sony pictures entertainment analyst meeting november 19, 2010 draft as of 11/15/10 10am sony...
TRANSCRIPT
SONY PICTURES ENTERTAINMENTAnalyst Meeting
November 19, 2010
DRAFT as of 11/15/10
10am
SONY PICTURES ENTERTAINMENT
MICHAEL LYNTON
Chairman & Chief Executive OfficerSony Pictures Entertainment
page 3
DRAFT
Sony Pictures
• SPE is diversified across multiple revenue streams
• Demand for content is growing
• SPE’s footprint is expanding
• Home entertainment consumption is shifting
• SPE is navigating these changes well
• SPE remains focused on financial discipline
• SPE is the only major studio owned by an electronics company, which creates advantages
• SPE is core to Sony’s 3D strategy
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Motion Pictures Television Production Television Networks
SPE is Diversified Across Multiple Business Lines
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Box Office TV Viewership
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
$7.7 $8.4
$9.2 $9.2 $9.4 $8.8
$9.2 $9.7 $9.6
$10.6
(1) MPAA, BMO Capital Markets, April 2010(2) Nielsen, and BMO Capital Markets, April 2010
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009
7:317:39 7:42
7:558:01
8:11 8:14 8:14 8:18 8:21
Demand for Content is Growing
US Box Office(1)
US$ BillionsUsage per US TV HH per
Day(2)
Hours: Minutes
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MotionPictures
• 2010 is SPE’s tenth straight year with over $1BN in North American box office receipts
• Eight #1 movie openings in 2009 and six to date in 2010
• Four films over $250 million in worldwide box office receipts in 2009 and three to date in 2010
• 73 #1 openings in the U.S. over last 10 years, more than any other studio
• Multiple franchise films in production
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DRAFTUpcoming ReleasesColumbia
The Tourist Angelina Jolie, Johnny Depp
How Do You KnowPaul Rudd, Reese Witherspoon, Jack Nicholson, Owen Wilson
James L. Brooks (D)
The Green HornetSeth Rogan, Jay Chou, Cameron Diaz
D = Director
TBU
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Just Go With ItAdam Sandler, Jennifer Aniston
Battle: Los AngelesMichelle Rodriguez,Aaron Eckhart, Bridget Moynahan
Upcoming ReleasesColumbia
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Burlesque Cher, Christina Aguilera
Country Strong Tim McGraw, Gwyneth Paltrow, Leighton Meester
The RoommateLeighton Meester, Minka Kelly
Upcoming ReleasesScreen Gems
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‘Event’ Films in the
Pipeline
• Plans in place for new films from existing franchises
– Spider-Man
– Men in Black 3
– Resident Evil 5
– Underworld 4
• Expanding relationships in animation
– Aardman partnership brings us Arthur Christmas and The Pirates!
• Introducing new franchises
– The Girl with the Dragon Tattoo in production and rights to the rest of the Stieg Larsson Millennium Trilogy secured
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3D at the Box Office
• 3D remains a growth driver
• Internationally, the proportion of box office receipts from 3D has been consistently high
• In the U.S., there have been fluctuations, but recent films have seen the majority of receipts from 3D
• Performance has varied by genre, with young-male oriented films generating the highest percentage of box office from 3D
Slide is in process and subject to change
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DRAFT
Motion PicturesTrailers
• The Green Hornet
• The Smurfs
• The Tourist
• How Do You Know
• Zookeeper
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Television
• Large and growing global footprint
• Continued investment in international production and networks
• In the U.S., SPT has 25 series on the air across 13 broadcast and cable networks this season, including 6 new shows
• “The Dr. Oz Show” was renewed for 3 more years
• “The Dr. Oz Show” was sold in 100 territories and is being produced in local language in China, Russia and the Middle East
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Expansion of Networks Globally
122 Feeds
140+ Countries435+ Million HH
22 Languages
mobile
mobile
mobile
mobile
mobile
Includes wholly and partially owned networks
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Culver City
Miami (Latin America/USH)
Bogota
Buenos Aires
Madrid Rome
Paris
LondonHilversum
CologneMoscow
Beijing
Hong Kong
New York
HUASO
FLORESTA
Sao Paolo
International Television Production Expanding Presence
Includes wholly and partially owned production companies
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Home Entertainme
nt
• Consumption patterns are shifting
• Recent pressure resulting from:
– Total number of transactions mainly flat with small fluctuations
– Revenues down as purchases shift to rentals
– Within the rental business, a shift from higher margin in-store-rental transactions to lower margin subscription and kiosk transactions
• A complex landscape going forward
– Physical sell-through under continuing pressure, although mitigated somewhat by growth in Blu-ray
– Rental transactions are up
• Shift from in-store-rental to subscription and kiosk continues
• Higher margin digital/VOD transactions accelerating and represents a key growth driver
– Potential for new distribution windows
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US Consumer Rental Transactions (billions)(1)
(1) Screen Digest 2010. VOD includes online, telco, MSO and DBS.
Home EntertainmentRental Landscape
• Recent shift within rental has been from physical in-store-rental to lower-margin physical rental options, including kiosk and subscription
• But overall transactions are forecast to grow; growth in higher-margin digital represents an opportunity
2009 2010 2011 2012 2013 20140.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
1.51.8
2.02.2 2.2 2.3
0.80.6
0.40.4 0.4 0.30.4
0.4 0.50.5 0.6 0.6
VOD
In-Store-Rental
Subscription / Kiosk (lowest rental margin)
(highest rental margin)
2.7 2.82.9
3.13.2 3.2
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DRAFT
Success in a Changing
Marketplace
• Continue to create high quality films
– Diversity across small, medium and large pictures
– Capitalize on existing franchises
– Introduce new franchises
• Home Entertainment growth drivers
– Blu-ray growth driven by added features and future 3D capabilities
– Higher margin digital/on-demand offerings
– New windowing opportunities
• Investment in television assets
– New programs
– Expand network and production footprint
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DRAFT
Success in a Changing
Marketplace (continued)
• Financial discipline
• Leverage Sony United opportunities
• 3D opportunity across SPE divisions
• Leverage growth in emerging markets
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Sony Ownership of SPE creates advantages
• Importance of integration
– Access to content and services differentiates hardware
– Sony services provide a distribution opportunity for SPE content
• Recent collaboration
– SPE films delivered digitally to Sony devices
– SPE was critical to Blu-ray format success
– Availability of 3D content important for 3D hardware
– SPE content cross-promoted with Sony hardware
– Hardware product placement in films
• Opportunities
– SPE content on Sony services
– 3D films and the 3D network
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3D Initiatives
• TheatricalUpcoming 3D films include: The Green Hornet, Priest, The Smurfs, Arthur Christmas and The Invention of Hugo Cabret
• Digital ProductionsSPE has produced stereoscopic 3D effects for more movies than any other motion picture studio
• Home EntertainmentReleased Cloudy with a Chance of Meatballs last summer as first Blu-ray 3D title available at retail and bundled it with Sony’s Bravia 3D TVs
• TelevisionLaunching 3D network in early 2011 in partnership with Discovery and IMAX
• 3D Technology CenterDevelops and evaluates systems for new 3D program production; creates and drives industry understanding and support of 3D technologies, techniques, and authoring tools
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Emerging Markets
• Key source of growth for the studio
• Established TV networks infrastructure and operating expertise in emerging markets
– Capitalize on growth in both TV audiences and advertising revenues
– Leverage established presence into additional territories
• Local TV production presence enables SPE to exploit TV formats globally
• Cross-Sony collaboration
– SPE content featured on Sony devices and packaging for retail and advertising
– Home entertainment products (e.g., BDs and 3D BDs) bundled with electronics and PS3s
– SPE content displayed outside and inside Sony stores
Q & A
SONY PICTURES ENTERTAINMENT