Slides from Steve Perlman's "Instant Gratification" presentation at D.I.C.E. on February 18, 2010.

1. Page 1 February 18, 2010

2. Instant Gratification Video Games in the “Now” Era Steve Perlman Founder & CEO, OnLive Page 2 February 18, 2010

3. Welcome to the “Now” Era All media what you want when you want it where you want it instantly delivered…NOW. February 18, 2010 Page 3

4. We’re Already There “Real-time entertainment traffic has exploded.” “26.6 percent of total traffic in 2009, up from 12.6 percent in 2008.” “Massive shift in behavior from … ‘download now, use later’ content acquisition to an on-demand mentality.” “Bytes are consumed as they arrive.” “Almost two-thirds of all Internet traffic in 2009 is enjoyed on arrival.”1 February 18, 2010 Page 4 1Source: SandvineBroadband Phenomena Report, 10/26/09

5. Music, Video/Movies, then Games Music became the first “Now” media Industry was unprepared: Devastated the business Videos/Movies in the midst of transition to “Now” Industry struggling to redefine itself So far, losing ground and no clear path Videogames just starting transition to “Now” Starting to feel the effects February 18, 2010 Page 5

6. Old Think: a Device Defines Media Physical device tied to the experience “What CD is playing?” “We’re watching a DVD tonight.” “Improve your grades or no more XBox!” February 18, 2010 Page 6

7. New Think: Experience Defines Media Music “It’s a track from a new Paramore-like band.” Could be from Pandora, iTunes, Amazon, pirate sites, etc. Unlikely from a CD Video/Movies “Did you see the new Tina Fey Sarah Palin skit?” Could be from YouTube, Hulu, nbc.com, pirate sites, etc. Unlikely watched on live TV February 18, 2010 Page 7

8. Media of the Moment Music, video/movies (“linear media”) Physical media in rapid decline Interim growth in rentals (Netflix, redbox) Downloaded media past its peak Even BitTorrent on the decline Streaming media now majority of all Internet traffic YouTube, Hulu, Pandora, etc. February 18, 2010 Page 8

9. Online Linear Media Hard to Monetize Online linear media a loss-leader business iTunes/App Store “a bit over break even”1 Apple makes its money selling hardware and software Netflix charges zero for online video Netflix makes its money mailing DVDs YouTube continues to lose money Google makes its money selling search ads Pirated linear media widely available YouTube infringement a game of “Whac-A-Mole” Hard to compete with free February 18, 2010 Page 9 1Source: Apple CFO Peter Oppenheimer, 1/26/10

10. What about “Now” Games? Videogames a different beast than linear media Large file needed before game can start Tied to specific playback devices Online games can’t be pirated Still, videogames subject to consumer attitude shift Used games continue to grow (about 1/3 of U.S. games sold)1 Clearly, consumers not tied to physical media Flash, iPhone provide near-instant experience Generally, far less value than console games As broadband speeds increase, piracy will increase Pirate downloads always grow much faster than legit downloads February 18, 2010 Page 10 1Source: Wedbush, ‘Money for Nothing’ Interactive Industry Report, 7/09

11. Monetizing Games in the “Now” Era Give consumers what they want Instant game play of high-quality games What they want, when they want it, where they want it Eliminate need for pricey, specialized hardware Focus consumer on the game, not the client device Offer game experiences in smaller “bites” Episodic, short-form, events, etc. Utilize Internet to mitigate piracy, used games Design games to require online connection February 18, 2010 Page 11

12. OnLive Game Platform for the “Now” Era Page 12 February 18, 2010

13. What is OnLive? Instant-play video games Latest high-end titles Instantly available for play Available on any device TV, PC, Mac, Phones, Tablets No high-end hardware needed Cloud-based gaming Unprecedented performance Never needs upgrading February 18, 2010 Page 13

14. OnLive MicroConsole™ Page 14 World’s most powerful game system Always state-of-the-art Far lower cost than current consoles Connects TV to OnLive Service Ethernet in  HDMI out Wireless/wired input devices HDTV/surround sound February 18, 2010

15. OnLive MicroConsole™ Interfaces USB Source x 4, Bluetooth, Low-latency Wireless 1/8” L/R Analog Ethernet HDMI 480p,720p, 1080i 5.1, L/R TOSLINK 5.1, L/R S-Video, Composite, L/R Component 480p, 720p, 1080i, L/R Page 15 February 18, 2010

16. OnLive Architecture February 18, 2010 Page 16

17. OnLive Video Compression OnLive interactive video compression Eliminates high latency inherent in linear video compression QuickTime, Flash, Windows Media way too slow Works reliably on home broadband connections Years of testing at 1000s of locations Bandwidth requirements SDTV: 1.5 Mbps >71% of US Homes have 2 Mbps or higher1 HDTV: 5 Mbps >26% of US Homes have 5 Mbps or higher1 February 18, 2010 Page 17 1 “Improving Performance on the Internet”, Communications of the ACM, Feb. 2009

18. OnLive data centers: 1000-mile reach Page 18 February 18, 2010 Key inventions assure direct routes through Internet Provide minimal, predictable latency

19. OnLive Demos February 18, 2010 Page 19

20. Community Built into the Platform Community features Friends, clans, teams, rankings, ratings,leader boards, ladders, tournaments,lobbies, matchmaking and more… “Virtual Living Room” shared experience Enabled by fast server-to-server network Communications and personalization Ubiquitous voice chat, messaging Customized pages, video profiles Loyalty programs, recommendations February 18, 2010 Page 20

21. Games Market Ripe for OnLive Reliant on retail/packaged goods Only digital media without effective online distribution Highly inefficient, static ecosystem, weak economics Piracy and used games draining publisher and console revenue OnLive breaks the console cycle Removes hardware and physical media from the equation The “Now” Era for video game systems On demand, no upgrades, no platform transition, state-of-the-art February 18, 2010 Page 21

22. OnLive Publisher Advantages Same SKU runs on TVs, PCs, Macs Minimal port of PC SKU No platform transitions No piracy, no used games Much better margins Telemetry Day-by-day, user-by-user Live Beta testing on-demand February 18, 2010 Page 22 Announced OnLive Publisher Partners

23. OnLive Consumer Advantages Any game, any time, anywhere Instant demos—try before you buy Unprecedented performance Community “Virtual Living Room” Flexible value proposition Demo, rent or buy Never upgrade again February 18, 2010 Page 23

24. OnLive SDK Adapts PC SKUs to be compliant with OnLive service Optimizes performance Higher quality on slow Internet connections Faster responsiveness Instant game loading Access to OnLive community features Spectating, chat, leaderboards, etc. February 18, 2010 Page 24

25. Economics February 18, 2010 Page 25

26. Retail vs. OnLive Economics February 18, 2010 Page 26 Retail Potential Spend $84 $12 Piracy Actual Spend $72 Used Games $12 OnLive Share MSRP $60 68% of Potential Spend Retailer Margin $15 Wholesale (WS) $45 $7 Returns/PP/MDF $4 Distribution/COGS $7 Platform Royalty Publisher GM $27 Publisher Share Publisher Gross Margin 32% of Potential Spend $27

27. OnLive Roadmap February 18, 2010 Page 27

28. Beta Program Started External Beta 9/09 100s of thousands of Beta sign-ups Initial objective: compatibility testing Positive feedback to date Ramping new server deployments Scaling Beta as approach launch Launch details to be announced soon February 18, 2010 28

29. Thank you. Page 29 February 18, 2010