Sony: PlayStation Business Is the “Largest Growth Driver” for Mid-Range Corporate Plans
Sony just released the documentation from the company’s Corporate Strategy Meeting, being held in Tokyo, Japan.
The documents included a few interesting pieces of information about the performance and outlook of the Game & Network segment of the company, which includes the PlayStation business.
- Sony considers the Game and Network Services segment the largest growth driver of its mid-range corporate plan, and as of May 2016, PlayStation 4 has cumulatively sold through more than 40 million units to customers worldwide, continuing its rapid growth and expansion as the fastest-selling console in PlayStation history. The platform as a whole, including network services, is receiving widespread customer acclaim, and profit growth is exceeding the expectations held when the mid-range corporate plan was initially formed.
- The network services business is also continuing to grow, achieving a 50% increase in sales in FY2015 compared to the previous year. The user base is expanding, driven in particular by the PlayStation Plus membership service, and Sony has continued to engage in investment towards further growth.
- Sony’s new PlayStation VR virtual reality system is scheduled to launch in October 2016. Sony has identified virtual reality as an area it believes offers great future potential for the Sony Group in games, as well as other areas. Virtual reality is an application in which Sony believes it can leverage its technological strengths in areas such as digital imaging, content acquisition and production, as well as its entertainment assets. The Company is accordingly engaging with virtual reality across the Sony Group, and also considering the possibility of cultivating it as a new business domain.
The mid-range corporate plan mentioned above finds its foundation in the following key points:
- Business management that emphasizes profitability, without necessarily pursuing volume.
- Business management that grants each business unit greater autonomy and mandates a focus on shareholder value.
- Clearly defined positioning of each business within a broader business portfolio perspective.
Below you can read the slides related to the PlayStation business, with a substantial increase of the targets for the fiscal year 2017 from the previous prediction. Now the company predicts sales to be between 1,800 billion yen and 1,900 billion yen, and operating income margin between 8% and 10%.
Only games and music have been revised upwards, while every other business has its financial targets sliced down to size.
Last, but not least, we can give a look at the business strategy for the whole company, Sony intends to launch the following initiatives:
- Based on its mission of being a company that provides customers with kando, and inspires and fulfills their curiosity, Sony will continue to target growth by developing the three pillars of its business—electronics, entertainment and financial services—and creating new business opportunities in these business domains.
- Sony believes its strength lies in its ability to develop products that exist at the closest point of contact with its customers and resonate with them at an emotional level, and to place them in the hands of customers around the world. In other words, Sony connects with its customers at the “last one inch” of the user experience.
- Sony intends to accelerate efforts to leverage its strengths in new business areas, based on the dual principles of its mission to provide customers with kando, and the pursuit of recurring revenue business models that generate sustainable business and profit growth.
- While continuing to proceed with the new business creation initiatives in which Sony is currently engaged, the Company will aim to combine its existing strengths in areas such as video and audio technologies, sensors and mechatronics, with artificial intelligence (AI), robotics, communications and other elements, and by doing so offer new proposals at the “last one inch” across all types of living spaces.
- In addition to initiatives already under way, such as the drone-based enterprise solutions that have been launched by Aerosense Inc., Sony’s joint venture with ZMP Inc., and the development of a range of Xperia smart products announced earlier this year, Sony has also embarked on the development of 4/5 a robot capable of forming an emotional bond with customers, and able to grow to inspire love and affection. In April 2016 Sony established a new organization in this area that is working towards a business launch. Sony will seek to propose new business models that integrate hardware and services to provide emotionally compelling experiences. In the future, Sony will explore broader business opportunities for its robotics and AI technologies, including applications such as production processes and logistics.
- In order to accelerate R&D in the areas that Sony will focus on going forward, Sony intends to further strengthen its collaboration with leading external researchers and start-up companies, and create a more open ecosystem. As part of these efforts, Sony plans to establish the “Sony Innovation Fund,” a corporate venture capital fund, which is scheduled to launch in July 2016. Having advisors and business incubators actively participate in strategically important businesses will enable Sony to support the growth of companies in which it invests, and also provide opportunities to nurture Sony’s leaders of tomorrow.