Transcript Concepts for Memox

Thoughts on Next 3 Slides
– Interesting concepts re: “real-time TV”
– Interesting point about where there are dominant players (either on content or brand). I
wouldn’t quite parse it they way they do
– In memo landscape section where we talk about dominance, be clearer about dominance
in brands that have been around a while
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Subscription film and TV – Netflix
Next day TV (ad-supported and, likely subs) – Hulu
Purchase of recent and library film and TV – iTunes, Amazon
– In memo where we talk about newer device based services trying to differentiate in the
face of dominance, be clearer about what is emerging and has no dominant player
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Real-time TV over IP to devices (e.g., MLB streaming)
Early Windows
– In memo
– Sony section – clarify “real-time” TV on devices is as an opportunity as an area that we
compete and, in some cases lead
Executive Summary
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Real-time pay television is a significant opportunity for Sony
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We have identified 4-5 products to add to our current video services
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Products are complementary to, & integrate with current VDS offering
Three types of live TV content offered: Live sports seasons, premium cable channels, basic cable bundles
3rd party video services like VUDU, CinemaNow & exclusive Sony content to be introduced as well
Consumers & cable networks have expressed interest in these offerings
A phased implementation is expected to positively contribute to the video services P&L
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Pay TV is the largest segment of media industry worldwide (6X video game & 4X film industry revenues)
Technology is enabling new players to compete with traditional Pay TV distributors (Cable, Satellite & Telco TV)
New players are not focused on real-time TV which represents over 60% of PayTV revenues & is growing
Products to be phased in over 2010-13 starting with sports & premium cable in the US
Remaining products & geographies to launch pending success of the initial offering
The combined offering is expected to contribute $3-5 M of op. profits in ‘10-11, growing to $30-40M by ’13
The broader video offering is expected to be a key differentiator for Sony products
Specific competitive gaps need to be closed in order for us to succeed
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Consistent & seamless user experience across devices is a key gap vs. competitors
Acceleration of TAM interface rollout, cloud storage & common video streaming protocols across devices essential
SNEI Business Model Options
The market and competitive landscape, along with profit potential, primarily determine
if SNEI should BUILD, BUY or Partner
Market Landscape
Segment
Market Size?
Digital Growth?
(US Mkt. >$5B)
(CAGR >10%)
Profit Potential
Segment
Economics
Video
TV-Library
Music
Publishing
Dominant
Player?
Sustainable
Advantage?
Business Model
Netflix
Partner
TV-Catch Up*
Hulu
Partner
TV-Real Time
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1st Party
Home Video- Library
Netflix
Home Video-New
iTunes
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1st Party
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1st Party
Radio
Pandora
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1st Party
Music
iTunes
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1st Party
Newspaper
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Wait
Magazines
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Wait
Amazon
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1st Party
Internet Search/Ads
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Wait
Video Games
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Compete
Box Office
Other
Competitive Landscape
Books
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Partner
Thoughts on Next Slide
– Interesting concepts re: our services are only on our devices; competitors are across
devices
– Get the concept into the memo:
– Sony Section -- Today, our services are only available on Sony Hardware
– Landscape Section – Another competitive advantage of 3rd party services is that they
are now available broadly across devices; hence more awareness / familiarity /
popularity
Two feasible models for network svc & devices
to compete together in a market
Network Service
Exclusive
Open
•Network svc. on 1st Party devices only
•Network svc. on all devices
Device
Exclusive
•Competing 3rd party
services have limited
functionality
•1st party svc. storefront
integrated in device UX
• Integrated model
• Mixed model
• Devices & service compete together
• Service competes independently
— Focus on differentiated & seamless
user experience
e.g. iTunes and iPhone/iPad/iPod
No Going Back
Sony cannot move back to an integrated model
without alienating consumers and partners
• Mixed model
Open
•Multiple competing
services
• No preferential
integration in UX
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Devices compete independently
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Service uncompetitive
— Competitor services work on 1st
party devices + other devices as well
• Devices uncompetitive
— Competitor devices offer same
service + other 3rd party services
e.g. Netflix svc. & original Netflix/Roku box
Incubation Strategy Feasible
Sony can transition from an integrated to
open model at any time
• Open model
• Devices and Service compete
independently on their own merits
Thoughts on Next Slide
– Interesting concepts re: we don’t seem to be taking a uniform approach to whether we
only build services where there is not a dominant competitor
– Get the concept into the memo:
– Sony section – call out that our “ambitious plans” include both competiting head-tohead where there are dominant competitors (e.g., video stores) and competitng where
there are limited competitors (e.g., real-time TV). Note that we should consider
whether to take a more uniform approach to prioritization or whether we must build
across categories if we want to offer integrated bundles and a killer UI
Sony has ended up adopting different market
strategies by segment
Market Segment
Sony Network Svc
Potential Competitor on Sony Devices
Market Strategy
Real time-Pay TV
Premium & Cable Lite
Google?, Boxee?
Fully Integrated Model?
New-Home Video
VDS/Q Video
Vudu, CinemaNow, Alphaline, Amazon
Open Model?
VDS/ Q Video- Early
Window
Vudu, CinemaNow, Alphaline, Amazon
Open Model?
PSN
Zynga?
Fully Integrated Model
Radio
Q Music
Pandora, Napster, Iheartmusic
Fully Integrated Model
(Incubation Strategy)
Music
Q Music
Pandora, Napster, Iheartmusic
Fully Integrated Model
(Incubation Strategy)
Books
eBooks
Amazon?
Fully Integrated Model
Box Office
Video Games
Is a consistent strategy needed going forward?
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