Presentació de Gerard Mulà al R4G Digital Entertainment de Barcelona Activa

1. Innovation in Digital Entertainment at Telefónica R&D Gerard Mulà 25th of February 2010 © 2008 Telefónica Investigación y Desarrollo, S.A. Unipersonal

3. Strategy is changing… Core business Stay connected New business development While connected Voice access Broadband connectivity Digital services and contents

4. Core Business New Business Development Stay Connected While Connected Technology strategy Planning, control and resources Internet & Multimedia IT (BSS/OSS) Network and Platforms Executive President (CEO) In 2007 Telefonica I+D was organized in such a way to be better aligned with global innovation strategy End-User Services Individual Home Enterprise

6. Internet Multimedia Data mining & User modelling Mobile Augmented Reality Social Networks & Communities P2P Content Distribution 3D Video Customer Entry Point Global Products Social search Mobile multimedia annotation and search Mobile Social Internet & Multimedia activity areas in Telefonica R&D 20% 3-5 years 30% 1-3 years 50% < 1 year Activity rate Time line Activity rate Time line Activity rate Time line Applied research Exploratory development Product development

7. Main initiatives during 2009 in Digital Entertainment . Current CIP Pinchos TV services solution “PINCHOS” launched as a commercial product, consolidated in Brazil Multimedia content services Video and 3D experimental projects TV services and platforms New TV service s and platforms between the full interactivity of IPTV and the simplicity of traditional pay-TV, as well as the virtualization through Telefónica network Videoconference, 3D stereoscopic Providing User Generated content platforms and services, and improving Mobile multimedia services Videosurfing 3D Agile Virtual STB Live Music DRM

8. A latest example of our activity in Digital Entertainment . Current CIP EL CONSORCIO ESPAÑOL 3DLIVE REALIZA LA PRIMERA TRANSMISIÓN DE UN EVENTO DEPORTIVO EN VIVO EN 3D EN ESPAÑA Para ello, el consorcio colabora con la Liga Nacional de Fútbol Sala, retransmitiendo en directo del partido entre el Inter Movistar y MRA Navarra que tendrá lugar el próximo día 27 de Febrero a las 18.00 http://3dlive.tid.es PRESS RELEASE

11. Entertainment & Media is a huge market whose revenues grow faster than Telecom Services Telecom revenue growth vs Entertainment & Media growth US Trillion CAGR 4,4% Telecom Services Entertainment & Media Source: Garner, Global Telecommunications Market Take, June 2008, include only Telecom Service Segment not equipment Source: PWC , Global Entertainment and Media Outlook 2008-2012, include traditional and digital revenue sources CAGR 6,6% US Trillion CAGR 25% CAGR 1% Source: (1) Source: NPD Group Survey, April-09. (2) IDC. 2,9% 2,8% 3,3% 3,4% 3,5% 3,5% 3,1% 3,0% 3,5% 3,9% 4,0% 4,1% % of Disposable Income 24% Innovation: new business / revenue models, new P&S 60% Growing percentage of discretionary spending & growth emerging markets (BRIC) 16% other Factors of growth Traditional Entertainment & Media Digital Entertainment & Media

12. But TEF is not the only one in a overcrowded space with well established players along the value chain There are some exceptions, mainly not so mature segments , like mobile games or ebooks, where there are still some places (developers , digital distribution) not overcrowded NOT EXHAUSTIVE

14. © 2009 Telefónica Investigación y Desarrollo, S.A. Unipersonal