Sony Group Representative Executive Officer, President, COO and CFO Hiroki Totoki (left) and Representative Executive Officer, Chairman and CEO Kenichiro Yoshida, answering questions from reporters at the FY2023 Management Policy Briefing.
On May 18, the Sony Group (hereafter, Sony G) held a management policy briefing for fiscal 2023. As of April 1, the company has just appointed Hiroki Totoki as President and COO (Chief Operating Officer) and CFO, and Kenichiro Yoshida as Chairman and CEO.
In other words, it is also the year of the change from “Yoshida Sony to Tenji Sony”.
The key is “entertainment” and “capital strategy”. It was announced that the financial business, including Sony Bank, will raise funds by relisting on the stock market in the next two to three years.
What is the future of the company? Let’s find out from the two comments.
The entertainment area is half of the whole.Long-term investment supports Sony
At the beginning, Chairman Yoshida stood on the podium.
As mentioned at the beginning, the president of Sony G has already changed from Mr. Yoshida to Mr. Totoki.
However, this time’s recital is the style of “Yoshida, 10 o’clock”. The management policy also had the impression that it was basically an extension of the previous policy.
However, the roles of the two people who stood in the explanation were different. My impression is that Chairman Yoshida spoke of a vision of sorts, and Totoki spoke of a capital strategy to realize it.
Chairman Yoshida was the first to step onto the podium.
Chairman Yoshida lists “sound” and “management from a long-term perspective” as key words.
Chairman Yoshida emphasized the importance of a long-term strategy.
“Sony’s founding business was sound. From there, we expanded the world of entertainment,” says Chairman Yoshida.
Until the 1980s, he focused on music, then expanded to film = video with the acquisition of Universal Pictures, and in the 1990s he entered the world of games with PlayStation.
As a result, the entertainment business now earns more than half of Sony G’s revenue. But there was a long way to go and a long-term investment plan.
More than half of the Sony Group’s revenue comes from its entertainment business.
In recent years, the expansion of investment in animation following the acquisition of American animation distribution company “Crunchyroll” has become a source of growth.
As for the financial business, he quoted the words of Sony founder Akio Morita, who said, “It takes 20 years to make a profit.”
Mr. Yoshida looks back on the words of the founder.
In terms of technology, the company’sInvestment in image sensors that have become the main earnerto emphasize
The company has invested 1 trillion yen in the last five years. It is used not only in smartphones, but also in the “α” of digital cameras. It is the so-called core technology of the electronics field.
Chairman Yoshida shaking hands with Mr. NPSingh, Managing Director and CEO of Sony Pictures Networks India.
by regionEmphasizes again its focus on the Indian market. “It’s a creative region that makes the world’s best movies. Half of the population is young, under the age of 30, and we can expect an expansion in anime and games.”(Chairman Yoshida) and showed recognition as a region with remarkable growth.
He also explained the importance of a long-term outlook for environmental measures as follows.
“In 2010, our company launched a plan to aim for zero environmental impact as ‘Road to Zero.’ At that time, neither I nor Totoki were still working at Sony headquarters, but at Sonnet.
At that time, the head office was in the red with a deficit of 260 billion yen. I once wondered, “Is there any meaning in discussing this if my (his achievements) are unsustainable?”
However, I am reconsidering that idea now. It was meaningful to work on it over the long term.” (Chairman Yoshida)
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PS5 solves product shortages and expands earnings through aggressive IP investment
President Totoki explained the specifics.
President Totoki proceeded with explanations by business as a more concrete theory.Games and entertainment IP (intellectual property), and financialis.
Regarding games, President Totoki says, “The first priority is to increase engagement on the PlayStation 5.” Since the end of the year, the shipment volume has expanded rapidly, and in fiscal 2022, 6.3 million units were shipped.
“Currently, we are still producing at full capacity,” said President Totoki.
In addition, IP collaboration among entertainment businesses such as music, movies, animation, and games will be strengthened. PlayStation Studio games such as “Gran Turismo” and “Twisted Metal” will also be made into movies this year. We plan to actively invest in these IPs in the future.
Financial business to be relisted in preparation for “investment in a different dimension”
Sony Financial Group consisting of Sony Life, Sony Assurance, Sony Bank &.
And the financial business was the biggest topic this time, and the question from the reporters was concentrated.
Currently, under the umbrella of Sony Group, the Sony Financial Group operates financial businesses such as “Sony Life,” “Sony Bank,” and “Sony Assurance.”
ButWe will spin off this business with the aim of listing in two to three years.was announced.
The purpose is “strategic fundraising.”
“For IP investment and semiconductors, there is a possibility that investments on a different dimension than before will be required in the future.
Sony G is a large group as a group, but looking at individual businesses,Lack of global opponents and scale.The scale of the business must be expanded to match the scaleProbably.” (President Totoki)
For that reason, we will raise funds by listing the financial business, which is a stable business.
President Totoki looks back on the 2020 acquisition of a subsidiary.
However, Sony made a tender offer for the shares of Sony Financial Group in 2020 and made it a wholly owned subsidiary in September. Once delisted, it will be listed again.
President Totoki explains this trend as follows.
“The fiscal 2020 tax reform has made it possible to do a partial spin-off.
In order to utilize this system, the value (of the Sony Financial Group) within the group will not change, nor will the brand name change.” (President Totoki)
Regarding the contradiction with the 2020 acquisition, please refer to “The one for 2020 is “Parent and Child Listed*The purpose is to eliminateThe purpose was to strengthen governance and management capabilities. Now that that purpose has been achieved, another way of thinking will emerge,” said President Totoki.
After all, this story can be said to be preparation for the “long-term strategy” mentioned at the beginning.
* Parent-subsidiary listing: A state in which the parent company and the subsidiary are listed at the same time. It is often pointed out that there are problems with corporate governance.
2023 economy is ‘uneasy’, but cameras are doing well
Sony G also has a severe forecast for the semiconductor business, including the field of “image sensors” for smartphones, in which it has a certain market share.
On the other hand, regarding the current situation,
“There is a mixture of expectations and concerns about the economics of FY2023.Especially for image sensors for smartphones, the distribution inventory level in China is high, and the global situation is not optimistic.” (President Totoki)
and make rigorous predictions.
On the other hand, he also expressed the view that “there are chances to make a leap at this time.”
“It is important to make decisions about when to reinforce facilities. It is also necessary to strategically hold large inventories and reduce capital investment.” (President Totoki)
Electronics products such as TVs and smartphones are also expected to face a difficult fiscal year 2023 due to front-loaded demand due to the impact of the corona crisis.We have no plans to increase the number of TVs and smartphones.”.
However, President Totoki said, “Cameras are performing well due to the growth in demand after the COVID-19 pandemic.”
“Regarding products, we would like to specialize in input creation, although it is not an area that pursues numbers.” (Chairman Yoshida)
“While cameras and other products are doing well, we would like to expand B2B areas such as sports tech and medical, which are new areas,” (President Totoki).
In other words, Sony G’s current thinking is to connect image sensors developed with long-term investment to areas related to content that will sell over the long term, medical care, and so on.
(Edited by Yutaro Kobayashi)
Source: BusinessInsider
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