Sony Group Corp

Thank you very much for coming to attend this meeting despite of your busy schedule. Now we'd like to start Sony Group Corporation's Corporate Strategy and Earnings Announcement presentation 2025. I'm going to serve as MC. My name is Ishii from PR department. Thank you very much. First, I would like to invite President and CEO of Sony Group Corporation, Mr. Todoki. He'll be talking about the corporate strategy for Sony Group Corporation. Then I will invite Ms. Tao and Mr. Yamada. They'll be talking about FY24 earnings and results and FY25 results forecast. And then after that, we are going to entertain questions. We are expecting the total of 90 minutes to complete the entire session. Todoki-san, please, the floor is yours.

Ladies and gentlemen, thank you very much for coming. Today, first, I would like to talk about, I'd like to first take a mid to long-term look at Tony Group's business and our overall strategic direction. Over the last several years, our business direction has shifted significantly towards entertainment. The decision to lean more heavily into this space was driven, of course, by the strength and growth of our entertainment businesses. but it also was driven by the power of entertainment to move people and to fill the world with emotion, which is, of course, at the heart of Sunny Group's purpose. In recent years, we have leaned heavily into expanding content in each category, such as games, music, film, and TV programs. IP expansion across our various businesses, strategic investments in content, music catalogs, and growth areas such as anime, and the development and use of innovative technologies to support creation. All of which has been transformative for the Sony Group, and it has led to very strong results disclosed today. Looking at those results, it is worth noting that our entertainment business accounts for roughly 61% of our consolidated sales, and we have seen the resilience of entertainment businesses during economic downturn, like during the COVID-19 pandemic. Our efforts in entertainment content and creation technologies are working steadily. and our priorities and commitment to growing these categories remain unchanged. Building on our momentum and results to date and working with a laser-like focus to realize our long-term creative entertainment vision will be at the core of our corporate strategies moving forward. Launched last year, our long-term creative entertainment vision illustrates how we want to deliver Kondo through creativity and technology. A vision of a future that will create infinite realities together with creators, partners, and employees, and through synergies among our various businesses. Let's take a look at the entertainment businesses that will be integral to making our creative entertainment vision a reality. First, the game and network services segment, which is doing extremely well. The expansion of PlayStation 5, both in the number of active users and per user spend, is expected to continue and drive steady profit. As we look ahead, We will seek to capitalize on our momentum to drive sustainable, profitable growth and invest thoughtfully to create the future of play. We expect to see stable growth in revenue and profits from network businesses due to the growth of monthly active users, corresponding to the further and steady expansion of the installed base. Specifically, we will seek higher revenue and profits from PlayStation Plus and maximize ARPU average revenue per user of... PlayStation Store through the personalization and by pricing optimization. In this fiscal year, we anticipate further growth in studio businesses through a broader user base driven by new title launches from narrative-based single-player titles like Ghost of Yotei and live service games such as Marathon, as well as continuing success of already-launched catalog contents and ongoing live services titles like Helldivers 2 and Destiny 2. We also plan to focus on stronger profitable peripherals, such as PlayStation Portal, where our recently introduced beta cloud streaming feature allows users to enjoy their games on the go more easily. In the music segment, we remain focused on strengthening our position in the global music market while continuing to improve profitability. Maintaining strong relationships with digital streaming platforms, Sony Music Group has had great success enhancing its core business value proposition, which includes repertoire centers in major markets around the world, robust label and artist services, tailored service to independent artists and DIY distribution, and music publishing. In FY24, our music business in Japan notably enjoyed great success in bringing Japanese artists such as Uesobi to the global market and plan to continue to build on this area. As we look ahead in this segment, we plan to continue to strengthen these important ecosystems and focus on growing organically and via deliberate acquisitions throughout our business and in high-growth markets such as Latin America, India, and other Asian countries. Exploring additional strategic investments in key areas of business as well as music catalogs to expand revenue opportunities and increase asset value. Discovering and nurturing talent as well as building and strengthening relationships with local independent labels and artists to enhance our presence. Servicing fans who passionately support specific artists and content. and expanding IP through biopics and documentaries involving Sony music artists as well as live events. And finally, we will continue exploring the use of cutting-edge technologies such as AI in ways that create value and also protect the rights of our artists. The film industry overall continues to recover from issues such as the COVID-19 and strike-related shutdowns over the last few years, which impacted the number of film and TV productions. Our film business, like the rest of Hollywood, continues to rebuild from these events and has some new titles on the horizon, as was presented at the most recent CinemaCon event. In 2026, Sony Pictures Entertainment expects to see the release of the latest Spider-Man movie, Spider-Man Brand New Day, as well as new film adaptation of the Capcom game Resident Evil and the latest Jumanji film. We expect Trump IP lineups to continue, including the final film in the Spider-Verse animated trilogy, Spider-Man Beyond the Spider-Verse in 2027, and The Beatles, a four-film cinematic event directed by Sam Mendes with exclusively hit theaters in 2028. Anime is also expected to be a significant growth driver for the picture segment as the anime-focused streaming service Crunchyroll steadily expands its paid subscribers and services. But more broadly, as we look ahead, we see SBE as a central hub for many of the synergistic cross-company collaborations that are central to our creative entertainment vision. In recent years, we have seen their value and potential well-executed cross-business collaborations across the Sony Group companies. Examples include PlayStation Productions, adaptation of our outstanding game IPs such as Uncharted and The Last of Us to film and television, with over 10 titles currently in production. or the many collaborations among Sony music artists and our other businesses and among our Sony Technologies and many other creative businesses. As we look ahead, we will lean into broader collaborations in anime, and through our engagement platform initiative, we will aim to create opportunities and synergies by connecting fan communities within and outside Sony across various entertainment sectors and in our location-based entertainment efforts.

Anime continues to be a major area which leads the growth for the Sony Group across many parts of our business. At the heart of everything is anime's vibrant creator and fan communities, which Crunchyroll will be celebrating later this month at its 2025 Crunchyroll Anime Awards in Tokyo on the 25th. Building on our already successful Aniplex and Crunchyroll businesses, we have moved forward with several initiatives over the last several months to expand our reach in anime and strengthen content development, including an upcoming anime series adaptation of Sony Interactive Entertainment's hit IP, Ghost of Tsushima Legends, to be produced in collaboration with PlayStation Productions, Aniplex, Crunchyroll, and Sony Music Entertainment. The establishment of Hayate Inc., a company jointly funded by Aniplex and Crunchyroll to plan and produce high-quality anime works for global anime fans, a strategic capital and business alliance formed with Kadokawa Corporation to promote further media mixes and global expansion of both companies' IP, and an establishment of a strategic partnership with brand Bandai Namco Holdings Inc. and Web3 startup Gaudi Inc., And as we look ahead, the anime industry's market size is expected to continue growing at a KGAR in the high single digits from 2023 to 2030, especially with the anime streaming market, which is Crunchyroll's core business that is expected to grow at a KGAR in the high 10% range by 2030. In this market environment, we also plan to further accelerate Crunchyroll's growth by enhancing service offerings and acquiring users. Our strategy is to broaden services offered to anime fans, which include e-commerce for anime merchandise, a mobile game library service, and manga offerings. To further expand Crunchyroll's user base, which has now grown to over 17 million paid members as of March 31, 2025, we are closely collaborating with PlayStation Network, which has the largest monthly active users in the Sony Group. Specifically, since February, new customers and renewing customers can smoothly register for Crunchyroll's paid services from PS5, which we expect to contribute further increases in paid membership. We will leverage PlayStation Network's monetization capabilities to enhance Crunchyroll's service. This back-end integration is part of the Engagement Platform Initiative we introduced last year, which aims to create business opportunities and synergies by connecting diverse fan communities, both within and outside Sony, across various entertainment sectors. Based on the robust network infrastructure of PlayStation Network, we will utilize core back-end functions such as payment, data infrastructure, and security across various network services within the Sony Group, aiming to build a new platform that connects users and creators by meeting fans' interests and desires. Alongside strengthening fan engagement, we also plan to enhance the development and operation of a common infrastructure that can be utilized across the Sony Group for better monetization. This will allow each company within the Group to focus resources on enhancing competitiveness and differentiation in their respective businesses, aiming for business growth through expanding and deepening customer engagement. Looking further into the future, we are at early stages in exploring the potentials of LBE to maximize the value of the IP across various entertainment sectors. Aspirational cross-business collaborative efforts to date that merge IP and technology to create new experiences have all illustrated the growth potential for future. Up to this point, I have discussed growth and strategies within our entertainment businesses, but our innovative technology is also critically important for realizing our creative entertainment vision. In the entertainment technology and services segment, we have shifted the focus of our business towards those that create content. Building on the success of Alpha, we are expanding our imaging ecosystem as a growth driver. This includes broadening offerings of tools and solutions for cinematographers, live streaming and remote workflow for industry leading creators and image authenticity technologies for news agencies. In addition, we also plan to continue to focus on technologies in growth areas such as sports entertainment. We acquired King Tracks last year to enhance our capabilities to utilize existing sports data like Hawkeye's officiating and play analysis, and we plan to continue to expand alternative broadcast through sports data and real-time content creation technology that enhance fan engagement and attract new audiences. To support the leap in entertainment, we also plan to continue to revolutionize content creation technology. Key solutions include spatial content creation support system and real-time VFX and 360 virtual mixing environment, which is now expanding into sound creation for films, games, and animation. Furthermore, in the imaging and sensing solution segment, we expect the image sensor as a key device for capturing the real world to enhance the accuracy of content creation and elevate the reality of entertainment experiences to the next level. For mobile image sensors, which is the pillar of the business, we're expecting the ongoing trend towards larger sensor size to continue for the coming few years. The demand for further evolution in image sensor performance such as resolution, noise reduction, dynamic range, and power consumption remains high. We will work to introduce a new generation process in order to accommodate the production of such innovative sensors. Combining this next generation process with sensors, such as the two-layer transistor pixel stacked Trista, we plan to continue delivering more value-added differentiated sensors, thereby meeting our customers' expectations. As we aim for further growth of the INSS business in these ways, a major challenge will be controlling the necessary capital investments at an appropriate level and enhancing it investment efficiency. To this end, we plan to explore a range of options. Beyond the mobile sensor business, we plan to continue generating stable profit through cameras and sensors for industrial equipment and social infrastructure. For businesses with future growth potential, such as automotive sensors, we aim for mid- to long-term growth under optimal development costs and frameworks, while carefully assessing the speed of market growth and business potential. In conclusion, the diversity of our business and our people will be of paramount importance in realizing our creative environment vision. Sony has about 110,000 employees actively working in various companies and organizations around the world, creating an environment of diverse and varied viewpoints, ideas, and strategies. The synergies generated by organically connecting diverse businesses and people are the source of Sony's unique competitive advantage. As we look ahead, we will continue to evolve, unleash the creativity of creators, and strive for a world of infinite realities, entertainment, and excitement. Thank you very much.