M+E Connections

Sony Entertainment is benefiting from the increased popularity of connected devices and growing number of over-the-top (OTT) TV and digital music services, company executives said June 29 at its investor day in Tokyo. The company also expects to benefit from an expanding international movie market led by China.

“Consumers are watching more television than ever before thanks to a growing universe of connected devices and the over-the-top networks that have emerged to put content on those devices,” Sony Entertainment CEO Michael Lynton said. “On-demand viewing technology has not just changed the amount of television that we see; I think it’s fair to say that the quality of the programming has never been better,” he said. On-demand TV viewing has “enabled consumers to more easily follow a season of television that develops over the course of a 10-hour dramatic series or 22 half-hour comedy episodes,” he said. That business model is very appealing to writers, so we’re seeing more top creators wanting to write for TV, he said.

The increased number of subscription on-demand networks has also “driven a meaningful increase in the amount of original programming in the marketplace,” he said. “Both traditional linear networks and these newer over-the-top entrants are wooing customers with original content and that has created a very fertile market” for the TV programs produced by Sony Pictures, he said.

Sony Pictures was hurt in the past fiscal year that ended March 31 by factors that included the “underperformance” of its film slate and the “negative impact from cyber-attack” costs, he said, referring to the hacker group that, in late 2014, released confidential company information and demanded that it not release the controversial comedy “The Interview.”

But Sony Pictures saw growth in a few key areas of its business in the past fiscal year, including increased international TV licensing, he said.

The company is optimistic about its movie business, in part due to international box office expansion in markets including China, Tom Rothman, chairman of the Sony Pictures Motion Picture Group, said. China’s box office is “experiencing explosive growth,” is expected to surpass the North American box office by 2018, and is projected to top $16 billion by 2020, driven by new movie screens in that market, he said.

Sony’s music business was helped in the past fiscal year by growth in music streaming that was “driven by an increase” in pay subscribers to services including Spotify and Apple Music, said Lynton. The music business also received a lift from “strong visual media and platform revenues, driven by” the sale of an unspecified game application for mobile devices distributed by Sony Music Entertainment in Japan, he said. Those increases were “more than enough to offset declines in physical media sales and digital download sales,” he said.

A major goal of the company is to “continue to drive revenue through new channels such as streaming with the use of playlists,” Sony Music Entertainment CFO and EVP Kevin Kelleher said.