Digital Services July, 2006. Why Digital Services are Critical to SPE and Sony Necessary to achieve margin expansion and growth objectives from what are.

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Presentation transcript:

Digital Services July, 2006

Why Digital Services are Critical to SPE and Sony Necessary to achieve margin expansion and growth objectives from what are fundamentally mature businesses Defensive strategy to protect traditional economics, plus an economic opportunity as new medium develops –Consumer time and advertising revenue shifting to new forms of content and channels, away from studio product –By far the best growth prospects among all media categories Provides consumer behavioral insights for marketing, content development and distribution –Consumer use of content expected to be increasingly intertwined with control features (eg – search) and technology Fills the “gap” between hardware and software –Increased market leverage to drive standards (eg – domain) –A hedge/alternative to potential formation of a monopolist (eg – Apple) Potential opportunity to identify new sources of talent early Opportunity to build studio capabilities in emerging areas –Software development –Multi-platform advertising

Potential Objectives for Digital Services Develop a stand-alone, primarily ad supported, revenue business –Potential secondary benefit to SPT ad sales business Distribute SPE content Market SPE content, leveraging direct consumer feedback/data Improve ability to create new forms of content by using direct customer insights Platform to support cross-Sony initiatives (eg – hardware services, Connect) Leverage existing ad business into new medium Identify international opportunities and build on international channel presence

Challenges Today in Realizing Objectives Customer service operational capabilities lacking within Sony/SPE Multiple divisions are currently pursuing Funding commitment for digital services is unclear Responsibility for delivering on digital services objectives unclear, with definable success metrics not yet established Organization is not established to ensure appropriate integration/coordination of service offers, whether acquired or built Sony commitment to SPE digital services not yet clear Links into Sony for SPE digital services are not yet clear

Steps Needed to Enable Realization of Digital Service Objectives Define divisional roles and point person(s) to hold accountable for implementation Define measurable objectives on timing, revenue targets, etc Define potential investment commitment and overall long range plan Obtain NY and Tokyo buy-in as necessary on strategy