Sony IR Day 2018_E - Sony Corporation

Sony IR Day 2018

May 22, 2018

Sony Corporation

 Game & Network Services（G&NS）

3

 Music（SME）

20

 Music（SMEJ）

31

 Pictures

48

 Imaging Products & Solutions（IP&S）  Mobile Communication（MC）

68

 Operation & Sales Platform  Home Entertainment & Sound（HE&S）

98

 Semiconductors

115

Sony IR Day 2018 Game & Network Services Segment May 22, 2018

John (Tsuyoshi) Kodera Business Executive, Sony Corporation President & CEO, Sony Interactive Entertainment

Agenda

Game & Network Services Segment

1. FY2017 Review 2. Strategy from FY2018

Sony IR Day 2018

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Game & Network Services Segment

1. FY2017 Review

Sony IR Day 2018

FY2017 Key Achievements Further expand PlayStation® user base

4

Game & Network Services Segment

Enhance game line-up

Grow PlayStation®Plus paid subscribers PlayStation®Plus paid subscribers

34.2M 26.4M

PlayStation®4

20.8M

79M units

cumulative sales as of Mar 31 2018

PlayStation™Network

80M+ MAU As of Mar 31 2018

PS4 Game Play

800M hrs+/week As of final week of Dec 2017

246M games sold

E/FY15

E/FY16

E/FY17

FY2017 PS4 software unit sales

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Challenges and improvements

Game & Network Services Segment

PlayStation®VR

PlayStation™Vue

ForwardWorks

VR market growth below expectation

Market & future business model remains uncertain

Delays in title development Still in investment phase

Improvements required in spite of steady growth Utilizing these businesses to strengthen user engagement is key

Sony IR Day 2018

FY2017 Operating Profit Variation from FY2016

6

Game & Network Services Segment

(Bil yen) Sales revenue

1,649.8

+18%

1,943.8 177.5

Operating income

135.6

① ②

① Profit improvement from hardware cost down etc. ② Profit growth from software sales and add-on contents including network

③ ④ ⑤

③ Network services growth mainly with PS Plus paid subscribers

④ Increase in SGA to support network sales growth and R&D

⑤ Impact of exchange rates*1 FY2016 Act

FY2017 Act

*1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2017 and comparing them with the previous fiscal year Sony IR Day 2018

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Game & Network Services Segment

2. Strategy from FY2018

Sony IR Day 2018

Strategy from FY2018 Enrich and utilize exclusive titles

8

Game & Network Services Segment

Leverage install base and active user

Grow and improve recurring revenue

PS4 cumulative install base

FY13

FY14 FY15

FY16

FY17

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Strengthen user engagement

Game & Network Services Segment

User engagement

eSports

Balanced game portfolio

F2P

Improve user experience

Variety of game models

Enhance data analytics

IP Franchise

PS VR

PS Vue

Sony IR Day 2018

The virtuous cycle of PlayStation

10

Game & Network Services Segment

Strengthen IP

リカーリング収益の更 なる成長と進化 OUTCOME

Exclusivity Utilize catalog

MAU Platform of Choice

PS Plus Enrich membership

Rich features

Grow revenue

Attractive services

Improve Ecosystem

Retention Cash Conversion Cycle

Cash Flow

２５

Expand user base Increase playtime

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Mitigate the impact of platform lifecycle

Game & Network Services Segment

(Bil yen)

190

O.P. trend

(FY1993〜2018)

• Aim to mitigate the impact of platform lifecycle compared to the past cycle and stabilize profit structure. • Generate cash flow by effectively utilizing 1 trillion yen network business.

93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18

Free Cash flow trend (FY2013〜2017)

5 years cumulative PlayStation® launch

PlayStation®2 launch

PlayStation®4 launch

700 Bil-yen+

PlayStation®3 launch Sony IR Day 2018

FY2018 Operating Profit Variation from FY2017

12

Game & Network Services Segment

(Bil yen) Sales revenue

1,943.8

1,900

Operating income

177.5

190

③ ④ ⑤

① Hardware unit sales decline and cost increase ② Profit growth from game software sales and add-on contents growth including network

③ Network services growth mainly with PS Plus paid subscribers

① ②

④

Increase in R&D and SGA etc.

⑤ Impact of exchange rates*1 FY2017 Act

FY2018 Apr Fct

*1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2018 and comparing them with the previous fiscal year. Sony IR Day 2018

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FY2020 Target

 Sales revenue

Game & Network Services Segment

1,800 Bil-yen

(For Reference)

 Operating Profit

130〜170 Bil-yen O.P trend

(FY1993〜2018, FY2020 Target)

190

(Bil-yen)

170 130

Sony IR Day 2018

1994

We were aiming 1M units.

From now

We are aiming 100M MAU.

Sony IR Day 2018

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Sony IR Day 2018 Music Segment May 22, 2018

Sony Music Business Overview

Music Segment

(Equity Method)

Sony Music Entertainment (“SME”)

Sony Music Entertainment Japan (“SMEJ”)

Sony/ATV Music Publishing (“S/ATV”)

EMI Music Publishing (“EMI”)

Outside Sales (FYE18 ACT)

Visual Media & Platform: 34% Recorded Music: 57%

SMEJ: SME: SME:

Music Publishing: 9%

SMEJ:

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FYE21 Financial Target

Music Segment

 Operating Income: 110~130 billion yen ※ Sales Amount (For Reference): 800 billion yen

Sony IR Day 2018

Sony IR Day 2018 Music Segment (SME) May 22, 2018

Business Executive Sony Corporation Chief Executive Officer Sony Music Entertainment

Chief Operating Officer Sony Music Entertainment

Rob Stringer

Kevin Kelleher

18

Sony Music FYE18 Achievements and Highlights Strong Financial Results

Year over Year increases in:

Revenue

Operating Income

Global Music Company

Market Share

Stronger Growth Global Market

Streaming

+44%

(ex Japan)

Operating Margin

#2

25.1%

A Global Leader

Cash Flow

Digital Video

+42%

Total Market

+10.5% Sony IR Day 2018

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Strong Repertoire Performance

Beautiful Trauma

Something Just Like This

P!nk

Chainsmokers Human

Rag’n’Bone Man

21 Savage

Camila Cabello

Childish Gambino

Kane Brown

Maluma

Khalid

Closer

Chainsmokers

Harry Styles

I’m The One

Harry Styles

DJ Khaled

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Evolution of Streaming Landscape Strategies:

1

Drive Paid Subscription Around the World

Healthy Competition and Consumer Choice

Increase Revenue Per User

2

Transition Established and Open Developing Markets to Paid Subscription

Modernize Product and Plan Offerings

Established

Create greater differentiation between paid and free tiers

SELL

unlimited

Construct new product configurations and content to upsell subscribers

Developing Expand the use of voice, a driver of music consumption in the home and soon in the car Launch pre-pay subscription options for developing markets

CURRENT FOCUS

LONG-TERM FOCUS Sony IR Day 2018

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Strategic Investment In The Orchard MUSIC

VIDEO

TECH

DISTRIBUTION

World Class Analytics Capabilities Talent Discovery Analytics in the Creative Process

Targeted Marketing and Promotion Digging Deeper To Find Talent Earlier

Predictive Analytics = Measured Risk Taking

Strengthening Artist Relationships

Optimizing Revenue Marketing ROI Increasingly Measurable

Breaking Hits

Transparency in Payments

Advanced Partner Analytics

Real Time Sales Reporting Sony IR Day 2018

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Creative, Artist-Centric Approach Increase Creative Workforce

Artist Relationships

Creativity & Musical Instinct

Streaming Genre Focus

Creative & Business Services

Human Resources Focus

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Recorded Music Market Profile ($ in billions; excludes Japan) Streaming Other Digital Physical Public Performance / Sync



Three years of solid market growth



Streaming growth more than offsetting declines in physical and download markets



Expect market growth in 2018



Streaming represents 45% of total market:



Continued rapid growth of streaming, reaching 54% of total market



Greater download and physical declines

-

Paid subscription revenue up 50% year over year

-

176 million premium paid subscribers

+4.0% $12.1

-2.6% $11.6

+9.1% $13.2

$1.9 16% of

$2.7

$4.5

$3.9

23% of Total Market

34% of Total Market

$3.6

Total Market

+10.5% $14.5

+4.1% $15.1

$6.5

$8.2

45% of Total Market

$3.2

$2.7

54% of Total Market

-35% Downloads

+29%

Audio Streaming

+15% Video

$2.1

$4.0

$3.8

$3.4

$3.2

$2.6

$1.8

$2.0

$2.1

$2.1

$2.2

CY14A

CY15A

CY16A

CY17A

CY18 Est

Healthy industry performance overall supports SME growth Source: IFPI Note: Digital Figures Include Digital Radio (SoundExchange)

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Sony Music Operating Income: FYE17 Act  FYE18 Act (US Dollars)

2

3

1

FYE17 Act

1

Physical & Download

2

Streaming

3

All Other (Investments, SG&A)

FYE18 Act Sony IR Day 2018

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Sony Music Operating Income: FYE18 Act  FYE19 Forecast (US Dollars)

2

3

1

FYE18 Act

1

Physical & Download

2

Streaming

3

FX / All Other (Investments, SG&A)

FYE19 Forecast Sony IR Day 2018

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Sony IR Day 2018 Music Segment (SMEJ) May 22, 2018

Business Executive Sony Corporation Representative Director Chief Executive Officer Sony Music Entertainment (Japan) Inc.

Director of Board CFO, Corporate EVP Sony Music Entertainment (Japan) Inc.

Michinori Mizuno

Toshihiro Konno

Agenda

Music Segment (SMEJ)

１．Business Outline ２．Mid-Term Vision ３．FY17 Results / FY18 Forecast

Sony IR Day 2018

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1. Business Outline

Sony IR Relations Day 2018 Sony Corporation Investor

Company Profile

32 32

Music Segment (SMEJ)

Name: Sony Music Entertainment (Japan) Inc. Established: March, 1968 Location: 4-5 Rokubancho, Chiyoda-ku, Tokyo Representative Director: Michinori Mizuno Number of Subsidiaries: Approximately 20 Revenue Breakdown

Other

Music Physical Digital

FY17 Anime

Artist Management Music Publishing

Mobile Game Sony IR Day 2018

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50 Year Journey

〜 Business Diversity Starting from CBS/Sony 〜

Diversify Business by Horizontal Expansion

Strengthen Music Business by Vertical Integration

1968

Est. CBS/Sony Records Inc. Began publishing business

ʼ97 began consignment sales for other companies Began music distribution business

Music Biz

Built record factory

Music Segment (SMEJ)

ʼ75 began record warehouse / logistics business

ʼ87 in-house jacket design

ʼ78 built recording studios

Began Zepp operations

Package Solution

ʼ17 first overseas Zepp

Live Solutions

Biz

Talent Managem ent Biz

Biz

Artist / Talent management

Managed comedian talent

ʻ97 est. SPE VISUAL WORKS

Anime Biz

ʼ03 changed name to Aniplex, increased investment ʻ78 est. Sony Creative Products Character Biz

Voice actor management

Began distribution of Fate/Grand Order

Production Studio

Global Distributi on

Mobile App Game Biz

ʼ05 est. US-based company

Sony IR Day 2018

Business Model

34

Music Segment (SMEJ)

Digital

Real Content Artists, songs, recorded music, anime, video, mobile game, characters, etc.

Live Sony IR Day 2018

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2. Mid-Term Vision

Sony IR Relations Day 2018 Sony Corporation Investor

Mid-term Vision

36 36

Music Segment (SMEJ)

Road to General Entertainment Company ◆ Creating and Maximizing Hits ✓ Strengthen music and anime IP ✓ Leverage IP

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Creating and Maximizing Hits

〜 Strengthen Music and Anime IPMusic 〜 Segment (SMEJ)

© 2018 Peanuts Worldwide LLC

©2016 川原 礫／ＫＡＤＯＫＡＷＡ アスキー・メディアワークス刊／ SAO MOVIE Project

Sony IR Day 2018

Creating and Maximizing Hits Expand Business Domain (Example: Fate Series)

〜 Leverage IP 〜 Theatrical

38

Music Segment (SMEJ)

Mobile Game

TV Broadcast

©TYPE-MOON / FGO PROJECT ©TYPE-MOON・ufotable・FSNPC

©TYPE-MOON/Marvelous, Aniplex, Notes, SHAFT

Visual Package Media

IP

Event

Music

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Creating and Maximizing Hits

〜 Leverage IP 〜

Music Segment (SMEJ)

Sustainable Growth in Mobile Game Business ✔ Fate/Grand Order Retention Initiatives

✔ New Hit IP-Based Products

ⓒ乃⽊坂46LLC

©Magica Quartet/Aniplex・Magia Record Partners

©Seed&Flower LLC/Y&N Brothers Inc. ©enish,Inc.

©TYPE-MOON / FGO PROJECT

Sony IR Day 2018

Mid-term Vision

40

Music Segment (SMEJ)

Road to General Entertainment Company ◆ Overseas Expansion ◆ New Businesses

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Overseas Expansion - countries/regions

France

Music Segment (SMEJ)

China (Shanghai) Representative Office

Germany

US (LA) Based Company

Live Venues in Asia

New Taipei Singapore

Australia

Kuala Lumpur Sony IR Day 2018

New Businesses

42

Music Segment (SMEJ)

Sports

Event

AI

VR

©Sony Music Entertainment(Japan)Inc. ©Intelligent Machines Amazes You Inc. ©Aisii Inc.

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3. FY17 Results / FY18 Forecast

Sony IR Relations Day 2018 Sony Corporation Investor

FY17 Operating Profit Variance from FY16

Mobile Game

Music/ Anime

44 44

Music Segment (SMEJ)

Gain on Sale of Real Estate Other

Operating Income

FY16

FY17*

FY17

(Excludes OneTime Factor) Sony IR Day 2018

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FY18 Operating Profit Forecast Variance from FY17

Mobile Game

Music/ Anime

Music Segment (SMEJ)

Other

Operating Income

FY18 Forecast

FY17* (Excludes OneTime Factor)

Sony IR Day 2018

Sony IR Day 2018 Pictures Segment May 22, 2018

Business Executive Sony Corporation Chairman and CEO Sony Pictures Entertainment Inc.

Tony Vinciquerra

46

S o ny IR D AY 2 0 1 8 TOKYO

TONY VINCIQUERRA CHAIRMAN & CEO, SONY PICTURES E N T E RTA I N M E N T 48

SPE FYE18 Review

REVENUE GREW 10% TO  OVER $9 BILLION; OI GREW  34% TO $376 MILLION

($ in millions)

SALES

+10.1%

$8,292 1

2

$9,133 3

1

4

$376 2

$280 *

OPERATING  INCOME

FYE17 Actual Note: FYE = Fiscal Year Ended (e.g., FYE17 = Fiscal Year Ended March 2017) Source: Pictures Segment Supplemental Data, March 31, 2018 * FYE17 operating income excludes the $962 million goodwill impairment write‐down

FYE18 Actual

Increase in Motion Pictures’ OI  driven by stronger slate in FYE18  (e.g., Jumanji, Spider‐Man:  Homecoming, Baby Driver, Peter  Rabbit) compared to prior year In Television Productions, higher  licensing revenues for U.S. TV series  offset by lower television licensing  revenues on catalog product in  current year

3

Media Networks had loss from  Ten Sports, a newly acquired  business

4

One‐off charges due to reductions  in centralized costs and executive  restructuring 49

50

51

S o ny   I R   DAY   2 0 1 8     TO K YO

52

“GENUINE CINEMATIC CRAFT  AND TECHNIQUE”  New York Times

“MOST FUN YOU'LL HAVE AT THE  MOVIES ALL SUMMER”  Rolling Stones    

“PURE MOVIE MAGIC”  Associated Press

53

FINDING THE BEST HOME FOR OUR CONTENT

54

55

56

Four Strategic Objectives CONTROL IP

STRENGTHEN  LABELS

GLOBAL FOCUS

FINANCIAL  DISCIPLINE

COLUMBIA PICTURES CONSUMER  FILM THEME PARKS       TRISTAR PICTURES PRODUCTS + LBE SONY PICTURES ANIMATION

IP GAMES

NEW TECH  TV SHOWS (VR)

SCREEN GEMS SONY PICTURES CLASSICS AFFIRM FILMS SONY PICTURES  INTERNATIONAL PRODUCTIONS

57

“THEATRICALITY”

TRANSITION  TO DIGITAL  MARKETING

RESHAPING THE  ORGANIZATION

TIGHTEN WINDOWS

“THE  OPPORTUNITY  OF URGENCY” 58

59

60

C R E AT I O N CONNECTING I N N O VAT E C O L L A B O R AT I O N EMPOWERING

61

REIMAGINING SPE

62

S o ny   I R   DAY   2 0 1 8     TO K YO

63

SPE FYE19 Forecast ($ in millions)

+0.8%

$9,133

SALES

ASSUMPTIONS FOR FYE19:

$9,210* 1

2

3

4

$400**

$376

OPERATING  INCOME

1

Our current projections for the  Motion Pictures’ FYE19 slate are  lower than FYE18’s very high‐ performing slate, and we expect  higher unreleased marketing costs

2

Television Productions is forecasting a  reduction in OI based on assumptions  regarding several series ending,  partially offset by new series  launching; also planning for higher  development spend

3

FYE18 Actual

FYE19 Forecast

Source: Pictures Segment Supplemental Data, March 31, 2018 and SPE Management * FYE19 sales forecast converted at 105 JPY/USD and rounded down to the nearest 10 billion yen to ¥960 billion ** FYE19 Operating Income represents best estimate under new GAAP

4

Media Networks growth primarily  from Ten Sports, GSN and the Latin  America region with general growth  across most of the rest of the  portfolio Change to GAAP rules and other 64

SPE FYE 21 Financial Target Revenue: ¥1,050 Billion ($10 Billion) (For Reference)

Operating Income:

¥58 – ¥68 billion ($550 – $650 million)

Implied Margin %:

5.5% – 6.5%

*$1 = ¥105 65

66

Sony IR Day 2018 Imaging Products & Solutions Segment Mobile Communications Segment May 22, 2018

Shigeki Ishizuka Corporate Executive Officer, Executive Vice President, Officer in charge of Imaging Products & Solutions Business/Mobile Communications Business Sony Corporation Representative Director and President Sony Imaging Products & Solutions Inc.

Imaging Products & Solutions Segment Mobile Communications Segment

Introduction

Shigeki Ishizuka Corporate Executive Officer, Executive Vice President, Sony Corporation Imaging Products & Solutions Segment

Mobile Communications Segment

Sony Imaging Products & Solutions Inc.

Sony Mobile Communications Inc.

Shigeki Ishizuka Representative Director and President

Mitsuya Kishida Representative Director and President

Toru Katsumoto Hiroshi Kawano Representative Director and Deputy President

Sony Network Communications Inc. Hirokazu Takagaki President and Representative Director

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Imaging Products & Solutions Segment Mobile Communications Segment

Agenda

1.

Imaging Products & Solutions Segment

Ishizuka

2.

Mobile Communications Segment

Ishizuka/Kishida

3.

Reference Materials

Sony IR Day 2018

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1. Imaging Products & Solutions Segment

Sony IR Relations Day 2018 Sony Corporation Investor

Imaging Products & Solutions Segment

Organization: Sony Imaging Products & Solutions Inc. Digital Imaging Group

Professional Solutions and Services Group Media

ILC

Lens

Cinema

DSC

Medical Business Group

Visual Simulation

Professional Products Group

Camcorder

Broadcasting Professional System Camcorder

FeliCa Business Division

Peripheral Medical Devices

Education Sports

70 70

Network Camera

Display

Life Science

Surgical Imaging Devices

Imaging Platform: Light to Display Light Source

Lens

Image Sensor

Image  Processingg

IP Transmission

Display

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Imaging Products & Solutions Segment

FY2017 Review

（bln yen）

FY2017 Operating Income (vs FY2016)

Sales

655.9

579.6

Operating Income 47.3

74.9

+27.7

Positive factors 1

Forex impact

2

Recovery from the Kumamoto Earthquakes (insurance income, sales recovery)

3

Increased value-added (shift to higher valueadded models)

Increased Value-Added

OPEX

Recovery from the Earthquakes

Forex Impact

Negative factors ４

Increase in OPEX（due to increase in sales） FY16

Factor

Factor

Factor

1

2

3

Factor

FY17

4

Sales and operating income increased significantly due to the recovery from the Kumamoto Earthquakes and the impact of forex

Digital Imaging: continued shift to higher value-added, especially in the interchangeable lens camera space Professional Solutions: new solutions service business offset by decrease in existing business sales Sony IR Day 2018

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Imaging Products & Solutions Segment

FY2018 Forecast

（bln yen）

FY2018 Operating Income (vs FY2017) Red: negative factor

Sales

655.9

Operating Income

74.9

660

75

+0.1

Blue: positive factor 1

Forex impact

2

Improvement in value-added (shift to higher value-added models)

FY17

Forex impact

Improvement in Value-Added

Factor

Factor

1

2

FY18

April forecast

Sony IR Day 2018

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Mid-Range Plan: Management Policy

Imaging Products & Solutions Segment

Business Foundation ・ Sony brand（B2B&C)

Strengthen products & services under the SONY brand

Sony Brand（B2B&C)

・ Customerʼs Real-Time Benefit Create customer value with “time”

・ Differentiation by L2D* technology Competitive advantage derived edge from in-house production technology

SIPS Strength

＋ Quantitative Target

Differentiation by L2D Technology

Operating Income Margin: 10% or More

Customer Real-Time Benefit

* L2D: Light to Display

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Imaging Products & Solutions Segment

Mid-Range Plan: Business Strategy

Strengthen and grow the Solutions Business by delivering Real-Time Benefit Solutions Products

*1

Create strong products based on our differentiated L2D technology

Tech nology PF

Light  Source

*1 L2D: Light to Display

*2 PF: Platform

Lens

Image  Sensor

Image  Processing

IP Transmission

Display Sony IR Day 2018

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Imaging Products & Solutions Segment

FY2020 Financial Targets

 Operating Income:

85~105 billion yen ※ Sales Amount (For Reference): 700 billion yen

Maximize profit growth and enterprise value Create strong and differentiated products based on L2D technology, deliver Real-Time Benefit, and strengthen and grow the solutions business

Sony IR Day 2018

Digital Imaging Business: Mid-Range Initiatives

76

Imaging Products & Solutions Segment

Win in an increasingly competitive market and continue to generate high profit Initiatives

Industry Trends



Revitalization of the mirrorless camera market



Competitors becoming more aggressive in the market

Basic

Resolution

Aim to be the top brand in the overall camera market 

Strengthen products, especially in the interchangeable lens camera space



Engage the professional market



Expand the lens business

Speed

Expand Lens Lineup

“Camera of the Year” Camera Grand Prix 2018

Expand Pro-Support Worldwide

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Imaging Products & Solutions Segment

Professional Solutions Business: Sales by Business Media

Sports

B2B Education, theater, visual simulation, etc

Services & Solutions

Broadcasting System

Professional Camcorder Display Network Camera

Sony IR Day 2018

Professional Solutions Business: Mid-Range Growth Targets

78

Imaging Products & Solutions Segment

enhance solutions that deliver Real-Time Benefit ・ Real-time solutions that leverage IP & cloud ・ Expand in the sports and B2B arena ・ Develop 5G solutions

Sales

enhance differentiation and rebuild a stable profit structure ◆

OP Margin

◆

FY17 Actual

・ Develop products which use our L2D technology ・ Reduce fixed costs in existing businesses

FY20 Target

■︓Product Sales ■︓Solutions Sales ◆︓Professional Solutions Business OP Margin

8K System Camera “UHC-8300”

Full Size Cinema Camera CineAlta “VENICE”

Proprietary Micro LED Crystal LED Sony IR Day 2018

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Professional Solutions Business: Mid-Range Initiatives Industry Changes and Understanding of Challenges

Action Plan

■ Changes in the media industry

- Develop 4K & IP products and solutions

- Rise of the OTT market, industry consolidation and greater reliance on IP and the cloud ⇒ Greater demand for cost reduction and efficiency - Full-scale demand for 4K and 8K (Start of satellite and IPTV 4K broadcasting) - Coming 5G era

- Develop technology for the 5G era - Pursue the sports and education markets - Revise our product and business portfolio so as to better adapt to changes in the industry

■ Growing new market for B2B

- Continuous cost reduction and operational transformation

■ Improving profitability Remote Integration “REMI”

Learnings Solution “Vision Exchange”

Control Room

Stadium

Imaging Products & Solutions Segment

Data Center

Network

Sony IR Day 2018

Examples of Solutions Businesses

80

Imaging Products & Solutions Segment

Medical Business: Mid-Range Strategy

Profit Margin Life Science Business

Surgical Imaging Device Business Monitor

IP Converter

Printer

(For Research and Clinical)

Peripheral Medical Device Business Transition from single-device business to high value-added business

SOMED & Solutions Business

4K Surgical Endoscope System Surgical Microscope with 4K 3D Capabilities

Transition from research device business to medical device business

Time

Life Science Business (Research) Cell Analyzer

Cell Sorter Sony IR Day 2018

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Imaging Products & Solutions Segment

Reference Materials

Sony IR Day 2018

IP&S Sales by Business Category and Geographic Area  FY2017 Sales by Business Category

82

Imaging Products & Solutions Segment

 FY2017 Sales by Geographic Area Other

Medical Asia

Digital Imaging

Sales 650 bln yen Still and Video Cameras

Japan

Other

China

Sales 650 bln yen U.S.

Professional

Europe

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Imaging Products & Solutions Segment

IP&S Key Product Market Share (Revenue Basis)  FY2017 Still Camera Market

 FY2017 Video Camera Market

Market Size: 1,400 bln yen

Market Size: 390 bln yen

Sony

ソニーシェア Sony

20%

ILC (Incl. Lens): 19% (#3) (#1 in Mirrorless Camera)

DSC: 26% (#2)

(#1 in Premium DSC*1)

Source: Sony

29% 29%

Components of Video Camera Pie Chart Video cameras for consumer (POV + Conventional)

Video cameras for business (Pro-sumer + Professional)

*1 Premium DSC = DSC with large (1/1.7 inch and over) image sensors or high zoom (20x and over)

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2. Mobile Communications Segment

Sony IR Relations Day 2018 Sony Corporation Investor

858 5

FY2017 Overview

１ Smartphone unit sales decrease (FY16 14.6M → FY17 13.5M units)

Mobile Communications Segment

FY16 Actual

FY17 Actual

Sales

759.1

723.7

Operating Income

10.2

3.7

-6.5

(bln yen)

-27.6

(excluding impairment)

２ Sharp increase in component costs ３ Negative impact of foreign exchange rates ４ Improvements in operational efficiency 5 Impairment 1

２

3

4

5

Operating loss recorded due to impairment charge Negative impact of unit sales decrease and sharp increase in component costs were offset by cost reductions; full-year profit was recorded on an operational basis Sony IR Day 2018

FY2018 Operating Results Forecast

Mobile Communications Segment (bln yen)

FY17 Actual

FY18 April Forecast

Sales

723.7

640

Operating Income

-27.6

１ Impairment ２ Smartphone unit sales decrease

86

+12.6

-15

(FY16: 13.5M → FY17 FCT: 10.0M units)

３ Positive impact of foreign exchange rates ４ Improvements in operational efficiency

1

２

3

4

Year-on-year profitability improvement by shifting away from less profitable models and engaging in continuous operating expense reductions Sony IR Day 2018

87

Recurring Revenue Business: Stable Profit Structure & Next Steps

Mobile Communications Segment

Mid-Term Vision

Going beyond being just an internet service provider Fixed Line Communication Business: Cumulative Subscribers SmartHome

Transportation

Healthcare

CAGR 7% Cloud Devices FY14

• •

FY15

FY16

LPWA※

Deep Learning

Technology

FY17

Network quality improvements driving customer satisfaction Deploying NURO services to more regions

Call Centers

Data Centers

*LPWA: Low Power Wide Area

Smartphone Business: Review (Accomplishments)

Operating Expenses

(billion yen) Forecast from FY15

Network Sony IR Day 2018

88

Mobile Communications Segment

Warranty-Related Costs

Actual -58% (150 using FY16 FX rates)

Accelerated reduction through continuous pursuit of further efficiencies

Significant reductions through quality improvements Sony IR Day 2018

89

Smartphone Business: Review (Outstanding Issues)

Mobile Communications Segment

Unit Sales (million units) Forecast from FY15 Actual

Issue: not improving product lineup fast enough ⁻ Mid-term product planning and development ⁻ Design and development lead time

Sony IR Day 2018

Smartphone Business: Business Direction

90

Mobile Communications Segment

Mid-Term Vision

Creating New Value to Customers for the 5G Era FY2018 Business Direction

Lean Transformation for Future Growth

Product

Sales

Manufacturing, Procurement, Operations

Add to strength and efficiency by leveraging the assets, business knowhow and infrastructure of the Sony Group

Reduce operating expenses & lower break-even point Sony IR Day 2018

91

Smartphone Business: Key Issues

Mobile Communications Segment

Enhance Product Offerings: Fully Utilize Sonyʼs Technological Assets

Design

Audio

Camera

Display

Lens

Sensing

Wireless Data Transmission

Battery

Mechatronics

Product Development Process: Rebuild and Improve Efficiency

Sony IR Day 2018

Strategic Direction for the 5G Era

Mobile Communications Segment

Sony IR Day 2018

Smartphone Business: Sales & Operation Enhancements

Mobile Communications Segment

Manufacturing, Procurement, Operations

Sales Project Europe

Manufacturing

Strategic partnerships with operators while bolstering open channel sales

Higher efficiency realized by automated line introduction Service evolution through quality improvement

Procurement

Key Actions

• Technological collaboration including 5G launch • Realize efficiencies through the integration of Sonyʼs electronics sales operations • Enrich product lineup through entertainment propositions

Create long-term partnerships as “One Sony”

Logistics

Utilize Sonyʼs global network Accelerate blockchain initiatives Sony IR Day 2018

Smartphone Business: Operating Expenses & Break-Even point

94

Mobile Communications Segment

Transformation into a Lean Business OPEX

 Rebuild product development process and significantly improve efficiency -30%

 Leverage Sony Group business know-how and infrastructure to bolster design, manufacturing, sales and operations

Sony IR Day 2018

95

MC Segment: Summary

Mobile Communications Segment

OP: 20~30 billion yen

FY2020 Target:

Sales Level: 670 billion yen (reference only)

Recurring Revenue Business: 

Realizing solid growth by leveraging stable customer base

Smartphone Business:   

Create a lean, agile business without an excessive focus on revenue and units sold Build a sustainable business structure through ʻOne Sonyʼ initiatives Steadily implement initiatives to bolster and prepare for the future

Creating New Value to Customers for the 5G Era Sony IR Day 2018

Sony IR Day 2018 Operation & Sales Platform Home Entertainment & Sound Segment May 22, 2018

Ichiro Takagi Corporate Executive Officer, Executive Vice President Officer in charge of Home Entertainment & Sound Business, In charge of Consumer AV Sales & Marketing, Manufacturing, Logistics, Procurement Sony Corporation Representative Director & President Sony Visual Products Inc. Representative Director & President Sony Video & Sound Products Inc.

96

Agenda 1.

2.

End-to-End Operations 1.

Manufacturing / Procurement / Logistics

2.

Sales

HE&S Segment 1.

FY2017 Review

2.

FY2018 Action Plan

3.

3.

•

TV Business

•

Video & Sound Business

•

Financial Forecast

FY2020 Financial Targets

Reference Materials

Sony IR Day 2018

98

Sony IR Relations Day 2018 Sony Corporation Investor

99 99

1. End-to-End Operations

End-to-End Operations Until March 2015

Business Unit

Product Planning / Design

Operation Platform

Manufacturing / Procurement / Logistics

Sales Platform

From April 2015 through March 2018 Collaboration between Business Units and Sales Platform  Saved 5 to 15 billion yen of Costs

Business Unit

Product Planning / Design

Operation Platform

Manufacturing / Procurement / Logistics

Sales Platform

From April 2018, Greater Efficiency of the Value Chain Business Unit

Product Planning / Design

Operation Platform

Manufacturing / Procurement / Logistics

Room for Improvement

Sales Platform Potential Upside Sony IR Day 2018

100

Manufacturing / Procurement / Logistics  Manufacturing



•

Align manufacturing strategy with our business strategy while improving efficiency.

•

Enhance manufacturing technology, including automation, to support our product strategy.

Procurement •

Leverage key partners to rebuild our procurement strategy to better align with our business and product strategy.

•

Ensure seamless procurement and optimal component costs through One Sony sourcing.

 Logistics •

Expand direct shipping and enhance logistical efficiencies based on our sales channel strategy.

•

Quickly change transportation methods to adapt to changes in the market environment.

Sony IR Day 2018

101

Sales

Sales strategy focused on select regions and product categories Sonyʼs Sales (by Geographic Region) (bln yen)

 Asian Pacific (including China), Middle East, Latin America, Other  Invest primarily in growth areas such as audio

Asia Pacific, Middles East, Latin America, Other Japan, U.S., Europe

 Augment sales operations

 Japan, U.S., Europe  Maintain market position  Manage downside risk FY16

FY17

FY18

FY20

(Reduce costs and increase profit through better forecasting of market demand and improved supply chain communication)

Sony IR Day 2018

102

Sony IR Relations Day 2018 Sony Corporation Investor

10 103 3

2. HE&S Segment

FY2017 Review

Home Entertainment & Sound Segment

Operating Income Analysis

1,222.7

Sales 1,039.0

Exchange Rates*1

(bln yen)

Model Mix Cost Volume Price Improvement Increase Increase Erosion

Results TV Business •

Introduction of OLED TVs secured our brand position in the premium segment of the market.

•

Profitability improved due to high value-added product strategy focused on OLED, 4K and large-sized TVs.

•

Incremental margins improved due to enhanced supply chain management and better control over inventory in response to changes in the market environment.

Video & Sound Business Operating Income

85.8 58.5

FY16

FY17

•

Grew sales primarily in the growth area of Audio.

•

Improved profitability as a result of high value-added products.

•

Improved branding.

Issues TV Business •

Can improve how we adapt to changes in panel prices.

Video & Sound Business •

Can improve operations further.

•

Can improve collaboration with sales channels.

*1: Impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in FY2017 and comparing them with the previous fiscal year.

TV Business: Strategy and Priorities

Sony IR Day 2018

104

Home Entertainment & Sound Segment

Maintain a stable business by pursuing a high-value added strategy g gy ◆Product Competitiveness

Sonyʼs TV Sales

Deliver the best customer experience through our proprietary technology.

4K TVs

Continue investing in technological innovation for the future.

2K TVs

◆Cost Competitiveness Manage expenses and streamline component procurement.

◆Operational Competitiveness Continue improving our end-to-end operations (from

Ratio of 4K TVs* (Volume Basis)

Average Inch Size*

FY17

FY18

（実績） Actual

Forecast （最新⾒通し）

35%

45%

(Market)

44 inches

45 inches

(Market)

46 inches

47 inches

(Sony)

production to sales) so as to adapt to changes in the market.

*Source: Sony

Sony IR Day 2018

105

TV Business: Product Concept

Home Entertainment & Sound Segment

Drive expansion of the premium 4K market

Best Picture/Sound Quality

Unique Design

Ease of Use

Sony IR Day 2018

Video & Sound Business

106

Home Entertainment & Sound Segment

Consistently grow sales and profits through greater product p g competitiveness in g growth categories Audio Market

CAGR (FY16-18)

Other Audio

+5%

Audio Growth Categories

2.2 Tril Yen

1.9 Tril Yen

 Enhance competitiveness of products in growth categories (e.g. headphones, wireless speakers)

58%

65%

FY16

FY17

68%

 Invest in technological innovation for Sonyʼs Sales

FY18

CAGR (FY16-18)

future growth (acoustics which make you

FY20

Other Audio

+10%

Audio Growth Categories

feel like you are there)  Strengthen operations

49%

56%

FY16

FY17

61%

 Enhance collaboration with sales platform FY18

FY20

Sony IR Day 2018

107

FY2018 Forecast

Home Entertainment & Sound Segment

Operating Income Analysis Sales 1,222.7

TV Business

(bln yen)

1,150

Exchange Rates*1 Price

Cost Model Mix Improvement Reduction



Further increase added value of products through proprietary technologies for high picture and sound quality, and excellent design and usability.



Customize product and sales strategy to each geographic region.



Further improve operations that adapt quickly to changes in the market environment.

Erosion

Operating Income

86

85.8 Volume Decrease

FY17

Video & Sound Business FY18



Enhance product competitiveness in audio growth categories.



Strengthen operations.



Address differences in geographic regions through greater collaboration with sales channels.

April Forecast

・ The FY2018 forecasts for the segments have been calculated using the assumed foreign currency rates of approx. 105 yen to the U.S. dollar and approx. 125 yen to the euro. *1: Forecasted impact of foreign exchange fluctuations is calculated using the sales and costs denominated in each currency in the FY2018 business plan and comparing them with the previous fiscal year.

FY2020 Financial Targets

 Operating Income:

Sony IR Day 2018

108

Home Entertainment & Sound Segment

75 to 105 Billion Yen ※ Sales Amount (For Reference): 1,200 billion yen

Continue to generate stable cash flow through enhanced product competitiveness centered on high value-added products and enhanced end-to-end operations Sony IR Day 2018

109

3. Reference Materials

Sony IR Relations Day 2018 Sony Corporation Investor

TV Business: FY2017 Sales by Product Type & Region / Unit and Revenue Share

 Sales by Product Type

11 110 0

Home Entertainment & Sound Segment

 Sales by Region Other Japan

2K TVs

4K TVs Sales

864.8 bln yen

Asia Pacific

Sales

864.8 bln yen

China

 LCD TV Unit Share by Manufacturer (Source: Sony / For the most recent year)

#5

U.S.

Europe

 LCD TV Revenue Share by Manufacturer (Source: Sony / For the most recent year)

1位 #3

Sony IR Day 2018

111

Video & Sound Business: FY2017 Sales by Product Type & Region

 Sales by Product Type

Home Entertainment & Sound Segment

 Sales by Region

Headphones

Other

Home Video

Video

Other

Audio

Sales

357.9

Growth

*1

Sound Bars

Asia Pacific

Category

China

Audio

Sales

357.9

bln yen

Wireless Speakers

Others

Japan

bln yen

U.S.

Europe

System Stereos

Audio Components

Digital Music Players WALKMAN

*1: ”Audio Growth Category” includes Headphones, Sound Bars and Wireless Speakers as its main products.

Sony IR Day 2018

Video & Sound Business: Key Productsʼ Market Share (Revenue Basis)

Home Entertainment & Sound Segment

Wireless Speakers

Headphones

Sound Bars

#3

#1

#3

※ Japan / U.S. / EU3*2

※ Japan

※ Japan / U.S. / EU9*1

#1 in Japan Digital Music Players (WALKMAN)

#1

1位

※ Japan

112

#1 in Japan Blu-ray Players/Recorders

2 #2

位

※ / ※ Japan ⽇⽶EU3 U.S. / EU3*2

※ Source: Sony For the most recent year *1 EU9: UK, France, Germany, Italy, Spain, Netherlands, Sweden, Poland, Czech *2 EU3: UK, France, Germany

Sony IR Day 2018

113

Semiconductors Segment

Sony IR Day 2018 Semiconductors Segment May 22, 2018

Terushi Shimizu Business Executive Sony Corporation Representative Director and President Sony Semiconductor Solutions Corporation

Agenda

Semiconductors Segment

1. FY2017 Review 2. FY2018 Action Plan 3. FY2018 – FY2020 Mid-Range Plan

Sony IR Day 2018

115

Semiconductors Segment

1. FY2017 Review

Sony IR Relations Day 2018 Sony Corporation Investor

FY2017 Review

11 116 6

Semiconductors Segment

Achieved record high profit for the Semiconductors business Operating Income Analysis (bln yen) Sales

Achievements

773.1

850.0

Image Sensors 548.6

Image Sensors 649.4

164.0 Others

image sensor sales and profit customer expansion for automotive image sensors  Improved operating results in the nonimage sensor businesses  Steady

Issues

Operating Income

Mobile Sensor

 Ability

to respond to fluctuations in demand from Chinese smartphone manufacturers  Optimization of inventory level  High currency sensitivity

Earthquake

▲7.8

 Increased

Exchange Rates

1 USD = 108.4 yen

Mobile Module

110.9 yen Sony IR Day 2018

117

Semiconductors Segment

2. FY2018 Action Plan

Sony IR Relations Day 2018 Sony Corporation Investor

Our View of the Image Sensor Market

11 118 8

Semiconductors Segment

Mobile application growth led by dual lens and sensing. Growth in new areas expected. Trend in World Wide Image Sensor Shipment Amount

New Area

New Area Mobile Sensing Mobile Dual Lens (Sub Camera) Mobile Front + Rear AV

• • •

Automotive: Rise of the ADAS market Factory Automation: Market expansion due to smart manufacturing Security: Market expansion due to automatic monitoring using AI technology

Mobile Area •

Market expansion from dual lens and mobile sensing

AV Area •

CY 11

12

*Source: Sony

13

14

15

16

17

18

19

Expansion of high-end sensor market

20 Sony IR Day 2018

119

Activities for Mobile

Semiconductors Segment

Evolve in plane, time and space to deliver “KANDO” in addition to achieving DSLR camera-like image quality. Evolution of Mobile Sensors

Present

Future ~

Image Quality

Plane

High Dynamic Range / High Sensitivity / Low Noise

Wide Angle / Enlargement

No blocked up shadows

Time

Super Slow

Free from Structure

Free from Shutter

Reproduce kando as is

Space

Sharpness even in dark places

Depth / Focus

Three-Dimensional / Immersive Sony IR Day 2018

Activities for Sensing

120

Semiconductors Segment

Succeeded in developing back-illuminated high-resolution ToF* sensor capable of distance measurement. Anticipate deployment to a wide range of use cases. Development of ToF Sensor

Front-illuminated ToF Sensor

Use Cases of ToF Sensor

Present

Automotive

FA

Future

Back-illuminated ToF Sensor *ToF: Time of Flight

aibo

Mobile

Drone Sony IR Day 2018

121

Activities for Automotive

Semiconductors Segment

Completed commercialization of stacked image sensor for ADAS. Strengthen cooperation with key players. Realization of “Safety Cocoon”

Cooperation with Key Players*

Commercialization of High Resolution Stacked Sensor for Automotive Cameras Conventional Product

Capable of capturing a sharp Development image of signs 160 meters away Product *Logos are arranged in alphabetical order

Sony IR Day 2018

Activities for Factory Automation

122

Semiconductors Segment

The market is expanding due to industrial automation. Transition from CCD to CMOS sensor proceeds. Evolution of FA Sensors

Present CCD

Low Error Rate

Front-illuminated CMOS GS*

Increase Throughput

Future ~ Back-illuminated CMOS GS

Stacked CMOS GS

High Speed and High Resolution Inspection

Automation of Production Line

Infrared Sensor

Transition from CCD

*GS: Global Shutter

Sugar Salt Invisible Light Inspection Sony IR Day 2018

123

Activities for Security

Semiconductors Segment

The security market is expanding due to the penetration of automatic monitoring using AI technology. Evolution of Security Sensors

Present Back-illuminated CMOS

Full Color Image Capturing at Night

Future ~

High Sensitivity

Low Noise Miniaturization

Stacked

Wider Area Image Capturing in Outdoors

High-definition Image Capturing in Wider Area

Optimization for AI monitoring

Region Control ５M

FHD

Data Capacity Reduction Sony IR Day 2018

Activities for Technology Development (1)

124

Semiconductors Segment

Proceed with technology development that creates added value responding to market needs. Direction of Technology Development

Present

Future ~

Back-illuminated Performance Evolution

Sensitivity Improvement

Stacked

Miniaturization and High Functionality

Cu-Cu* Connection

Productivity Improvement and Space Saving

Pixel-Parallel ADC Function Expansion

Performance Expansion

Image Distortion Cancellation

Event Driven

Power Consumption 1/100

Region Control ToF

Data Capacity Reduction

Distance Information Detection

Polarization Infrared

*Cu-Cu: Copper to Copper

Technology Development for New Sensing Market

Distortion and Scratch Detection

Invisible Light Inspection Sony IR Day 2018

125

Activities for Technology Development (2)

Semiconductors Segment

Developed event-driven stacked CMOS image sensor realizing 1/100 power consumption. Image of Sensor

Image of Motion Detection

Realized by stacked structure with Cu-Cu connection

Motion Detection & Automatic Switching Sony IR Day 2018

Activities for Technology Development (3)

126

Semiconductors Segment

Movie

Sony IR Day 2018

127

FY2018 Forecast

Semiconductors Segment

Increase Capital Investment and R&D to Accelerate “Preparation“ Operating Income Analysis (bln yen)

Environment

850.0

870

Image Sensors 649.4

Image Sensors 690

Sales

164.0

 Rise

of dual lens for smartphones

of sensing and automotive market

 Appreciation

of the yen and sluggish smartphone market growth are risks

Basic Policy

One Time Items

Operating Income

 Advancement

Exchange Rates

100

Depreciation/ R&D Expenses

Inventory Change

 Increase

capital investment and R&D to accelerate “Preparation“

 Maximize

profitability of mobile and AV fields which are the leading profit drivers

Quantity Increase/ Product Mix Improvement/ Cost Reduction

 Foster

new areas such as sensing and automotive

 Continue

activities to reduce manufacturing cost of

sensors (Apr. Fct)

1 USD = 110.9 yen

105 yen 128

Sony IR Day 2018

Semiconductors Segment

3. FY2018 – FY2020 Mid-Range Plan

Sony IR Relations Day 2018 Sony Corporation Investor

12 129 9

Financial Target for FY2020



Semiconductors Segment

Financial Target for FY2020 

Operating Income

160 - 200 billion yen

*1 USD = 105 yen

Sales Amount (For Reference): 1,100 billion yen



Mid-Range Plan for FY2020 

Maximize mobile sensor profit by enhancing response to environmental changes



Aim for profit contribution by new areas including sensing and automotive business



Promote technology development including function and performance expansion

Sony IR Day 2018

130

Operating Income Targets for FY2020 （ billion yen ）

Game & Network Services (“G&NS”) Segment

130 〜 170

Music Segment

110 〜 130

Pictures Segment

58 〜 68

Home Entertainment & Sound (“HE&S”) Segment

75 〜 105

Imaging Products & Solutions (“IP&S”) Segment

85 〜 105

Mobile Communications (“MC”) Segment

20 〜 30 160 〜 200

Semiconductors Segment Assumed foreign currency exchange rates

(For your reference) Branded Hardware* *The

1 US dollar 1 Euro

: Approx. 105 yen : Approx. 115 yen

180 〜 240

sum of HE&S, IP&S and MC segments Sony IR Day 2018

131

Cautionary Statement Statements made in this presentation with respect to Sonyʼs current plans, estimates, strategies and beliefs and other statements that are not historical facts are forwardlooking statements about the future performance of Sony. Forward-looking statements include, but are not limited to, those statements using words such as “believe,” “expect,” “plans,” “strategy,” “prospects,” “forecast,” “estimate,” “project,” “anticipate,” “aim,” “intend,” “seek,” “may,” “might,” “could” or “should,” and words of similar meaning in connection with a discussion of future operations, financial performance, events or conditions. From time to time, oral or written forward-looking statements may also be included in other materials released to the public. These statements are based on managementʼs assumptions, judgments and beliefs in light of the information currently available to it. Sony cautions investors that a number of important risks and uncertainties could cause actual results to differ materially from those discussed in the forward-looking statements, and therefore investors should not place undue reliance on them. Investors also should not rely on any obligation of Sony to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Sony disclaims any such obligation. Risks and uncertainties that might affect Sony include, but are not limited to: (i) the global economic and political environment in which Sony operates and the economic and political conditions in Sonyʼs markets, particularly levels of consumer spending; (ii) foreign exchange rates, particularly between the yen and the U.S. dollar, the euro and other currencies in which Sony makes significant sales and incurs production costs, or in which Sonyʼs assets and liabilities are denominated; (iii) Sonyʼs ability to continue to design and develop and win acceptance of, as well as achieve sufficient cost reductions for, its products and services, including image sensors, game and network platforms, smartphones and televisions, which are offered in highly competitive markets characterized by severe price competition and continual new product and service introductions, rapid development in technology and subjective and changing customer preferences; (iv) Sonyʼs ability and timing to recoup large-scale investments required for technology development and production capacity; (v) Sonyʼs ability to implement successful business restructuring and transformation efforts under changing market and regulatory conditions; (vi) changes in laws, regulations and government policies in the markets in which Sony operates, including those related to taxation and corporate social responsibility; (vii) Sonyʼs ability to implement successful hardware, software, and content integration strategies, and to develop and implement successful sales and distribution strategies in light of new technologies and distribution platforms; (viii) Sonyʼs continued ability to devote sufficient resources to research and development and, with respect to capital expenditures, to prioritize investments correctly (particularly in the electronics businesses); (ix) Sonyʼs ability to maintain product quality and customer satisfaction with its products and services; (x) the effectiveness of Sonyʼs strategies and their execution, including but not limited to the success of Sonyʼs acquisitions, joint ventures and other strategic investments; (xi) significant volatility and disruption in the global financial markets or a ratings downgrade; (xii) Sonyʼs ability to forecast demands, manage timely procurement and control inventories; (xiii) Sony's reliance on external business partners, including for the procurement of parts, components, software and network services for its products or services, the manufacturing, supply and distribution of its products, and its other business operations; (xiv) the outcome of pending and/or future legal and/or regulatory proceedings; (xv) shifts in customer demand for financial services such as life insurance and Sonyʼs ability to conduct successful asset liability management in the Financial Services segment; (xvi) the impact of changes in interest rates and unfavorable conditions or developments (including market fluctuations or volatility) in the Japanese equity markets on the revenue and operating income of the Financial Services segment; (xvii) the ability of Sony, its third-party service providers or business partners to anticipate and manage cybersecurity risk, including the risk of unauthorized access to Sonyʼs business information, potential business disruptions or financial losses; and (xviii) risks related to catastrophic disasters or similar events. Risks and uncertainties also include the impact of any future events with material adverse impact. 132