avex group growth strategy 2020 - IR Webcasting · avex group growth strategy 2020 ~towards an innovative future of entertainment~ ©2016 Avex Group Holdings 1 ... We will reset the

©2016 Avex Group Holdings

May 11, 2016

avex group growth strategy 2020 ~towards an innovative future of entertainment~

1 ©2016 Avex Group Holdings

1. Introduction

2. Growth Strategy for the Third Takeoff

3. Individual Strategies

4. Upcoming Plans


1. Introduction



4. Upcoming Plans


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Sales Operating Income

Financial Trends

Sales (billions of yen)

Operating

Income (billions of yen)

1988

Avex

Foundation

2005

2nd takeoff: structural reform

‐

Currently facing stagnation

Unable to maintain the

growth rate,

and earnings fell

Avex group grew progressively after it was founded in 1988, and

maintained growth by pushing through a structural reform at the time

of stagnation in the 2000s. In recent years, however, we have faced a

new stagnation.

2013:

Video distribution

business and live

business led sales

2009:

Video distribution

business began

1999:

Listed on TSE

1st Section

1995:

Management operation

grew to a major business

1992:

Imported record sale and

label business began


0

400

800

1,200

1,600

2010 2014

0

100

200

300

2011 2015

0

50

100

150

200

2011 2015

0

250

500

2007 2015

Market Situation

While the music market has been shrinking every year, the

entertainment market, LIVE , DIGITAL content, and ANIME surrounding

the music industry, has been growing steadily. Considering our

comprehensive “360-digree model” in the entertainment market, we

view this situation as a positive growth opportunity.

Approx. double in 4 years Approx. 1.9 times in 4 years Approx. 1.3 times in 4 years

The market is shrinking every year

(approx. 35% decline since 2007)

(billions of yen)

(billions of yen) (billions of yen) (billions of yen)

Source: Recording Industry Association of Japan

(total of package and digital distribution)

Source: Nomura Research Institute, Ltd. Source: Survey conducted by

Association of Japanese Animations and

publicly available statistics

Source: All Japan Concert & Live

Entertainment Promoter's Conference

Live Market Anime Market Digital (VOD) Market

Music (Software and Digital Distribution) Market


Business diversification is blocking the sharing of the

Company’s direction, and the Group’s sense of unity needs to

be nurtured further more.

Principles

Inadequate business selection and concentration are

preventing a full shift to growth markets. Strategy

The organization’s inflexibility and progress of individual

optimization resulted in a decline in labor productivity. Organization

Not enough uptake from the growing market

Despite the growth of the entire market surrounding us, the financial

results we had scheduled in our “Mid-term Strategy 2018” had fell

behind the plans.

Problems encountered while implementing the

Mid-term Strategy 2018

Problems encountered


1. Introduction



4. Upcoming Plans


Problems encountered while executing the

Mid-term Strategy 2018

Rethinking how we should be

as an entertainment company

Principles

Need for selection and

concentration

Strategy

Reform into a system for

total optimization

Organization

Details to be explained after P8 Works in progress

Positioning of the Reformation (The Third Takeoff)

We will reset the plan period and develop a growth strategy to overcome

the problems we faced while implementing the Mid-term Strategy 2018,

and accelerate and maximize our growth. We will also be carrying out a

company-wide reform that includes the organization and principles.

Position these as the “third takeoff” and implement a company-wide reform

< Strengthen growth strategy >

Define the focus areas in

which to concentrate

investments

< Review the principles >

Redefine the management

philosophy and code of

conduct (who and how Avex

should be)

< Reform the organization >

Design policies and systems to

revitalize the organization and

its members and maximize

their value


Selection and concentration in growth market

Strategies to create

new hits

Thorough total

optimization

• LIVE：Business expansion by

incorporating content other than

music and strengthening and

entering peripheral businesses

• ANIME：Acquire new rights and

maximize existing businesses

• DIGITAL：Establish advantages

for existing businesses and

promote digitization of all forms of

entertainment

[New] artists, creative

professionals,

and content

LIVE DIGITAL

ANIME

Management

MD/

FC

Others

Package

Music

Publishing Education

Grand Image of our business scale by 2020： Consolidated net sales of 250 billion yen

Focus on LIVE, ANIME, and DIGITAL as the areas of selection and

concentration, and pursue total optimization to promote business synergies

while aiming for business expansion. Additionally, we will implement the

strategies to create new hits using our 360-degree business foundation.

Growth Strategy: Overview Reviewing

Principles

Organizational

Reform

Strengthening Growth Strategy


1. Introduction



4. Upcoming Plans


1. Increase the number of live events through library expansion

• Increase new deals for the production and operation of Japanese and foreign music live concerts

through alliances with outside companies, which was not possible for Avex alone.

• Actively increase other events such as major overseas music festivals, theaters, and musicals.

2. Maximize profit per event by strengthening existing and entering new live event peripheral businesses

• Strengthen live-event peripheral businesses such as fan club operation, merchandise sale, ticket sale, and sponsor acquisition.

• Enter the transportation and lodging businesses that capitalize on the flow of people incidental to live events, and maximize the profitability from LIVE related businesses as a whole.

3. Enhance contents by actively utilizing the functions as the one and only Live entertainment platform operator

• Actively expand the merchandise and ticket businesses into the sports and other territories.

• Aim to enhance content and increase monetizing opportunities by exercising businesses meeting

the demands of artists and content owners

Business Reinforcement 1: LIVE

Expand our businesses and profitability in the

growing LIVE market and surrounding markets

using our know-how as one of Japan’s leading live

event business operators and external alliances.

LIVE DIGITAL

ANIME


professionals,

and content

Management

MD/

FC

Others

Package

Music



2. Obtain new IP and increase rights

• Develop and acquire original copyrights for anime content.

• Acquire more rights that allow secondary use (overseas, digital distribution,

merchandise sale, game apps, etc.).

1. Maximize sales from hit content

• Focus on capitalization through the sale of games apps and merchandise

that use hit content such as “Osomatsu-san”. Build a winning model and

divert it to other IPs.

3. Strengthen content procurement business of The Anime Times Company

• Enhance the links with “dTV,” Geo Channel, etc.

• Increase the supply capacity of anime content to other digital distribution

and VOD players.

LIVE DIGITAL

MD/

FC

ANIME


professionals,

and content

Business Reinforcement 2: ANIME

Develop the “360-degree business” in ANIME

market and maximize the sales by capitalizing the

growing peripheral businesses of games apps,

merchandises, digital distribution, etc.

IP=Intellectual Property

Management Others

Package

Music



1. Enlarge and establish presence as a video distribution platform

• Strengthen its position as Japan’s largest video distribution platform and

establish advantages in the competitive landscape.

2. Add further value and increase mutual links among digital services

• Increase the added value of the overall services by mutually linking video

distribution and digital services for fan clubs, e-commerce, etc.

3. Actively capture opportunities for other digital-related businesses

• Accelerate an increase in business opportunities such as ticket sales, fan

club operation, merchandise sales, etc. by using digital means and promote

the digitization of entertainment businesses.

DIGITAL LIVE

Management

MD/

FC

Others

Package

Music



professionals,

and content

ANIME

Business Reinforcement 3: DIGITAL

Pursue business opportunities not only in the

existing digital distribution business, but also in

the digitization of various types of entertainment

including LIVE and ANIME.


●Structure and system to achieve total optimization

●System of sharing and using information,

other resources, and best practices

Package

LIVE DIGITAL

ANIME

Managememt

MD/

FC

LIVE

Management

MD/

FC

Others

Package

Music



professionals,

and content

ANIME

DIGITAL

Total Optimization Throughout

Despite the business expansion, each business has been more

individually optimized and the true value as a group is not fully

exercised, which leaves ample room for capitalization and cost

reduction.

Total optimization needs to be pursued in order to maximize the

Group’s business value.

Music

Publishing

Others

Education

Achieve total optimization and maximize group synergy.


1. Incorporation of varied content

• Recruit influential and creative talents, not limited to musician or artists

• Maximize opportunities for such talents using Avex’s business functions.

2. Overseas expansion

• Locate the main hub in North America, and increase content import and export capacity by improving interregional alliances.

• Develop artists not only for both Japanese and international market, and improve business development both in Japan and overseas.

3. Venture capital model

• Invest in and support talented people, whom aspires to succeed in the entertainment

industry.

• Create new hits, defying the conventional measurement of “a hit”.


professionals,

and content

New Strategies to Create Hits

Implement new strategies to create next hit

content. Take in a variety of content regardless of

the existing boundaries, and discover and

develop talents with new approaches.

LIVE

Management

MD/

FC

Others

Package

Music


ANIME

DIGITAL


Discover

talents

E-commerce

Marketing

Collaboration New HQ Building

Communities

Paradise for the

“creative people”

New Strategy to Create Hits 1: Incorporation of Varied Content

Being true to the basics of our business, we will continue to seek for influential

and creative people in whatever fields or categories they are talented in.

We will aim to provide a “creative people’s paradise” that offers various

opportunities and functions to support their inspirations and outcome.

Provide opportunities

and functions

LIVE Brands


Japan

Europe and

North America

Asia

Until today From now on

Japan based

We will not remain in the domestic market, but will make strategic moves in the

international markets. We will strengthen our ties between Japan, the U.S., and

Asia, using North America as a hub, and build an organizational structure

capable of discovering, importing, and exporting content appropriate for local

preferences and needs.

• Based on domestic business development of

Japanese content

• Limited to some import of Western content and

export of Japanese content to Asia

Global development

using North America

as a hub

• Discover content in North America and promote

development into Japan and other Asian regions

• Accelerate the export of comics (manga), anime,

and other Japanese content

• Strengthen our presence in Asia, particularly in the

Chinese market

North America

Japan Asia

New Strategy to Create Hits 2: Overseas Expansion


New Strategy to Create Hits 3: Venture Capital Model

Not only providing the environment and systems, we will invest in talents

aspiring to succeed in the entertainment industry to contribute more to the

creation of hits and the revitalization of the industry. While the factors of hits are

diversified due to changes in the users and media, we aim to create future hits

through open innovation defying the conventional measurement of “a hit”.

Entertainment

venture fund

Entertainment

entrepreneur

HR

< Support Scheme >

Activity support

(people, goods,

and money)

Discover and develop

[Use external resources]

Potential artists, TV

personalities, creative

professionals, etc.

* Launched initially as an

internal project

Composition

[Use our resources such

as schools and auditions]

Potential artists, TV

personalities, creative

professionals, etc.

Entertainment business

candidates in general public

Taking on the challenge of open innovation

corresponding to the diversification of hit factors due to changes in users and media

Establishment of new value through co-creation

that uses our resources and functions

http://www.flopdesign.com/download/premium_silhouette/pages/105.html





1. Introduction



4. Upcoming Plans


Upcoming Plans

Issues to be discussed by April 2017

Principles

Strategy

Organizations

and Systems

• Management Philosophy

• Code of Conduct

• Corporate Logo

• Tag Lines

• Social Contribution

• Rebuilding of Indivisual Business

Strategies

• Optimal Resource Distribution

• System to promote Group synergy

• New Management and Operation

System

• Organization for Strategy

Implementation

• Personal Evaluation system

Turn of Events

June 24, 2016 Announcement of new

management and

operation system

April 2017 Start of the “Third Takeoff”

We will fully review/reform and improve the philosophy, organization, and

structure of the entire Group to maximize the Group value with all employees

facing in the same direction and continue to provide customers with more

surprises and excitement.

Reviewing

Principles

Organizational

Reform



Change in the Governance System Reviewing

Principles

Organizational

Reform


Review the system in which the Representative Directors concurrently execute business, so that

“decision and supervision” by the Board of Directors of AGHD and “execution of business” by Corporate

Executives are clearly divided by delegating the execution of business to corporate executives who take

charge of each area.

Change the system to attain the following purposes by clarifying the responsible operating officers by

assigning Corporate Executives in charge of each business and area of the Group to AGHD.

Board of Directors

Business B Business A Business C Business D

AGHD

Board of Directors

AGHD

In charge of

Business A

Opera

ting

com

pan

ies

Board of Directors

In charge of

Business B

Board of Directors Board of Directors Board of Directors

In charge of

Business C In charge of

Business D

●Increasing the promptness of decision-making ●Clarifying responsibilities

●Cultivating next-generation managers ●Promoting company-wide optimization

[Present] Representative directors concurrently

execute business

[from July] Execution of business to be

delegated to Corporate Executives

Purposes of

changing the

governance

system

Corporate Executives Representative

directors

concurrently

execute business

In charge of

Area X

In charge of

Area Y

Business B Business A Business C Business D

Board of Directors Board of Directors Board of Directors Board of Directors

Promote company-wide

optimization through the

Management Meetings,

etc.

Opera

ting

com

pan

ies

Documents

avex group growth strategy 2020 - IR Webcasting · avex group growth strategy 2020 ~towards an innovative future of entertainment~ ©2016 Avex Group Holdings 1 ... We will reset the