Sony Sets Pictures, Games Among Growth Drivers; Plans Aggressive Investment

Sony laid out its mid-term corporate strategy for 2015-2017 this afternoon in Tokyo, setting a target of more than 10% return on equity, and operating income of over 500B yen ($4.2B) for the fiscal year 2017. This is chief executive Kazuo Hirai’s second mid-term plan since he took over in 2012 and includes an emphasis on profitability rather than volume, and greater autonomy in the business units. The Pictures division has been placed in the growth driver column, along with devices, games, network services and music as Sony continues to benefit from the popularity of its PlayStation consoles with 64M active monthly users. In these areas, Sony says it will implement growth measures and engage in “aggressive” capital investment.

Specifically in the film unit, Sony is talking a lot about TV. The division will focus on “expanding the audience for its Media Networks business by growing ratings and increasing its channel offering, strengthening its television production business, and improving margins in its motion picture business.”

The cyberattack that hit the film division at the end of last year, will have “no impact on the mid-range plan,” Hirai said today. He called the incident a “despicable attack” and said through a translator, “We are learning a lesson from this and although we can’t be perfect, we would like to defend and protect our system.”

Earlier this month, the company downplayed the long-term impact of the hack attack and trimmed its loss forecast to $1.4B, boosted by higher-than-expected sales of its image sensors and PlayStation consoles. Sony Pictures benefited from a weakening yen to show a provisional profit of $20M, but the studio also saw a 90% drop in operating income compared to the same period in 2013 due to the hacking and lower theatrical revenue. Sony has delayed the announcement of its earnings for the October-December quarter to March.

If the last three years were about transforming Sony, the second mid-range plan is about “profit generation and investment for growth,” Hirai said. Sony will spin out its video-and-sound business into a separate company in October and begin preparations for other as-yet undefined spin-offs.

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