Sonic Foundry and Sony Pictures Digital Entertainment Announce Strategic Alliance

Sonic Foundry, Inc. (Nasdaq: SOFO), the leading developer and marketer of digital media and Internet software tools, services, and systems, announces a strategic alliance with Sony Pictures Digital Entertainment (SPDE) and its affiliates to include software, consulting, encoding, and webcasting services. Additionally, the alliance includes an equity interest in Sonic Foundry taken by Sony Pictures Entertainment.

Under terms of the agreement, Sonic Foundry will provide software and a broad range of media consulting services to SPDE to support the newly formed company's Internet initiative. SPDE has also selected Sonic Foundry Media Services as its preferred encoding and live-event webcasting partner to bring traditional Sony entertainment to the online entertainment space. Additionally, SPDE will provide Sonic Foundry with promotional consideration to cross-promote and market the software, technology, and entertainment content through collaborated efforts.

"Sonic Foundry is able to provide us with the necessary tools and services we need to forge ahead in our online entertainment offerings," stated Yair Landau, president of Sony Pictures Digital Entertainment. "Their expertise and turnkey media solutions will help make our efforts a success."

"Sony Pictures Digital Entertainment is moving very quickly and effectively into the online entertainment business," said Rimas Buinevicius, chairman and chief executive officer of Sonic Foundry. "This partnership is one that will push the envelope of online entertainment, and we are looking forward to providing Sony with our expertise and state-of-the-art techniques to do this."

About Sony Pictures Digital Entertainment

Sony Pictures Digital Entertainment (SPDE), an operating unit of Sony Pictures Entertainment (SPE), oversees the activities of SPE's digital production and online assets that include Sony Pictures Imageworks, Sony Online Entertainment, and Columbia Tri-Star Interactive. SPDE focuses on three areas: 1) producing and developing of visual effects and computer-generated imaging (CGI), digital character animation, and original content for motion picture, television, online, and PlayStation audiences; 2) tapping SPE's film and television libraries and its talent relationships to develop new forms of online content, games, and interactive programming; and 3) leading SPE's efforts to provide video-on-demand, interactive television, and the distribution of other forms of digital content and services over the emerging broadband networks.