Sony IR Day 2017 All Materials
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Sony IR Day 2017 May 23, 2017 Sony Corporation Entertainment Business (Pictures/Music) 3 Game & Network Services (G&NS) 24 Mobile Communications (MC) 37 Imaging Products & Solutions (IP&S) 59 Home Entertainment & Sound (HE&S) 74 Semiconductors 88 Sony IR Day 2017 Entertainment Business (Pictures/Music) May 23, 2017 Kazuo Hirai President and CEO, Representative Corporate Executive Officer Sony Corporation Chairman and Co-CEO, Sony Entertainment Inc. Rob Stringer Chief Executive Officer Philip Rowley Sony Music Entertainment Inc. Senior Executive Vice President & Kevin Kelleher Chief Financial Officer Chief Operating Officer Sony Pictures Entertainment Inc. Sony Music Entertainment Inc. Entertainment Financial Services Electronics Sony’s Music Business Recorded Music Music Publishing Visual Media & Platform (Equity Method) Outside Sales(FY2016 Actual) Sony IR Day 2017 4 Sony Music Entertainment (Japan)(SMEJ) Success in Growing Market Create New Business Create and Maximizing Smartphone Game Application SMEJ‘s First Museum Entertainment Create New Hit Content Fate/Grand Order SNOOPY MUSEUM TOKYO Maximize Catalogue Value Create hit content in growing market Create new business and expand utilization of catalogue IP and revitalize existing IP Sony IR Day 2017 5 Sony/ATV Music Publishing (Sony/ATV) No.1 Music Publisher 27% September, 2016 Sony/ATV became a wholly owned 20% subsidiary of Sony Corporation 12% 6% ABC * Music & Copyright, May 2017. Based on worldwide revenue for calendar year 2016. Sony IR Day 2017 6 Sony IR Day 2017 7 Photo by Joshua White Sony IR Day 2017 8 Entertainment Industry Trends Motion Pictures Larger share of revenue concentrated on fewer tent-pole films Television Productions Networks seeking to own more content rights Media Networks TV distributors reevaluating their network portfolios Sony Corporation 9 Issues of Sony Pictures Entertainment Motion Pictures Implementing turnaround strategy Television Productions Maintain and strengthen relationships with top content producers and major networks Media Networks Generate stable profit through recurring- revenue business model Sony Corporation 10 Anthony Vinciquerra Chairman and CEO, Sony Pictures Entertainment effective on June 1, 2017 Chairman and CEO, Fox Network Group Senior Advisor, Texas Pacific Group Board Director, STX Entertainment Extensive experience in media, entertainment and technology space Sony IR Day 2017 11 Financial Update SPE FYE17 Review ($ in millions) All businesses saw topline growth; +5.3% however, fully allocated OI Sales $7,875 $8,292 decreased for several reasons: Motion Pictures’ FYE17 films had higher marketing costs for films released in the 1 1 last quarter of FYE17 compared to the $346 2 3 prior year’s films 4 $280 * In Television Productions, less favorable 2 product mix (prior year included an SVOD sale of Breaking Bad) Media Networks had higher programming costs (including increased programming Operating 3 investment and a write-off of Income programming in Italy) FYE17 incurred one-off charges due to 4 FYE16 FYE17 reductions in centralized costs Actual Actual Note: FYE = Fiscal Year Ended (e.g., FYE17 = Fiscal Year Ended March 2017) Source: Pictures Segment Supplemental Data, March 31, 2017 * FYE17 operating income excludes the $962 goodwill impairment write-down Sony IR Day 2017 13 SPE FYE18 Forecast ($ in millions) Factors impacting performance: +12.7%** Sales $8,292 $9,346** Improvements in current year’s films and cost reductions in Motion Pictures 3 4 1 partially offset by lower catalog sales 2 $359** 1 Television Productions growth driven by $280* 2 syndication of The Goldbergs and several new show launches Media Networks growth driven by GSN 3 and India, somewhat offset by TEN Sports Operating Unfavorable impact of budget FX rates 4 Income and one-time costs FYE17 FYE18 Actual Forecast Source: Pictures Segment Supplemental Data, March 31, 2017 and SPE Management * FYE17 operating income excludes the $962 goodwill impairment write-down ** FYE18 sales forecast converted at 110.00 JPY/USD and rounded down to the nearest 10 billion yen to ¥1,020,000 million Sony IR Day 2017 14 Sony IR Day 2017 15 SME FYE17 Achievements/Highlights Success from multiple Broke new talent to create Recognition through Sony Music gaining market repertoire centers future superstars industry awards share in growing market • 7 of the Top 20 on the IFPI 2016 • Broke The Chainsmokers, G-Eazy, • Adele awarded 5 Grammys, • Calendar 2016 market share grew Global Album chart, including #1 Rag’n’Bone Man, DJ Khaled, Alan including the top 3 – Album of the +0.5% to 26.0% (Beyoncé) and #2 (Adele) Walker, Zara Larsson in FYE17 Year, Record of the Year and Song • The market grew 6% year-over-year of the Year • 9 of the Top 20 on the IFPI 2016 driven by 60% growth in streaming Global Singles chart, including • SME’s other winners includes David • Acceleration of paid subscription breakout tracks from The Bowie (5), Beyoncé (2), The offsetting declines In Physical and Chainsmokers, ZAYN, Alan Walker Chainsmokers, Maren Morris, Download Solange, Cage The Elephant, • FYE17 top sellers include Pentatonix and many others • Future upside from new entrants into international superstars, Catalog the market (Amazon, Pandora and artists, new artists • Sony Music won an unprecedented 10 iHeartRadio) out of 13 Brit Awards, the most in company history Successful, Profitable Year For Sony Music On Multiple Fronts Sony IR Day 2017 16 VISION A Global Entertainment Leader, Building Artist Brands and Careers and Maximizing Profit Through The Best Creative Teams, A Culture of Entrepreneurial Innovation, and Aggressive Investments Two Key Areas of Focus: Direct Reporting Data Digital International Lines Analytics Growth Expansion Talent Commercial Development Opportunities Culture of Aggressive New Business One Sony Entrepreneurship Growth Investment Strategies Initiatives Maximize Profits, Improve Margins and Grow Market Share 日付 | SonySony IR DayIR Day 2017 2017 | 1717 Recorded Music Market Profile ($ in billions; excludes Japan) Two years of solid market growth Expect slight market growth in 2017 Streaming growth more than offsetting declines in physical and download markets Continued rapid growth of streaming, reaching Streaming represents 41% of total market: 56% of total market Digital / Streaming - Paid subscription revenue up 92% year over year Greater download and physical declines Physical - 97 million premium paid subscribers $10.9 $11.1 $10.1 $9.8 $10.2 -30% $1.4 Downloads 14% of Total Market $1.9 $2.8 19% of $4.5 Total Market 28% of Total Market 41% of $6.2 Total Market 56% of +44% $4.0 Total Market Paid Streaming $3.8 $3.5 $2.9 +5% $2.1 Video $4.7 $4.2 $3.9 $3.5 $2.8 2013 2014 2015 2016 2017 est Healthy industry performance overall supports SME growth Source: IFPI Sony IR Day 2017 18 Streaming Landscape Current Upcoming Future Top Streaming Partners New Entrants Into Market Product Innovation Price tier innovation Voice will become a more 1 unlimited important component of services Visual (not just video) will enhance the listening experience Video is a different experience 2 and must establish and maintain a separate value with consumers and services Others No streaming service right now is optimized or successful in the car Individual upsell opportunities Per Full Year FYE16FC exist for super fans Goal: Incentivize users to upgrade from free to paid users Sony IR Day 2017 19 Music FYE16 Act FYE17 Act (USD mil.) Sales $5,156 $5,976 4 5 6 The Orchard Step up gain 1 1 3 720 2 Physical & Download 2 700 3 Streaming 569 4 Visual Media & Platform Strong year Achieved growth in 5 Publishing operating profit (excluding The Orchard gain) despite significant 6 FX & Others physical/download market shrink and negative foreign currency impacts FYE16 ActFYE16 Act FYE17 Act 1$=120.1 yen Excl. The Orchard Gain 1$=108.4 yen Sony IR Day 2017 20 Music FYE17 Act FYE18 4F (USD mil.) Sales $5,976 $5,727 1 Physical & Download 2 3 4 5 1 2 Streaming 700 683 3 Visual Media & Platform 4 Publishing 5 FX & Others Similar level of profitability despite negative impacts from continuing physical / download market declines, unfavorably FX and difficult year over year comparison due to strong success of Fate / Grand Order in FYE17 FYE17 Act FYE18 4F 1$=108.4 yen 1$=110 yen Sony IR Day 2017 21 Music Segment Financial Trend (USD mil.) $5,976 $5,727 $5,086 $5,156 $720 $700 $683 $551 $569* FYE15ACT FYE16ACT FYE17ACT FYE18BP FYE15ACT FYE16ACT FYE17ACT FYE18BP Revenues Operating Income Operating Operating Operating Operating Income Income Income Income Margin Margin Margin Margin 10.8% 11.0%* 11.7% 11.9% * Excludes The Orchard step up gain Sony IR Day 2017 22 Sony IR Day 2017 Game & Network Services Segment May 23, 2017 John (Tsuyoshi) Kodera Business Executive Sony Corporation Deputy President Sony Interactive Entertainment Agenda Game & Network Services Segment 1. FY2016 Review 2. FY2017 Strategy *FY2017 = Fiscal year ending on March 31, 2018 Sony IR Day 2017 24 Game & Network Services Segment 1. FY2016 Review Sony IR Day 2017 25 FY2016 Key Achievements Game & Network Services Segment Highly successful growth and development of PlayStation®4 1 (PS4™) ecosystem 2 Continued innovation with mid-lifecycle upgrade with PS4™Pro Successful launch of PlayStation®VR (PS VR) for brand-new 3 immersive entertainment Sony IR Day 2017 26 FY2016 Operating Profit Variation from FY2015 Game & Network Services Segment (Billion yen) Net Sales 1,551.9 1,649.8 ① Continuous expansion of PS4™ platform ③ ② ② Successful growth in network revenue ④ 135.6 ③ Decrease of PlayStation®3 (PS3™) platform sales ① ⑤ 88.7 ④ SGA increase to support business expansion, etc. ⑤ Unfavorable impact of exchange rates*1 FY2015 FY2016 Act Act *1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2016 and comparing them with the previous fiscal year Sony IR Day 2017 27 Game & Network Services Segment 2.