DRAFT
Changing TV Landscape
June 2013
Group
Strategy Division | 2010 MRP
Sony
Corporation
1
Changing Television Landscape
• TV distribution and consumption are changing all over the world
• In the U.S. and other developed markets, new devices and platforms are leading
increased programming consumption
• In other territories, more traditional pay television services continue to grow, adding
new channels and viewers
• Hit shows and formats created in the U.S. are finding a more global audience; at the
same time, the market for local programming is thriving
The result is an increased demand for new and library content, and
programmed channel experiences
Group
Strategy Division | 2010 MRP
Sony
Corporation
2
Connected Devices such as Tablets, Smartphones, Consoles, &
Smart TV’s are Enabling Ubiquitous Consumer Access to Content
Over the next 4 years, device ownership is expected to grow at a 13% CAGR
102
13
85
70
12
48
11
52
10
36
26
35
8
20
7
6
2
5
7
2010
16
13
16
18
9
(1)
Game Console
19
13
16
19
22
10
2011
(2)
2012
2013
(3)
2014
2015
Stand Alone Set-Top Box
Internet Connected TVs and Blu-Ray Player
(4)
PCs/Home Media Server
Source: SNL Kagan. Number of devices in millions.
(1)
Applies to Internet-connected video game consoles used to access professionally produced content. Excludes multiple video game consoles per HH.
(2)
Stand-alone set-top boxes including, but not limited to, Apple TV, Roku, Boxee and TiVo. Excludes set-tops integrated with multichannel service
(3)
Internet capable TVs and blu-ray units that are connected and used for OTT video. Excludes overlap of devices.
(4)
Applies to households using a PC or media server to transfer OTT delivered content to the TV. Excludes households viewing content directly on PC screen.
Group
Strategy Division | 2010 MRP
Sony
Corporation
3
Connectivity and Devices are Driving Online Viewing
U.S. TV and Online Viewing Households (MM)
(1)
Total TV Households
42
'11
(1)
47
'12
53
'13
123
122
120
119
117
115
Online/OTT Video Viewing HHs
58
'14
63
'15
68
'16
Does not represent cord cutters but applies to households regularly viewing television shows or movies using Internet or over-the-top (OTT) delivery, most online/OTT video HHs in
the above graph also subscribe to multichannel services. Source: SNL Kagan, September 2012.
Group
Strategy Division | 2010 MRP
Sony
Corporation
4
The Emergence of Online Viewing has Created new
Players as Consumers Seek Flexibility
TV Everywhere
OTT
Traditional MSOs (i.e., cable & satellite) and
networks are adapting their services to
accommodate online viewing
New digital networks have emerged taking
advantage of the ability to go directly to the
viewer without an MSO middleman
Group
Strategy Division | 2010 MRP
Sony
Corporation
5
By Adding Digital Networks to the Traditional “Linear”
Channels, There is Greater Demand for Content
Digital networks also create demand for programming that is discontinued on traditional linear networks
Broadcast
Basic/Premium Cable
Internet
Services
Group
Strategy Division | 2010 MRP
Sony
Corporation
6
Networks are Under Greater Pressure to Distinguish
Themselves and Attract Viewers
Original programming has become a critical tool
Originals
Exclusive licensed
content
Non-exclusive library product
Group
Strategy Division | 2010 MRP
Sony
Corporation
7
Both Traditional Networks and Digital Networks are
Spending More on Programming
Traditional Linear Networks
New Digital Networks
Est. Annual Content Spend
$2Bn+
$500MM – $1Bn
$500MM
Group
Strategy Division | 2010 MRP
Sony
Corporation
8
Continued Growth of International Pay TV Universe
Tremendous growth opportunities internationally where Pay TV penetration is expected to grow to 61% by 2016
International Pay TV Subscribers & Penetration
900
90.0%
800
80.0%
700
70.0%
600
60.0%
500
50.0%
400
40.0%
300
30.0%
200
20.0%
100
10.0%
0
0.0%
2005
2006
2007
2008
2009
2010
2011
2012E 2013E 2014E 2015E 2016E
Subscribers
Int'l Penetration
Note: Subscribers in millions.
Source: Morgan Stanley research as of January 2013. SPT Networks FY16 sourced from FY 2013 MRP.
Group
Strategy Division | 2010 MRP
Sony
Corporation
US Penetration
CAGR TBD, remove US line
9
Global Growth in Television Consumption is
Increasing Worldwide Demand for US Content
Chart to be updated
Group
Strategy Division | 2010 MRP
Sony
Corporation
10
Sony Pictures Television: Highlights
SPT is well positioned to take advantage of the changing TV landscape
Global Pay TV
Growth
• Networks projected to have an EBIT CAGR of 23% across the plan, coming from all
regions across the world as newer channels mature to profitability and more
mature channels grow or maintain their margins
New Distribution
Opportunities
• International distribution continues to grow given new buyers and opportunities
with SVOD and a strong global Pay TV market
• Increasing buyers for content as new SVOD (i.e., Netflix) and AVOD (Crackle)
services continue to proliferate
• Crackle breaking new ground with original production and continue distribution
across platforms and global expansion
Increased
Demand for
Content
• Most successful production slate in a decade with SPT receiving orders for seven
new scripted series
• Currently producing 32 programs for 17 US networks
Group
Strategy Division | 2010 MRP
Sony
Corporation
11
SPT Embraces Changes
An industry leader constantly shaping and adapting to new trends, SPT has experienced significant growth and
has become the largest contributor of profitability to SPE
Profit – FYE03
Total TV = 60%
Total TV = 37%
TV
Production
&
Distribution
33%
TV
Production
&
Distribution
27%
TV
Networks
4%
Group
Strategy Division | 2010 MRP
Sony
Corporation
Profit – FYE13
Motion
Pictures
63%
TV
Networks
33%
Motion
Pictures
40%
12
SPT Networks: Global Expansion
SPT is capturing the subscriber growth trend by continuing to expand our channel presence internationally
through new channel launches and targeted acquisitions in key growth areas
159 COUNTRIES
804 MILLION HOMES
124 FEEDS
22 LANGUAGES
EUROPE & RUSSIA
KOREA
NORTH AMERICA
JAPAN
ASIA
AFRICA
LATIN AMERICA
Group
Strategy Division | 2010 MRP
Sony
Corporation
AUSTRALIA
13
SPT Networks: Adapt or Die
SPT’s broader network strategy also recognizes new distribution platforms and consumer behavior
SPE already owns a premium content OTT digital network with Crackle
• Top ad-supported premium content service that is available across all platforms; broader audience reach than several
top paid services, including Hulu+ and Amazon
• Top ad-supported channel on key platforms (Top 5 channel on Bravia, Blu-ray, and Roku)
• Crackle expanding device and territory footprint to capitalize on growth in alternative consumption models
Expanding Reach of Linear Networks
• Evaluating direct-to-consumer apps (e.g., AXN Go in LATAM) with cable/sat partners
• Participating in existing local TV Everywhere offerings of cable/sat partners (e.g., Singapore)
Group
Strategy Division | 2010 MRP
Sony
Corporation
14
SPT Distribution: Growing Buyer Pool
International distribution continues to grow given new buyers and opportunities with SVOD and a strong global
Pay TV market. The team has continued to build relationships with content buyers both domestically and
internationally which is directly reflected in the growing number of SPT customers we sell to
International
Domestic
780
136
509
76
300
41
1990s
2000s
Current
1990s
2000s
Current
Source: SPT analysis.
Note: Domestic count does not include local affiliates of national networks already included.
Group
Strategy Division | 2010 MRP
Sony
Corporation
15
SPT Distribution: Shift in our Revenue Mix
SPT has capitalized on the shift in consumer consumptions patterns. This is directly reflected in our shifting
sources of distribution revenue as well as our new deal structures and partners (ex. Community on Netflix)
International Revenue Mix
U.S. Revenue Mix
1%
12%
1%
86%
5%
11%
1%
83%
6%
14%
2%
78%
6%
14%
4%
8%
18%
1%
6%
6%
1%
7%
1%
6%
2%
94%
93%
92%
90%
2%
6%
7%
10%
76%
85%
63%
FY08 FY09 FY10 FY11 FY12
EST/iVOD
PPV/VOD
SVOD
Free/Pay
FY08 FY09 FY10 FY11 FY12
EST/iVOD
PPV/VOD
SVOD
Free/Pay
Source: SPT and SPHE finance.
Group
Strategy Division | 2010 MRP
Sony
Corporation
16
SPT: U.S. Production
SPT has had the most successful production slate in a decade with SPT receiving orders for seven new scripted
series. SPT’s increased production slate reflects our success creating original television content to satisfy a
greater demand for our product
26
24
22
6
16
17
17
17
10
8
5
8
11
9
10
18
12
11
9
2006-2007
16
8
6
2005 -2006
14
2007-2008
2008-2009
New Series
2009-2010
2010-2011
2011-2012
2012-2013
Returning Series
Note: Excludes Wheel of Fortune, Jeopardy!, The Young and the Restless, and Days of Our Lives.
Group
Strategy Division | 2010 MRP
Sony
Corporation
17
SPT: International Production
Building a Worldwide Presence
Companies in 13 countries around the world covering multiple regions;
Programs aired in 88 countries, 73 languages and counting…
London
Paris
Amsterdam
Cologne
Beijing
Moscow
ASIA
Rome
Culver City
Beirut
Cairo
Miami
(Latin America/USH)
Dubai
Hong Kong
Bogota
AMERICAS
EMEA (Europe, Middle East, Africa)
Sao Paolo
Tuvalu
Group
Strategy Division | 2010 MRP
Sony
Corporation
18
Q&A
Group
Strategy Division | 2010 MRP
Sony
Corporation
19