporation draft changing tv landscape june 2013

Documents

traditional networks

sony corporation connectivity

ott new digital networks

cagr slide

sony corporation global

online viewing tv

new devices