A Premium

Sony Entertainment Products & Services Opportunity

Exclusively for Wealthy Chinese Consumers

Sony’s Concierge

3104

1739

924

535 454 396282 243 193 170 155 153

0

1,000

2,000

3,000

4,000

2009

2010

Source: World Wealth Report 2011, Forbes, 2011,Cap Gemini and Merrill Lynch; McKinsey

Number of

HNWIs (000)

+12%China’s Growth in 2010

• The number of High Net Worth Individuals (over $1M in assets) in China grew by +12% in 2010, reaching 535,000

• The number of HH’s with more than RMB$10M (US$1.5M) in assets is forecasted to reach 1 million by 2015

Chinese Consumers… Have Incredible Purchasing Power!

Source: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011

…Are Optimistic About the Future!

• They are young and confident about the Future

– 73% of them are under age 45 (vs. 50% in the US)

– 45% of them are under age 35 (vs. 28% in Western Europe)

• Are extremely optimistic about their future and their prospects of getting richer

– Never lived through the recession and have seen their family income and property value rise steadily

• Are eager to enjoy the finer things the world has to offer…and money is no object

– 50% of them believe in enjoying life today rather than worrying about the future

– 64% of them believe their incomes will continue to grow significantly over the next 5 years

• In 2009, luxury goods saw +16% sales growth! reaching RMB 64 billion

• By 2015, China is expected to account for over 20% of the global luxury market!

• See next page for “Lifestyles of the Chinese Rich”, By Robert Frank, Wall Street Journal, The Wealth Report, August 25, 2009

5

55 6480

~180

1998 2008 2009 2010E 2015E

<1 6 8 10 20Global Share (%)

Luxury Goods* Consumption in China, 1998-2015 (Billion RMB*)

…Are Buying Luxurious Experiences!

Sources: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011;(Table) The Campaign, 2011 - Top 1000 Asia-Pacific Brands. *Luxury goods include ready towear, leather goods/ handbags, watches and fine jewelry; at 2010 Real RMB.

We Believe There’s a Strong Opportunity for a Luxury Media Service!

Price

Demand

Television

Online Premium Video

Cinemas

Luxury Video

Source: National Bureau of Statistics of China 2010; EntGroup 2009 May; CNNIC 2011 Jun, MPA 2011 Jun. 1 USD = 6.6 RMB

Medium Cost to Viewers ($) Addressable

Population as % of Total

Median Income of Addressable

Market

Luxury Video

? ? ?

Cinemas Avg $8 in 1st-tier

cities 0.28 admissions

/capita Monthly Personal

Income $450

Online Premium Video

Mostly Free; Avg $3/mth for SVOD;

$0.75/view for VOD

All online video users: 22%

Pay online video users ~1.31%

All Online video uses Monthly

Personal Income: $227-303

Television Avg $3/mth for

basic cable subscription

~100% Monthly Personal

Income: $136

Sony Concierge

Introducing…

A personalized high-end and fully integrated Sony

Entertainment Service exclusively for Chinese

consumers, featuring Sony hi-tech home theater

equipment and a subscription to the latest theatrical

releases, concerts and other premium content.

• Concerts and High Fidelity Music • i24/96 HD Format

• Current feature releases, at or slightlybefore China theatrical releases

• Selection of most popular/best-knownlibrary features

• Current TV series (immediately afterUS broadcast)

• Selection of premium library TV series• 1080p HD Format

• Content stored in user’s home server• DRM protected• Files only played (no downloads)• Automatic content deletion• Late night content and system updates

Sony’s VPL-VW1000ES, the first 4K projector for the home

The STR-DA3500ES, Sony'spremium receiver

Sony Tablet S with a custom built-in appmust provide control of the media serverand all hardware with maximum ease anduser friendliness.

• DADC to provide connection to user’s Home.• As in a Digital Cinema, all content is watermarked.

Sountina NSA-PF1 as an example of high-end

speaker system

Sony Concierge

• Stage 1: Sony Companies and other Movie Studios• Stage 2: Other Companies and Products

Consumers are Identified

The Potential Revenue is Attractive!!!

• Economic model/Total cost of Ownership/Pricing Plan

GROSS REVENUE ($M) - CONTENT

Yrly Fee

$ 12,000 30.0 60.0 120.0 240.0 480.0

$ 9,000 22.5 45.0 90.0 180.0 360.0

$ 6,000 15.0 30.0 60.0 120.0 240.0

$ 3,000 7.5 15.0 30.0 60.0 120.0

GROSS REVENUE ($M) - EQUIPMENT

Equipment Purchase

$ 100,000 250.0 500.0 1,000.0 2,000.0 4,000.0

$ 75,000 187.5 375.0 750.0 1,500.0 3,000.0

$ 50,000 125.0 250.0 500.0 1,000.0 2,000.0

$ 25,000 62.5 125.0 250.0 500.0 1,000.0

2,500 5,000 10,000 20,000 40,000

Buyers / Subscribers

Note: All Numbers are rough estimates.

Operational Set Up

Go-to-Market

• Targeted Database• Country club

members• Super car owners• AMEX Centurion

members• Selected Premium

Retail• Country clubs• Macao casinos

• Built-in to super-luxury new homes in partnership with real estate developers

• Requires superbly-trained sales force

In-Home Consultation

• On-site consultation to check:• Existing hi-fi

system configurations

• Wiring requirements

• Installation requirements

• For a nominal fee• Create proposal/work

order for installation• May require working

with third-party home-decorators

Installation

• Can Sony Professional Services do this?

Customer Service

• Premium Call Center• Promise of 3-day

resolution• Can Sony Professional

Services do this?

Considerations

• An incredible Sony United opportunity in one of our most critical markets – Easily duplicated in other key countries or regions (India, Russia, Middle East) with

large populations of high net worth individuals.

• These are a most spoiled and demanding group of consumers– Can Sony provide all of these components, connect them seamlessly and provide a

totally guaranteed service?

• Hardware– Hardware and software to be bundled as a standard offering (users do not have a

choice on other products), – Users with existing equipment will be encouraged to update and/or upgrade

• Location of main server(s) and connection to users home• Must identify and address Legal/regulatory issues and hurdles• What infrastructure do we currently count with (amongst all Sony

companies)?• How to best ensure smooth development and launch and of course a ongoing

Sony United philosophy • Many others to be identified as project progresses

Appendix

Are Buying Luxurious Experiences at Premium Prices!

• Lifestyles of the Chinese Rich, By Robert FrankWall Street Journal, The Wealth Report, August 25, 2009

– There are 8,800 (yuan) billionaires in Beijing (USD$150M) and 7,000 in Shangai

– The “typical rich family” in China:• Has a 43-year-old dad, 42-year-old mom and one 14-year-old child.

• Needs to spend at least 87 million yuan (or about $12.7 million) on property, cars and other luxury goods to be regarded as “one of the city’s new aristocrats in Beijing”

• The bulk of their spending is on real estate, furnishings and fabrics, the report said.

• Have at least three homes, often filled with porcelain and jade collections mixed with modern art.

• Spends more than $7,000 a year on piano lessons.

– Beijing men drive Mercedes Benz R500 limos and usually are members of Yongfoo Elite, the popular Beijing club

– Beijing wives drive BMW sport cars and belong to the Lan Club and wear Bulgari platinum and diamond watches

A Growing Consumer Group• Among China’s wealthy households, those with annual income between RMB 300,000 to

1 million comprise a reliable base of customers that is growing at 15% a year. By 2015, 5.6 million households will fall under this category.

• The very wealthy, those with household income of more than RMB 1 million (who typically own assets more than RMB 10 million) are growing even faster, at about 20% a year, reaching 1 million household by 2015.

Source: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011

Appendix

Their Preferences• “Internationally well-known brand” has become one of the top buying factors with

“superior craftsmanship” continue to be the most important among the top 3 key buying factors for luxury purchases.

• Delivering exceptional service in the store is critical; the importance of service attitude has rose up from 17% in 2008 to 30% in 2010.

• Louis Vuitton assign specialist (sometimes the store manager herself) to spend time educating luxury shoppers about the story of Louis Vuitton’s founding, the company’s deep European roots and the way they handcraft leather goods.

• The internet has also become the second most important consumer touch point. Consumers in China spend a lot of time collecting basic brand and product information and reading what others say about the products.

• Social networking site such as Kaixin001, RenRen and Youku, micro-sites on Sina and BBS forums are often the first boutique for this kind of information.

• In a recent survey conducted by TNS, Sony is the #1 most valued brand in China (as well as in Asia!). Though the survey is about overall consumer, it reflects the fact that Sony is a well-known and most valued brand in China which fit to the top buying factor of “internationally well-known brand” among luxury buyers.

Source: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011, WSJ

Appendix

Where Are They?

Source: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011

• Shanghai and Beijing, together account for 21% of luxury consumption and will continue to retain their importance, capturing 19% of growth from 2010 to 2015.

• Nine large markets, Chongqing, Dongguan, Foshan, Guangzhou, Hangzhou, Nanjing, Shenzhen, Tianjin and Wenzhou account for one-third of luxury consumption today, and will still account for 30% by 2015.

Appendix

• Footprints comparison of Luxury Brand in China and Japan

Source: McKinsey Insights China, Understanding China’s Growing Love for Luxury, April 2011,

Luxury Brand China Japan

Hermes 20 45

Chanel 8 50

Louis Vuitton 36 57

• Presence of electronic giants in China

Beijing Shanghai

Apple 2 2

Sony 1 1

Appendix

About Capgemini-Merrill Lynch’s World Wealth Report • For over 20 years, Capgemini and Merrill Lynch Global Wealth Management have collaborated to

identify and analyze the investment needs of the world’s High Net Worth Individuals (HNWIs) defined as people with more than US $1 million in net financial wealth, excluding primary residence.

• The model currently covers 71 countries accounting for over 98% of global Gross National Income and 99% of world stock market capitalization.

• Total wealth levels by country are estimated using national account statistics from recognized sources such as the International Monetary Fund and the World Bank to.

• Wealth distribution by country is based on formulized relationships between wealth and income. Data on income distribution is provided by the World Bank, the Economist Intelligence Unit and countries’ national statistics.

• The financial asset figures include the value of private equity holdings stated at book value as well as all forms of publicly quoted equities, bonds, funds and cash deposits. They exclude collectibles, consumables, consumer durables and real estate used for primary residences.

About McKinsey Insights China’s Luxury Consumers Report • Over 1,500 luxury consumers across 17 cities in 2010. • Face-to-face interviews of between 35-45 minutes with Chinese luxury consumers. Respondents

came from 17 different cities across several geographic regions of China. Of these cities, 3 were Tier 1, 9 were Tier 2, and 5 were Tier 3.

• Extensive interviews with brand managers and marketing specialists from leading luxury brands across a range of product categories.

• Factor analysis to identify key themes around consumers’ attitudes about their lifestyle and luxury consumption. Cluster analysis to arrive at a needs-based segmentation of luxury consumers.

Appendix