Contributing to Creativity through Management with a Long-term View,
and Achieving Growth through Evolution of Diversity
- Sony Corporate Strategy Meeting 2023 -
Sony held the "Corporate Strategy Meeting 2023" at its headquarters in Shinagawa, Tokyo on May 18. Kenichiro Yoshida, Chairman and CEO, spoke on the theme of "Contributing to Creativity through Management with a Long-term View, and Achieving Growth through Evolution of Diversity." In his presentation he provided an overview of Sony's businesses, which originated in sound and have expanded through management from a long-term perspective, and introduced a number of initiatives related to the pursuit of Kando centered on Sony's Purpose. President, COO and CFO Hiroki Totoki also took the stage and underlined how Sony aims to achieve further growth by continuing to evolve the diversity of its people and businesses, and explained the growth strategies for each business. In this blog we will share key points from the speeches at Sony's Corporate Strategy Meeting.
The expansion of Sony's business that originated in sound and long-term management perspective
Yoshida began his speech at the Corporate Strategy Meeting by explaining how Sony's business spread from the origins of sound, and spoke on management from a long-term perspective.
The company name and brand "SONY" is derived from the Latin word "SONUS," meaning sound. Sony's electronics business expanded from products such as the tape recorder, transistor radio and Walkman. Sony's entry into the music business in 1968 was the starting point for its expansion into other entertainment businesses, including pictures and games. Semiconductors started from components called transistors, which were key to miniaturizing radios. These businesses have their origin in sound, and Sony has expanded them through management from a long-term perspective.
Yoshida also pointed to Sony's founders as the starting point for the company's long-term perspective, and said that the decision by co-founder Akio Morita to enter into the life insurance business was symbolic of this approach.
Pursuit of Kando centered on Purpose
Next, as examples of initiatives taken in recent years to advance Sony's pursuit of Kando centered on its Purpose, Yoshida touched on efforts to reorganize the Group architecture, focus on creativity, and expand the Kando space.
In 2020, Sony announced a restructuring of its Group architecture, and Yoshida reflected that this restructuring boosted synergies between businesses and content IP.
Enhancement of creativity
Yoshida stated, "We have focused on getting closer to creators and creating Kando, and at the same time we have invested in the ability to create Kando," and explained that Sony has invested 1 trillion yen over the past five years in strengthening content IP. He added, "Collaboration with partners is important in delivering our creators' works to more users and `filling the world with emotion,'" and provided the television adaptation of the PlayStation® game The Last of Us as an example. Yoshida emphasized how the show being a mega-hit boosted sales of The Last of Us game software, as well as the number of streams played of Sony Music Publishing's song used in the show. He noted that in this way, in recent years, Sony's group collaboration in content IP has become more active, leading to the strengthening of creativity. He added that "DTC services are initiatives to learn from users, and at the same time aim to contribute to creators," highlighting that Crunchyroll, a DTC service specializing in the anime "Community of Interest" feeds back viewership data to creators. "Under the long-term vision of expanding the number of people directly connected to the Sony Group to 1 billion people, I would like for us to continue delivering Kando in specific areas such as anime, games, and in India, and make use of them in our creations," said Yoshida.
Stating Sony's aim to "become the brand chosen by creators around the world who create Kando," Yoshida then focused on initiatives to strengthen creation in the area of products. He introduced a number of technologies, including the "VENICE" cinema camera series, which is widely used not only by Sony Pictures but by other Hollywood studios; Virtual Production, which supports creators' new visual expressions with technology; and Hawk-Eye Innovations, which contributes to the realm of sports excitement. Touching on CMOS image sensors, that Sony positions as "creation semiconductors that create Kando," he explained that over the past five years Sony has invested more than 1 trillion yen in this area, and will continue to focus on key devices that support creation moving forward.
Expansion of Kando space
"As we pursue Kando, we are also working on the challenge from a long-term perspective to expand the field of Kando from real space into virtual space and the mobility space."
Yoshida explained that the virtual space created by game technology is a place for creation as well as a place where people can connect with each other, and stated that Sony is working on initiatives in live service games, live music performances, and sports fan engagement. He introduced technologies such as VR, which leads people to virtual worlds, "mocopi," which makes creation easy and fun, and a skeletal tracking system that reproduces the real movements of athletes, as examples of Sony's initiatives to seamlessly connect the virtual and physical worlds. Furthermore, he raised "Gran Turismo Sophy" as an example of connecting the real and the virtual through AI, which is itself positioned as an important technology that expands the creativity of creators.
Yoshida also pointed to Sony Honda Mobility's AFEELA as an initiative in the Kando space of mobility.
He explained that in addition to imaging and sensing technologies, as well as communications and networks technologies, Sony is collaborating with Epic Games to purse new entertainment possibilities using the Unreal Engine.
He explained that going forward, Sony would like to extend the field of Kando to outer space, and is conducting exploration activities to bring emotional experiences through the nano-satellite "EYE."
A challenge in India, a place of creativity
Yoshida then introduced India as an example of a place where Sony has been working to spread Kando since the 1980s.
Sony India has been providing products which create and deliver Kando, Sony Music Entertainment India actively promotes local creation, and Sony Pictures Networks India delivers Kando, for instance through its media networks business and by providing streaming content dubbed in Hindi on Crunchyroll.
Looking to the future, Yoshida mentioned the expected merger of Sony Pictures Networks India and Zee Entertainment Enterprises Ltd. and expressed his expectations for continued evolution in local creation in India, saying, "We would like to further expand creations rooted in local culture."
N.P. Singh, CEO of Sony Pictures Networks India, then took the stage and introduced the growth and potential of the Indian market and the many initiatives underway, particularly in the entertainment domain. He stated, "Our efforts in India are aligned with Sony's Purpose of `filling the world with emotion,' and we strive to push the boundaries and go beyond what is expected."
Growth strategies for each business
President, COO and CFO Totoki then took the stage and opened his speech by reporting on the progresses of the 4th mid-range plan, and stated for the current fiscal year, the final year of the MRP, "We will promote business operations with a focus on immediate risk management to ensure the achievement of our KPI."
Next, he explained the growth strategies of each business segment. For Game & Network Services, he stated the importance of increasing the number of active users through the growth and expansion of PlayStation®5 and the strengthening of our first party game portfolio. In Music, he outlined measures to outpace market growth in streaming and emerging media. And in the Pictures segment, he explained the strategy to maximize IP value over the long term, including leveraging Sony's strengths as a strategic supplier and maintaining focus on theatrical releases.
Totoki also shared examples of synergies between games, music and pictures, including Gran Turismo and Twisted Metal, as well as collaboration between Aniplex, the anime production company behind titles such as "Demon Slayer: Kimetsu no Yaiba," and Crunchyroll to maximize the value of anime IP globally while also increasing the number of anime fans. He also introduced initiatives in the area of location-based entertainment leveraging Sony's film and anime IP, including "Columbia Pictures Aquaverse," a water park in Thailand based on various Columbia Pictures IP; a new ride in Spain that takes people through the world of the movie Uncharted; and "THE TOKYO MATRIX," an indoor interactive attraction based on Aniplex's "Sword Art Online" series. Emphasizing that these are all measures to maximize content IP, Totoki expressed his expectations for further growth in this area.
Totoki then explained that in the Entertainment, Technology & Services segment, Sony aims to expand the technology and services it provides to a wide range of creators. He stated that in Imaging & Sensing Solutions, in order to strengthen its No. 1 position in image sensors, Sony aims to continue to achieve growth driven by the shift to larger size and higher performance CMOS image sensors for smartphones, and expand its market share in automotive and infrastructure applications. In terms of the Financial Services segment, he touched on the importance reinforcing branding, leveraging the Group's infrastructure, and investing in growth, before stating that Sony has decided to explore a partial spin-off based on the premise of the listing of the shares of Sony Financial Group Inc. He explained that Sony would still maintain less than 20% equity in the company, and that the names and brands of each SFG company, and their position within the Sony Group, would remain unchanged, adding that Sony will conduct a detailed assessment of the partial spin-off leading up to the end of the current fiscal year, giving consideration to executing it within the next two to three years.
Totoki then emphasized the importance he places on evolving diversity, and introduced some of the measures Sony is engaging in both inside and outside the company to drive further people diversity. He stated that, "I would like to see the diverse individuals brought together through these measures share their knowledge and activities beyond boundaries, evolve our business diversity, and connect organically to further grow and enhance the long-term value of the Sony Group".
Creating Kando with creators and contributing to expanding it to the world
Returning to the stage, Yoshida referenced Sony's "Road to Zero" long-term environmental plan. Started 13 years ago, this aims to achieve a net zero environmental impact and create opportunities to foster feelings toward the Earth, so that the "world" stated in Sony's Purpose can be sustainable.
He concluded his speech by stating, "There is no end to the Purpose of `filling the world with emotion, through the power of creativity and technology.' Going forward, we will continue to create Kando with creators and contribute to expanding it to the world."
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