Sony Pictures Television Networks D i g i t a l MRP FY14 – FY16

Presented July 17, 2012 Introduction: Digital Networks Group

Crackle Crackle US CA, UK, AU

Content Crackle Studio Br/LatAm

SPT Networks Digital Networks Group

Common Platforms, Products and Approach Games / Apps Rapid Shift to a Connected World Significant Adoption of Connected Devices People are Watching Video Everywhere Target Audience is Global

● % of People Watching Online Video World of Pay TV and OTT is Colliding

2012 2016

SET Authenticate d PAY TV AXN

SPIN THE NEW NETWORKS WORLD Convergenc OTT The line between authenticated and e Mobile open networks blurs; consumers can seamlessly access all channels Crackl Web e without deference to source

Woma DIGITAL Open n NETWORK S Music

Health As a company that already is out in front, now is the time to invest

● For Networks, move to Common Platform 3.0 for mobile and tablets, Tech / and Drupal by FY16 Platforms ● Establish Crackle Shared Services ● Build fully distributed set of products across online, mobile and OTT

● Establish a dedicated Crackle sales team in the US to get to $100M Sales ● Augment digital sales in Latin America ● Evolve Dolphin into a digital sales company in Europe

Portfolio ● Launch new brands (e.g., Women’s network in LatAm, Animax in Growth / UK) Expansion ● Extend mobile Games onto OTT TV platforms ● Explore acquisitions of new digital networks

● Invest in original long-form series and IP for the Networks Content organization ● Develop brand extensions and original IP in the games space ● Acquire long-term rights to movies and TV from outside studios U.S.

MRP Presentation

July 17, 2012 Crackle Growth Strategy Themes for FY13

Retention, Global and Not Just Acquisition Scalable

Minors to Majors: Consumer Quality is Pervasive World Class Experience Platform (sales, software, product, content, marketing)

3 Platform Sales as a Product Business (Ad Experience)

…and keep building the talent pool, and hit financial milestones - 10 - Key Metrics Across Platforms

Increased engagement across multiple platforms will drive growth

Uniques Streams Ad Impressions (monthly in MM) (avg monthly in MM) (avg monthly in MM)

OTT 2x ad load Mobi le Onli ne

Streams Per Unique Ad Pods Per Stream

Y-o-Y Growth 5.5 5.5 5.5 5.5 2.8 3.2 3.9 4.9

4.2 4.9 4.9 4.9 2.3 2.5 3.1 3.9 OTT 86% 20% 20% 1.9 1.8 1.9 1.9 2.9 3.2 3.7 4.4

Mobile 37% 20% 20%

Online 0% 8% 9% - 11 - Sales Revenues

Crackle is poised to match sales with inventory created over online, mobile, and OTT TV platforms.

OTT Mobil e Onlin e

Net Total $44.7 $67.2 $97.6

CPM OTT Mobile Web Premium $18 $25 $15 Sellout 85% 85% 85% Network $11 $14 $9

- 12 - CPMs held flat across forecast period Premium 70% 80% 80%

Network 30% 20% 20% Crackle U.S. Historical Context: FY08 to FY16

FY08 FY09 FY10 FY11 FY12 FY13 Fcst FY14 MRP FY15 MRP FY16 MRP SPT Ad Sales $ 1,615 $ 2,969 $ 6,781 $ 7,522 $ 11,324 $ 17,700 $ 44,747 $ 67,228 $ 97,566 Other Revenue 557 1,673 3,312 9,185 6,286 9,007 7,625 6,922 6,790

Total Revenue 2,172 4,642 10,093 16,707 17,609 26,707 52,372 74,150 104,356 Op Income Before SPE Content (23,329) (18,145) (11,725) (846) (2,786) 1,095 4,500 13,200 23,400 SPE Content Cost 1,177 (1,394) (4,484) (3,660) (4,021) (4,095) (4,500) (6,000) (9,000) EBIT (22,152) (19,539) (16,208) (4,506) (6,807) (3,000) (0) 7,200 14,400

Cash (27,204) (27,171) (14,597) (8,890) (11,411) (12,100) (18,300) (8,200) (4,600) Headcount Crackle U.S. 53 53 43 38 41 52 40 42 43 Ad Sales Plan 24 35 48 58 76 75 90 101

Moved Crackle to First full year of Los Angeles – new Crackle – re- November 2008 launched April 2009

• From $2.2M revenue to $10M in FY10 (New Crackle) to $104M in FY16 (10x increase in 6 years). • In 8 years, from ($22M) EBIT loss to $14.4M profit, and from ($23M) loss to SPE to $23.4M.

- 13 - Crackle U.S. Plan-Over-Plan Comparison

FY13 FY14 FY15 FY16

Q2 Fcst Budget Variance 2012 MRP PY MRP Variance 2012 MRP PY MRP Variance 2011 MRP SPT Ad Sales $ 17,700 $ 17,700 $ - $ 44,747 $ 32,385 $ 12,362 $ 67,228 $ 45,560 $ 21,668 $ 97,566 Other Revenue 9,007 12,460 (3,453) 7,625 10,860 (3,235) 6,922 9,560 (2,638) 6,790

Total Revenue 26,707 30,160 (3,453) 52,372 43,245 9,127 74,150 55,120 19,030 104,356 OI Before SPE Content 1,095 2,550 (1,455) 4,500 7,700 (3,200) 13,200 11,700 1,499 23,400 SPE Content Cost (4,095) (4,200) 105 (4,500) (4,000) (500) (6,000) (4,000) (2,000) (9,000) EBIT (3,000) (1,650) (1,350) (0) 3,700 (3,700) 7,200 7,700 (501) 14,400

Cash (12,100) (11,000) (1,100) (18,300) (8,000) (10,300) (8,200) (6,300) (1,900) (4,600) Headcount Crackle U.S. 52 52 - 40 51 (11) 42 52 (10) 43 Ad Sales Plan 24 - 24 35 35 48 48 58 76 52 24 75 51 24 90 52 38 101

- 14 - Distribution

- 15 - Distribution & Global Partnerships

Shift focus from building our distribution network to driving audience growth and retention on critical strategic partners and our existing integrations

Strategies & Tactics

● Focus on top five strategic partnerships that drive ~75% of our offsite revenue: Xbox, Deepen Existing iOS, SEL/PS3, Android, and Roku Strategic ● Secure and expand tier one partnership status via preinstall and premium placement Partnerships opportunities ● Work with partners to gain early access and insights into their strategic initiatives to leverage for our own advantage: HTML5, companion experiences, second screen, etc. ● Establish ourselves as the market leaders in OTT and mobile distribution to help improve overall brand awareness Improve Retention, ● Improve and update native integrations Loyalty, Usage, ● Optimize ad experience (develop next gen ad units, improve measurement, etc.) and User ● Develop products for next generation connected platforms Engagement

● Secure early access to strategic discussions with major emerging platforms (e.g. Drive New Apple TV, Nexus) Business ● Prioritize online efforts on existing and new dominant platforms (e.g., Win8, Development Facebook) Opportunities ● Leverage global partnerships to support incremental international expansion and the launch of new digital networks ● Hit revenue targets for licensing, subscription, and CYC businesses ● Exploit Crackle IP by continuing- 16 - to leverage SPE’s ancillary distribution channels Distribution Partnerships

2/3 of revenue will come from OTT and Mobile; several key accounts will drive success.

FY14 OTT and Mobile Revenues Total: $29,563,602 All figures in millions $0.3 $0.3 $0.3 $0.2 $0.1 $0.5 $0.3 $0.0

$0.7 Xbox $0.7 IOS PS3 $1.4 $8.2 Android - Google Play ROKU BIVL $2.0 Samsung Android - AMZ Kindle Vizio

$2.6 LG Panasonic Windows Toshiba

$2.9 Android - Nook $6.0 Western Digital Playstation Home $3.1 GoogleTV

- 17 - Ad Sales

- 18 - Exec Summary

Situation Strategy

• Inventory is growing a year ahead of plan • Transform the Crackle positioning, but ad-revenue is lagging value proposition and sales — Eight part time sales reps organization — RFP driven business • Move from a video ad network to a — Value proposition unclear premium network to drive revenue • FY14 plan $32MM • Accelerate FY14 plan by one yr/ • FY15 plan $45MM $13MM to $45MM

Sales & Revenue End-to-End Sales Support & Strategy Sales Structure Tactics

1. Go directly to clients 1. Sales talent and 1. Marketing solutions & (brands) footprint Research 2. Strategic acct builds 2. Support scope & 2. Marketing / brand drive planning & scale awareness solution requirements 3. Yield mgmt 3. Quality programming content 4. Tech & Product capabilities 19 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Sales Leadership Requirements

Sales Outreach Structure & Experience

• Focus on Clients (brands) in • Dedicated sales leadership in parallel with agencies all regions that positions us for success

• Change overall proposal • Proven digital track record for activity to be a balance of securing meetings with clients “proactive” pitches to clients to influence “media buy” and RFPs from agencies decisions and close multiple $400M to $1MM+ major accounts

20 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Revenue Composition

Revenue by Category and Revenue by Category Major Accounts Model Premium Revenue Analysis QSR; 5% Retail; 5% Automotive; 16% Categor MJR Acct y % of Rev Rev Major Accts Rev % of Rev Other; 14% Studio/T V 21% 7,405,230 9 4,620,000 13% CPG 17% 5,994,710 7 3,740,000 11% Auto 16% 5,642,080 7 3,520,000 10% Alcohol; 3% Other 14% 4,936,820 6 3,080,000 9% Studio/Tune GamingIn; 21% 10% 3,526,300 4 2,200,000 6% Mobile 9% 3,173,670 4 1,980,000 6% QSR 5% 1,763,150 2 1,100,000 3% Mobile; 9% Retail 5% 1,763,150 2 1,100,000 3% Alcohol 3% 1,057,890 1 660,000 2%

Gaming; 10% Measurements100% 35,263,000 for Success:44 22,000,000 62% Packaged Goods; 17% Source: Sales MRP Plan • 4-5 Categories: 65% of revenue • 44 Accounts/Brands: 62% of revenue

21 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Campaign Analysis

Mrkt Solutions have a major impact:

• 352 premium campaigns sold • 44% of revenue will be tied to marketing solutions • 56% media only • 4% of the campaigns will represent 24% of revenue

Campaign %/Campaig Ad Revenue Type Revenue %/Total$ Avg s ns Premium Custom Integrated Mrkt 10,650,500 24% 500,000 21 4% Premium OTS Mrkt 8,950,000 20% 100,000 90 17% Premium Media Only 15,662,500 35% 65,000 241 45% Network Media Only 9,486,075 21% 50,000 190 35% 44,749,075 100% 82,642 541 100%

22 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES FY14 Revenue & Sales Activity Output

Q1 Q2 Q3 Q4 Total Premium Revenue Total 5,641,691 8,462,536 10,578,170 10,578,170 $35,260,567 Premium Revenue % 16% 24% 30% 30% 100% Proposals 469 704 879 879 2931 Campaigns Sold 56 84 106 106 352

Network Revenue Total 3,320,126 3,320,126 1,422,911 1,422,911 $9,486,075 Network Revenue % 35% 35% 15% 15% 100% Campaigns Trafficked 66 66 28 28 190

The Path to Revenue

• FY14 Sales activities begin FY13 Q3 • 2900+ proposals and media plans will be created • Premium revenue will ramp up by Qtr • Dependency on network revenue will decrease by Qtr

23 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES SPT Ad Sales P&L

Crackle is at a critical state to develop its own sales team to stay competitive and achieve higher goals.

OTT Mobile Online SPTAS Plan (Fully- Loaded) Hybrid Plan add’l cost $ in millions

Net Total $36.9 $56.6 $84.1

Cost as % of Sales 17.6% 16.0% 13.8%

24

Premium $35.2 $52.5 $84.1

Network $9.5 $9.7 $13.4 EBIT Impact

We decided to pay for our own Sales, so now we need to do it right.

FY13 FY14 FY15 FY16 EBIT before Ad Sales Plan ($1,900) $5,400 $14,200 $22,400 SPTAS Plan (1,100) (5,400) (7,000) (8,000) (3,000) (0) 7,200 14,400

Hybrid Plan - add'l costs (760) (2,460) (3,670) (5,480) EBIT ($3,760) ($2,460) $3,530 $8,920

25 Range of Scenarios Evaluated

Following our strategy and requirements to grow our ad business, we evaluated a range of scenarios:

• Shared sales leadership for national and regional SPTAS • Leverages current sales mgmt Plan

• Dedicated sales leadership for national and regional Hybrid • New SVP of sales with a proven digital track record • Planning and Ad Ops leadership continues to be a shared resource

• Reports into Crackle Go it • Dedicated sales leadership for national and regional Alone • New SVP of sales with a proven digital track record • New Planning and Ad Ops team

26 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Scenarios: Pros & Cons

PROS CONS • Keeps TV connection & • No proven digital track record multiplatform SPTAS • Utilizes current operations Plan • Unified 26MM Crackle Media uniques • Avoids sales channel conflict • Costs are lower

• Keeps TV connection & • Search time for new SVP Hybrid multiplatform • Costs are higher • Utilizes current operations • Unified 26MM Crackle Media uniques • Avoids sales channel conflict • Dedicated sales leadership with proven digital track record Go it Alone • Dedicated sales leadership with digital • No multi-platform experience • Sales channel conflict • No unified comScore number • Operations issues ie. office space 27 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE• OFSearch SONY PICTURES time for new SVP • Costs are higher SPTAS ORG Design

Source: Sales MRP 28 Plan Hybrid ORG Design

SALES PLANNING & AD OPS SVP SVP National National SALES SVP SALES SALES East PLANNING AD OPS Vice President Vice President Exec. Director Exec. Director West Central NY NY

SALES SALES SALES SALES SALES SALES PLANNING TECH Sales Asst SR. AE Sales Asst SR. AE Sales Asst SR. AE Director Director LA LA CH Detroit NY NY Revenue Analyst LA LA

PLANNING SALES PLANNING SALES PLANNING SALES PLANNING TECH SR. Media AE Sr. Media SR. AE SR. Media AE Sr. Mgr. Ad Engineer Planner LA Planner CH Planner NY Revenue Analyst LA LA CH NY LA AD OPS SALES AD OPS AD OPS SALES AD OPS TECH Campaign Mgr. AE Campaign Mgr. Campaign Mgr. AE Sr. Campaign Ad Engineer LA LA CH NY NY Mgr. LA LA

PLANNING SALES PLANNING SALES Media Planner AE Media Planner AE LA LA NY NY Indicates shared service AD OPS SALES AD OPS SALES Campaign Mgr. AE Campaign Mgr. AE Indicates dedicated LA LA NY NY planning, ad ops or tech SALES AE Indicates dedicated NY sales

29 Staffing & Costs Comparison

SPTAS Hybrid FY13 FY14 FY14 FY16 FY13 FY14 FY15 FY16 Revenue Target - $44.7 $67.2 $97.5 - $44.7 $67.2 $97.5 Premium Revenue - $35.2 $57.5 $84.1 - $35.2 $57.5 $84.1 Network Revenue - $9.5 $9.7 $13.4 - $9.5 $9.7 $13.4 % Increase - 38% 50% 45% - 38% 50% 45% Dedicated Sales 0 0 0 0 4 4 5 6 Leadership Headcount Sales AE Headcount - 16 22 28 5 14 20 26 Revenue per AE - $2.20 $2.61 $3.00 - $2.51 $2.88 $3.23 Sales Assistants - 5 7 8 2 3 4 5 Planning - 7 9 10 6 7 9 10 Ad Ops - 5 7 8 2 5 7 9 Technology - 2 3 4 1 2 3 4 Total Headcount 24 35 48 58 20 35 48 60 Headcount Cost Estimate $1.10 $5.40 $7.00 $8.00 $1.86 $7.86 $10.67 $13.48 add'l Hybrid costs 0.76 2.46 3.67 5.47

Sales leadership costs and levels within teams are the primary difference in estimates

30 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Sales Solutions & Marketing Support

VP,● GSMDirector,Admin Sales Key Functions & Roles VP, GSM 1. Strategy 2. Proposals & RFP response Admin 3. Marketing solutions (TBH) • Media innovation • Research & Insights Director, Sales Director, Ad • Custom packages Mrkt Solutions • OTS packages (Current) (FY13) 4. Sales Materials & Tools 5. Post-sales Execution Sr. Mgr, Sales Graphic Mrkt Designer 6. Trade marketing (FY13) (FY13) 7. Corporate synergy

Mgr, Integrated Graphic Mrkt Services Designer (FY14) (FY14)

31 CONFIDENTIAL - NOT FOR RELEASE OUTSIDE OF SONY PICTURES Programming & Content Acquisitions

32 Programming & Content Acquisitions

Program and acquire feature films, TV and originals that solidify Crackle’s positioning as the best free ad- supported digital entertainment network for males 18-34.

Strategies & Tactics

● Curate premium feature films that support and further core genres: Comedy, Action, Thriller, Crime, Sci-Fi, Horror, Anime and Music Reinforce Curation ● Enhance TV quality and sharpen focus to better align with brand strategy by defining five TV and Strengthen programming pillars (Drivers, Genre-based Action & Sci-Fi Series, Cult, on-brand Reality, Anime) Our Editorial Voice - Create timely and seasonal assemblages of content for high value, premium sponsorships (e.g. Kill Count) - Engage users with compelling watchlists that convey curation and further the Crackle voice and brand - Launch 2-3 on-brand celebrity guest programming stunts per year - Minimize dependencies to program for Hulu

SPT Licensing: Establish a - Manage market complications and cost increases commensurate with the evolution of SVOD and TV Reputation as a Everywhere to secure exclusive availabilities for driver titles and lock in long term windows Legitimate “Buyer” - Purchase short network window avails for high value, on-brand feature films (District 9, Zombieland, etc.) with SPT - Acquire driver TV series from SPT (e.g. Rescue Me, The Shield) - Select genre-targeted, on-demo library features and TV product to support ad-sales initiatives and ad packages

3rd Party Licensing: Expand Content - Close ground breaking AVOD license opportunities with other major studios and maintain existing 3rd Offering via 3rd party licensing relationships (Snag Films, Content Films, etc) Party Content - License on-brand genre-targeted TV series (e.g. Stargate SG-1, Hercules) from at least 2-3 major studios Acquisitions - License on-demo, adrenaline-based reality TV and originals (e.g. Discovery Channel, Military Channel) - Source premium content to support launches of new verticals (e.g. anime, music).

- 33 - Programming & Content Acquisitions

Content Spend continues to be focused on movies, though TV plays a larger role over time.

Content Budget All budgets in millions $20.00 $18M $18.00 $1.00 $16.00 $4.00 $14.00 $12M $12.00 $0.75 Original Acquisitions $10.00 $9M $3.00 TV $0.50 $8.00 Movies $2.00 $13.00 $6.00 $4.525M $0.15 $4.00 $0.75 $8.25 $6.50

$2.00 $3.63

$- FY13 FY14 FY15 FY16 Movies Movies per Month 250 300 350 400 Driver Titles per Month 5 10 15 25 % SPT 70% 60% 55% 50% Non-SPT Major Studios 1 2 4 4 Television Total Series per Month 60 50 55 60 Driver Titles per Month 1 3 5 7 % SPT 40% 50% 40% 40% Non-SPT Major Studios 1 2 4 4 Originals Licensed Originals 3 3 4 4

** Illustrative content progression over MRP. ** - 34 - Original Programming

- 35 - Original Crackle Series

Dramatically increase the volume and quality of original content while establishing a unique format and transmedia experience to enhance perception and widespread use of Crackle as a true linear network alternative.

Strategies & Tactics

● Speed the pace of the traditional TV drama hour Evolve Series ● Evolve to 13 x ½ hour drama approach, with an eye towards 13 x 1 hour format Approach: in FY16 Own ½ Hour Model ● Establish ½, high-intensity drama as viable and unique Crackle network format. ● Produce second seasons of successful shows to build franchise properties ● AXN / Crackle 13 eps long-form series partnership tentative in FY15 ● Increase per episode budgets from $175k to $300+k by FY16

● Build 360 experience (second screen, gaming Fully Integrate platforms, social integrations, etc.) around original “Second Screen” production franchises into Production ● Dual screen integrations for all series increases advertising and sponsorship opportunities ● Second screen experience executed in parallel with production

Features and 6 Eps ● Original features to serve as pilots for future franchises and special events Series as “Pilots” ● Launch AXN / Crackle international back-door pilot / feature partnership annually

● Crackle Branded Increase volume of short-form network originals such as “Why It Crackles” and Series “Smokin’ Crackle Movie”

- 36 - Crackle Original Development – Production Slate Strategy

FY13 FY14 FY15 FY16

feature 6x22 13x22 13x44 feature 6x22 13x22 13x44 feature 6x22 13x22 13x44 feature 6x22 13x22 13x44

a a a

b

c

d d

e

f f f

g g

h h

i

j k

- 37 - Marketing

- 38 - Marketing

Grow all KPIs to position Crackle as a “cable network without the cable”

Strategies & Tactics

● Achieve awareness of 50%+ among target audience (Men 18-34) Cable Level ● Continuous (year round) media presence Awareness ● Achieve continuous press presence via dedicated resources

● Leverage growing awareness to gain visibility on partner decks (“virtuous circle”) Exploit ● Supplement high profile permanent placement with editorial stunts and features Partnerships to ● Drive OTT/Mobile Launch cross platform awareness campaign (e.g., ad slot dedicated to platform promotion)

● Build and engage network level social followings via acquisition drives, Grow Online partnerships and social evangelists Audiences ● Dramatically expand ecommunication via list acquisition and frequency enhancement ● Expand search marketing and maintain best in class SEO practices ● Continuous targeted B2B media to achieve virtual 100% awareness Target “Must Buy” ● Establish thought leadership via custom research and associated trade press Status ● High profile presence at Newfronts (annual originals slate announce)

● Learnings/Best Practices summits Facilitate Global ● Global advertising assets Growth ● Global vendor agreements and templates where feasible (eCommunication, social, etc.) - 39 - Marketing Spend

Values in 000s FY13 FY14 FY15 FY16 Traffic Driving 1,500 1,500 1,500 1,500 Media 2,100 4,675 7,700 1,4700 Creative 600 600 1,000 1,500 PR 175 300 300 300 B2B 100 600 1,000 1,500 Research, etc 325 325 500 500 Total $4,800 $8,000 $12,000 $20,000

- 40 - Financial Overview FY13 Q2 Fcst FY14 FY15 FY16 REVENUES SPTAS - Domestic - Online $ 11.7 $ 15.2 $ 20.8 $ 28.0 SPTAS - Domestic - Mobile 3.6 10.1 16.0 23.9 SPTAS - Domestic - OTT 2.4 19.4 30.4 45.7 SUBTOTAL - AD SALES 17.7 44.7 67.2 97.6 Advertising - Domestic - OTT Challenge 2.3 - - - Licensing & Subscriptions 2.9 1.4 0.5 - DVD & TV Syndication - Crackle Originals 2.7 3.6 3.7 4.0 SUBTOTAL - OTHERS 7.9 5.0 4.2 4.0 Var. Licensing - YouTube CYC 1.1 2.6 2.8 2.8 TOTAL REVENUE 26.7 52.4 74.2 104.4

COSTS Content Cost (4.5) (9.0) (12.0) (18.0) Ultimate Amortization (1.2) (2.9) (2.7) (2.8) Bandwidth (4.8) (7.0) (10.0) (14.0) Technology Shared Services - (6.1) (6.4) (6.8) Product & Video Ops (1.2) (0.3) (0.4) (0.7) Marketing (5.0) (8.0) (12.0) (19.5) General and Administrative (8.4) (6.2) (6.5) (6.8) SPT Ad Sales Plan (fully-loaded) (1.1) (5.4) (7.0) (8.0) Other (3.4) (7.2) (9.5) (13.0) SUBTOTAL (29.6) (52.2) (66.6) (89.6) CYC - G&A (0.1) (0.2) (0.3) (0.4) TOTAL COSTS (29.7) (52.4) (67.0) (90.0)

EBIT $ (3.0) $ (0.0) $ 7.2 $ 14.4

HEADCOUNT Crackle U.S. 52 40 42 43 SPT Ad Sales Plan 24 35 48 58 TOTAL 76 75 90 101

CASH FLOW $ (12.1) $ (18.3) $ (8.2) $ (4.6)

Content Cost includes SPE Licensing, Originals Productions, Acquisitions and Editing Other includes Outside Participation, Deprec, Amort, Rev Share, Music Fees, Ad Serving, Ad Creative, Originals Distribution Costs - 41 - Headcount Requirements TO BE UPDATED

Crackle is looking to add several head over the MRP period to address strategic growth opportunities

FY14 Description FY15 FY16 Distribution Manager Primary business contact for key partner accounts, and BD Technical Product responsible for cultivating new partnerships and driving Project revenue opportunities with existing partners Manager

Public Relations Have been sharing resource with SPT; dedicated resource Programming Director required to drive dramatically enhanced press presence Partner Marketing Frees up director to focus on larger, more strategic platform Manager partnerships; needed to achieve 20% unique user growth Web Producer Programs, schedules and quality-checks on-site web content and cross-platform media. Web Producer Allocate and manage workload among design team

Production Artists (2) Develop pitches, RFP responses and implement integrated ad deals Original Production Increase in volume of original content studio output requires Development Manager additional head to help grow slate and bolster development capabilities Ad Solutions Director XXX

Sales Marketing XXX Manager Integrated Mktg Service XXX Mgr. Graphic Designers (2) Changes status of current graphic- 42 designers - to full time

Total 13 2 1 Shared Services Organization A Shared Services Organization will support Crackle / Digital Networks globally

● For Crackle US, ELI and Latam/BR, there currently are 26 heads working on the platform ● Shared Services Organization (10 product/16 engineering) – 0 paid for by ELI ● 13 Increm – 4 paid for by Latam/BR ental – 22 paid for by US 26 Existing Headcount ● We recommend pooling those 26 heads into a (Product/Ops, Engineering) Shared Services Organization

● To support the objectives of the SSO the following incremental costs are required: – 13 New Headcount (6 Engineering, 7 Product); $2.2MM-$2.3MM FY14-FY16 – Outsourced developers: $1.6MM FY14, $1.8MM FY15, $2.0MM FY16

- 44 - Why Pool Resources Into a Shared Services Organization?

● 1 Consistency of Technology and Operations across all networks and regions

2 ● Re-architect, develop and maintain a scalable global platform for all networks

3 ● Scalability = efforts of one benefit the many

● Centralization of Product Roadmap to better coordinate launch 4 efforts/opportunities

5 ● Central knowledge store keeps experience and expertise centralized so that all may benefit

● 6 Will require fewer resources to launch and maintain products than if onus fell on individual networks

- 45 - Why is it Necessary to Increase Headcount for a Shared Services Organization?

● To effectively launch new initiatives - current capacity is ideal maintenance only

– Current capacity limits ability to launch products at the pace needed to hit our goals

– Would afford the Digital Networks group the much needed yet often overlooked capacity for projects to help keep organization competitive

● To build platform to a state where it can more effectively scale (channels, languages, regions, products)

● To achieve faster time to market for new channels (incremental work vs. building from scratch)

– Less guesswork due to collective experience acquired and retained by SSO

– Fewer resources required to launch new networks and regions with fuller feature sets

- 46 - What are the Key Elements to the Shared Services Center?

Content Delivery 3rd Party Services Core Platform Apps (CDN) & Security

Project Management Office (PMO)

- 47 - Core Platform

● Update with improved support for multiple languages, regions, platforms & devices Content ● Iterate and improve on proprietary Crackle features/IP (Rights Management, GPMS) Management ● Utilize newer technologies to build a best-in-class platform (vs. platform built in 2006 for System (CMS) UGV-focused experience) ●

● Improve API consistency, versioning and documentation to more efficiently power apps ● Broaden APIs to support new devices and protocols APIs ● Improving APIs increases potential for full integration between SPT Networks sites / apps and Crackle, and the ability to share content across regions, devices, services

● Continue to enhance Crackle’s state-of-the-art video transcoding infrastructure to enable Video sharing of video transcode capacity and expertise across all regions and services at low Transcoding cost ● Incorporate multiple content protection and digital rights management (DRM) schemes in order to facilitate licensing of content from other studios and to protect SPE content

● Continue to leverage and innovate with cloud providers Amazon and Microsoft in order Systems & to build out high value infrastructure with low investment, maintenance and deployment Data Center costs ● Continue to maintain highly scalable, secure and reliable infrastructure utilizing a hybrid of cloud providers and ancillary SPE-hosted data centers

● Build YouTube / Hulu-grade reporting tools that enable comprehensive ad-serving performance metrics - this will increase the attractiveness of advertising on any SPT, Reporting Crackle or other service integrated with the Shared Services platform

- 48 - Apps

● New product and feature development for fast evolving space (e.g., new Development set-top platforms, expanded feature-sets, second screen experience, etc.) Scale ● Integration of “ads as product” into myriad platforms and devices ● Dedicated R&D time to scope out new app technologies and user experiences ● Improved Quality Control (proactive functional, load and unit testing) and test coverage across the growing list of consumer devices and platforms

● Collective bargaining with third parties and technology vendors based on a Market Input & global organization spanning multiple networks Power ● Improved focus on user feedback and stakeholder input

- 49 - Content Delivery Networks (CDN)

● Build tools to distribute video content across multiple content delivery networks (CDN) and to configure and balance distribution of that content CDN Management across the various CDNs, thereby maximizing quality of service (user satisfaction and engagement) and cost-effectiveness ● Leverage additional products from CDNs (such as content protection, firewall, and site acceleration) across all Shared Services implementations ● Centralize CDN evaluation, testing and contract negotiations within SPT

- 50 - 3rd Party Services

● Implement cutting-edge search and recommendations engines (and other Search & utility features) that can be used ‘a la carte’ by all the Crackle regions & Recommendations other SPT Networks

● Continual user and content security monitoring and improvement. Provide content and user security protection that is up-to-date, scales and performs Security well and is consistent with SPE and third-party content owner specifications. Proactively monitor & fix security issues, instead of in response to intrusion or hacking attempts

● Ensure key third party API integrations are continually improved and updated (e.g., Facebook, Twitter, Windows Live ID, PSN). Integrate into the Social shared platform then re-use the improvements across all regions. This makes the individual services more engaging and facilitates social marketing across the entire network

● Implement tools that enable pinpointing playback issues on a per-user Improved basis (e.g. by IP address) and fixing such issues, thereby increasing user Customer Service (QOS) Tools satisfaction, engagement time and as a result increasing ad revenue

- 51 - Project Management Office (PMO)

● Improved collection and management of stakeholder requests Manage & ● Product decisions based on empirically measurable business needs Schedule Inputs / Requests

● Dedicated team project managers to ensure timely delivery of scheduled Manage Project products Executions ● Vastly improved management status feedback and project transparency

- 52 - How Does it Work?

● Establishment of Project Management Organization to collect business requirements, analysis and prioritize based on business need, while providing detailed feedback and status to stakeholders

● Designate dedicated teams to certain key tasks so that they become experts in their field (e.g., player, social, CDN, systems integration); further improves time-to-market and scalability

● Additional budget to off-shore/outsource necessary yet more predictable technology tasks to third party contractors/developers

● Shared Services ● Network Instances Organization

● Network Operations New Product Project Video Ops US ELI Territories: Development Management India, Poland

New Networks: Art & Design Ad Tech Engineering LATAM / BR Vidzone, Animax, Womens

- 53 - What Does It Cost?

FY14 FY15 FY16 ● SSO Costs Existing New Total Existing New Total Existing New Total Headcount 26 13 39 26 13 39 26 13 39 Salaries/ Fringe/ Bonus $4,330 $2,180 $6,510 $4,430 $2,240 $6,670 $4,560 $2,300 $6,860 Product Development $1,200 - $1,200 $1,320 - $1,320 $1,452 - $1,452 Outsource - $1,600 $1,600 - $1,804 $1,804 - $1,989 $1,989 Overhead $890 - $890 $906 - $906 $999 - $999 Total $6,420 $3,780 $10,200 $6,656 $4,044 $10,700 $7,011 $4,289 $11,300

- 54 - How Will Costs be Allocated to the Networks and Regions?

● Allocated 60% US, 10% ELI, 30% LATAM / BR

● SSO to be a cost center with additional budget to be paid for as a portion of new business opportunities

US FY14 FY15 FY16 ELI US Latam % Allocation 60% 60% 60% Cost $6,120 $6,420 $6,780 30% ELI % Allocation 10% 10% 10% Cost $1,020 $1,070 $1,130 LATAM/ BR 60% % Allocation 30% 30% 30% 10% Cost $3,060 $3,210 $3,390 Total $10,200 $10,700 $11,300

- 55 - FY14 Timeline for Implementation

● Jan 2013 ● Apr ● July 2013 ● Sept 2013 2013

Hire Additional Assign Shared Identify Long Shared Services Role Term 3rd Party Full Operating Services and to Existing Partners, Bring Capacity Network Team Up to Speed Instance Heads

- 56 - ELI – Canada, UK and Australia FY2014 MRP Financial Overview

FY13 Q2 FY14 FY15 FY16 ($ in thousands) Forecast REVENUE TOTAL REVENUE $1,501 $3,170 $5,094 $8,578

COST OF REVENUES - - - - Content Cost (671) (1,203) (1,670) (2,300) Partner's Revenue Share (93) (193) (348) (645) Hosting/Bandwidth (556) (671) (795) (1,017) Ad Serving Fees (50) (85) (126) (197) TOTAL COST OF REVENUES (1,370) (2,152) (2,939) (4,160)

Website/Technology Product/Tech Shared Services Alloc. (150) (1,020) (1,070) (1,130) Traffic & Music Fees (33) (71) (113) (191) Sales and Marketing (220) (470) (740) (1,150) TOTAL OPERATING EXPENSE (403) (1,561) (1,923) (2,471) GROSS PROFIT (272) (543) 232 1,948 - - - - General and Administrative (262) - (561) - (638) - (656) - TOTAL COSTS (2,035) (4,274) (5,500) (7,287) - - - - EBIT $ (534) $ (1,104) $ (406) $ 1,292

SPE EBIT Impact (Inc. Content Licensing) $ 137 $ (21) $ 930 $ 3,017 - - - - Headcount 2 5 5 5 CASHFLOW (728) (304) 194 602

- 58 - Crackle Canada

Incremental investment in Canada has driven content offering, user growth and brand awareness

• Strategic Benefits – Unencumbered by challenging regulations for traditional networks, Crackle establishes wholly owned SPT Networks brand in a rapidly growing online ad market to one of the most engaged digital audiences in the world – Ad sales partnerships with Videology and Rogers provides data gathering opportunity to inform and drive content and marketing decisions, improve ad targeting/experience, and consider bringing in-house – Expanding Crackle’s footprint as a multi-territory operator increases leverage in relationships with global distribution partners – Canada business supports shared services infrastructure and scales Crackle to accelerate growth internationally in all English language speaking markets – Establishes relationships with players across distribution, ad sales and content providers to support new launches in other markets – With incremental investment in content, marketing and resources, business positioned to be EBIT positive by FY15

• FY14/15/16 Strategy – Work with ad sales team and ad rep partners to explore premium direct sales opportunities/sponsorships/collections – Enhance content offering through third party acquisitions – Improve and update native integrations – Develop products for next generation connected platforms – Ensure customization of product to be localized specifically for Canada (collections, social messaging, newsletter) – Build upon U.S. marketing campaigns with incremental and timely spend in Canada – Continue to build awareness and traffic via low cost tactics such as search marketing, social media and e-communication – Deepen strategic partnerships with key global partners (Apple, Google, Samsung, Sony) and expand relationships with local teams in Canada

- 59 - Crackle UK

Providing a digital presence in EMEA to position traditional networks for strategic growth and digital integration

• Strategic Benefits – Ad sales relationship with Videology and existing ad operations infrastructure provides market data and best practices to develop SPT/Dolphin digital ad sales capabilities in key digital advertising market (~$7.8 billion online advertising spend in 2011) – Largest and core digital asset in EMEA, Crackle will be critical driver in growing EMEA digital networks portfolio – Increase scale and strengthen position with ad reps for network websites, Animax SVOD and other new digital networks – Leverage existing distribution partner relationships to launch new digital networks – Potential co-branding/marketing cross-promotional opportunities with Movies4Men channels

• FY14/15/16 Strategy – Manage Crackle UK operations out of Los Angeles and provide guidance to prepare for transition to local management of Crackle operations (target FY15) – Optimize monetization by leveraging Dolphin direct sales force and third party ad networks – Switch from content revenue share to licensing model – Secure 3rd party content to bolster and establish differentiated and compelling offering for users – Launch Playstation Swordfish implementation – Build relationships with local teams of global distribution partners to increase promotional/placement opportunities – Initiate marketing spend to increase brand awareness of Crackle in the UK

- 60 - Crackle Australia

Maintain operations with minimal investment until large local distribution partnership is secured (i.e. Telstra)

• Strategic Benefits – Positions SPT Networks on forefront of digital video streaming trends in market – Standalone digital asset for SPT Networks portfolio in APAC region in favorable digital ad market – Online video advertising spend in Australia expected to grow at a CAGR of 27.1% from 2012-2016 and Crackle commanding favorable market CPM’s – Limited investment and resources necessary to operate close to break-even and seed brand with early digital enthusiasts while providing option value for mid-term future – In depth data-gathering further positions Crackle to maximize value in this growing territory – Partnership with Ignite Media benefits both growth in Crackle business and SPT’s equity stake in Ignite

• FY14/15/16 Strategy – Secure deal with large strategic distribution partner in Australia (e.g. Telstra) by FY14 or re-evaluate overall business and structure – Manage Ignite and other ad rep relationships to optimize monetization and increase fill rates to similar levels of Canada and UK – Work with APAC Networks team to create long term growth plans and best management approach – Continue to improve content offering – Leverage major global distribution partnership relationships to launch on new platforms and explore promotional/marketing opportunities

- 61 - International Expansion – New Markets

Launch Crackle in healthy digital markets where SPT Networks provides ad sales and marketing advantages

• Leverage global distribution relationships for immediate reach and product/technology shared services infrastructure to expand Crackle’s international footprint and brand with incremental investment • Closely partner with local SPT Network teams to maximize ad sales synergies, co-marketing opportunities and identify local content prospects

1 • India Opportunity – Market conditions of 3G roll-out, mobile online video consumption, lack of India and Other English competition and 300MM+ English language speaking population present attractive opportunity Speaking to launch Crackle supported by strength of MSM market position, infrastructure and promotional support on PIX and SIX channels [Target launch November 2012] • Other English – Assess incremental expansion opportunities in other English language markets including Africa, Scandinavia, etc.

2 • Spain and Portugal Opportunity – Potential to customize existing Spanish language and Spain and Portugal Portuguese language products of Crackle LatAm for Spain and Portugal markets. Launch supported by strength of SPT Iberia infrastructure and traditional networks presence. [Spain targeted for April 2013]

3 • German Language – Explore opportunities for German language territories including Germany and Austria Germany, Austria and Switzerland

4 • Work closely with local SPT Networks teams to track opportunities in high growth and high Track China, Turkey, potential digital markets and pursue launches opportunistically France, Russia, Korea and Japan for Deployment

- 62 - Headcount Requirements

Crackle ELI is looking to invest in resources over the MRP period to address strategic growth opportunities

Position Description Date

International Marketing Primary Brand-Builder April 2013 Manager • Drive awareness, traffic, customer acquisition and retention • Secure partner promotions • Work closely with Crackle US marketing team for strategy and creative development, • Create localized house campaigns • SEO, SEM, display and social media Account Management/ Partner Management December Distribution Biz Dev/Ad • Support and cultivate day-to-day relationships with 2013 local teams of existing distribution and content Sales partners • Identify and pursue new partners • Support planning and process of new business launches • Support overall relationship with incumbent ad sales partners

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