DRAFT

1. Digital Services and Distribution Acquisition Strategy DRAFT CONFIDENTIAL

2. Executive Summary • Grouper’s initial focus positioned it for growth during the early development of the UGV market • Strong, seasoned management team • Small but compelling base of content with a core focus on user-generated videos • Easy-to-navigate interface and technology for sharing content • Competitors are broadening their offerings through acquisitions and new product introductions, raising the minimum requirements success • Google acquires YouTube • MySpace launches MySpace Videos • Yahoo acquires JumpCut and partners with CurrentTV • Sony must acquire to ensure we continue to meet minimum threshold for audience size and breadth of content/functionality • Near-term focus on increasing audience through syndication plays and acquiring broadly appealing content and functionality • Once minimum thresholds are met, seek opportunities to build a deeper offering, including expertise in specific verticals

3. Distinct Service Categories Formed at the Outset of Digital Video Social Network User Generated Video (UGV) Aggregators Channel Promotional • Allow audience to watch and share videos created and uploaded by users • Primarily advertising based revenues • Online communities enabling interactivity between users • Primarily advertising based revenues • Aggregate video across providers for purchase • Includes sell-thru, rental, and ad-support • On-demand videos programmed in channels or on a show-by-show basis • Advertising supported, with some upsell to subscription • Short video clips promoting the site owner’s content, merchandise, and brand • May include some advertising and limited commerce capabilities

4. Players with the Largest Audience are Broadening their Offerings, Blurring the Line Between Service Categories Original Focus Areas of Expansion Service • Aggregator • UGV – Acquired YouTube for $1.65BN • Social Network • UGV – Launched MySpace Videos • Channel – Fox Full Throttle • Store – Download-to-own Episodes • Channel (e.g., Music Videos on Yahoo! Music) • UGV Tools – Acquired JumpCut • UGV Content – CurrentTV Partnership

5. Market Evolution: Observations and Hypothesis • Multiple market entrants grow at a similar rate • Players refine offerings to “good enough” status and focus on a small base of content and/or functionality Inception (2004 – 2005) • Leading destination sites emerge based on differentiated feature or piece of content • YouTube explodes as users discover “Lazy Sundays” • MySpace users flock to improved community features • Successful followers begin to build audience through partners/syndication • Grouper grows through Yahoo links and Friendster partnership • BrightCove, Veoh, and Roo build successful syndicator businesses Rapid Growth (Early 2006) • Leaders broaden offerings through acquisition and product extensions • MySpace launches video • Google acquires YouTube • Succesful followers continue to invest in audience and broaden offerings • Laggards focus on narrow vertical offerings, hoping to differentiate and find audience Breadth (Late ’06 / Early ’07) • Leaders build or acquire to create depth in specific verticals • Targeted offerings that have found an audience are acquired at a premium or survive on a smaller scale • Targeted offerings with smaller audiences languish or exit Depth (Late ’07 / Early ’08)

6. Digital Service Acquisition Considerations Considerations Near-term Approach Sony Skill Set • Audience and 3rd party distribution currently lagging and difficult to build organically • SPE has expertise in-house to expand content and functionality • Repurposing SPE content and licensing from 3rd party partners • Grouper leading development and licensing as needed • Focus on narrow universe of significant acquisition targets • Prioritize audience / syndication • Seek partners that pair audience with differentiated content or functionality Potential Future Expansion M&A Landscape • Limited window for compelling acquisitions • Competitors acquiring aggressively • Valuations increasing • Point acquisitions to reinforce areas of differentiation • Targeted content • Features and functionality Phase of Market Growth • Current phase of growth demands broader offerings • Future growth will reward depth

7. Digital Service Acquisition Priorities Audience: Syndicators Audience: Destinations Breadth Depth • Companies that syndicate video to a network of online partners • Content and/or functionality established audience • Targeted content or functionality • Sites with audience but no differentiated content Description Valuations Attractive Moderate Moderate Expensive Speed Fast Gain traction quickly Fast Gain traction quickly Slow Requires multiple acquisitions Slow Requires content and functionality deals to supplement 1st 2nd Low Priority

8. Acquisition Candidates Content + Audience Break.com (3.3) eBaum’s World (3.0) Bolt.com (2.9) Heavy.com (2.7) Tier 1 Candidates Tier 2 Candidates Content College Humor (0.9) JibJab (0.6) SingingFool/VideoDetecitve Broadband Sports (0.1) RocketBoom(0.04) Ruckus (0.02) Revision3 (0.02) Channel 101 (0.02) Audience Syndicators PhotoBucket (12.0) Roo Media (5.8) Veoh (N/A) Brightcove (N/A) Low Priority Audience Destinations AddictingClips (1.9) Putfile (1.4) DailyMotion (0.8) Functionality + Audience Six Apart (10.4) Image Shack (9.3) Xanga (5.5) Reunion (4.7) MetaCafe (3.1) Digg (2.1) Friendster (1.0) Tagged (0.8) Functionality Meetup (0.7) Piczo (0.5) Text America (0.5) Imeem (0.2) VideoEgg (0.2) eyeSpot (0.2) MotionBox (0.2) Famster (N/A) Content + Functionality Pure Video (0.9) Castpost (0.2) Now Public (0.09) Bix (0.08) Blip.tv (0.06) Dave.tv (N/A)

9. Tier 1 Acquisition Candidates • Monthly Unique Users per Nielsen Net Ratings except for Roo • Roo audience estimate is of unique streamers per ComScore

10. Tier 2 Acquisition Candidates • Monthly Unique Users per Nielsen Net Ratings

11. APPENDIX A(Alternative Strategic Frameworks) CONFIDENTIAL

12. The Current State of Market Evolution Rewards Broader Offerings Deeper Offerings Broader Offerings Tipping Point / Audience Growth Inception (2004 – 2005) (Early 2006) (Late ’06 / Early ‘07) (Late ’07 / Early ‘08) • Leaders expand to adjacent markets Market Dynamic • Multiple market entrants grow at similar rates • Leaders break-out from the pack • Market rewards players with deep content catalogs and robust technology • Larger audience • Breadth of content • Range of functionality • Larger audience • Broad offering • Brand known for an area of expertise Minimum Requirements to Compete • Content and features on-par with competitors • Single compelling characteristic • Broadest range of content • Network effect of larger audiences Areas of Differentiation • Limited differentiation • Unique piece of content • Ease-of-use • Ability to supplement broad offering with depth in specific verticals • MySpace launches videos • Google acquires YouTube Examples • Dozens of pure-play UGV sites struggle to reach a million unique users • YouTube explodes with “Lazy Sundays” • MySpace users flock to improved community features • Content verticals have not yet gained traction • Yahoo media group continues to struggle

13. Digital Service Acquisition Priorities Broad Audience + Content High Priority May require significant investment Audience - Syndicators High Priority High-value opportunities Deep Lower Priority Potential for small acquisitions to address specific demographics Audience - Destination Site Avoid Pureplay destination sites generally overvalued Broad Audience + Functionality High Priority May require significant investment Deep Content + Functionality Lower Priority Potential for small to medium acquisitions Deep Lower Priority Potential for small acquisitions to round-out feature set

14. Audience: Syndicators Audience: Destinations Acquisition Candidates Breadth Depth Content College Humor (0.9) JibJab (0.6) RocketBoom(0.04) Revision3 (0.02) Channel 101 (0.02) Audience + Content Break.com (3.3) eBaum’s World (3.0) Bolt.com (2.9) Heavy.com (2.7) AddictingClips (1.9) Putfile (1.4) DailyMotion (0.8) vMix (0.8) vidiLife (0.8) ManiaTV (0.6) Revver (0.5) Vimeo (0.5) PhotoBucket (12.0) Roo Media (5.8) Veoh (N/A) Brightcove (N/A) Functionality Meetup (0.7) Piczo (0.5) Text America (0.5) Imeem (0.2) eyeSpot (0.2) Audience+Functionality Six Apart (10.4) Image Shack (9.3) Xanga (5.5) Reunion (4.7) MetaCafe (3.1) Digg (2.1) Friendster (1.0) Tagged (0.8) Content + Functionality Pure Video (0.9) Bix (0.08) Blip.tv (0.06) Dave.tv (N/A) 1st 2nd Avoid

15. APPENDIX B(Company Profiles) CONFIDENTIAL

16. Break.com: Summary Overview User Metrics Content • Online entertainment network and community powered by traditional user-generated content • Content base skews toward 15-35 year old male-oriented humor, sports and racy categories • Majority of the content is original and created by users specifically for Break.com • Pays $250/ video for videos it wants to feature, incentivizing users to create high-quality videos (est. to spend ~$250K/ month buying user videos) • Generate revenue through banner ($20 CPM) and text ads only – no pre-rolls Unique Users (MM) Note: estimated to generate ~100MM streams/ month 3-mo. growth: 12.8% Web page views (B) 1.4 1.9 1.3 Time/ person(min.) 16.1 21.5 15.3 Internal break.com sources estimate uniques of approx 13MM Background Partnerships • Established in 1998 as Big-Boys.com, a video-sharing site • Purchased in May 2004 by Keith Richman, co-founder of Billpoint, and changed name to Break.com • 100% owned by Richman and a few business partners – has never taken any venture financing • Based in Beverly Hills, CA with 20 employees • Leverages AdBrite to sell its banner and text ads • Established partnerhsip with Amp’d Mobile in Nov. 2005 to distribute videos through mobile, charging $2.99/ month for unlimited access * Source: Nielsen//NetRating used for page view, time data, AdBrite; BambiBlogs.com; Break.com; Multichannel News; Amp’d Mobile; PureVideo; ComScore Video Matrix

17. Break.com Functionality Advertising: • Banner ads – no pre-rolls or text Break.com demo Content • User-generated • Share it with friends (viae-mail) • Embed & blog it Interactivity: • Promote to home page • Rate It • Recommend • Comment

18. Heavy.com: Summary Overview User Metrics Content • Broadband entertainment network focused on providing high-quality content • Content base skews toward 18-34 year old male-oriented humor and racy categories • Content is a mix of video, animation, and games created by Heavy and/or its partners, e.g., NBC delivered through distinct channels • Generates revenue through banner ads, pre-rolls, and branded production, e.g., Burger King videos • Ad sales and marketing conducted internally Unique Users (MM) Note: estimated to generate 80-90MM streams/ month 3-mo. growth: (5.4%) Web page views (B) 0.9 1.0 0.6 Time/ person(min.) 1.5 1.2 1.0 Background Partnerships • Established in 1999 as a P2P digital content sharing site by Simon Asaad & David Carson • Polaris venture capital holds a 25% stake in Heavy • Polaris lead a $10MM round in January 2006 • Expected to generate ~$20MM adv. revenues in 2006, a 300% increase over 2005 (recently valued at ~$200MM – source: paidContent.org) • Based in New York, NY with 20 employees • Recently announced partnership with TiVo to provide content for TiVo’s VoD service • Established partnership with Verizon Wireless in April 2006 and created a channel on Vz’s V Cast subscription mobile offering • Parnter with Sony PSP, video iPod, and Virgin Mobile to distribute non-wireless mobile content Source: Nielsen//NetRating used for page view, time data, Heavy.com; Multichannel News; PureVideo; ComScore Video Matrix; paidContent.org; FT.com; VCMike’s Blog

19. Heavy.com Functionality Advertising: • Banner ads • Pre-rolls Heavy.com demo Content sharing: • Heavy/ partner produced channels • Share it with friends (viae-mail) • Blog it Interactivity: • Rate It • Comment

20. Digg.com: Summary Overview User Metrics Content • Online user-driven news/ information community • Target IT professionals, developers, professional “geeks” and news junkies • Content is a mix of categorized text (primary) and video (secondary) postings from blogs, professional news sites and random Web sites • Users tag news stories they like (dig) and dislikes, driving what content appears on the home page • Generate revenue through banner and text ads only – focused on growing audience with minimally invasive advertising Unique Users (MM) Note: estimated to generate 20-30MM streams/ month 3-mo. growth: 13.8% Web page views (B) 0.6 0.5 1.2 Time/ person(min.) 2.2 2.1 2.5 Background Partnerships • Established in Nov. 2004 as an information and news sharing site by Kevin Rose • Closely held (Rose owns ~30-40%) with minimal venture financing – received $2.8MM round in Oct. 2005 to support initial growth • Expected to generate ~$3MM in adv. revenuesin 2006 (recently valued at $200MM – source: BusinessWeek, 8/2006) • Based in San Francisco, CA with ~20 employees • Leverages Federated Media to sell its banner ads • Digg.com founders started a video production company, Revision3, in Sept. 2006 • Focused on high-end humor and tech content targeted at young, tech-oriented people • Advertising model is 1950s throwback – based on sponsors named in advance of ‘shows’ by hosts Source: Nielsen//NetRating used for page view, time data, Digg.com; Multichannel News; PureVideo; ComScore Video Matrix; Federated Media; HowStuffWorks.com; BusinessWeek (8/06); Red Herring

21. Digg.com Functionality Advertising: • Limited banner and text ads • No pre-rolls (link directly to other video sites, e.g., YouTube) Digg.com demo Content • User-posted and recommended • Share it (viae-mail) • Blog it Interactivity: • Edit It • Rate (Digg) It • Comment

22. Bix.com Management Team / Board of Directors Strategic Profile • Based in Palo Alto, California • Workforce of 16 employees, mostly engineers from eBay • Formerly known as 900Seconds.com, Bix.com operates a user-generated contest site • Enables consumers to create their Web-based talent competitions and enter existing competitions • Currently, the website is ad-free, depending solely on corporate-sponsored contests for revenue • Bix.com is seeking alternative revenue sources, including advertisements on its site and user-generated ringtones Funding History & Investors Unique Users(in thousands) • Bix was launched on August 8th, 2006 Geoff Ralston Citigroup Estimates 1

23. Positive Reviews for Bix.com “Two of the biggest phenomena in pop culture have been the ‘American Idol’ TV show and the plethora of Web sites that depend on user-generated content … Bix.com hosts contests that include ‘American Idol’-style stuff like singing … Bix is ad-free, depending for revenue solely on corporate-sponsored contests … Bix will seek alternative revenue sources, including advertisements on its site and user-generated ringtones.“ - Walter S. Mossberg & Katherine Boehret “American Idol proved not just that we love watching the highs and lows of wannabe superstars, but that a surprising number of us wanted to be up there … Bix, a company enabling public and private contests online … is trying to address a real business problem: diminishing effectiveness of brand advertising … [it] believes controlled sponsorship of a legally sanctioned online contest … is a powerful brand advertising ” - Neil Kjeldsen Will Bix Kill the Record Industry? “Bix is a platform for creating contests online much in the mold of American Idol … The company plans to allow end-users to download their own audio clips and use them as ringtones for a small charge. Eventually the same content could be sold to others, and at that point the company is going to split the proceeds with the creators … Bix is hoping to cash in on the shift of ad-dollars to the online medium … these contests will be ideal vehicles for brand advertising.” - Om Malik “The idea behind Bix is neat -- a combination of American Idol and YouTube's lip syncing madness. Basically, anyone can set up a contest -- karaoke, lip-syncing, beauty, whatever … If Bix really takes off, then bands who win "best original song" contests will have a built-in audience to buy their music. And who needs the record industry to press CDs or make deals with iTunes then?” - Mark Frauenfelder 2

24. PhotoBucket Overview