Status Update

May 19, 2020

Press Release

We would now like to start Sony Corporation's FY 2020 Corporate Strategy Meeting. I will be acting as your moderator today. I am Kato from Corporate Communications. This meeting is being held for the media analysts and institutional investors whom we have informed in advance. And a sound and presentation will be posted on our website. So first of all, our CEO, Yoshida, will give an explanation. Good afternoon, everyone. I am Kenny Chiro Yoshida. As I explained at the corporate sales meeting of fiscal year 2018, which was also my 1st year as President, management with a long term view is a lesson passed down to us from our founder, Akio Monitor. Now that the new coronavirus has changed the world, I am reminded once again of its importance. When managing a company with a long term view, it is essential to clarify the meaning of the company's social existence that is its purpose and the direction management is taking the corporation. For Sony, the purpose is to fill the world with emotion through the power of creativity and technology. And our management direction is getting closer to people. Many of Sony's 110,000 employees are having to telework today, but they are conducting business with a shared goal of filling the world with emotions and getting closer to people. I have never felt so strongly as I do now. The social significance of continuing to deliver emotionally impactful audio and video content to the world at a time when people around the world are refraining from going outside. Now I would like to discuss these three points. People are at the core of Sony's business portfolio. Our content and direct to consumer businesses, which together with creators, create emotionally impactful content and deliver them to users, seek to move people's hearts. Sony's branded hardware businesses provide equipment that is essential for creators to create emotionally impactful content and for users to enjoy them. Our CMOS image sensor business makes a key device for smartphones used by people around the world to share their emotions. These are businesses that connect people to people. At this year's CES, I talked about contributions to the future of mobility through technology such as CMOS sensors and our first ever active sensing lidar solution for automotive use. I also introduced Vision S, which embodies our efforts in this space. And at last year's C Tech, we exhibited a wide range of medical equipment. These businesses aim to contribute to the safety and health of people. And our Financial Services business, which has a 40 year history, places great value on providing assurance to people, and these are businesses that support people. And then we view the 3 areas where we support people in terms of safety, health and assurance as growth businesses for Sony over the long term, and they are areas where we can leverage technology. And as you can see, Sony's business portfolio is diverse even while it is always centered on people. And this diversity contributes to the stability of the company. And going forward, we will continue to strengthen the management of the group to make that diversity even more of an advantage. In the past, we withdrew from some businesses like the PC business and the battery business. We will continue to review the composition of our portfolio as a regular practice of management of people who always remain at our core. In order to promote the evolution of each business and solidify our diverse business portfolio as an advantage, we announced 2 actions designed to strengthen group management. The first is the creation of the Sony Group Corporation in April 1, 2021. We will clearly separate and redefine the functions of the current Sony Corporation, which currently has a mixture of group headquarter functions and electronics business headquarters functions and create a company which will focus on group headquarter functions. The mission of Sony Group Corporation will be to conduct the activities shown on this slide from the perspective of the entire group. When Sony Group Corporation launches, the Sony Corporation company name will be inherited by the electronics business, which is the original business of the Sony Group. The second action to strengthen group management is the consolidation of Sony Financial Holdings, of which we currently own 65% into a wholly owned subsidiary. Financial Services, along with electronics and entertainment, is a core business of Sony, and it is a business which supports people, which we view as a long term growth area. And precisely because it is a core business, we have increased our ownership ratio of it several times in the last few years, strengthened its governance from the perspective of shareholders and taken various actions recently such as changing its dividend policy. In order to strengthen the management of this business and increase the corporate value of the entire Sony Group, We have decided to make it into a wholly owned subsidiary. This is because we believe that rather than maintaining an independent source of capital in the form of a listed subsidiary, which brings with it certain restrictions, it would be better to prioritize swift and nimble decision making and increase management optionality so as to pursue strategies that are tailored to each business and synergies across the Sony Group. Moreover, the Financial Services business has a stable business platform in joining this business because it can contribute to the stability of managing the Sony Group. Now I would like to discuss the state of state and direction of each of our businesses. First is the game and network services segment. At a time when people are voluntarily not going outside, demand for digital entertainment such as games is increasing globally. In this environment, PlayStation users have increased significantly. As an example, subscribers to our TS plus subscription service increased by 2,700,000 over the course of the 3 months of Q4 of the previous fiscal year. As of the end of March of this year, the total number of subscribers reached 41,500,000. It is important for us to maintain and expand this increased engagement going forward. One way to do that will be for Sony to further revolutionize the game experience for users by launching the PlayStation 5, which is scheduled for the holiday season of this calendar year. In order to further enhance the sense of immersion in games, we expect to improve not just the resolution, but the speed of games. For example, through a custom designed high speed SSD, we plan to realize game data processing speeds that are approximately 100x faster than PS4. Game load times should be much shorter, and players should be able to move through immense game worlds in almost an instant. And this should enable us to provide users game experiences that are unbroken in their immersion. In addition, to create games that provide players more of accessory experience than ever before, we plan to revolutionize the controller. For example, by installing haptic feedback, we aim to create the feeling of heaviness when a car passes over a muddy road. And by installing adaptive triggers, we plan to create a sensation of tautness when a bow is pulled back. These realistic sensations should bring further excitement to games, and sound is also an important part of immersion. By installing a customized 3 d audio processing unit in PS5, we have made it possible to deliver diverse and sophisticated 3 d audio experiences. Players can experience sound that moves from a front to behind, above to below and all around them. By combining speed, haptics and sound, we can further improve on the wonderful experience available on PS4, making the PS5 a truly next generation console by providing game experiences that were not possible before. Games for the PS5 that deliver this new game experience are being made by both first and third party developers, and we plan to introduce a compelling lineup of titles soon. At PlayStation, we believe consoles provide users game expenses that are immersive, while cloud gaming provides users with game experiences that are seamless and can be enjoyed anytime and anywhere, and we will provide you with both types of experience going forward. PlayStation Now is a cloud gaming service that Sony began earlier than any other company back in 2014. By changing the price and strengthening our catalog of games, including the addition of any AAA titles, we have expanded this service into one that has over 2,200,000 paying subscribers as of the end of this April. Using the same streaming technology, our remote play functionality enables users to play games on their PlayStations anytime and anywhere at no additional cost. And since the rollout of this functionality on iOS and Android, users have increased almost 2.5 times. Music is a business that is expected to grow steadily due to the strengthening of our music publishing business through the acquisitions acquisition of EMI Music Publishing and the growth of the streaming market. Meanwhile, competition in the industry for artists and catalogs is becoming more intense. In the overseas music business, the Sony Music Group, which combines recorded music and music publishing, was established in August last year With a vision to become the most talent friendly music company, the label and publishing teams are working together to support artists from all directions. In the Japanese music business, which has created hits in diverse areas of IP such as music, anime and character merchandising, artist management is also an area that will be enhanced. In the summer of last year, we established Orchard Japan to support the discovery and development of indie artists and the overseas distribution of domestic Japanese artists. Next is the Pictures segment. At a time when DTC services are being launched one after another and the demand for content has increased even more than before, Sony Pictures is investing in the development of owned IP and the strengthening of its creative capacity. It has been making films using the Sony Pictures universe of Marvel characters that have performed well in recent years. It plans to make movies and TV shows based on IP from PlayStation games in the future. It has reactivated IPs it already owns. And Sony Pictures Animation is continuing to make animated films despite the current difficult environment. And we aim to continue to produce superb video entertainment in these diverse genres. At the same time, the impact the coronavirus is having on the video entertainment industry is extremely large. Along with the creative community and our supply chain partners such as exhibitors, we plan to thoroughly assess how consumption of video content will change in the future and adapt to those changes accordingly. Now I would like to talk about anime, which stands our game, music and picture segments and is an IP genre around which fans form an extremely strong community. The global market for Japanese anime content has grown about 1.5 times over the past 5 years, and the main driver of this growth is sales outside of Japan, which currently accounts for nearly half of the market. Sony is a global entertainment company headquartered in Japan, and we want to contribute to delivering Japanese anime to fans all over the world through our proprietary anime DTC services such as SPEs for animation. Anime and games have a high affinity in terms of the customer base, and we plan to further strengthen efforts such as the promotion of animation on the PlayStation Network. In terms of content production, Aniplex has created the Demon Slayer Kimetsu no Yaiba anime, which has now become a hit that can be called a social phenomenon, and it is developing a mobile game and a PS4 game based on this IP. As part of the overseas expansion of anime IP, we have formed a capital and business alliance mainly in the anime and game fields with Bilibili, a company with whom we already collaborate to distribute FateGrand Order in China. Regarding digital entertainment in China, where growth is expected, we will strive to strengthen a wide range of relationships with local companies in anime, games and music. The electronics products that Sony has introduced the world since their founding are the key elements that has built the Sony brand. The EP and S segment will inherit the Sony Corporation company name and will work to increase its value. In the area of electronics, we are focused on high value added products. We will continue to deliver products and services that deliver reality and real time through sound, video and communication technologies, connecting creators to users. In addition to reality and real time, we recognize the need is increasing for solutions that connect people to people and people to things remotely due to the coronavirus crisis. Here, Sony believes that it can expand into new areas such as acceleration of remote solutions for shooting, relaying and editing technologies originally developed in the broadcasting business and can deliver live music remotely using the solutions that we develop. In the medical business, which supports people, we will strive to contribute to the health of people over the long term by leveraging the imaging, display and mechatronics technologies that we have cultivated over many years. The coronavirus crisis has had a major impact on product demand and supply chain in this segment. We will work to enhance our competitiveness in response to these changes in the environment. In the Imaging and Sensing Solutions business, we are reviewing our capital expenditure plans due to the recent deceleration of smartphone market, but there's no change to our goal of maintaining our global number one position in imaging and gaining the global number one position in sensing. The adoption of sensing solutions for mobile devices that connect people to people is expected to expand, including the adoption of top sensors for smartphones. In addition, we are working on automotive sensing solutions that support people and which are expected to grow over the long term. We believe that image sensors will be key devices in the AI era. So last week, we announced the commercialization of the world's 1st intelligent vision sensor with AI processing functionality. Today, we jointly announced a new collaboration that will bring together Sony's image and sensing solutions technology with Microsoft Azure to provide value added AI solutions for enterprise customers across industries. In this area, we plan to take advantage of a world leading sacking technology to diversify the range of data that can be captured data from data that is viewed by human beings to data that is used by machines to learn and make decisions. And that will enable the use of data across numerous applications. Further, in the AI space, we've established Sony AI as subsidiary comprised of a group of the world's top level AI researchers and engineers. We plan to advance AI technology in fields that only Sony can, such as games and imaging and sensing and in new areas. As I said at the beginning, financial services is a business that supports people whose hearts we aim to move, and it is a business that contributes to the economic assurance of individuals and families. It is also Sony's original D2C business in the service business space and that utilizes the Sony brand. Going forward, the management structure of Sony Financial Holdings will be strengthened. After making the Financial Services business a wholly owned part of the Sony Group of Companies, we plan to take various actions such as further increasing the value of life planners who constitute the core value of the life insurance business, which is the center of the business. Moreover, we aim to create even more synergies through by, among others, leveraging Sony's technologies as we have done before. And today, I have spoken about these points. As I mentioned at the beginning, Sony's social mission is to create and deliver emotion. For people to be connected through emotion, it is necessary for people, society and the global environment to be healthy. At Sony, we are taking various steps to address the environment, beginning with contribution to the future of mobility, which will help reduce footprint on environment in the future. In response to the current global issue of the new coronavirus, we launched a $100,000,000 global relief fund to support the medical, education and creative communities. As part of the support we provided through this fund, we are collaborating with M3 to contribute to their front lines of medical care. We are supporting the production of ventilators and providing face shields for medical sites. We are assisting children whose access to education is constrained by providing free of charge educational programming kits. And we are providing support to artists and game developers who are facing difficulties. In addition, artists and creators who have close relationships with Sony appealing to their fans on their own initiative to promote behavioral change and social solidarity. Going forward, Sony will continue to contribute to people, society and planet through its business operations as well as various social support activities. Thank you for your attention.