Turbo-charge PlanSteering Committee Update
June 6/7th , 2010
Transformation Management Office 2
THE GAME IS ON…RECENT BUZZ ON NETWORK SERVICES
“Robbie Bach (Head of Games Division) pushed out…our mobile efforts aren't keeping pace with other new trends”
Disappointed with progress, Microsoft “axes executives
behind Xbox”…re-boosting its strategy?
“Apple TV will retail for $99”
“$30 a month to watch TV via iTunes”
“Apple is moving away from the model of local storage,
and will be focusing on cloud-based storage”
Sources: Forbes, Independent, The Korean Herald, Smarthouse, Engadget
“Significant budget allocation to the bada OS
project … determined to be a major competitor to
both Google TV and Apple.”
“Wooing developers to create content and software for televisions…ultimately work with its mobile platform, bada”
Xbox Live Anywhere: ‘3 Screen, 1 Cloud’
“Cloud based, subscription TV model…alternative to Cable?
Aggregator's Aggregator bada TV to take on Google &
Sony
Transformation Management Office 3
KEY DECISIONS TO TURBOCHARGE EXECUTION
Agree on service plan hypotheses and what to test in customer survey? (e.g., What do we need to turbo-charge to make Network Services a growth pillar for Sony)?
– Key headlines or value propositions1. “Your place for ‘SPORTS”2. “Best of cable with better price point”
– Specific exclusive content to differentiate from others3. “Exclusive Sony original programming”
Discuss speed of execution, prioritization of resources/budget allocation. --Decision to be as early as possible for fast execution (incl. pilot scope)
– Content aggregation
– Device coverage and integration to support network services
Others
Next steps
Transformation Management Office 4
TURBOCHARGE SERVICE HEADLINES TO BE TESTED
• INTERACTIVES service provided by Sony• Original game shows, Education /Health & Wellness
• Exclusive offering from SPE/SME library • Anime/concerts/early releases of SPE films
• Tailored entertainment packaging from SPE library • Movies/dramas selected for YOU – by target segment
• All ‘must have’ sports available
• Some popular sports / niche sports highlights/lives are ONLY available here
• Sony original programming for popular sports (e.g., mix martial arts)
Build “Your Own” subscription, nothing more, nothing less
• ‘Cable Lite’ (40-50 channels) for better price and better experience (VOD/Live/Linear)
• Premium cable subscription (a la carte)
‘Best of Internet’1. “Your place for SPORTS” 2. “Best of Cable”
3. Tailored “Sony” Original Entertainment Packages To Meet Your Needs(based on customer segment / demographics)
Transformation Management Office 5
1. Your Place for Sports
WE ARE CURRENTLY NEGOTIATING KEY SPORTS CONTENT…NEED TO CONSIDERFURTHER COVERAGE/EXCLUSIVITY TO PURSUE
Exclusive for any media
Exclusive for online
Exclusive for non-PC connected
devices
Exclusive forgame consoles
Exclusive to competitor
brands
Non-exclusive
Level of Exclusivity
Tier 1 Sports
Tier 2 Sports
Others
Highlights Tennis
CricketIn pipeline of
negotiated by SNEI
(Bounty model)
In pipeline of SPE negotiations
Original MMA themedprogram JV w/ Tap out
Lev
el o
f T
raff
ic
Transformation Management Office 6
Selective Content VOD ‘Best of cable’
2. ‘BUILD YOUR OWN CABLE PACKAGE’
WE ARE BUILDING OUR ‘CABLE LITE’ SERVICE IN A PHASED APPROACH… ENGINEERING RESOURCES MAY BE NEEDED TO ACCELERATE LAUNCH TIMING
In negotiation to launch ‘Hulu PLUS’ in FY10 July
In negotiation to launch selective premium cable channels live/linear online in FY10 2H onwards
FY2011 2HFY2010 July FY2010 2H
(VOD and/or Live /Linear of Premium Cable – ‘A la Carte )
(VOD of some cable shows)
In negotiation to launch FOX/NBC/Disney 40-50 channels as ‘Cable Lite’ offering
(Live /Linear of All Cable Content ‘Best of Cable’)
Needs more than 12 months under current engineer
capacity
Transformation Management Office 7
3. SONY ORIGINAL ENTERTAINMENT PACKAGE
SONY EXCLUSIVES INCLUDING ORIGINAL PRODUCTIONS AND TAILORED ‘SONY’ PACKAGES BY CUSTOMER SEGMENT TO DRIVE FURTHER REVENUE
New Interactive Entertainment Experience Produced by Sony
Sony Exclusive (Exclusively Distributed via Sony Network Services only (including Early ReleaseA))
Original Packaging from Sony Library
Young Gamer Pack Family Pack
Seinfeld
Health& Wellness EducationOriginal Game Shows
Iron man Anime Wolverine Anime Petit Prince 3D Anime
Transformation Management Office 8
SPEED OF TURBO PLAN VIDEO SUBSCRIPTION: KEY DISCUSSION POINTS
FY2010 FY2011
Jul Aug Sep Oct Nov Dec Jan Feb Mar AprContents/Services
Mar
Devices
Marketing
Your Place for Sports
Build YourOwn cable
TailoredSony OriginalEntertainment Packages
Turbo-charged Cable Lite?
Pilot Full launch
Must haves
Featured hot sports Mix martial arts: Further exclusivity? + Original production?
Hard to find any where else
FamilyMale
Female
Young gamer
Turbo-charge other sports acquisition?
PS3Vaio (Media Go pre installed)
Net box (Need engineering capacity)?
IPTV small screen (Need engineering capacity)?Android TV?
Smartphones?
Marketing hook device (Net box, IPTV small screen for low price with NW bundling)?
Consistent marketing message on target devices (Features NW service w/ device?)
All content package Integrated marketing?
Co-marketing w/ SPE/SME ?
Co-marketing w/Game or music subscription package?Co-marketing with SCE?
PSP (Remote play needed for streaming)?
Key decision point
Original Game shows?
Health& wellness?
Education?
Transformation Management Office 9
POPULAR SPORTS CONTENTS/ ONLINE AVAILABILITY
Source: Mediamark Research & Intelligence 2008Note1: Population represents adults who attend these sporting events one or more times a month; (some estimated based on relative no. of website)
Illustrative - For Discussion Purposes Only
# of fans*1
(attend more than one time a
month)
More than 3mil
1 mil- 3mil
Less than 1 mil
Hard to find online
ProFootball(4.6M)
Baseball(8.6M)College
Football(6.4M)
NASCAR(2.1M)
CollegeBasketball
(4.2M)Pro
Basketball(3.9M)
Golf(2.4M)
Boxing(1.1M)
Ice Hockey(2.5M)
Tennis(1.4M)
HorseRacing(1.3M)
Bowling(1.8M)
Pro Wrestling
(1.3M)
Figure Skating(0.6M)
Fishing Tournament
(0.9M)
Soccer(3.3M)
MotorcycleRacing(1.0M)
Pro BeachVolleyball
(0.4M)
Rodeo(0.9M)
Equestrian Events(0.9M)
MartialArts
Action SportsSwimming
Volley ball
Cricket
Running
Rugby
Track &Field
Hunting
Lacrosse
Live streaming service available
Only archive available on line
Some deal done/Planned to negotiate by SNEI
Not in scope yet
Can be a first mover to lock in, but require technical resource investment to make them online PF eligible
Transformation Management Office 10
KEY DECISIONS TO BE MADE FOR ‘TURBOCHARGE’ EXECUTION
Key Considerations
What should we turbo-charge/ prioritize to make strong NW service?
- Headline?- Coverage?- Exclusivity vs.
aggregation?- Others?
• Further or other exclusive sports needed?
• Accelerate our ‘Cable Lite’ offering timing from FY11 2H to earlier?
• More exclusive offering from SPE/SME library? Or accelerate developing interactive original programs?
• Accelerate other Services/Apps strategy?
• ROI & time to market judgment for cost for exclusivity/production acceleration
• Priority & time to market judgment to allocate further engineering resources
• ROI & priority judgment for budget& resource allocation
• Proper talent assignment and strategic direction decision
Key Decision Points
How should we turbo charge key devices support NW service?
- Upgrade Server? - Upgrade Client?
• Accelerate BIVL platform/device (core TV/BD) capability for turbo-charged video service?
Turbocharge marketing integration
- What are we marketing? NW or devices? Or Both?
- How to make consistent message?
• Engineering resource allocation needed for client/PF changes
• Accelerate Android TV/BD support for NW service instead?
• SW development needed to accommodate NW service (currently not on the SW roadmap)
• Should we make bold NW/device marketing by strong device subsidies (vs. Apple TV)?
- Net box at $50? - IPTV small screen with lower price?
• Should we make an integrated marketing among game/music/video service for pilot?
• Engineering resources needed for client/PF changes
• Marketing budget and execution capacity (esp. SEL/direct channel) to be secured
• Clarify common key concepts/headlines?• Co-market game/video bundle for PS3?• Co-market music/video bundle for Vaio?
Transformation Management Office 11
NEXT STEPS Contents/Services ROI Verification
– Customer Survey– 3rd Party Discussion
Technical Readiness Assessment and Required Resources to Execute
– Client Feasibility (device processing power, decoding, UI) BIVL PF/Device Upgrade Android TV Smartphones Other Iconic NPSG Devices
– Server/PF scalability (PSN/Qriocity)– Codec / DRM– Streaming/ delivery– Billing / reporting
Feasible Pilot Marketing Plan Development
Business Case/Economics Model Development
Governance Model, Organization and Staffing
Transformation Management Office 12
APPENDIX
Transformation Management Office 13
OUR PROPOSAL FOR TURBO CHARGING NW SERVICE
Stronger value proposition
More sustainability
Ensure early success
Only place to find all you need for ‘SPORTS’
‘Base of cable of better price points’
Exclusive content acquisition only for ‘THE SWEET SPOTS’
‘Sony originals’ to create sustainable competitive advantage
Launch tangible pilot service in US in FY10 2H
Not in 24 hrs
Transformation Management Office 14
‘ONE STOP SHOP FOR ALL SPORTS ‘AND ‘BEST OF CABLE WITH BETTER PRICE’ COULD BE COMPELLING VALUE PROPOSITION FOR CUSTOMERS
Sports and news are the most frequently checked video contents on internet
Transformation Management Office 15
1. ALL YOU NEED FOR SPORTS
COVERAGE; POPULAR SPORTS CONTENTS/ ONLINE AVAILABILITY
Source: Mediamark Research & Intelligence 2008Note1: Population represents adults who attend these sporting events one or more times a month; (some estimated based on relative no. of website)
Illustrative - For Discussion Purposes Only
# of fans*1
(attend more than one time a
month)
More than 3mil
1 mil- 3mil
Less than 1 mil
Hard to find online
ProFootball(4.6M)
Baseball(8.6M)College
Football(6.4M)
NASCAR(2.1M)
CollegeBasketball
(4.2M)Pro
Basketball(3.9M)
Golf(2.4M)
Boxing(1.1M)
Ice Hockey(2.5M)
Tennis(1.4M)
HorseRacing(1.3M)
Bowling(1.8M)
Pro Wrestling
(1.3M)
Figure Skating(0.6M)
Fishing Tournament
(0.9M)
Soccer(3.3M)
MotorcycleRacing(1.0M)
Pro BeachVolleyball
(0.4M)
Rodeo(0.9M)
Equestrian Events(0.9M)
MartialArts
Action SportsSwimming
Volley ball
Cricket
Running
Rugby
Track &Field
Hunting
Lacrosse
Live streaming service available
Only archive available on line
Some deal done/Planned to negotiate by SNEI
Not in scope yet
Can be a first mover to lock in, but require technical resource investment to make them online PF eligible
Transformation Management Office 16
1. ALL YOU NEED FOR SPORTS
EXCLUSIVITY: BSKYB SECURED PREMIER LEAGUE SOCCER TO DRIVE SUBSCRIPTIONS
Exclusive Premier League Deal
1988 1992 1996 2000 2004 2008
0
5
10
9.5 Million
Sources: Sky Corporation website, BBC News, EU Research on BskyB
£191 MillionValue of first Premier League TV deal in
1992–1997 (60 matches per season)
£1.6 BillionValue of 2010–2013 Premier League TV deal in 1992 (115 matches per season)
More than 60% of Premier League fans subscribing to Sky Sports say Premier
League football was the primary reason to subscribe*
Sky, which has drawn over 9 million customers (more than 1 in 3 homes in U.K. & Ireland), relies heavily on major sports coverage like football and movies for winning and keeping subscribers
Subscribers (Millions)
News Corp’s BSkyB Uses Exclusive Content to Drive Subscriptions and Device Purchases
Transformation Management Office 17
Boxing
2.4 million pay-per-view buys May 2007 bout between Oscar De La Hoya vs. Floyd Mayweather ($54.95 per view in the U.S.)
1.05 million pay-per view buys Floyd Mayweather’s fight with Juan Manuel Marquez ($49.95 per view in the U.S.)
1.25 million pay-per-view buys Manny Pacquiao’s fight with Miguel Cotto which didn't feature an American fighter and sold for $54.95 in the U.S. ($5 more than Mayweather-Marquez)
1. UFC 100: Brock Lesnar vs. Frank Mir 1.6 million
2. Boxing: Manny Pacquiao vs. Miguel Cotto, 1.3 million
3. Boxing: Mayweather vs. Marquez, 1.1 million
4. UFC 94: Georges St. Pierre vs. B.J. Penn 920,000
5. UFC 101: Penn vs. Silva vs. Griffin, 850,000
6. Boxing: Manny Pacquiao vs. Ricky Hatton 825,000
7. UFC 107: B.J. Penn vs. Diego Sanchez 650,000
8. UFC 97: Silva vs. Liddell vs. Mauricio Rua 650,000
9. UFC 98: Machida vs. Hughes vs. Matt Serra 635,000
10.Wrestling: WWE WrestleMania 25 582,000
Sources: Yahoo! Sports
Top-ten pay-per view events of 2009
Buys
1. ALL YOU NEED FOR SPORTS
EXCLUSIVITY- UFC LIVE MATCHES COULD DRIVE SIZABLE TRAFFIC
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2. ‘Build your own package ‘
RESEARCHE INDICATES THAT US CUSTOMERS ARE MOVING TO ONLINE VIDEO BY CANCELLING CABLE
Customers are looking for
1.Better price with only channels you need
2.Better user experience (i.e. always accessible to the contents you want, both Live/Linear +VOD)
Customer segment
Transformation Management Office 19
SCOPE OF PILOT SERVICE IN FY10 2HFree accessservice
3. ‘Sony original entertainment package- JUST for you’
Featuring HOT sports – Special subscription for ‘Exclusive matches’ + ‘Sony original programs’
VOD (Baseline) Free contents- Traliers etc
2.‘Best of your cable with your selection
1.‘ ALL YOU NEED FOR SPORTS’
Mixed Martial Arts (UFC/Tapout )
Cable Lite- Top rated cable 40-50 channels (FOX/ NBC/Disney)
Starz Showtime HBO
Family package Young gamer package Male package Female package
‘Movies for you’ - Segment target picks from SPE archives + Acquired Indy films
Sony Originals/Exclusive entertainment
‘Dramas for you’ – Segment target picks from SPE dramas
Education for adults
Family package
For young gamers For Family For Male For Female
For young gamers
Original Anime – Iron Man, Wolverine
Original Game Shows – Pressure points, Current TV
Health & Welleness
Education for Kids
Game related program
Original Drama – Craclke drama
For Family For Male For Female
‘Must Haves’- Subscription to premium 3rd party service (a la carte)
Motor Sports
MLB NBA NHL NFLESPN3
・・・・
・・・・
‘Hard to find anywhere else’ – Exclusive VOD (or subscription)
Exclusive Sony Music Concert (3D concerts, etc)
BMX/Motocross Skate Track & Field Surf Cricket
Areas to seek for Strong Exclusiveness
Soccer (FIFA/UEFA) ・・・・
EPIXHulu plus
Tennis
Transformation Management Office 20
HOW WE MAKE DECISIONS ; CUSTOMER SURVEY & FURTHER DISCUSSIONS WITH 3rd PARTY WILL PROVIDE SOLID FACTS FOR CONTENT/SERVICE JUDGMENT
•Which headline move customers most? Sports? Cable Lite? Different by segment?•Do ‘Sports’ & ‘Cable Lite’ services drive enough customers to subscribe our original entertainment pack?
•What specific contents/service generate most traffic and revenues?•Is our current sport service enough to make customers’ traction? If not, what should we cover further to make ourselves ‘special’ for sports?• Is our ‘Cable Lite’ offering plan compelling? Should we accelerate the launch timing if that is the case?
What should be our priority headline for the service?
What should we accelerate ? Sports right coverage? Cable Lite launch?
What is the must haves/priority among potential ‘exclusive’ contents to invest?
How can we make feasible & sustainable service model?
•What is the most appealing, ROI optimal exclusive contents among our potential turbo-plan list ? (Traffic generators? Revenue enhancer?)
•Mix martial arts (UFC/Tapout)? •Original game shows? Health&Wellnes? •Exclusive Sony library contents like Sienfield?
•What is the optimal bundle/pricing for segment based package to maximize our wallet share?
•How can we minimize upfront investment/minimum gurantee? What can we do as a negotiation tactics?
Expected questions to be answered by customer survey result
Transformation Management Office 21
1. ALL YOU NEED FOR SPORTS
‘SONY ORIGINAL PROGRAM ON HOT SPORTS’SPE STARTED DISCUSSION ON MIX MARTIAL ARTS ORIGINAL PRODUCTIONVIA JOINT VENURE WITH ‘TAPOUT’
•Reality television series that focuses on the world of mixed martial arts.
•The series follows employees of the TapouT clothing and gear line, as they travel around the country in search of promising MMA fighters to develop and possibly sponsor.
•Each episode follows the training and development of one fighter, culminating in a fight at a professional MMA event.
What is TAP OUT?
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TARGET DEVICE FOR PILOT (FY10 2H) WILL BE RESTRICTED TO PS3, VAIO UNLESS WE URGENTLY ADD ENGINEERINC CAPACITY FOR OTHER DEVICES TO ACCOMMODATE VIDEO SUBSCRIPTION/STREAMING SERVICE
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PRELIMINARY SERVICE OFFERING IDEAFree accessservice
3. ‘Sony original entertainment package- JUST for you’
Featuring HOT sports – Special subscription for ‘Exclusive matches’ + ‘Sony original programs’
VOD (Baseline) Free contents- Traliers etc
2.‘BUILD YOUR OWN CABLE PACKAGE’
1.‘ABSOLUTE PLACE TO GO FOR SPORTS’
Mixed Martial Arts (UFC/Tapout etc)
Cable Lite- Top rated cable 40-50 channels (FOX/ NBC/Disney)
Starz Showtime HBO
Family package Young gamer package Male package Female package
‘Movies for you’ - Segment target picks from SPE archives + Acquired Indy films
Sony Originals/Exclusive entertainment
‘Dramas for you’ – Segment target picks from SPE dramas
Education for adults
Family package
For young gamers For Family For Male For Female
For young gamers
Original Anime – Iron Man, etc.
Original Game Shows – Pressure points, Current TV
Health & Welleness
Education for Kids
Game related program
Original Drama – Craclke drama, Spin off dramas of SPE movies etc
For Family For Male For Female
‘Must Haves’- Subscription to premium 3rd party service (a la carte)
Motor Sports
MLB Tennis NHL NFL ESPN3
・・・・
・・・・
‘Hard to find anywhere else’ – Exclusive VOD (or subscription)
Exclusive Sony Music Concert (3D concerts, etc)
BMX/Motocross Skate Track & Field Surf Cricket
Areas to seek for Strong Exclusiveness
Soccer (FIFA/UEFA) ・・・・
EPIXHulu plus Netflix
Transformation Management Office 24
EXCLUSIVITY: YOUTUBE’S IPL CRICKET STREAMS NEAR 50 MILLION VIEWS
YouTube’s IPL channel has over 49.5 million views, exceeding the company’s internal expectations of 10 million views over the course of the tournament.
Viewers from 200 countries have watched the streams.
India has the most views overall; coming in second is the United States — YouTube had expected that spot to go to the UK or Australia, where cricket gets far more attention
Google’s two-year deal with the Indian Premier League gives the Google-
owned YouTube the exclusive rights to stream IPL matches online*
Sources: UK Guardinan, Techcrunch
Exclusive Content Examples
Key Impact
*Note: When the IPL deal was first signed it granted YouTube live streaming rights for every country except for the United States, where matches have been posted fifteen minutes after they ended. However, YouTube is streaming both the semi-finals and
finals live
1. ALL YOU NEED FOR SPORTS
Transformation Management Office 25
Sony Corporation Internal Use Only page 25
Significant investments and a longer term outlook are required to build a successful distribution business
Estimated Investment1
Service Break Even Year
$250-$350M
Year 3
$200-$300M
N/A
$500M+
Year 5
(1) “Microsoft’s $1B Bet on Xbox Network”, NyTimes; Providence investment of $100M, Yahoo! News(2) Goldman Sachs April 2007 Report (MSFT); Credit Suisse (Apple) May 2006(3) Actively seeking device partners for direct-to-TV distribution
1st 3 Year Device CAGR2 184% TBD3 130%
Estimated 2007 Revenue
$250M (1st Year) March 2008 Launch
$2B (5th Year)