Sony IR Day 2019
May 21st, 2019 Sony Corporation
Opening Remarks 3
Game & Network Services 11
Music (SME) 46 (Sony/ATV) 65 (SMEJ) 82
Pictures 90
Electronics Products & Solutions 114
Semiconductors 142
Sony Corporation 2 Opening Remarks
Senior Executive Vice President, CFO Sony Corporation
Hiroki Totoki
FY2018 Consolidated Results
FY2017 FY2018 （bln yen) Sales & 8,544.0 operating revenue 8,665.7
Operating income 734.9 894.2
Net income attributable to Sony Corporation’s stockholders 490.8 916.3
Operating Cash Flow* 770.6 753.4
* Sony Group consolidated without Financial Services Segment Sony Corporation 4 Improvement in Financial Position
As of the end of As of the end of FY2017 FY2018
Equity Ratio * 34.7% 40.3%
Net Cash Position* ** 482.9 bln yen 397.7 bln yen
* Sony Group consolidated without Financial Services Segment ** This is the amount deducting interest-bearing debt from cash. Sony Corporation 5
FY2018 Achievements in Each Segment
Game & • Accumulated total PS4® unit sales 96.8 million units, Network Services PS Plus subscribers 36.4 million users Segment • Ratio of Network Services sales 62%
• Total streaming sales growth of Recorded Music/Music Publishing +16%* Music Segment • Improved cash generation capability(EBITDA) by EMI consolidation approx. 29 billion yen* (Total music publishing EBITDA: approx. 43 billion yen*)
• US box office revenue share in CY2018 11% (exceeded double-digit /#4 position for the first time in 4 years) Pictures Segment • Reduced cost by “Reimagine SPE” Project 15.0 billion yen /year
* Including EMI, year-round basis
Sony Corporation 6 FY2018 Achievements in Each Segment
Electronics Products • Free cash flow 89.5 billion yen & Solutions • Reduced operation costs in MC Business approx. ▲17% Segment (vs FY2017)
• Image sensors revenue share 51%* Semiconductors • Image sensors capital expenditure 128.9 billion yen Segment （Invested 22% of approx. 600 billion yen of FY2018-20 budget)
• Historically-high new policy amount in force at Sony Financial Services Life 6.15 trillion yen (increased by 16% vs. FY2017) Segment • Operating income 161.5 billion yen
* Source: Sony
Sony Corporation 7
FY18-20 Three Year Total Capital Allocation (without Financial Services)
Operating Strategic Capital Expenditure Dividends Cash Flow Investment
2.2 Trillion Yen or more FY18（Major achievements） ✓Consolidation of EMI 392. 8 bln yen （Includes assumption of interest-bearing debt） Approx. 1.1 ✓Repurchase of Shares 100 bln yen Trillion yen FY19（Previously announced) ✓Setting of Parameters for Repurchase of Shares 200 bln yen (maximum)
✓Key focus areas ✓Increase dividends in a ✓Primarily in Image Sensors -ContentIP stable and long-term manner - Technology acquisition
Sony Corporation 8 Policy Regarding Strategic Investment
Make investments for growth with higher return
Strategically repurchase own shares to increase capital efficiency
Sony Corporation 9
Today’s Speakers
Game & Music Segment Network Services Segment
Jim Ryan Rob Stringer Jon Platt Michinori Mizuno Shunsuke Muramatsu
Electronics Products Pictures Segment Semiconductors Segment & Solutions Segment
Tony Vinciquerra Shigeki Ishizuka Terushi Shimizu Sony Corporation 10 Game & Network Services Segment Sony Interactive Entertainment
Senior Vice President Sony Corporation
President & CEO Sony Interactive Entertainment Jim Ryan
Game & Network Services Segment Today 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 12 Game & Network Services Segment
PlayStation Assets
Sony Corporation 13
Game & Network Services Segment
OWNED IP BRAND COMMUNITY
Sony Corporation 14 Game & Network Services Segment Owned IP
Distinguished Improving Competence in Franchise Strength Increasing Game Studios ‘Game as a Service’ Revenue
Highest paying user spend* of any 13 Studios Worldwide Lifetime unit image by title and platform Sports title on the US Store
10mil
US Japan
PS2 PS3 PS4 PS3 PS4 PS3 PS4
92 94 92 93 95 95
Europe MLB® The Show™ 19
* Comparison in PlayStationTMStore 6weeks after launch
Sony Corporation 15
Game & Network Services Segment Our Brand Is Our Greatest Strength #3 #7 #13 (UK) (DE) (US)
Prophet brand relevance index Sep-18
Sony Corporation 16 Game & Network Services Segment Community
Engagement Spend
• 94M+* PlayStation™Network monthly active users • Consumer spend through the PS4 ecosystem estimated at over $20bn for the first time in FY18 • Over 90% of all consoles ever seen have connected over the last 12 months • Average lifetime device spend exceeds $700
• Player used PS4 for over 21 hrs per week on average • Average launch year lifetime device spend exceeds in FY18 $1,600
* PlayStation®Plus subscriber base exceeds 36 million * As of end of Mar, 2019
Sony Corporation 17
Game & Network Services Segment
Platform Strategy –The Role of Next Gen
Sony Corporation 18 Game & Network Services Segment Generational Transformation
Loading time (sec) Loading time (sec) 00:00.83 00:08.10
Ultra High Speed
Next Generation PlayStation®4 Pro ( under development )
Sony Corporation 19
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 20 Game & Network Services Segment Next Gen What we have said so far
Backwards All New CPU, GPU SSD Compatibility
Ray Tracing 8K Disc Support 3D Audio
What we have not spoken about yet Date Price Games User Experience Country Rollout
Sony Corporation 21
Game & Network Services Segment 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
Sony Corporation 22 Game & Network Services Segment
Content Distribution Strategy – The Role of Cloud and Streaming
Sony Corporation 23
Game & Network Services Segment
Today
Sony Corporation 24 Game & Network Services Segment
PS4 Remote Play Offers Seamless Multi-Device Streaming Today
・
iOS PC/Mac
2 Android* *1 5.6 Million active users, 71M+ hours of gameplay *1 FY18 yearly figure *2 Xperia only as of today
Sony Corporation 25
Game & Network Services Segment PlayStation™Now – the History
Current area coverage > 70% PS4 base Our experience in game streaming
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
2014 2015 2019 2016 PS Now subscription service launch
700k Subscribers : 40% CAGR* * As of end of Mar, 2019
Sony Corporation 26 Game & Network Services Segment PlayStation™Now – Today
15 Data Centers 780 games 37 Network POPs No developer effort required
19 Countries Streaming + Download
PS4/PC Client 170 Publishers Supporting
* As of end of Mar, 2019
Sony Corporation 27
Game & Network Services Segment PlayStation™Now and its technology
Ultra Low latency with only 5Mbps bandwidth required
Server Network Client
Dynamic Low Adaptive Congestion Control Latency Streaming Client
Stream Network Packet Loss Shaping Protocol Concealment
Sony Corporation 28 Game & Network Services Segment
Medium Term
Sony Corporation 29
Game & Network Services Segment PlayStation™Now – Our Plans
Support Improve Maximize Leverage Strengthen 1080p Quality of Off-console Existing Marketing and beyond Content Opportunity Capacity Support
Increase CAGR to over 50% Existing capacity investments support 5 mil subscriber base
Sony Corporation 30 Game & Network Services Segment
Longer Term
Sony Corporation 31
Game & Network Services Segment SIE Believes in Gamer Choice
CD/DVD Blu-ray Blu-ray ++ Mainstream Download Download Business Model + Streaming
Generation Next Gen
PlayStation® PlayStation®2PlayStation®3 PlayStation®4
Sony Corporation 32 Game & Network Services Segment Role of Streaming in Next Gen
A massively enhanced PlayStation community where enriched Our Vision and shared PlayStation experiences can be seamlessly enjoyed independent of time and place – with or without a console
Engines of Growth - Portable Client devices - Static Client devices 5 mil - New Entitlement models (capacity) - Next Gen Hardware - Next Gen Games - Evolved services Games Next Gen Launch PS3 PS4 Next Gen
Sony Corporation 33
Game & Network Services Segment Using Partnership to Achieve Scale
• 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 34 Game & Network Services Segment
Questions we want to respond to
Sony Corporation 35
Game & Network Services Segment Console promotional activity has been proportionate and has positive ROI
PS2
$299 2018 Black Friday – $199 $179 $199 promotional pricing self-financed $149 $129 $99 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 during FY18 PS3 $599
$399 All FY19 promotions will $299 $249 $199 self-finance this year 2006 2007 2008 2009 2010 2011 2012 2013 PS4
$399 $349 $299
2013 2014 2015 2016 2017 2018 2019 2020
Sony Corporation 36 Game & Network Services Segment The 99, Not the 1
99
Sony Corporation 37
Game & Network Services Segment Cost Management
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 38 Game & Network Services Segment
One Sony Collaboration
Sony Corporation 39
Game & Network Services Segment One Sony Collaboration
Collaboration st Original music for 1 party games on Contents IP VR content with Sony artists
Sony Corporation 40 Game & Network Services Segment FY2018 Operating Profit Variation from FY2017
(Bil yen)
Sales Revenue +19% 1) Sales growth of both 1st and 3rd party game software 1,943.8 2,310.9 and add-on contents
2) Sales growth of network services mainly in PS Plus (3) 311.1 (2) (4) (5) Operating 3) Unit decrease due to lifecycle and higher console cost Profit in hardware and peripherals 177.5 (1) 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. FY2017 FY2018 Act 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 42 Game & Network Services Segment FY2019 Operating Profit Variation from FY2018
(Bil yen)
Sales Revenue -0.5% 1) Continuous sales growth of network services mainly 2,310.9 2,300 in PS Plus
Operating Profit 2) Cost improvement more than unit decrease due to 311.1 lifecycle in hardware and peripherals (1) (2) (3) 280 (4) (5) 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. FY2018 FY2019 Act 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 Corporation 43
Music Segment Sony’s Music Segment Music Segment
Sony Music Sony Music Sony Music Entertainment (“SME”) Entertainment Japan (“SMEJ”) Publishing (“SMP”)
FY18 Outside Sales
SME Visual Media & Platform: 33% Recorded Music: 54% SMEJ: SME SME: SME:
SMEJ Music Publishing: 13% SMEJ SMEJ:
SMP
SMEJ Sony Corporation 45
Music Segment Sony Music Entertainment
Executive Vice President Sony Corporation
Chief Executive Officer Sony Music Entertainment Rob Stringer Recorded Music Market Music Segment Four Consecutive Years of Solid Revenue Growth; Expected to Continue ($B, includes Japan) CY18 vs CY17 +9.7% KEY METRICS +7.4% $19.1 +9.2% $17.4 –3.2% +3.7% $16.2 +33% $14.3 $14.8 PAID $9.0 SUBSCRIPTION Streaming 47% OF TOTAL MARKET Downloads / +22% Other Digital $2.3 VIDEO
Physical $4.7 -21% Public Performance/ DOWNLOADS Sync $3.1
CY14 CY15 CY16 CY17 CY18
Source: IFPI. Note: Digital Figures Include Digital Radio (SoundExchange) Sony Corporation 47
Music Segment
Global 2018 Success Grammy Awards
Childish Gambino • Record of the Year • Song of the Year • Best Rap/ Sung Performance • Best Music Video Camila Cabello IFPI 2018 Best Selling Global Single “Havana” 2.9Bn Streams LTD
Sony Corporation 48 Music Segment 2019 So Far…
Over 1.5Bn Streams 2019 YTD
5.8Bn Streams LTD Approaching 4M Album Equivalent Units Khalid Lil Nas X Globally 50M Monthly Listeners “Old Town Road” Travis Scott Now #1 Global Spotify 900M Streams Artist #1 Track of This Year
7 #1 Albums On Billboard Album Chart Future, Backstreet Boys, Hozier, Khalid, BTS, P!nk, Vampire Weekend
Sony Corporation 49 Source: Spotify, Nielsen Music Connect, SME Sales Reporting
SME Financial Highlights Music Segment Strong Growth in Operating Income, Cash Flow and Margin
CAGR +25% Profit Record Margin Profit +6.5 pts Vs. FY16 Operating Income FY16 FY17 FY18* FY19 FCT
+ Additional $1BN Spotify Gain
* Excludes one-time $1B Spotify gain Sony Corporation 50 Music Segment Successful Investment in The Orchard
Continued Expansion of Global 24,000 600,000 Footprint & Service Capabilities Labels Artists 40+ Markets Worldwide
13 30,000 Million New Tracks Tracks per Week
OPERATING INCOME CAGR +26% SINCE FY15
NOTE: The Orchard Revenue Reported On A Net Fee Basis Sony Corporation 51
Increased Investment in Talent Acquisition and Development Music Segment
Increased
Resources in Talent Discovery Increased Annual Creative Staff Headcount: Artist Signings* Signings: +75% vs. FY15 +93% vs. FY15
FY15 FY16 FY17 FY18 FY19 FCT FY15 FY16 FY17 FY18 FY19 FCT
Increased Increased Investment In Talent Roster Size* Annual Talent Roster Size: Investment: +45% vs. FY15 +46% vs. FY15
FY15 FY16 FY17 FY18 FY19 FCT FY15 FY16 FY17 FY18 FY19 FCT
* Number of Persons Sony Corporation 52 Expanding Repertoire Centers and Creative Resources Music Segment
New Leadership atat Relaunch LabelEstablishing Partnerships Joint Key Creative CentersCenters of Arista Records andVenture Joint Labels Ventures
• New President and Keep Cool Visionary Co-Heads of A&R • Additional Major U.S. Label – 20 New Artists Signed
• Experienced Executive September Six Course CONTINENTAL EUROPE & AFRICA Team • Management & Publishing • Newly Structured Region Divisions • New Head of GSA SamePlate Palm Tree
Sony Corporation 53
Driving Global Music Market Development Music Segment Working With Commercial Partners to Drive Paid Subscription Growth
Supporting Partner Sharing Market Collaborative New Leadership at Relaunch Label Partnerships Innovation Intelligence With DSPs Marketing Key Creative Centers of Arista and Joint Ventures
Genre Acquisition and Opportunities Untapped Conversion Demographics Campaigns Voice Activation
Accretive Bundles
Consumer Behavior Promotion Effectiveness New Business Models
Sony Corporation 54 Driving Global Music Market Development Music Segment Emerging and Growth Markets
Subscription Model Creating Opportunities In…
Latin Iberia China New Markets Build On #1 Expand Global Aggressive SME Leadership Position Footprint Growth Strategy In Latin Iberia Eastern Europe Russia #7 Global Headcount +13% +33% Market & Roster Market Streaming India Growth Growth Growth Y-o-Y* Y-o-Y* Joint Africa SE Asia 3 of Top 15 Venture with Global Markets
Sony Corporation 55 * Annual Growth in CY2018
Sony Music’s Extensive Value Proposition to Artists Music Segment
Creative Marketing Relationships Global Data & Excellence Expertise and Access Reach Analytics
World-ClassWorld Class Global Global Workforce Workforce [employee photos in background] Core: Talent / Artists
Sony Corporation 56 Sony Music Value Proposition Music Segment Investing In Capabilities to Expand Our Value Proposition and Deepen Our Relationship with Artists
Premium New Podcasting Merchandising Content Production Brands Services
Creative Artist Management Artist-Led Studio Centers Live / Ticketing Hubs Ventures
Sony Corporation 57
Enhancing Data & Analytics Capabilities Music Segment Continued Investment In People & Technology
Simple, Insightful Enhanced Internal Cutting Edge Tools and Capabilities Analytical Dashboards Techniques
Talent Discovery
Marketing Efficiency
Audience Development
Commercial Sales
Sony Corporation 58 Industry Leader in Artist Relations Music Segment Sony Music Industry Leading Approach to…
NewFair Leadership at RelaunchTransparent LabelReal Partnerships Time CompensationKey Creative Centers Artistof Arista — Label Royaltyand Joint Ventures For Artists Relationship Accounting
Extremely Positive Introducing Real Time Reaction to SME Spotify Royalties & Cash Out Simple Flexible Equity Payments Artist Contracts
Best-In-Class Artist Sales and Royalty Portals
Sony Corporation 59
Pharrell Williams & Sony Partnership Music Segment
CES Presentation In The Water Festival January 2019, Las Vegas April 2019, Virginia
Music Technology Sony HQ Visit Development November 2018 Tokyo Project Ongoing Sony Corporation 60 Sony Competitive Differentiation Music Segment
Sony Music Position as Part of the Sony Family of Companies Enabling Unique Commercial, Promotional, and Creative Opportunities Across Business Units
Sony Corporation 61
Appendix Sony Music Operating Income: FY17 Act to FY18 Act Music Segment
(US Dollars)
1 Physical & Download
2 3 2 Streaming
1 3 Higher prior year one time expenses and current year savings offset by increased investment in talent, SG&A, and unfavorable FX
FY17 Act FY18 Act
Sony Corporation 63
Sony Music Operating Income: FY18 Act to FY19 Forecast Music Segment
(US Dollars)
2 3 1 Physical & Download
1 2 Streaming
3 Investment in talent, data analytics, emerging markets, and new business verticals
FY18 Act FY19 Forecast
Sony Corporation 64 Music Segment Sony/ATV Music Publishing
Chairman & Chief Executive Officer Sony/ATV Music Publishing Jon Platt
Music Publishing Overview Sony/ATV Music Publishing
Diversified Sources of Revenue
Radio Physical & Digital Advertising Stations Downloads Streaming
Television Cable Film Soundtrack Video Live Concert Networks Networks and Trailers Games and Stage
Sony Corporation 66 Music Publishing Market Sony/ATV Music Publishing
Growth Trajectory
$ in billions
$5.5 $4.9 $4.2 $4.4 $4.0 $4.0 11% 11%
5% 4% 2% 2%
CY 2013 CY 2014 CY 2015 CY 2016 CY 2017 CY 2018CY CY 2021E 2021
Global Music Publishing Revenues Growth %
Source: Music & Copyright Sony Corporation 67
Importance of EMI Acquisition Sony/ATV Music Publishing
Exemplifies Sony Corp’s Content Strategy
High Margin
Diverse Revenue Stream
Recurring Revenue
Decade Spanning
Stable Cash Flow 2.1 Million Copyrights Genre Diversity
One Sony Projects
Sony Corporation 68 Impact of EMI Acquisition Sony/ATV Music Publishing
Material Increase to Operating Income
FY 2017 FY 2018FY FY 2019 2019 FCT
39.8% Equity 100% Owned 100% Owned Interest November 2018 Full Year
Sony Corporation 69
Roster of the Most Talented Songwriters Sony/ATV Music Publishing
Taylor The Beatles Ed Drake Carole Stevie Swift Sheeran King Wonder
Luis Fonsi Lady Sara Pharrell Queen P!nk Gaga Bareilles
Sony Corporation 70 Top Earning Songs By Release Year Sony/ATV Music Publishing Older 1960s & 1980s 1970s & 2000s 1990s & Today 2010s &
Sony Corporation 71
#1 Publisher Around the World Sony/ATV Music Publishing
Based on CY 2018 Worldwide Revenue (1)
Based on CY 2018 Radio Airplay in the U.S. (2)
Based on CY 2018 Singles Market in the UK (3)
(1) Music & Copyright (2) Nielsen BDS (3) Music Week Sony Corporation 72 Long Term Strategies Sony/ATV Music Publishing
1 Be the Destination For the Best Songwriters in the World
2 Leverage Our World Class Licensing Organization
3 Achieve Fair Digital Streaming Royalty Rates
4 Expand Our Presence in Emerging Markets
5 Differentiate and Grow through Proprietary Technology
Sony Corporation 73
Long Term Strategies (Continued) Sony/ATV Music Publishing
1 Be the Destination For the Best Songwriters in the World
Khalid Cardi B Travis Scott
Sony Corporation 74 Long Term Strategies (Continued) Sony/ATV Music Publishing
2 Leverage Our World Class Licensing Organization
Sony Corporation 75
Long Term Strategies (Continued) Sony/ATV Music Publishing
3 Achieve Fair Digital Streaming Royalty Rates
Sony Corporation 76 Long Term Strategies (Continued) Sony/ATV Music Publishing
4 Expand Our Presence in Emerging Markets
Sony Corporation 77
Long Term Strategies (Continued) Sony/ATV Music Publishing
5 Differentiate and Grow through Proprietary Technology Administration Licensing Creative
SATV Proprietary Software
New Songwriter Discover & Accompanying Analysis
Sony Corporation 78 Appendix
OP Bridge from FY17 to FY18 Sony/ATV Music Publishing
4 5 2 3 1 Removal of 39.8% prior ownership of EMI
Consolidation of 100% 2 of EMI
Declines in Physical 1 3 and Digital Download
4 Growth in Streaming
5 FX/All Other
FY17 FY18 Actual Pro Forma Sony Corporation 80 OP Bridge from FY18 to FY19 Sony/ATV Music Publishing 4 2 3 1 Declines in Physical 1 and Digital Download
2 Growth in Streaming
Consolidated Cost 3 Savings
4 FX/All Other
FY18 FY19 Pro Forma FCT Sony Corporation 81
Music Segment Sony Music Entertainment (Japan) Inc.
Executive Vice President Sony Corporation
Chairman and Representative Director of the President and Representative Director of the Board, CEO Sony Music Entertainment (Japan) Inc. Board, COO Sony Music Entertainment (Japan) Inc. Michinori Mizuno Shunsuke Muramatsu Music Segment (SMEJ)
Executive Vice President Sony Corporation
Chairman and Representative Director of the Board, CEO Sony Music Entertainment (Japan) Inc. Michinori Mizuno
Sony Corporation 83
Music Segment (SMEJ)
Creating and Maximizing Hits Strengthen music and anime IP Leverage IP
Road to General Entertainment Company
Sony Corporation 84 Music Segment (SMEJ)
Digital Real Content
Artists, Songs, recorded music, anime, video, mobile game, characters, etc.
Live
Sony Corporation 85
Music Segment (SMEJ) Function-basis Contents-basis
Label, Marketing & Distribution Artist ＆ Music
Artist Management & Publishing
Visual Visual ＆ Character
Solution
Entertainment Solution Net & Media／Live
Sony Corporation 86 Music Segment (SMEJ)
President and Representative Director of the Board, COO Sony Music Entertainment (Japan) Inc. Shunsuke Muramatsu
Sony Corporation 87
０１∞
Sony Corporation 88 Sony Corporation 9
Pictures Segment Sony Pictures Entertainment
Executive Vice President Sony Corporation
Chairman & CEO Sony Pictures Entertainment Tony Vinciquerra Senior Leadership Team Pictures Segment September 2018 August 2018 November 2017 July 2017
June 2017
Stacy Green Erik Moreno Mike Hopkins Jon Hookstratten EVP, Chief People EVP, Corporate Chairman, EVP, Administration & Officer Development Sony Pictures Operations And M&A Television
May 2016 May 2015 February 2015 April 2001
Tony Vinciquerra Chairman and CEO
Philip Rowley Robert Lawson Tom Rothman Leah Weil SEVP & Chief EVP, Chief Chairman, Motion SEVP & General Financial Officer Communications Picture Group Counsel Officer Sony Corporation 91
Pictures Segment
State of the Entertainment Industry
Sony Corporation 92 Increase in Sony Pictures Streaming Shows Pictures Segment
17
4 • Behind Her Eyes • The Commons • Them: Covenant • White Lines • Wheel of Time 2015 2019
Sony Corporation 93
“Reimagine” SPE Pictures Segment
Global Digital Centers for Theatrical Marketing
Consolidation of Media Networks, TV Distribution and Home Entertainment
Media Networks Portfolio Review
Sony Corporation 94 Pictures Segment
“Reimagine” SPE
Approximate Annualized Savings of $135 million
Sony Corporation 95
Margin Improvement Pictures Segment
6.0% 5.5%
4.1%
FY17 FY18 FY19E FY20E FY21E
Operating Margin
Sony Corporation 96 Controlling Cost/Managing Risk Pictures Segment
Controlling Production Costs
Managing Marketing Spend
Co-financing/Strategic Partnerships
Sony Corporation 97
Managing Risk & Volatility Pictures Segment
Expanded relationships, co-financing partners
Sony Corporation 98 Four Pillars Pictures Segment
Strong I.P. Independent StudioContent Library One Sony Collaboration
Sony Corporation 99
Strong I.P. Pictures Segment
Sony Pictures Universe of Marvel Characters Extending SPE’s Library I.P. Focus on I.P.-Based Material and Franchises
4
Kraven
Sony Corporation 100 Independent Studio Pictures Segment
Sony Corporation 101
Diversified Portfolio of Shows… Pictures Segment
Sony Corporation 102 …Across All Platforms Pictures Segment
Sony Corporation 103
Content Library Pictures Segment
Sony Corporation 104 One Sony Collaboration Pictures Segment
Sony Music
Cinderella
Sony Corporation 105
Sony’s Breadth and Scale Pictures Segment
Sony Corporation 106 Pictures Segment
Sony Corporation 107
Sony Tech in Production Pictures Segment
Sony Corporation 108 Creating & Delivering High Quality Content Pictures Segment
Jumanji: Welcome to the Jungle © 2017 Columbia Pictures Industries, Inc. All Rights Reserved. The Crown © 2018 Left Bank Pictures (Television) Limited. All Rights Reserved.
Sony Corporation 109
Sony Tech in Delivery Pictures Segment
Sony Corporation 110 Appendix
SPE FY18 Review ($ in millions) Revenue Decreased 3% To $8.9 Billion; Sales revenue -2.9% OI Grew 30% To $489 Million $9,133 $8,870 1. Substantial increase in Motion Pictures’ OI driven by the carryover performance in FY18 of higher Operating income margin FY17 titles such as Jumanji: Welcome to the Jungle and Peter Rabbit (no comparable $489 carryover performance in FY17 from FY16 titles), 2 3 higher television/home entertainment sales and $376 4 margins, and development/overhead savings 2. In Television Productions, lower revenues in the 1 current year from various current and prior U.S. television series
3. Media Networks had lower advertising and subscription revenues at SPNI and various international channels FY17 Actual FY18 Actual 4. One-off charges due to Media Networks portfolio review costs, partially offset by impact of GAAP Note: FY17 Revenues and OI are under Old GAAP. FY18 Revenues and OI are under New GAAP. rules change Source: Pictures Segment Supplemental Data, March 31, 2019
Sony Corporation 112 SPE FY19 Forecast ($ in millions)
Sales revenue +10.7% Assumptions for FY19: $8,870 $9,820* 1. Projected decrease in Motion Pictures OI is due primarily to slate mix and timing (e.g., larger 4th quarter theatrical marketing expense in FY19) and Operating income less carryover performance from the FY18 slate $593 than the carryover into FY18 from the FY17 slate $489 2. Television Productions is forecasting an increase in OI related to the 3rd season of The Crown and 4 assumed new and returning series, partially offset by increased development expense 1 2 3 3. Media Networks growth primarily from India as well as the projected improvement in earnings from the MN portfolio review undertaken in FY18
FY18 Actual FY19 Forecast 4. One-off charges in FY18 due to Media Networks portfolio review costs Note: Revenues and OI are under New GAAP Source: Pictures Segment Supplemental Data, March 31, 2019 and SPE Management * FY19 sales forecast converted at 110 JPY/USD to ¥1,080 billion Sony Corporation 113
Electronics Products & Solutions Segment
Senior Executive Vice President Officer in charge of Electronics Products & Solutions Business Sony Corporation
Representative Director and President Sony Imaging Products & Solutions Inc.
Shigeki Ishizuka EP&S Organization Electronics Products & Solutions Segment
Shigeki Ishizuka Ichiro Takagi Senior Executive Vice President Senior Executive Vice President Officer in charge of Deputy Officer in charge of Electronics Products & Solutions Business Electronics Products & Solutions Business
Imaging Products & Mobile Communication Business Home Entertainment & Solutions Business Sound Business Digital Imaging Professional Medical Smart Phone Internet Service TV Audio / Video
Sales & Marketing Platform
Manufacturing / Logistics / Procurement / Engineering Platform
Sony Corporation 115
EP&S Basic Policy Electronics Products & Solutions Segment EP&S • Maintain financial discipline and accountability in each business • Create new customer value that exceeds the confines of each business by leveraging technology • Maximize growth and eradicate opportunity loss through operational efficiency • Nurture next generation talent and deploy personnel across business units HE&S IP&S MC TV DI Smartphone Maintain a stable business Establish top brand position in Become profitable in FY2020 foundation based on large panel overall camera market • Reduce OPEX by completing premium product strategy Maintain No.1 position in mirrorless transformation in FY2019 on a revenue basis • Strengthen product appeal by V&S Medical leveraging leading technology Consistently grow sales and from the Sony Group profits through greater product Aim to expand the business over and technology competitiveness the mid to long term Internet Service / IoT in growth categories Professional Solution Strengthen recurring services Expand the B2B solution business by leveraging EP&S products Sony Corporation 116 EP&S Business Foundation Electronics Products & Solutions Segment
Business Foundation (Key Strategies) Customer Value
①Sony Brand（B2B&C) Strengthen products & services under the Sony brand ① Sony Brand（B2B&C） ------
② Customer Real-Time Benefit Create customer value with “time” ➂ Differentiation by Technology In-house technology ②Real-Time “Light to Display/Sound/Communication” Benefit ④ Strengthen Solutions Business Sony Network Communication, Professional Product Solution Group ➂ Differentiation by Technology ④ Strengthen Solution Business
Sony Corporation 117
Electronics Products & Solutions Segment
Home Entertainment & Sound Business (HE&S)
Sony Corporation 118 TV Business Electronics Products & Solutions Segment Maintain Stable Business Foundation Based on Large Panel Premium Product Strategy High Quality Sound Immersive Picture Quality Easy Hands-Free Operation That is Part of Visuals Regardless of Panel Source For both Broadcast and Internet Immersive and Realistic
OLED
Z9G series For OLED models For LCD models A9G series Further Evolution of End-to-End Supply Chain Management
from Procurement to Manufacturing to Sales Sony Corporation 119
Video & Sound Business Electronics Products & Solutions Segment Consistently Grow Sales and Profits Through Greater Product and Technology Competitiveness in Growth Categories Audio market 10% annual growth, lead by the headphone market(*) Strengthen Premium Products Launch of 360 Reality Audio (Evolution of Sound Technology) ■Best-in-Class Noise Cancelling Sony’s leading spatial sound technology creates Headphone (1000X series) the New Experience of Being Engulfed by Sound Pursue partnerships with studios, labels and content providers
WH-1000XM3 WI-1000X WF-1000X ■Premium Home Speaker
Feel the sound coming from all around HT-Z9F *: Source: Sony Sony Corporation 120 Electronics Products & Solutions Segment
Imaging Products & Solutions Business (IP&S)
Sony Corporation 121
Digital Imaging Business Electronics Products & Solutions Segment Establish top brand position in overall camera market Maintain No.1 position in mirrorless on amount basis
Full-size APS-C SEL24F14GM Camera Grand Prix 2019 Lens Awards
Basic Resolution Speed 1 Mount Image Speed Stamina Compact Lens quality design The Five Fundamentals Full-size×APS-C Fundamental lens Technology that supports seamless launched new standard for mirrorless and further expansion compatibility Sony Corporation 122 Medical Business Electronics Products & Solutions Segment
Aim to expand the business over the mid to long term
Surgical Imaging Life Science Business expansion in the 4K & Expand lineup and increase operating room solutions space recurring business CAGR 10%+ (*) Launched in 2015 Acquired in 2016 Launched in 2017 Launched in 2018 Disposable Sorting 4K Surgical Operating Room 4K/3D Video Cell Sorter Chip Endoscopy System Solution Microscope System MA900 eSATURNUS
Contributing to the Medical Field with Imaging Technology
*Since FY2013 Turn positive in FY18 Sony Corporation 123
Electronics Products & Solutions Segment
Mobile Communication Business (MC)
Sony Corporation 124 Smartphone Business Transformation Electronics Products & Solutions Segment Withdrew from certain Regions and Conducted Sales, Engineering and Manufacturing Review
Non-Focus and Defocused Regions Focus Regions Reviewed Sales, Engineering (Japan, Europe, Taiwan, Hong Kong) and Manufacturing No Operator Businesses China (Factory) • Ceased Production Sweden (Engineering) • Reduced focus on mobile • Shifted R&D focus to communication technology and new businesses Japan (Headquarters) • Reduced outsourced design • Transferred UK (European Business Sales) corporate functions to Sony • Merged sales & marketing functions with Sony Europe Sony Corporation 125
Smartphone Business Transformation Electronics Products & Solutions Segment Complete Structural Reforms in FY2019 Reduce OPEX by 50% and Overall Cost by 57% in FY2020 ※vs FY2017 Actual Overall Cost
Impairment One time transformation cost Other Cost After service / 44 billion yen ▲34% Patent Operating ▲57% etc Loss
▲31%
▲50% Profit OPEX Margin
FY2017 Actual FY2018 ActualFY2019 Plan FY2020 Plan
Sony Corporation 126 Smartphone Business Competitive Products Electronics Products & Solutions Segment 2019 Flagship Model Leveraging Leading Technology from the Sony Group Image Processing Algorithm Supervised by Sony Pictures from α series Mixer for 3D Sound Design ・AF/AE following 10fps burst mode ・Eye AF ・Dolby Atmos
Professional Monitor-Level VENICE Cinematography experience Picture Reproduction with “Cinema Pro” ・4K OLED ・Adopted VENICE ・BT2020 color space color Look ・10-bit HDR Powered by
High Quality Picture 21:9 Wide Screen Format for Technology from BRAVIA Mobile Gaming ・X1 for mobile engine Immersive gaming ・HDR remaster in 21:9 format such as ・Fortnite ・Asfalt 9 ・Arena of valor Sony Corporation 127
Electronics Products & Solutions Segment
Solution Business
Sony Corporation 128 Create new customer value that exceeds the confines Electronics Products & Solutions Segment of each business (B2B&C) ①Large Display Solution ②Personal Entertainment Solution New Visual Experience with Large Merge Sound and Communication Displays, from Consumer to B2B Technologies to Create New Value
Sony Corporation 129
Create new customer value that exceeds the confines Electronics Products & Solutions Segment of each business (B2B&C) ③5G Solution Pursuing Real-Time Benefit in Various Applications
Capture Create Listen / Experience Live content transmission Low cost, live content Real-time viewing and with 5G (wide bandwidth / creation solution with 5G listening to content taken low latency) (MEC / low latency) from multiple cameras
Operator Cloud /Multi-access Edge Computing
“Crystal LED“ Public Viewing
Live Streaming
Remote Production Immersive Audio User device
Applicable to sport, music live, movie, news distribution etc.
Sony Corporation 130 Create new customer value that exceeds the confines Electronics Products & Solutions Segment of each business (B2B&C) ④xR Solution Create New Visual Experiences and VR Content by Leveraging the Sony Group’s Strength Provide Highly immersive VR content and solutions
Hikaru Utada Laughter in the Dark Tour 2018 ‐ “Hikari”＆“Chikai” ‐ VR
Shooting system includes multiple cinema cameras from SIPS to create high quality VR content
Site operation and post-production Provide highly immersive virtual experience of being which leverages the Sony Group’s in the same space as the artist content creation know-how Applicable to sport and various live events as well as music
(c)2018 U3MUSIC/Sony Music Entertainment (Japan) Inc. (c)2018 Sony Interactive Entertainment Inc. Sony Corporation 131
Electronics Products & Solutions Segment
Create New Value, Connect Creators and Users Through the Power of Technology
Sony Corporation 132 Electronics Products & Solutions Segment
Appendix
Sony Corporation 133
FY2018 Review ‒ HE&S Electronics Products & Solutions Segment
(bln yen) FY2018 Operating Income (vs FY2017) Sales 1,222.7 1,155.4 Operating +3.8 89.7 Income 85.8 Positive Factor 1. Improvement in the product mix reflecting a shift to high value-added models
Negative Factors 2. Price decline 2 3 3. Negative impact of foreign exchange 4 5 1 rate
4. Decrease in sales
5. Increase in OPEX (research and FY17 FY18 development expenses for competitive products) Sony Corporation 134 FY2018 Review ‒ IP&S Electronics Products & Solutions Segment
(bln yen) FY2018 Operating Income (vs FY2017) Sales 655.9 670.5 Operating +9.1 84.0 Income 74.9 Positive Factors 1. Improvement in the product mix reflecting a shift to high value-added models
2 3 2. Improvement in OPEX 4 1 Negative Factors 3. Negative impact of foreign exchange rate
FY17 FY18 4. Decrease in sales
Sony Corporation 135
FY2018 Review ‒ MC Electronics Products & Solutions Segment
(bln yen） FY2018 Operating Income (vs FY2017） Sales 723.7 498.0 Operating -69.5 -97.1 Negative Factors Income -27.6 1. Decrease in smartphone unit sales
FY17 FY18 2. Increase in expense primarily for the write-down of excess inventory due to regional withdraw and clearing market inventory
3. Increase in restructuring charges
5 Positive Factors 1 4. Reduction in operating costs 2 3 4 5. Decrease in the impairment charge recorded against long-lived assets
Sony Corporation 136 FY2019 Forecast ‒EP&S Electronics Products & Solutions Segment
（bln yen） FY2019 Operating Income (vs FY2018) Sales 2,320.6 2,240 Operating 76.5 +44.5 121 Income Positive Factors 1. Improvement in the product mix reflecting a shift to high value-added models in TV and DI Business 3 2 4 2. Improvement in OPEX in MC Business
1 Negative Factors 3. Decrease in sales
4. Negative impact of foreign exchange FY18 FY19 rate April forecast
Sony Corporation 137
Electronics Products & Solutions Segment TV Business: FY2018 Sales by Product Type & Region / Unit and Revenue Share Sales by Product Type Sales by Region
Other
Japan 2K TVs 4K TVs
Sales U.S. Asia Pacific Sales 791.8 bln yen 791.8 bln yen
China China Europe
LCD TV Revenue Share by LCD TV Unite Share by Manufacturer Manufacturer (Source: Sony / For the most recent year） (Source: Sony / For the most recent year）
#5 1#3位
Sony Corporation 138 Electronics Products & Solutions Segment Video & Sound Business: FY2018 Sales by Product Type & Region
Sales by Product Type Sales by Region
Home Video
Headphones
Other Other Japan Video Sales *1 Asia Pacific Sales 363.6 Audio Sound Bars 363.6 bln yen Growth Category U.S. bln yen System Stereos Audio China Others
Europe Audio Components
Wireless Speakers
Digital Music Players WALKMAN
＊1：”Audio Growth Category” includes Headphones, Sound Bars and Wireless Speakers as its main products. Sony Corporation 139
Electronics Products & Solutions Segment IP&S Sales by Business Category and Geographic Area
FY2018 Sales by Business Category FY2018 Sales by Geographic Area
Other
Medical Asia Japan
Other Sales Sales Digital Imaging 670 670 bln yen China bln yen Still and Video Camera Professional North America
Europe
Sony Corporation 140 IP&S Key Product Market Share (Revenue Basis) Electronics Products & Solutions Segment
FY2018 Still Camera Market FY2018 Video Camera Market Market Size: 1,300 bln yen Market Size: 300 bln yen
Sony Sony 24% 29%
ILC (Incl. Lens)：23％（#2） Components of Video Camera Pie Chart （#1 in Mirrorless Camera） Video cameras for consumer (POV + Conventional) DSC ：29％（#1） Video cameras for business (Pro-sumer + Professional) (#1 in Premium DSC）
*1 Premium DSC = DSC with large (1/1.7 inch and over) image sensors or high zoom (20X and over) (Source : Sony) Sony Corporation 141
Semiconductors Segment
Executive Vice President Sony Corporation
Representative Director and President Sony Semiconductor Solutions Corporation
Representative Director and President Sony Semiconductor Manufacturing Corporation
Terushi Shimizu Semiconductors Segment
1. Business Environment
2. Long-Term Business Strategy
Sony Corporation 143
Semiconductors Segment
1. Business Environment
Sony Corporation 144 Worldwide Image Sensor Shipments (Revenue Basis) Semiconductors Segment
New Area New Area Mobile Sensing • Automotive: No change in the speed of Mobile Multiple Lens (Sub Camera) growth of the ADAS market Mobile Front + Rear AV • Factory Automation：Growth market in the mid to long term • Security：Stagnant market from late FY18 to early FY19. Expect recovery in FY19 Mobile Area • Market expansion from multiple lens and large sized sensors • Steady adoption of sensing products although the pace of market growth is slower than expected AV Area CY 11 12 13 14 15 16 17 1819E 19 20E 20 21E 21 22E 22 23E 23 24E 24 25E 25 • No change in expansion of high-end sensor market
※Source: Sony
Sony Corporation 145
Semiconductors Segment Mobile Market Growth: Smartphone Units x Multiple Lens x Larger Size
Approximately Approximately Increase in 15%* 20%* Sensor Units Average Annual Average Annual Increase in Multiple Increase in Sensor and Lens Adoption Size Number of Wafers
Smartphone Smartphone Multiple Lens Sensor Optical Size Adoption Rate
※Source: Sony’s Forecast
Sony Corporation 146 Toyota Corolla Sports vehicle with Sony’s sensor was awarded the top score in the automatic braking tests for night-time pedestrians (1st half of FY18) Alarm Sound
Brake!
Automotive Initiatives Semiconductors Segment
Camera
Milliwave Sensor radar Fusion
Current Model IMX224（1.27M pixels） LiDAR
IMX490 IMX324（7.42M pixels）
• Achieve quality and functionality for • Able to integrate large amounts of raw data automotive - high sensitivity, high resolution, from camera images, LiDAR and milliwave radar and capable of reducing LED flicker while • Identify objects even in harsh conditions maintaining high dynamic range Recent initiatives Initiatives for the future Automotive image sensor space Sensor fusion Sony Corporation 148 Automotive Initiatives: Sensor Fusion Semiconductors Segment
Current Technology
Sony’s Sensor Fusion
• Identify car ahead despite fog • Identify car ahead despite • Identify car ahead despite making it difficult to see glare making it difficult to see headlights and rain making it difficult to see Scene 1: Fog Scene 2: Backlight Scene 3: Night & Rain
Sony Corporation 149
Image Sensor Revenue Share Target Semiconductors Segment
Sony 60% Sony 51%*
FY18 FY25 Target
※Source: Sony
Sony Corporation 150 Revenue Portfolio Target Semiconductors Segment
Sensing 30% Sensing Several%
FY18 FY25 Target
Sony Corporation 151
Image Sensor CAPEX Semiconductors Segment
Approx. 700 billion yen
FY12-14 FY15-17 FY18-20E FY21E-23E
Sony Corporation 152 ROIC Target / Roadmap to Improvement Semiconductors Segment
FY18FY21 FY25
Target ROIC Actual 15% 20%-
＝ 25%
Higher functionality, higher value added Decrease in Margin products depreciation and R&D × Operational improvement
Improvement in Invested CAPEX increase turnover rate due to due to higher Capital decrease in CAPEX demand Turnover Rate investment
Sony Corporation 153
Semiconductors Segment
2. Long-Term Business Strategy
Sony Corporation 154 Long-Term Business Strategy Semiconductors Segment
FY19-21 Beyond FY21
Market Market for mobile-use image sensors grows Sensor market growth stabilizes Environment Mobile 3D sensing penetration expands Use case diversifies
HW Aggressively invest to Generate cash flow maintain No.1 position in imaging and Expand the business through Strategy take No.1 position in sensing new use cases in sensing
Combine edge AI processing SW Pursue partner strategy in with sensor hardware Strategy the software space Pursue a recurring revenue business model
*HW: hardware, SW: software
Sony Corporation 155
Semiconductors Segment Sony Sensors Used in Various Applications Around the World
Sony Corporation 156 Cloud and Edge AI Processing Semiconductors Segment
Cloud AI Processing Edge AI Processing
Processing
Processing
Benefit: Benefit: • Big data processing is • Ensure privacy possible • Reduces data transfer time • Less influence from edge • Reduces cloud usage costs device performance • Reduces bandwidth
Sony Corporation 157
Image Sensors × AI Possibilities Semiconductors Segment
Imaging AI Sensing AI
Better Picture Quality Recognition and
Possibilities limited to Machine Vision the number of human eyes Unlimited Possibilities
Moire
Utilizes complementary colors Eliminates moire High sensitivity and color Correction beyond reproduction physical limitations
Sony Corporation 158 Role of Image Sensors in the AI Era Semiconductors Segment
What Image Sensors Aimed What Image Sensors Aim To Do Up Until Today To Do Going Forward Create clean images based on Create clean image data based on how human eyes see the world how AI sees the world
Sony Corporation 159
Integration of Edge AI Processing and Sensor Hardware Semiconductors Segment
Sony Image Sensors AI Applications
Approximately 51%* global market share Superb expertise in data output space
Integrate edge AI processing and sensor hardware Pursue a recurring revenue business model
※Revenue basis, Source: Sony
Sony Corporation 160 Semiconductors Segment Increase Image Sensor Possibilities with Stacked Structure
Pixels Embed AI Recognition Logic
Sony Corporation 161
Semiconductors Segment
Growth in Image Sensor Business Sensing Edge AI
Sony Corporation 162 Semiconductors Segment
Appendix
Sony Corporation 163
FY2018 Review Semiconductors Segment
Operating Income Analysis（bln yen） Achievements
Sales 850.0 879.3 Increase in sales and OI in image sensors Image Sensors Image Sensors for mobile-use due to the shift to 649.3 711.4 multiple lenses and larger sized sensors 164.0 Adoption of Sony’s ToF sensors for
143.9 mobile applications Increased presence in the automotive One-Time Exchange market Factors* Rate Inventory Change Operating Income Depreciation / R&D Unit increase/ Product Mix Issues Improvement /Cost Reduction Adaptability to market volatility for factory automation and security cameras
1USD=110.9 yen 110.9 yen Sony Corporation 164 * Please refer to slide 24 of Presentation Material for FY2018 Earnings. FY2019 Forecast Semiconductors Segment
Operating Income Analysis（bln yen） Environment
Sales 879.3 990 Acceleration in multiple lens and larger Image sensors Image sensors sized sensor adoption 711.4 840 Sensor market for factory automation and security are expected to recover 145 143.9 from the second half of FY19, after a
Exchange slowdown in the second half of FY18 Rate Inventory Change Basic Strategy
Operating Depreciation Unit increase/ Invest to meet the growing demand for Income / R&D Product Mix Improvement sensors /Cost Reduction Accelerate initiatives to generate monetization opportunities that go beyond selling sensor hardware
（April Forecast） 1USD=110.9 yen 110 yen Sony Corporation 165
Cautionary Statement Statements made in this presentation with respect to Sony’s current plans, estimates, strategies and beliefs and other statements that are not historical facts are forward-looking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on management’s assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to: (i) Sony’s ability to maintain product quality and customer satisfaction with its products and services; (ii) Sony’s ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences; (iii) Sony’s ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms; (iv) the effectiveness of Sony’s strategies and their execution, including but not limited to the success of Sony’s acquisitions, joint ventures, investments, capital expenditures, restructurings and other strategic initiatives; (v) changes in laws, regulations and government policies in the markets in which Sony and its third-party suppliers, service providers and business partners operate, including those related to taxation, as well as growing consumer focus on corporate social responsibility; (vi) Sony’s continued ability to identify the products, services and market trends with significant growth potential, to devote sufficient resources to research and development, to prioritize investments and capital expenditures correctly and to recoup its investments and capital expenditures, including those required for technology development and product capacity; (vii) Sony’s reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, marketing and distribution of its products, and its other business operations; (viii) the global economic and political environment in which Sony operates and the economic and political conditions in Sony’s markets, particularly levels of consumer spending; (ix) Sony’s ability to meet operational and liquidity needs as a result of significant volatility and disruption in the global financial markets or a ratings downgrade; (x) Sony’s ability to forecast demands, manage timely procurement and control inventories; (xi) foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sony’s assets, liabilities and operating results are denominated; (xii) Sony’s ability to recruit, retain and maintain productive relations with highly skilled personnel; (xiii) Sony’s ability to prevent unauthorized use or theft of intellectual property rights, to obtain or renew licenses relating to intellectual property rights and to defend itself against claims that its products or services infringe the intellectual property rights owned by others; (xiv) the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment; (xv) shifts in customer demand for financial services such as life insurance and Sony’s ability to conduct successful asset liability management in the Financial Services segment; (xvi) risks related to catastrophic disasters or similar events; (xvii) the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sony’s business information and the personally identifiable information of its employees and customers, potential business disruptions or financial losses; and (xviii) the outcome of pending and/or future legal and/or regulatory proceedings. Risks and uncertainties also include the impact of any future events with material adverse impact. Important information regarding risks and uncertainties is also set forth in Sony’s most recent Form 20-F, which is on file with the U.S. Securities and Exchange Commission. Note to the Financial Information without Financial Services Financial information without Financial Services made in this presentation is not in accordance with accounting principles generally accepted in the United States of America, which is used by Sony to prepare its consolidated financial statements. However, because the Financial Services segment is different in nature from Sony’s other segments, Sony utilizes this information to analyze its results without the Financial Services segment and believes that a comparative presentation may be useful in understanding and analyzing Sony’s consolidated financial statements. Sony Corporation