Media & Digital Business Unit What We Aim To

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Media & Digital Business Unit

What We Aim to Be and Growth Strategy

May 16, 2019

Toshikazu Nambu General Manager, Media & Digital Business Unit 1. Business Unit Overview

2. Business Unit Growth Strategy

3. DX Initiatives

4. Financial Target

1 Organization

Transportation Mineral Resources, Metal Products & Construction Infrastructure Media & Digital Living Related & Energy, Chemical Systems Real Estate & Electronics

Smart Communications Media Division Digital Business Division Platform Business Division

Telecom Cable television TV shopping System integrator Mobile handset operator (1) Core (1) Core distributor business operator channel

(3) DX Center

(2) New Digital media business Overseas smart platform business

*No. of personnel: Headquarter 460 persons/Group total 42,000 persons 2

Contributing to the SC Group’s digital transformation (DX) and building the platform of a smart society with enabler functions for innovation by leveraging advanced technologies and by developing human resources with digital expertise.

3 Image of Growth Strategy

Platform layers

Digital economies Conventional business SC Group DX promotion

Service Food Material

Predictive Digital Apparel Biomass maintenance AD Failure detection

Business foundation

Social Real estate business infrastructure

Venture investment

4 1. Business Unit Overview

2. Business Unit Growth Strategy

2-1. Core Business Value Improvement 2-2. Entry into New Fields

3. DX Initiatives

4. Financial Target

5 Business Overview

Market share Business foundation

■Size of subscribing households

About 50% Japan’s total households 58.01 million

No. of “home pass” households million (ready for service) 21.64 FY2017 CATV subscribing No. of subscribing households million household 5.48 share

■Customer contact point Sales & support 3,200 persons About Service engineers 4,200 persons 10,000 Customer center 3,200 persons persons J:COM コミュニティネットワCommunity Network Center ークセンタiTSCOMイッツコムーその他Other

Sales of 756.5 billion yen, operating profit of 114.9 billion yen, net profit of 67.6 billion yen (as of March 2019) 6 Growth Strategy

Upgrade 3 basic services Enhance life infrastructure services

TV PHONE NET ELECTRICITY MOBILE GAS

Future focus

Meet demands with Expand JCOM sporting events economies

2019 2020 Rugby World Tokyo Olympic Next-generation set Cup Games top box 7 Expand businesses on J:COM platform

Expand J:COM economies

3 basic Life Aligned with TV shopping Home IoT Health care services infrastructure retail services …

Data Management Platform

8 Expand businesses on J:COM platform

Home IoT (service image)

Light/air conditioning control IoT home electronics

Next-generation STB Remote control of home electronics

Home security

AI speaker Insurance consultation

9 Business Overview

Market share Business foundation

About 30% Airtime 24 hours 365 days LIVE FY2017 TV shopping market share

Products 500 Available for items/week 29.5 million (New products SHOP QVC households account for a サントリーウェルネスSuntory Wellness ジャパネットたかたJapanet Takata half) キューサイQ’SAI 他Other

Sales of 159.3 billion yen, operating profit of 24.8 billion yen, net profit of 17.8 billion yen (as of March 2019) 10 Growth Strategy

 Increase the customer base  Enhance sales channels → TV + E-commerce + SNS, etc.  Sophisticate data marketing  Develop variety of new products

Big sellers at the shop

Fashion Jewelry Cosmetics

11 New Initiative (1)

Smartphone application renewal

On-air Feature Notice

12 New Initiative (1)

TV & SNS Hybrid live commerce

At 0:00 / 12:00 in June 2019, live simulcast starts for limited-time offers

TV TV broadcasting distribution ability

Linked with the program

Internet Interactive & instantaneous Communication using smart device 13 New Initiative (2)

Developing variety of new products Utilizing data

(1)Introducing premium brands Demand forecast using AI Explore big sellers ⇒ Improve brand value BMW i3

Improve accuracy of sales plan Formulate marketing measures

Magazine CM (2)From tangible to intangible goods

consumption Email magazine/DM Web AD ⇒ Propose high-quality extraordinary travel

Internal & external data integration, real-time use

J:COM Sales plan EC Logistics Customer Data on viewing inquiry 14 New Initiative (2)

Enhance One-to-One Marketing

15 Business Overview

Position in the industry Business foundation

(100 million yen) Operating profit 1,477

Customer base 714 About 8,000 companies

384 380 359

Service quality Technology Work style NTT Data NRI SCSK TIS CTC Intellectual reform Operating property, Health & 7％ 14％ 11％ 9％ 8％ margin IT asset productivity management

Sales of 358.7 billion yen, operating profit of 38.4 billion yen, net profit of 27.9 billion yen (as of March 2019) 16 Growth Strategy

Service provider business Promote strategic business

Enhance services for distribution, ・ In-vehicle system business financial, and media industries ・ Promotion of business using AI ・ DX initiatives

Upgrade global operation

・ More than 200 cases of system introduction in 38 countries, primarily led by sites in U.S.A., U.K., China, and Singapore

・ Partnership with the largest IT company in Vietnam, FPT Corporation

17 Expand New Business with DX Initiatives Integrate real business and advanced IT to co-create the future of customers, by taking advantage of integrated corporate strength

Business Pursue real business with customers

Global Co-Creation Customer

Best-of-breed advanced IT proposal IT Solutions

Cloud

18 Promote Global Business Build a foothold for global business in Southeast Asia

SCSK site SC site SCSK Shanghai SC subsidiaries, associated companies SCEA SC development projects (Venture investor) Northern Hanoi Smart City

Thilawa Special Economic Zone (81 companies) Thang Long Industrial Park (TLIP) TLIP II (Total 173 companies) Telecom operator SCSK AP

East Jakarta Industrial Automotive Park (93 companies) retail, financing, leasing 19 Business Overview

Market share Business foundation

(10,000 units) Units sold in FY2017 DoCoMo Mobile phone SoftBank sales au 2,000 stores

Enterprise Settlement Customer base service 8,000 60,000 companies stores T-GAIA CONEXIO Nojima + MX Mobile Kanematsu TD Mobile (Itochu) ITX (Marubeni) (Toyota Tsusho/Denso)

Sales of 526.9 billion yen, operating profit of 15.5 billion yen, net profit of 10.8 billion yen 20 Growth Strategy

Strengthen and reform business foundation Strengthen mobile solutions Measures taking advantage of No. 1 share in mobile phone sales Introduce IoT and smart devices ・ Strategic partnership with telecommunication carriers

・ Reform for a comprehensive ICT IoT provider ・ Create new business using store network

Enhance settlement business

Digitize QUO card

User recognition: 92.3% The “QUO Card” is now available as a convenient digital gift.

21 Expand Solution Business

One-stop support, from procurement to replacement

Replacement Procurement

Terminal change Life Cycle Management

Environment Mobile phone development management service Operation & Introduction maintenance

Security Tablet solution solution 22 Enhance Settlement Business

Easy, convenient, 3-step digital gift

Send the URL of QUO Card Just open the URL to receive QUO Show it at a store. Pay to a smartphone. Card Pay. No signature or ID is required. You can easily and speedily send it When the recipient opens the URL and Settlement at a store only requires anytime, using email, SNS, or any the amount appears on the screen, the barcode reading. other tool that can send a URL. delivery process is complete. A The recipient can repeatedly use the dedicated application that facilitates the QUO Card Pay as long as the balance use is also available. is available, and can use it with cash. 23 Telecom Business in Myanmar

Market share Business foundation

Mobile subscribers in Myanmar (90-day active) and share

(10,000 persons) Telecom network 5,800 Covering 98% of 5,100 5,000 Myanmar population 3,900

2,500 No. 1 Sales Customer channel Base (100,000 2,100 2,300 in mobile, 750 1,900 stores) 1,600 fixed line, and covering the 1,200 enterprise 500 entire business Myanmar When we entered Mar. 2015 Mar. 2016 Mar. 2017 Mar. 2018 Mar. 2019

MPT Telenor (Norway) Ooredoo (Qatar)

Mytel (Vietnam) MPT’s share 24 Growth Strategy

Enhance business foundation Expand the customer base

・ Enhance 4th-generation mobile ・ Enhance mobile sales agent network network ・ Increase income from data ・ Increase enterprise transactions (including fixed line)

Build MPT economies

・ Expand content business (e-book, music, video, game)

・ Provide value as life platforms (e.g., finance, off-grid power, healthcare)

25 Build MPT Economies in Myanmar

MPT economies Digital content initiatives Music Closest Life Platformer E-book distribution

Digital Mobile Micro Off-grid power content money finance generation Service

Video Game Myanmar distribution

23 million mobile subscribers Infrastructure

26 Contribute to Development of Myanmar

Co-create the future of Myanmar

Financial support for Myanmar Support for Japan-Myanmar student National League exchange program Youth development

27 1. Business Unit Overview

2. Business Unit Growth Strategy

2-1. Core Business Value Improvement 2-2. Entry into New Fields

3. DX Initiatives

4. Financial Target

28 Smart Platform Strategy in Asia (1)

Expand the economies MPT economies

Digital Mobile Micro Off-grid power Digital AD FinTech IT solution content money finance generation Service

Myanmar Asia

Mobile communication, fixed line Mobile communication, fixed line Infrastructure

Singapore ● Transfer part of the unit’s functions, accelerate business development, sophisticate operation ● Enhance the multi-national expert group 29 Smart Platform Strategy in Asia (2)

Digital Micro finance Digital content AD IoT

axiata 150 million mobile subscribers

Malaysia

Singapore ● Transfer part of the unit’s functions, accelerate business development, sophisticate operation ● Enhance the multi-national expert group 30 Digital Media Strategy (1)

Broadcasting (TV) Communication (Internet) Sumitomo Corporation ） Video (AD Terrestrial Video SC distribution Digital Media BS distribution ︵広告型 Free (private) AbemaTV, TVer ︶

Pay terrestrial (NHK) Cable TV Video Satellite BS distribution (SKY NETFLIX (charge-based) PerfecTV, Hulu WOWOW) AmazonPrime Pay

31 Digital Media Strategy (1)

AD market Source: Dentsu Communication Institute Inc.

Terrestrial, BS (TV) FY2018 2 1.8 trillion yen

FY2018 1.8 trillion yen The Internet

0 2009 2011 2013 2015 2017 2019 2021

32 Digital Media Strategy (2)

Partner Advertiser

Platform Creator

KIDSLINE Toshi soel / FCL 33 Digital Media Strategy (3)

34 Digital Media Strategy (3)

Video

35 1. Business Unit Overview

2. Business Unit Growth Strategy

3. DX Initiatives

4. Financial Target

36 The Organization

Corporate Metal Transportation Infrastructure CIO/CSO Products & Construction Systems

Living Mineral Resources, Media & Energy, Chemical & Digital Related & Real Estate Electronics IT Corporate Governance& Planning& 30+ Administration Coordination persons

Global Innovation Corporate Committee planning

Cross-organizational DX Center functions Regional DX Center organizations (business development, IT Planning R&D) & IT sales Promotion 30+ persons Media & Digital Business Unit External experts CDO + (mid-career hire, consultant) 37 Strengthen DX Center

【Business unit / regional organizations] [Advanced technologies] DX Center Metal Products Start-up Team by Transportation Open

Ideas organization & Construction Issues

Systems collaboration

Infrastructure Solution by theme

Major IT companies Media & Digital Technology Center

Living Related & Real Estate CVC Mineral digital

Accelerator advanced Resources, technologies technologies Introduction of

Energy, Chemical Combination of & Electronics

38 Co-create with Start-ups

Global CVC Accelerator

Strategy Vision

Tokyo 20 persons/$30M Silicon Valley 1998– 30 persons/$150M London ＠Silicon Valley/Tokyo 2017– 10 persons/$20M Tel Aviv Hong Kong 2019 – 2002 –

Under 10 persons/$50M ・・・ consideration Human resources

Information

(1) Find/apply new technologies, (2) keep ahead of industrial structural change, (3) incubation 39 Direction in DX Initiatives

AgriTech MaaS business Q-Park (Nordic Digital media parking facilities) Digital QUO Managed care

(3) Change business model (2) Digitize contact point

RPA Market forecast

Increase new revenue sources revenue Increase new (1) Digitize operation Predictive maintenance Status quo Sophisticate operations

40 Progress of DX Initiatives

Create a momentum for DX Medium-term Management Plan Presentation (top management, company-wide, business unit, Total 3,000 persons local organization) Management Council, Division General Managers’ Meeting, GM Meeting, Subsidiary Top Meeting Total 500 persons DX seminar (basic/application/management versions) Total 2,000 persons DX presentation for sales unit/subsidiaries, Idea Creation Workshop More than 20 times

Promote DX projects Progress RPA: 80 organizations DX: 171 projects

Corporate Planning/examining DX 22 3 2 5 DX企画・検討 Demonstration実証実験 experiment Metal Products Preparing実現準備 11 20 2 1 23 Executing実⾏中

Transportation & Construction Systems 20 20 8 2 4 34

Infrastructure 5 25 6 31

Media & Digital 3 9 5 6 8 28

Living Related & Real Estate 4 23 8 2 3 36

Mineral Resources, Energy, Chemical & 15 11 2 1 14 Electronics 41 DX case

DX case video

42 Management Reform by Sumitomo Corporation DX

Environmental Integration of industries with social digitization, rapid changes changes in the market, diversifying needs

Issues Reforms

● Build cross-organizational system ● Vertically divided organization ● “Business x Digital thinking” ● Fixed staffing, uneven human resources distribution of knowledge ● Diversity & Inclusion human ● Difficulty in creating business (Appoint external experts, build resources beyond industrial borders Organization, partnership)

● Value creation management from ● PL-oriented yearly management the mid- to long term perspective ● Manufacturer/product-oriented ● Design thinking (customer ● Appreciation of unfailing perspective-oriented)

culture excellence ● Start small, fail fast Corporate ● Bottom-up ● Top-down 43 Management Reform by Sumitomo Corporation DX

Environmental Integration of industries with social digitization, rapid changes changes in the market, diversifying needs

Issues Reforms

culture excellence ● Start small, fail fast Corporate ● Bottom-up ● Top-down 44 Promote Diversity & Inclusion

Digital marketing Global information & professional communication expert

ビジョン戦略 Accelerate innovation

DX Tech Center Data scientist AI engineer 45 1. Business Unit Overview

2. Business Unit Growth Strategy

3. DX Initiatives

4. Financial Target

46 Investment Plan (3-Year Total)

Smart platform Digital Media Consolidated

3-year total 700 billion yen (including investment by equity method affiliates)

Total asset size including equity method: 2 trillion yen (Headquarter and subsidiaries’ total asset of 1 trillion yen + equity method total asset of 1 trillion yen) 47 Net Profit

Medium-Term Management Plan 2020

(100 milllon yen) Net profit

FY2017 results FY2018 results FY2019 budget FY2020 plan

Media & Digital Living Related & Real Estate 48 Thank you!

Media & Digital Business Unit

Communication partner robot “unibo”