#1Sony Interactive Entertainment Game & Network Services Segment Sony Interactive Entertainment Senior Vice President Sony Corporation President & CEO Sony Interactive Entertainment Jim Ryan Today Game & Network Services Segment PlayStation® Assets Platform Strategy - The Role of Next Gen Content Distribution Strategy - The Role of Cloud and Streaming Today Medium Term Longer Term Questions we want to respond to One Sony Collaboration Sony Corporation#2GOD OF TATA D THE LAST OF US PART HORIZON ZERO DAWN PlayStation Assets UNCHARTED B Game & Network Services Segment Sony Corporation Game & Network Services Segment OWNED IP BRAND COMMUNITY Sony Corporation#3Owned IP Game & Network Services Segment Distinguished Game Studios 13 Studios Worldwide 10mil Franchise Strength Increasing Lifetime unit image by title and platform Improving Competence in 'Game as a Service' Revenue Highest paying user spend of any Sports title on the US Store THE SHOW19 US Japan Europe PS2 PS3 PS4 PS3 PS4 PS3 PS4 metacritic 94 GODOWAR Phillies UNCHARTED THE LAST OF US MLBⓇ The Show™ 19 *Comparison in PlayStation™Store 6weeks after launch Sony Corporation Game & Network Services Segment Our Brand Is Our Greatest Strength #3 #7 #13 Rank Brand (UK) Rank Brand (DE) Rank Brand (US) 1 1 1 2 LEGO 2 Google 2 amazon 3 B 3 3 P 4 Google 4 LEGO 4 NETFLIX 5 NETFLIX 5 amazon 5 6 + fitbit 6 NETFLIX 6 Google 7 Spotify 7 eB 7 SAMSUNG 8 amazon 8 Spotify 8 KitchenAid 9 NHS 9 P PayPal 9 Spotify 10 10 SAMSUNG 10 11 LEGO 12 YouTube 13 B Prophet brand relevance index Sep-18 Sony Corporation#4Game & Network Services Segment Engagement Community Spend ⚫ 94M+* PlayStation™M Network monthly active users • Over 90% of all consoles ever seen have connected over the last 12 months Player used PS4 for over 21 hrs per week on average in FY18 Consumer spend through the PS4 ecosystem estimated at over $20bn for the first time in FY18 Average lifetime device spend exceeds $700 • Average launch year lifetime device spend exceeds $1,600 PlayStation®Plus subscriber base exceeds 36 million As of end of Mar, 2019 Sony Corporation Platform Strategy - The Role of Next Gen Game & Network Services Segment Sony Corporation#5Generational Transformation Loading time (sec) 00:00.83 Next Generation (under development) Ultra High Speed Game & Network Services Segment Loading time (sec). 00:08.10 PlayStation®4 Pro Sony Corporation Game & Network Services Segment SIE Believes in Generations We will harness the power of new technology to offer completely transformative and immersive gaming experiences We will leverage Backwards Compatibility to transition our community to Next Gen faster and more seamlessly than ever before We provide stability of environment for content creators Sony Corporation#6What we have said so far All New CPU, GPU Next Gen SSD Ray Tracing 8K What we have not spoken about yet Date Price Game & Network Services Segment Backwards Compatibility Disc Support 3D Audio Games User Experience Country Rollout The Critical Role of PS4 Will remain the engine of engagement and profitability for the next three years Will provide the fertile early adopter gamer base critical for Next Gen success Outstanding roster of exclusive AAA games still to come THE LAST OF US Sony Corporation Game & Network Services Segment GHOST Sony Corporation#7Content Distribution Strategy - The Role of Cloud and Streaming Today Game & Network Services Segment Sony Corporation Game & Network Services Segment Sony Corporation#8Game & Network Services Segment PS4 Remote Play Offers Seamless Multi-Device Streaming Today ios *2 Android PC/Mac 5.6 Million active users, 71M+ hours of gameplay *1 *1 FY18 yearly figure *2 Xperia only as of today Sony Corporation Game & Network Services Segment PlayStation™ Now - the History Current area coverage > 70% PS4 base Our experience in game streaming 2014 2015 2019 2012 Acquisition of GAIKAI Rich 2014 PS Now rental service launch IP Portfolio 2015 Acquisition of OnLive IP Sony BRAVIA, Blu-Ray, Samsung TVs support 2016 PS Now subscription service launch 700k Subscribers: 40% CAGR * *As of end of Mar, 2019. Sony Corporation#9PlayStation™ Now - Today Game & Network Services Segment 15 Data Centers 37 Network POPS 19 Countries PS4/PC Client B 780 games No developer effort required Streaming + Download 170 Publishers Supporting *As of end of Mar, 2019 Sony Corporation Game & Network Services Segment PlayStation™ Now and its technology Ultra Low latency with only 5Mbps bandwidth required Server Network Client Dynamic Adaptive Streaming Congestion Control Low Latency Client Stream Shaping Network Protocol Packet Loss Concealment Sony Corporation#10Medium Term Game & Network Services Segment Sony Corporation Game & Network Services Segment PlayStation™ Now - Our Plans Support 1080p and beyond Improve Quality of Content Maximize Off-console Opportunity Leverage Existing Strengthen Marketing Capacity Support Increase CAGR to over 50% Existing capacity investments support 5 mil subscriber base Sony Corporation#11Mainstream Business Model Generation Longer Term SIE Believes in Gamer Choice Game & Network Services Segment Sony Corporation Game & Network Services Segment CD/DVD Blu-ray Blu-ray + + Download Download + Streaming Next Gen PlayStation® PlayStation®2 PlayStation®3 PlayStation®4 Sony Corporation#12Game & Network Services Segment Role of Streaming in Next Gen Our Vision A massively enhanced PlayStation community where enriched and shared PlayStation experiences can be seamlessly enjoyed independent of time and place - with or without a console 5 mil (capacity) Games Next Gen Launch PS3 PS4 Next Gen Engines of Growth Portable Client devices Static Client devices New Entitlement models Next Gen Hardware Next Gen Games Evolved services Sony Corporation Game & Network Services Segment Using Partnership to Achieve Scale SONY Microsoft May 16, 2019 Sony and Microsoft to explore strategic partnership Companies to collaborate on new cloud-based solutions for gaming experiences and isolates TOKYO and REDMOND, Wash. -May 16, 2019 Sony Corporation (Sony) and Microsoft Corp. (Microsoft) announced on Thursday that the two companies will partner on new innovations to enhance customer experiences in their direct-to-consumer entertainment platforms and Al solutions • We will leverage existing and new partnerships to achieve growth and scale faster than ever before . This follows the model successfully followed in growing our PSN business Sony Corporation#13Questions we want to respond to Game & Network Services Segment Sony Corporation Game & Network Services Segment Console promotional activity has been proportionate and has positive ROI $299 $199 $179 $149 PS2 $129 $99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 $599 $399 $299 PS3 $249 2006 2007 2008 2009 2010 2011 2012 $199 • 2013 2018 Black Friday - $199 promotional pricing self-financed during FY18 All FY19 promotions will self-finance this year $399 $349 $299 PS4 2013 2014 2015 2016 2017 2018 2019 2020 OF US Sony Corporation#14$ The 99, Not the 1 Game & Network Services Segment 骨 99 Cost Management LAST B Sony Corporation Game & Network Services Segment We recognize the need for a more stringent approach to the management of our cost base PlayStation™ Vue will not negatively impact our P&L from FY20 onward Sony Corporation#15د SONY MUSIC One Sony Collaboration One Sony Collaboration Sony Music Original music for 1st party games VR content with Sony artists PlayStation. PRODUCTIONS Game & Network Services Segment Sony Corporation Game & Network Services Segment SONY PICTURES Collaboration on Contents IP Sony Corporation#16(Bil yen) Sony Interactive Entertainment Game & Network Services Segment FY2018 Operating Profit Variation from FY2017 Sales Revenue 1,943.8 +19% 2,310.9 (3) 311.1 (2) (4) (5) Operating Profit 177.5 FY2017 Act (1) 1) Sales growth of both 1st and 3rd party game software and add-on contents 2) Sales growth of network services mainly in PS Plus 3) Unit decrease due to lifecycle and higher console cost in hardware and peripherals 4) Increase of SGA in enhancement and expansion of network business, 1st party game software development and R&D cost of next generation 5) Negative impact of exchange rate *1 etc. FY2018 Act *1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2018 and comparing them with the previous fiscal year. Sony Corporation#17Game & Network Services Segment (Bil yen) FY2019 Operating Profit Variation from FY2018 Sales Revenue 2,310.9 Operating -0.5% 2,300 Profit 311.1 (2) (1) (3) 280 (4) (5) FY2018 Act 1) Continuous sales growth of network services mainly in PS Plus 2) Cost improvement more than unit decrease due to lifecycle in hardware and peripherals 3) Sales decrease of 1st party game software that had big hit titles in FY2018 4) Increase of SGA in acceleration of next generation development activities 5) Negative impact of exchange rate*¹ etc. FY2019 Fct *1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2019 and comparing them with the previous fiscal year. SONY Sony Corporation