Investor Relations 2019

KB Securities Asia NDR, July 2019 Disclaimer

This financial information in this document are consolidated earnings results based on K-IFRS.

This document is provided for the convenience of investors only, before the external audit on our 1Q 2019 financial results is completed. The audit outcomes may cause some parts of this document to change.

In addition, this document contains “forward-looking statements” – that is, statements related to future, not past, events. In this context, “forward-looking statements” often address our expected future business and financial performance, and often contain words such as “expects”, “anticipates”, “intends”, “plans”, “believes”, “seeks” or “will”. Our actual results to be materially different from those expressed in this document due to uncertainties. Investor Relations 2019 TABLE OF CONTENTS

I Studio Dragon at a Glance

II 1Q 2019 Earnings Release

III Growth Strategy

Appendix I Studio Dragon at a Glance

1. Highlights 2. Comprehensive Studio 3. Studio Dragon at a Glance 4. Studio Centered Industry Change 5. No.1 Studio in Korea We Create New Culture 1 Highlights

(1) (1) (1) (2) DOMESTIC M/S REVENUE GROWTH INTL. REVENUE CREATORS

27% 32% 29% 161People

+4Titles +64.1% +16.0% +11.9% +1.6%p

110.2 26 51.8 40.1 5.0 35.9 44.7 22 67.2 3.4

2017 2018 2017 2018 2017 2018 2017 2018 2017 2018 Production Trend International Revenue Domestic VOD Payment to Creators Viewer Rating (3) (Titles) (Wbn) (Wbn) (Wbn) (%)

Note (1) As of 2018, (2) As of 1Q 2019, (3) Refers to household average viewer ratings; Excludes Olive’s series

5 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.2 Comprehensive Studio

6 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.3 Studio Dragon at a Glance

26 4,105 22 18 16

991 373 473

Studio Dragon 2015 2016 2017 2018

Note (1) Each companies’ audit report (consolidated basis) 7 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.4 Studio Centered Industry Change

8 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (1)

9 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ① Production Capability (2)

10 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture I.5 No. 1 Studio in Korea ② Business Capability

11 | Investor Relations 2019 – I. Studio Dragon at a Glance We Create New Culture II.5 No. 1 Studio in Korea ③ Stable Profit Structure

Annual Production Trend Production Cost to Revenue Revenue to Cost of Sales

Unit: titles Unit: Wbn

26 379.6 22

286.8 18 16 195.5

97.4

86.1% 93.5% 83.6% 85.4%

2015 2016 2017 2018 2015 2016 2017 2018

Note Companies’ homepage and other sources

12 | Investor Relations 2019 – I. Studio Dragon at a Glance II 1Q 2019 Earnings Release

1. Operating Performance 2. Programing 3. Distribution 4. Cost We Create New Culture 1 1 1Q 2019 Operating Performance

Romance < > is a Bonus Book

International Domestic (1) Production Distribution Distribution Revenue Trend Revenue Revenue

w111.8bn w42.6bn w13.6bn 12titles (YoY +40.0%) (YoY +87.4%) (YoY +45.0%) (YoY +33.3%)

Note (1) Each quarter includes all titles in progress

14 | Investor Relations 2019 – lI. 1Q 2019 Earnings Release We Create New Culture 1 1Q 2019 Operating Performance

Summary

 1Q19 International distribution revenue posted high growth of 87.4% YoY, driven by enhanced content quality  strong top-line growth as well as improved profit despite increased production budget

 2Q19 Launch more lineups (2Q18 8 titles  2Q19 11 titles) and maintain domestic & global competitive edge via mega IP

Revenue Operating Profit Net Profit

Unit: Wbn Unit: Wbn Unit: Wbn

17.4% 13.3% 14.0% 123.7 12.0% 9.9% 9.9% 9.8% 11.4 111.8 8.2% 101.7 11.5 9.5 79.9 74.3 63.4 7.1 37.8 11.4 56.2 0.4% 1.7% 32.1 21.5 28.8 17.3

54.4 11.0 8.9 9.2 48.9 44.1 10.7 7.9 40.7 34.1 7.3 0.4 1.7 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19

Programing Distribution Others Operating Income OPM Net Income NP Margin

15 | Investor Relations 2019 – lI. 1Q 2019 Earnings Release We Create New Culture 2 1Q 2019 Operating Performance

Programming

 1Q19 Programming revenue grew 8.4% YoY, attributable to solid growth of captive revenue (+33.0% YoY)

 2Q19 Diversify originality and strengthen market influence by launching new lineups including , , , etc.

Programming Revenue Production Trend Note (1)

Unit: Wbn Unit: Titles

54.4 100.0% 100.0% 100.0% 100.0% 48.9 0.6 0.2 44.1 77.8% 40.7 0.2 7.7 34.1 1.0 53.8 48.7 12 43.9 11 9 33.0 33.1 8 8

1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19

Captive Non-captive Current Titles % of Captive Titles

Note (1) Each quarter includes all titles in progress 16 | Investor Relations 2019 – lI. 1Q 2019 Earnings Release We Create New Culture 3 1Q 2019 Operating Performance

Distribution

 1Q19 Distribution revenue grew 75.1% YoY, accelerated by increased leverage from strong growth in overseas sales of titles including , , etc.

 2Q19 Continue to 1) upscale selling price and 2) expand sales regions, based on brand recognition

Distribution Revenue No. of Library Sales

Unit: Wbn Unit: Titles

※ Note(1) 3.1bn 2.9bn 6.1bn 3.5bn 4.5bn 125 5 63.4 108 102 104 56.2 101 7 12 17 25

46.2 37.8 32.1 28.8 42.6 120 95 24.8 89 87 83 22.7 16.5

17.2 9.4 12.3 13.0 13.6

1Q18 2Q18 3Q18 4Q18 1Q19 1Q18 2Q18 3Q18 4Q18 1Q19

Domestic International Old Titles New Titles

Note (1) Average distribution revenue per title (distribution revenue / number of library sales) 17 | Investor Relations 2019 – lI. 1Q 2019 Earnings Release We Create New Culture 4 1Q 2019 Operating Performance

Cost

 1Q19 OPEX W100.8bn (+45.6% YoY) : COGS Ratio 86.6% (+3.7%p YoY), SG&A Ratio 3.6% (-0.2%p YoY)

 2Q19 Focus on securing mega TV series in order to reinforce IP competitiveness

COGS and SG&A Ratio OPEX

Unit : % Unit: Wbn

1Q18 2Q18 3Q18 4Q18 1Q19 93.6

85.7 86.6 COGS 66.2 63.7 98.9 95.2 96.8 82.9 79.9 Labor Costs 1.5 1.6 1.8 2.8 1.9

Dep. & Amort. 0.1 0.1 0.1 0.1 0.3

Commissions 0.5 0.5 0.5 0.7 0.9 5.9 4.4 Marketing 0.2 0.2 0.1 0.0 0.0 3.7 3.6 2.7 Others 0.7 0.9 0.8 2.5 0.9

1Q18 2Q18 3Q18 4Q18 1Q19 OPEX 69.2 67.0 102.2 101.3 100.8 COGS Ratio SG&A Ratio

18 | Investor Relations 2019 – lI. 1Q 2019 Earnings Release III Growth Strategy

1. Media Industry 2. Studio Dragon 2.0 3. Global Roadmap 4. Outlook We Create New Culture II.1 Growth Strategy - Media Industry

Global OTT BIGBANG Maintain competitiveness Expand Presence

20 | Investor Relations 2019 – lII. Growth Strategy We Create New Culture II.2 Growth Strategy - Studio Dragon 2.0

Studio Dragon 2.0

Build global business model through OIMU (One IP Multi Use), diversify continuous revenue streams

New Systemize Release Universe Production Seasons Tour/ Game Animation Exhibition

VR Goods

. Secure global target IPs . Systemize writers, . IP branding directors, and casting

[Asadal Chronicles] . Human fantasy historical . Built production site in . Release 2nd season in 2020 genre Osan (In Progress) Game Animation Tour Goods VR

-219 -| Investor Relations 2019 – lII. Growth Strategy We Create New Culture 2 Growth Strategy - Studio Dragon 2.0 (Cont’d)

Movie Game Performance

OIMU Bad Guys: < > (One IP Multi Use) Vile City

X

What’s Wrong with < > Secretary Kim Remake Goods

X

Memories of Fountain Asia < > < > the Alhambra Pen What’s Wrong with VR < > Secretary Kim X

Memories of Emergency < > < > the Alhambra Couple 22 | Investor Relations 2019 – lII. Growth Strategy We Create New Culture II.3 Growth Strategy - Global Roadmap

Distribution

Overseas Domestic Overseas Domestic Domestic Overseas

23 | Investor Relations 2019 – lII. Growth Strategy We Create New Culture 3 Growth Strategy - Global Roadmap (Cont’d)

Step 1 Step 2 Step 3 (~2018) (~2021) (2021~) “International revenue “International revenue proportion 30%” proportion 70%”

Step 2

International Revenue Trend  Increase in  Expanded  Enhanced (Unit: Wbn) selling price countries localization 38.1% 29.0% 22.6% 23.4%

110.2

67.2

44.2 42.6

 1Q19 45.2%↑  1Q19 100 countries↑  1Q19 6 countries↑ (YoY, Avg. selling price) (Excludes sales overlaps (Co-production, excludes and OTTs) OTT originals) 2016 2017 2018 1Q19 International Revenue International Revenue to Total Revenue

24 | Investor Relations 2019 – lII. Growth Strategy We Create New Culture II.4 2019 Outlook

PRODUCTION INTL. PRODUCTION INTL. GROWTH RATE

31Titles 5 Titles 30%↑

In-house Producers Production Subsidiaries

6

26 110.2 25

2018 2019E 2018 2019E Captive Non-Captive Production Trend International Revenue (Titles) (Wbn)

25 | Investor Relations 2019 – lII. Growth Strategy Investor Relations 2019 APPENDIX

1 Corporate Overview

2 Vision

3 Business Model Canvas

4 Financial Statements Summary 1. Financial Position 2. Income Statement

5 2Q 2019 Lineups We Create New Culture I.1 Corporate Overview

Group Structure Shareholder Structure

* Listed companies As of end-2018 * Foreign CJ Corp. ESOP 0.22% Investors 2.85%

39.36% Institutional Investors CJ ENM * 13.19%

71.30% Retail Investors * 9.38% Related Parties 100% 100% 100% 100% 3.06% CJ ENM 71.30%

Share Price Trend

2017.11.24=100

17.11 18.1 18.3 18.5 18.7 18.9 18.11 19.1 19.3 19.5 Studio Dragon KOSPI KOSDAQ

27 | Investor Relations 2019 – Appendix We Create New Culture I.2 Vision

28 | Investor Relations 2019 – Appendix We Create New Culture I.3 Business Model Canvas

29 | Investor Relations 2019 – Appendix We Create New Culture I.4 Financial Statements - Financial Position

(Unit: Wbn) 1Q18 4Q18 1Q19 % QoQ % YoY Total Assets 456.3 512.4 514.1 0.3 12.6 Current Assets 282.6 247.2 242.5 (1.9) (14.2) Cash and Cash Equivalents 182.4 153.0 131.8 (13.9) (27.8) Others 100.2 94.2 110.7 17.6 10.6 Non-Current Assets 173.8 265.2 271.6 2.4 56.3 Tangible Assets 1.1 1.0 1.3 31.5 22.4 Intangible Assets 127.6 198.5 187.5 (5.5) 47.0 Others 45.1 65.7 82.8 26.0 83.4 Total Liabilities 79.9 111.1 103.6 (6.8) 29.7 Current Liabilities 79.4 108.2 99.2 (8.3) 25.0 Non-Current Liabilities 0.5 2.9 4.4 51.0 772.1 Shareholders’ Equity 376.5 401.3 410.5 2.3 9.0 Equity Capital 333.6 334.1 334.1 0.0 0.2 Retained Earnings 40.0 67.7 76.9 13.6 92.3 Other Components of Equity 2.9 (0.5) (0.5) n/a TTR

Key Financial Ratios Current Ratio (%) 356.1 228.4 244.4 16.0%p (111.7)%p

Net Debt (Net Cash) to Equity (%) (48.5) (38.1) (32.1) 6.0%p 16.4%p Cash Ratio (%) 229.9 141.4 132.8 (8.6)%p (97.1)%p

Note (1) K-IFRS consolidated basis (2) Current Ratio = Current Assets / Current Liabilities, Net Debt (Net Cash) to Equity = Net Debt (Net Cash) / Shareholders’ Equity, Cash Ratio = Cash and Cash Equivalents / Current Liabilities (3) TTR (Turn To Red), TTB (Turn To Black), CR (Continue Red), n/a (not available)

30 | Investor Relations 2019 – Appendix We Create New Culture I.4 Financial Statements - Income Statement

(Unit: Wbn) 1Q18 2Q18 3Q18 4Q18 1Q19 % QoQ % YoY 2017 2018 % YoY

Sales Revenue 79.9 74.3 123.7 101.7 111.8 9.9 40.0 286.8 379.6 32.4

Programming 40.7 34.1 48.9 54.4 44.1 (18.9) 8.4 131.2 178.1 35.7

Distribution 32.1 28.8 63.4 37.8 56.2 48.7 75.1 111.9 162.1 44.9

Others 7.1 11.4 11.4 9.5 11.5 20.9 63.1 43.7 39.4 (9.7)

OPEX 69.2 67.0 102.2 101.3 100.8 (0.5) 45.6 253.8 339.7 33.8

Cost of Goods Sold 66.2 63.7 98.9 95.2 96.8 1.7 46.2 239.7 324.0 35.2

SG&A 3.0 3.3 3.3 6.1 4.0 (34.3) 33.0 14.1 15.7 10.7

Operating Profit 10.7 7.3 21.5 0.4 11.0 2,403.2 3.5 33.0 39.9 21.0

Margin (%) 13.3 9.9 17.4 0.4 9.9 9.5%p (3.4)%p 11.5 10.5 (1.0)%p

Non-operating Profit 0.2 3.7 0.6 1.3 2.2 62.5 1,136.3 (2.7) 5.7 TTB

Non-operating Income 1.1 3.5 0.9 1.6 3.4 114.2 209.4 1.4 7.0 392.9

Non-Operating Expenses 0.9 (0.2) 0.3 0.3 1.2 340.9 39.9 4.1 1.3 (68.9)

Pre-tax Profit 10.9 11.0 22.1 1.7 13.2 669.2 22.2 30.3 45.6 50.8

Income Taxes 3.0 2.1 4.8 (0.0) 4.0 expense 35.5 6.4 9.8 52.7

Net Profit 7.9 8.9 17.3 1.7 9.2 427.8 17.2 23.8 35.8 50.3

Margin (%) 9.8 12.0 14.0 1.7 8.2 6.5%p (1.6)%p 8.3 9.4 1.1%p

Note (1) K-IFRS consolidated basis (2) TTR (Turn To Red), TTB (Turn To Black), CR (Continue Red), n/a (not available)

31 | Investor Relations 2019 – Appendix We Create New Culture 5 2Q 2019 Lineups

Distributor ∙ tvN ∙ tvN ∙ tvN ∙ tvN Date (#. of episodes) ∙ Mar. 23~May 12 (16) ∙ Apr. 10~May 30 (16) ∙ May 6~Jun. 25 (16) ∙ Jun.1~ (18) Writer / Director ∙ Lim Hee-Chul / Kim Cheol-Kyu ∙ Kim Hye-Young / Hong Jong-Chan ∙ Moon Soo-Yeon / Yoo Je-Won ∙ Kim Young-Hyun, Park Sang-Yeon / Main Cast ∙ Lee Jun-Ho, Yoo Jae-Myoung ∙ Park Min-Young, Kim Jae-Wook ∙ Park Bo-Young, Ahn Hyo-Seop Kim Won-Seok ∙ Song Joong-Ki, Jang Dong-Gun, Kim Ji-Won

Distributor ∙ tvN ∙ OCN ∙ OCN ∙ MBC Date (#. of episodes) ∙ Jun. 5~Jul. 25 (16) ∙ May 8~Jun. 20 (14) ∙ May 11~Jun. 30 (16) ∙ May 22~Jul. 11 (16) Writer / Director ∙ Kwon Do-Eun / ∙ SeoJoo-Yeon / Lee Kwon ∙ Ma Jin-Won / Nam Ki-Hoon ∙ Kim Eun / Ahn Pan-Suk Main Cast Jung Ji-Hyun, Kwon Young-Il ∙ Lee Som, Uhm Tae-Gu, ∙ Lee Ha-Na, Lee Jin-Wook ∙ Jung Hae-In, Han Ji-Min ∙ Im Soo-Jung, Jang Ki-Yong Chun Ho-Jin

32 | Investor Relations 2019 – Appendix Thank You

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