FY13 F1 Premium Contents Delivery 2012/09/18 Premium Contents WG Agenda F1 Schedule F1 Project organization Phase 1 F1 service F1 box/security 4K mastering BD F1 Distribution - Schedule Outline Schedule Outline CY12 Event Standard 4KTV products 4K Playback devices CES NAB CY13 CES IFA/IBC London Olympic NAB CY14 IFA CES

Confederatio ns Cup HDMI 2.0 HEVC 4:2:0 8bit UHDTV Normal color gamut 2K4K up-converter4K up-converter HDMI 1.4 4K YUV 422 30P / WCG 2K4K up-converter4K up-converter HDMI 1.4+ Phase 0 PC server - AVC / no DRM - AVC / TV + Set Top Box 4K Mastering BD with xvYCC (2K) 4K Native distribution - AVC World Cup Soccer HEVC 4:2:2 10bit 4K Native demo 4K decoder on PC Premium Content IFA NAB Sochi Olympic

CY15 4K YUV 444 60P / WCG 2K4K up-converter4K up-converter 4K decoder built-in possibility HDMI 2.x F1 Project Organization Project Owner Hirai F1 Report Saito, Nemoto, K. Suzuki, Ishizuka Lynton, Schaaff Leader Nagata PJ Promotion Promotion Leader : YasebeHouse MTG (Report in GEC) Project Manager Imamura UGC/UX Product Strategy Policy Confirm. MTG =Consumer P MTG Premium Content K. Suzuki, Ishizuka, Policy Confirm. Imamura, Furumi, House, Schaaff MTG UGC/UX Product Strategy WG Premium Content WG (Nagao) (Shimazu/Suzuki) PMO: Sumimoto

-Personal Content -Combination with I-Pro -Combination with Orbis -Creation of New UX PMO: Katsumata -Business model -Technology -Alliance Saito, Nemoto, Imamura SEL (Molyneux) SPE (Cookson) Strategy/ Planning Technology Total Picture Quality Strategy WG (Ogura) Marketing WG (Okuda) Marketing Role of each party (Premium contents distribution Phase 1) Technology fixing Technical study Muramatsu Security system study Requirements

Sonoda / Yonemitsu Define Format C. Cookson Define Security system Security/Quality requirement Mitsuhashi Secure IF study C. Cookson Service preparation Sonoda SNE / DADC Decoder Box Solution study Service Infrastructure Usage policy SNE or SEL Define Service model Other Studios

HW preparation HES Business Operation Design STB SNE or SEL(DADC) HES Implement Secure IF on TV Service Execution Yanagihara Spencer SNE or DADC SPE ColorWorks Contents Encoding SEL (Y. Takahashi) - Schedule Outline Tokyo - Schedule Outline SPE - Schedule Outline SNE - Schedule Outline SEL - Schedule Outline DADC Encoder F1 Total Marketing (HW and Service) Joint Promotion of HW and Service and Content 4K library Encoder Preparation

Business Planning Y. Takahashi Yasebe Total Business Planning For Development, Preparation & Operation Sony Confidential Role of each party (Premium contents distribution Phase 1) SPE to define requirements on security system and picture quality. Tokyo to study security system, I/F security, and decoder box architecture. Tokyo to define distribution format and security system for F1 movie distribution, based on above st udies and discussions with SPE. Secure I/F standardization work is also to be conducted. Tokyo to design STB and implement secure I/F on TV. SPE and Tokyo to study encoder solutions and develop or outsource encoder. SPE to build 4K movie library. Clarify business responsibilities between SEL/SNEI to: Define service/distribution system sustainable for 4K distribution (such as pre- Schedule Outlinedownload and download model) Develop distribution system (outsource to DADC) Movie distribution execution/operation to customers (outsource to DADC) WW aggregation of non- Schedule OutlineSPE studios. SPE to help convince other studios. SEL to execute marketing of 4K hardware and service. Tokyo and SEL to work on total business/financial planning and assessment including initial investm ent. Tokyo to create framework for WW service/distribution. PHASE 1 SERVICE 7 F1 service (distribution) How we design service model friendly to user is key for success. Best utilize of pre- Schedule OutlineDL to local storage and alternative distribution will reduce user frustration

of non streaming solution. Average 20- Schedule Outline25Mbps AVC encode required in order to keep 4K quality, which s hows clear difference from up- Schedule Outlineconversion. Streaming is not possible. Download depends on real speed of network, but 3 ~4 times DL is not acceptable for user who is get used to streaming. SNEI says (confidentially) download model is not very popular and 70% of purchasers never return of purchasers never return to buy again (HD case) Need to consider Combination of download, pre- Schedule Outlinedownload, and off- Schedule Outlineline media delivery (data disc, memory device) and design service Sell model / transactional rental model (or combination) To make 4K service simple, bundle with UV or VU for other needs, such as second room and mobile use.) Service Model Image New title EST Catalog title EST TV series Early window rental Non movie contents 9 Pre Download DL by transaction Off- Schedule Outlineline media Pre Load On box Yes (before

Release date) - Schedule Outline Yes - Schedule Outline - Schedule Outline Yes Yes Yes (some) 1st episode /next a few Ep. Following episodes Yes 1st episode Yes (before Release date) - Schedule Outline - Schedule Outline - Schedule Outline Yes Yes Service model needs to be well designed, considering reducing user frustration, pre DL cost, and promotion.

In narrow band countries, consider selling fully pre- Schedule Outlineloaded box or pre- Schedule Outlineloaded external HDD. F1 service image (Pre-DL/Pre-Load Online) Contents distributor Authentication Server 4. 4K and HD/SD VU (or UV) rights to users account Transaction Server CDN 1. Pre-Download / Pre-Load content 6hours 2. Order content Payment 4K file internet 3. server authentication 4K Contents 5. View content HDD Online Pre-download / Pre-load F1 BOX F1 TV *) HD/SD content can be streamed to 2nd room TVs or mobile

devices with VU or UV rights. F1 service image (Physical/Online hybrid) Contents distributor 4K Premium Contents Authentication Server 2. 4K and HD/SD VU (or UV) rights to users account 4K Transaction Server CDN 3. Download content 6hours 5. View content after server authentication 4K file 1. Order content and select media (optional) 3. Ship physical media w/ content Payment 4K Content s internet 4. View content after download HDD Online

download F1 BOX media(TBD) USB/NSM(SDcard)/(BDdata) F1 TV 4. Insert media to F1 Box Physical Delivery F1 Service Image - Physical/Online hybrid Service model: EST Transactional rental potentially Early Window Online Network delivery Immediate 4K Download rights. Pre-DL if purchase date < street date Automatic rights to HD/SD VU streaming/DL. And/Or UV locker rights for HD/SD (coupon code with physical delivery). Physical Media delivery - Optional User selects media (USB/(BD-data) etc TBD) - Price depends on media: Usage rules: 4K can only be viewed on Box - user & device bind Network authentication required for playback Can backup content to other media no media bind HD/SD VU/UV can be viewed in second room or mobile devices- user domain 12 F1 service (contents) [Non Real-time Contents Expansion Image] SPE New (4K shooting/4K scan)

7 (2013) Major Catalog (4K scan) 8 (over 200mil) 19 (100-200mil) 2 on going TV series Classic Major Catalog (65mm) Classic Catalog (65mm/35mm) Non Movie (4K shooting) (5 season 60Ep) 4 season 48Ep) Studio A - 2013 launch - 2013~2014 Studio B, C (David Bishop) Not positive to include TV series. Would like SPHE to pick movies from the title list that are suitable for 4K audience. Launch target 30 40 (movie 15-20, TV 12 and other) 100 by 2014/M incl. additional studio. (Phil Molyneux) For CES announcement, requested 50 titles at launch. 100 titles in 2014. F1 service (Business) Service to continue at lease 5 years. Even in the case, major service be shifted to HEVC coded, prepare AVC file and release at the same timing for this service during the period. Who should be the business owner of this service

Be responsible for business, select titles, and make contract with other studios. Must be knowledgeable of content aggregation and capable of manage operations. Business owner for other territories. Recoup scenario to be approved Calculate initial investment and maintenance cost (other than running cost) Clarify responsibility between SEL and SNEI (including WW distribution). Rough calculation of initial cost need to be done by Oct/B. F1 service (Supply chain) Content Provider License content Aggregator Content aggregatio n Business deals SNEI? SEL? 19 Content Authoring/Distributor Encode/Mux(wrap) Asset Prep (metadata, thumbnails,..) Encryption DRM License Server Ingestion Physical media prep/delivery

QC Storefront SKU mgmt DADC? Retailer User ID manage ment Payment processin g Sony Direct? SEN? CDN/ Distributi on Center ISP/ Shipping service Box/TV manufact urer Enduser F1 BOX/SECURITY/SERVER SYSTEM 20 Box Scope FY13 F1 Distribution service FY13 F1 Distribution Box Download receiver decoder with 1TB HDD

Service launch by Aug/2013 (June/2013 if possible) Region: US, Other territories (TBD) AVC 4K2K 420 24P(avg:25Mbps/peak:50Mbps) decode Media option(TBD) : USB memory/USB HDD/SD Card(NSM)/(BD Data) External storage (TBD): USB HDD Target cost: 150$ (w/o BD drive), Qty:100k 84FSH (FY12 model) Update Home Projector Update (VPL-VW1000ES) FY15 TV will implement F1 distribution box functions (TBD) 21 2013-14 F1 Network delivery (BRAVIA box) 4K Premium Contents DL authorize Decode authorize UI file UI Picture 4K Contents UI on BRAVIA 4K file Display port and HDMI 1.4 modify Pre DL Media (TBD) USB/SD card(NSM)/(BDdata) 4K file

Uniphier 4K decode URL Command 4K TV 2015- F1 Network delivery (BRAVIA builtin:TBD) 4K Premium Contents DL authorize Decode authorize 4K file UI file UI Picture 4K Contents 4K TV 4K file F1 BOX Block Diagram DDR3 DDR3 2GB 2GB NAND NAND x32bit x2 800MHz YUV SATA I2S x4

Hi Res. Audio HDMI HDMI Tx Tx HDMI1.4b HDMI HDMI1.4b Local Storage USB Key/FAN Uniphier Pro4 HDMI HDMI HDMIBridge Bridge and/or and/or DP DP Bridge Bridge Ether HDMI1.4b 4K Premium Contents 4K Contents HDMI1.4c or DP1.2b

Ether HUB HUB Ether F1-BOX AV Amp Terminal Terminal Adopter Adopter 4K TV WebApp(Content list) Native (BOX Setting) F1 Distribution Box Specifications Video Format H.264 AVC [email protected] Decode Audio Format CFF/MPEG Dash

Security(DRM) MPEG4 AAC-LC 48KHz/2ch, 5.1ch High Resolution Audio(TBD) Container Frame rate: 24p YUV 8bit 4:2:0 Bitrate: avg25Mbps/peak50Mbps Marlin-BB (TBD) Graphics Timed Text Interface G-bit Ether(Wired) AV Output HDMI1.4c /DP1.2b (w/HDCP2.2) Output YUV 4:2:[email protected] xvYCC HDMI (Audio Output) for TheaterSystem Storage 1TB HDD External USB HDD(TBD) Media Option (TBD) USB memory/USB HDD/SD card(NSM)/(BD

data) 25 Schedule Outline 12 8 FSM/L TV Set 9 10 8/M SCT2 (SW) 26 11 12 11/M CVT Distributi on System F1 Box (HW) 13 10/M SpecFix 9/E

SpecFix 10/M System FIX 10/M SpecFix 1 2 4 3/B 3/22 MP1 Ex- Schedule OutlineF 4/19 Ex- Schedule OutlineF (original) 1/B MVT 3 (TGT) 12/M Test Stream 11/E G/O 5 3/M Test Server

) 1/M LF( 6/B Service Launch 3/B 4/E ET( ) EPP( ) 6 RC 5/M 5/E MP Ship GM 7 8 9 F1 box Security Uniphier-based Trusted Execution Environment available (secure boot, DRM process in

H/W) Closed Platform New Segmentation method (MPEG Dash based) with Marlin BB User Bind Individualized Encryption Forensic WM capable Workable for both Pre-Load to Recordable Media and Net-Download 2012/9/14 Sony Confidential 27 Server: to prepare Multiple Segments encrypted with Different Keys 2-1 moof 2-2 moof 2-3 moof 2-4 Segment Video 1-1 moof mdat moof Segment Segment mdat n-1 moof mdat

mdat Each segments encrypted by different key. also Different watermark(studio choice) can be embedded to support forensic function. mdat mdat to Client: Deliver Segments selected at random with MPD corresponding such Segments Audio AdaptationSet Representation MPD(*) for Client moof mdat (*) MPD: Media Presentation Description including meta data related to url of each segment moof mdat moof mdat Video AdaptationSet Representation 1-1 moof mdat 2-2 moof

mdat n-1 moof mdat 1-1, 2-2, n-1 2012/9/14 Sony Confidential 28 In case of Net-Download (Example): User Step 1: Pre- Schedule Outlinedownload etc. MPD ID = 02F1 Marlin: User Authentication & Key Server User Authentication

Step 2: Key acquisition Content Preparation & Delivery: Content Delivery Server Each Segment can be embedded 0 to F video watermark Also Each segment is encrypted by different key Financial Transaction MPD ID=02F1 Keys for MPD ID=02F1 Step 3: Playback 2012/9/14

(No transaction necessary) Sony Confidential 29 In case of Pre-Load to Recordable Media (Example): User Financial Transaction(*) Content Preparation & Delivery: Content Preparer Step 1: Media purchase MPD ID = 02F1 Marlin: User Authentication & Key Server User Authentication MPD ID=02F1 Keys for MPD ID= 02F1 Step 3: Playback 2012/9/14 (*) Payment during key acquisition may be applicable

instead of Pre- Schedule OutlinePaid (No transaction necessary) Sony Confidential Step 2: Key acquisition & playback Each Segment can be embedded 0 to F video watermark Also

Each segment is encrypted by different key Or All segments are encrypted by one unique key in media recording timing 30 Items SPE Requirements F1 box security Under study Description Description Marlin BB + Enhanced New Feature (Forensic watermark capable etc.) 1 Phase + NDS ?? 1 A new approach to security 2 New compliance & robustness requirements Trusted Execution Environment based on Uniphier security (e.g. Secure Boot, DRM process in H/W) - 3 Designed and reviewed by

organizations expert in security Combination of Established Technologies - 4 Single content protection system Only Marlin BB + Enhanced New Feature - 5 3rd party device certification Dedicated service for only Sony devices - 6 Active monitoring and response Player Integrity Check by Security Code cannot be applicable to Uniphier Continue to discuss with Panasonic Under study. e.g. how to combine Marlin and NDS 7 Renew security with every download or with every title 7-1: Individualized Encryption 7-2: Individualized Key Retrieval st

Multiple Segments encrypted with Different Keys - Key Retrieval from Security Code cannot be applicable to Uniphier under study. e.g How to best use Obfuscation proposed by NDS 8 Hardware protected video path Cannot run snooping applications to retrieve decoded frames due to secure boot. - 9 Hardware root of trust Trusted Execution Environment available (e.g. Secure Boot, DRM process in H/W) - 10 HDCP 2.1 only Planning to support HDCP2.x - 11 Verance watermark detection Will support Cinavia (Note: AACS flags which need AACS approval ?) -

12 Playback license tied to consumers Online Account Will be supported by Marlin BB - 13 Forensic watermark traceable to consumers Online Account Will introduce AACS Sequence Key like approach. Server will prepare several segments which have different watermark and distribute unique combination of segments to user. - 2012/9/14 Sony Confidential 31 F1 service distribution system Content Encode SEN & HES role and function Account Managemen t/ Commerce Global Reg/CAM (m/l)GRC SonyID and account management

system. SNEI will provide Green box features. HTTP via browser Content Injection Content Navigation Shop Server 4K Auth Gateway Auth Gateway protocol Content CDN (SNEI rate) Content Delivery Network (CDN) DRM Purchase confirmation token Marlin DRM Service

(MDS) Action Token/ Configuration Token HTTP Acquisition protocol Download Marlin Download protocol File check HTTP via Browser / Kamaji protocol To be developed by DADC Japan Sony online PC/Mobile TV Box Total Distribution operation may be done by DADC. 32 4K MASTERING BD 33 4K Mastering BD with wide color gamut (xvColor) Concept of Product Mastering BD from 4K sources (film scanned with more than 4K imager or shot with 4K camera) yields the greatest possible high- Schedule Outlinedef picture quality for all HDTV and it also creates a satisfying 4K experience when up- Schedule Outlinescaled on a 4KTV.

4K Mastering BD shall include wide color gamut (xvColor) to provide the best BD picture experience. Request to SPHE 4K 4K Mastering Mastering xvColor xvColor Announce title list at CES2013 Create tagline and eye- Schedule Outlinecatching sticker for packaging Worldwide release plan starting April 2013 with 4KTV launch Create promotional clips to be included in Bravia demo discs 4K 4KMastering Mastering xvYCC xvYCC 4K Mastering BD with wide color gamut (xvYCC) Under study We would like to work with SPE to find out a way to transmit down- Schedule Outlineconversion parameters of 4K mastering BD title, in order to reproduce the best 4K image when up- Schedule Outline scaled on Sony 4KTV

4K 4K TV TV 4K 4K source source DD oow wn Include n- Schedule Outline- Schedule Outline ccoo Down conversion nnv Parameters to BD v vv n n ccoo Utilize Down conversion parameters - Schedule Outline - Schedule Outline p to maximize reproduction of the UUp original picture when up-scaling 4K 4KMastering Mastering xvYCC xvYCC 4K Mastering BD with xvYCC Containing down conversion parameters

EOF 36 Considerations for F1 service planning [Status of broadcasters] Technical side of pay broadcasters are positive for 4K trial, and some br oadcaster already committed to 4K. (Sky- Schedule OutlineD CEO at IBC) Trial shooting from now to 2013. Studying possibility of 4K broadcasting by HEVC from 2014? Pay Satellite operators and sports related channel are positive. Nature program by 4K also is under study. SERVICE BACKUP 38 4K product positioning Should not short sell 4K - Premium/High/Mid/Mass market? 2013/2014 TV - Premium to High market Premium/High demographic sensitive to quality/UX Mid/mass demographic not so sensitive but not reachable in short term. Position 4K as Premium/Exclusive Quality/UX target 4K native > BD-ROM 40Mbps up-conversion + lossless audio? 4K native > 2K 1.5Mbps-8Mbps up-conversion + lossy audio? Determine 4K native Quality/UX based on target 39 SERVICE MODEL ANALYSIS 40 Service model: 4K EST Pros High profit margin New titles from studios Cons Storage management delete, add storage, migrate to new device After service device/storage failure

41 Service model: 4K Subscription Pros Fixed revenue/expense (tax) Revenue from catalog titles 40 catalog titles/yr = $$$ generates revenue when bundled, compared to 1 catalog title = approx 0$ Easier SKU management for online store Cons Studio negotiation Need attractive library # of titles Constant content renewal Premium titles - Catalog titles only not good enough Established Netflix/Hulu competition and benchmark (price and UX). e.g. mix few new/original titles w/ large catalog title library(75,000+?) for $7.99/month Low profit margin Blackouts exclusive windows 42 Service model: 4K Transactional Rental (Early Window/VOD) Pros No need for storage management - auto delete. Potential Early Window use case attractive to studios Cons Low profit margin for Non-Early Window use cases 43 Service model: Summary Subscription model not suitable for 4K initial service due to limi ted title selection & new content. Would be difficult to sustain subscription program. Pursue combination of:

EST Transactional rental. 44 4K title list analysis (SPE Movies) 450 U$ Mil US Box Office of SPE 4K titles 400 Box office source: Box Office Mojo Chart does not include 18 classics of unknown BO numbers 350 Chart does not include TV episodes 300 8 250 Above $200M 200 19 150 Above $100M Below $100M 100 50 0 ai e ia r l e il r d e r hi ill rs le o y It la y le e y ia k e t s la n n n 2 le 2 h 5) e y 3 k ss s h ia id s st s r ll w n 3 y n ll h m s d h ld 2 2 w ron ab Gi er et a iv e Kin om ae nd Ch te ub rad lor gh cu Da att F ir ud ph lac On Ge zil g o ow ma ck ott an it c (3 od bb an coc r e on rut J ul K uy uri ele che ba V o Ma IB Bo ma eca Rus siu illip ea art or ps rfs r K v a f A r nny e W t D i Dr ird ndr ram Ga Big bus Do lv e G rou Dra og Se of R del in B rce it God Dra k D er- Bla Thr r-m H hed ci C y Bo r-m an Exp Dem ly T nd rat e er G To A ng Tea ney he A M My er- l R m Ely Ph il D r E e W n U mu e h

H le d g a a t h e s d e n s x h y K o T ke S id a i u v a n v e n w i d i n ll e e ost dy Si i la n F o a s itc V i ick ide Th r's nd s in Lin t 's S p Tot em ai E Aft f th row Ri N o Fu y W La Ta e T a S V s. p n U ie K O Th Lo Ba M Li de a Sp en Fu Spid Th Gh Bo Ph Me Air ood a e o G e of nce : r pt ha ng ns oke rou les he k h in r ew Da of R Sp id ck H : ap es a The Jul The he e P a t T

u s n M B W Th l e h e p t l i i Th uns re H C f C m G T R St G e n e d nd z n gl tt h , a e e o i s l h E n r w

r a I a T e g a P n a T ll o G La s A B e Th Sl A ve m ge B Kr An er Am Th ge Ba Ri ra Ti 's e nt id g A B he Th li e ou Br

in T r c h : a c En ts Ch ou e gh Cr os Ni Cl a g Also de include l la Ta 18 titles not listed in above chart 1950s-70s (28) 80s (6) 90s (11) 2000-2010 (19)

2011 (3) 2012 (7) 2013 (7) 29 +18 classics Box office unknown 4K title list analysis (SPE TV episodes) New Television Series User Rating on IMDb Save Me 2012 3.2/10 from 7 users (Comedy) Beth Harper, after an accident, thinks she is channeling God. Masters of Sex 2012 (Not yet released) (Drama) about the pioneers of the science of human sexuality whose research touched off the sexual revolution. TBD - Schedule Outline Future Show #1 (Not yet released)

TBD - Schedule Outline Future Show #2 (Not yet released) New Television Series - 3rd Party Post Services The Mob Doctor 2012 4.0/10 from 23 users (Drama) A young thoracic surgeon becomes indebted to the South Chicago mafia and is forced to moonlight as a mob doctor, while also working full time at Chicago's most prominent hospital. Made in Jersey 2012 (Not yet released) (Drama) Centers on a working- Schedule Outlineclass woman who uses her street smarts to compete with her more polished colleagues at a top New York law firm. 2008- Schedule Outline2013 (Season 1- Schedule Outline5) 9.4/10 from 123,742 users (Crime/Drama/Thiller) Informed he has terminal cancer, an underachieving chemistry genius turned high school teacher uses his expertise to secretly provide for his family by producing the world's highest quality crystal meth. 2010- Schedule Outline2012 (Season 1- Schedule Outline4) 8.7/10 from 17,570 users (Action/Crime/Drama/Thriller) Old- Schedule Outlineschool U.S. Marshal Raylan Givens is reassigned from

Miami to his childhood home in the poor, rural coal- Schedule Outlinemining towns in Eastern Kentucky. Current Episodic Television Breaking Bad Shot on RED Epic Justified DELIVERY METHOD ANALYSIS 47 Delivery method: 4K Pre-DL VOD (satellite) Pros no DL time - No user noticeable DL time Established business model for satellite VOD Fixed satellite broadcast bandwidth and cost Fixed DL time Allocate popular titles to satellite bandwidth. Less popular titles to internet delivery Cons No known plans for 2013 48 Delivery method: 4K Pre-DL EST (internet) Pros no DL time No user noticeable DL time Cons Only works if order prior to street date Need to wait if order after street date e.g. Box ships out day before new Pre-DL titles start downloading. Box arrives in 3 days. DL starts after Box arrives. Per DL CDN cost Limits # of Pre-DL titles need to cover by separate subscription fee Variable DL time Cannot estimate max download time DL not in time for street date

ISP cost 49 Delivery method: 4K Download EST Pros Can deliver content where: content bitrate > network bandwidth Cons Long download time Bad UX 70%+ users never return after 1st purchase (SNEI confidential) Storage management ISP cost 50 Delivery method: 4K Streaming (ABR) Pros Instant playback and no buffering interruptions No storage Cons Requires high bandwidth 40Mbps+ for moderate quality 4K streaming a t 25Mbps. ISP cost 51 Delivery method: 4K Physical Media delivery Pros Huge bandwidth with storage delivery; e.g. BD DL 50GB No storage mgmt. Media is backup. No content re-DL scenario for rental Possible high quality 4K and lossless audio Not limited by network infrastructure. Consistent UX.

Cons Inventory control depends on # of media choices BD/USB memory/SD card/HDD... Storage size variations; e.g. user purchases 10 titles in 1 order. Player cost increase if BD Drive Operation cost: Media Preparation/Distribution center need strategic allocation per territory 2015+ TVs not likely to support BD USB memory cost needs to drop to replace BD delivery by 2015 (refer to next page) BD-R data disc user confusion w/ BD-ROM format 52 Delivery method: summary Pre-DL VOD satellite not in time for 2013 However most feasible delivery option Customers may migrate to such service whenever it launches Streaming not likely due to high bandwidth requirements Need to improve DL UX Pursue combination of: Pre-DL EST internet DL EST Physical Media Delivery 53 4k package tie-in: BD-ROM Pros Adds value to 4K bundle package Cons User may already own BD-ROM Quality/UX comparison If - 2K BD (40Mbps) upconv w/ lossless audio > 4K native (25Mbps) and lossy audio (d epends on 4K format). Inventory control low product movement Box does not play BD-ROM user confusion

Should not bundle BD-ROM 54

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