Avex Group Mid-term Business Plan Next Era 2014

Transcription

1 Avex Group Mid-term Business Plan Next Era 2014 December 1 st, 2010 AVEX GROUP NEXT ERA

2 Recognition of current situation Restructure of existing business Mid-term growth strategy Reinforcement of management structure Target guideline AVEX GROUP NEXT ERA

3 Avex Net Sales 100 million JPY Cooperate History CD+Distribution Market 100 million JPY Industry Widespread of CDs1988 Launch of i-mode1998 Cyaku-uta service started titles became million-hit (1998 Cyaku-uta full service started 2004 First HMV store opened in Shibuya 1990 Launch of ipod2001 Launch of YouTube 2005 Avex From 1988 Started importing and wholesaling records. From 1993 Started business as a record company Produced number of dance music + J-POP hits. Developed together with market growth. From 2001 Stagnation of growth caused by CD market s shrinkage. Expanded sales, converting to an overall entertainment company. We have flexibly changed our business style, not sticking to existing business lines. Our company has expanded growth, by challenging new business areas valiantly, leading the competitors. However... AVEX GROUP NEXT ERA

4 Music distribution unable to offset the market decline anymore... Music Distribution Market every 3 month) Jan-Mar 2005 Jan-Mar 2006 Jan-Mar 2007 Jan-Mar 2008 Jan-Mar 2009 Jan-Mar 2010 people Considering to stop using Stop repeated use Not sure to use repeatedly Will be using the same way Total Male Female Can listen on video site Inconvenient to listen to cyaku-uta only on mobile phones Much cheaper if we rip the rented CDs Survey to 2,000 people age from 10s to 30s) (July 2010) SourceAvex Group own survey AVEX GROUP NEXT ERA

5 Big change in users sense of value and method of obtaining Symbolic events in mega-hit era Symbolic events in digital era Method of obtaining Purchase CD was basic Legal: Listen via free video sites Illegal: Download from illegal sites Ripping the CD Source of information TV programs Drama, CM, Music program Search on interest based on their own interest. Sense of value Desire to posses package, such as CD jacket, lyric booklet. Data is enough! AVEX GROUP NEXT ERA

6 There is no decline in music listeners, however How often do you listen to the music? More than 50% of them listen to music everyday Only 2% of them does not listen to music 90% of them listen to music more than once a week almost everyday 4-5 days a week 2-3 days a week Once a week Less than above Never There is no decline in numbers with music listeners 50.4% listened to music everyday, 5 years ago) What is your main method of obtaining? Purchase CD at CD/record store Purchase CD by online store Purchase from downloading site Download for free Rent CD from rental store Borrow from friends Record the broadcasting programs (radio, etc) Others Survey to 2,000 people age from 10s to 30s) (July 2010) Source: Avex Group own survey) Rental dictates the method of obtaining chart. The % of those obtaining for free (free download, borrow from friends, record the broadcasting programs) is 23, quite the same % as those who purchase CDs 70% of the method (in chart) relates to record company, but only 40% actually selling to users directly. AVEX GROUP NEXT ERA

7 Business targeting active users is firm Expansion of the concert market, increase of our revenue from merchandising and fan club suggests that agency business is firm. Especially with the business targeting active users who gather and share information to each other. This is considered part of the trend, polarization in consumption patterns, premium consumption, where people save money by obtaining daily essentials economically and spend the money thoroughly on what they like. Transition of concert market (100 million JPY) ten thousand people) annual sales attendance Percentage of premium consumption. Promoter s SourceNomura research Institute, Ltd. Survey to 10,000 people) AVEX GROUP NEXT ERA

8 Internet became main focus in users life Domestic internet users almost reach 100 million! Time spent on Internet eightfold in 9 years! ten thousand people Transition of domestic net users Transition of time spend on Internet (year 2001 as 100 unit) SourceMinistry of Internal Affairs and Communications Data collected in March each year. Time spent on home PC SourceNielsen AVEX GROUP NEXT ERA

9 Chance arrived for contents holders Wireless network that was in predawn stage will start to speed up and have greater capacity. This will lead to greater demand for contents (especially videos). Infrastructure Hardware Software Till today Developing and improving network infrastructure, correspond devices, and service. From now Speed up by adopting LTE 3.9G Complete conversion to digital terrestrial Speed up of communication devices Wider spread of smartphones less border between mobile phones and PCs Wider spread of net books Wi-Fi-enabled appliance Socialization Development of cloud computing Open market Globalization AVEX GROUP NEXT ERA

10 Mobile market will expand with an average growth rate of 15%! million 4 trillion JPY! 2 trillion JPY! AVEX GROUP NEXT ERA

11 Avex s Mid-term Growth Image EXISISTING BUSINESS We estimate continuous decline in the Record Company Business that deals with music package and digital distribution. However, we plan to compensate the decline of Record Company Business and maintain the same sales level as FY2010, by increasing Agency Business that deals with live and merchandising etc. NEW BUSINESS The growth driver for mid-term growth would be new business lines to be described later on this material. Net Sales FY2010 level????? NEW Agency Business + Bee TV Membership Business Record Company Business EXISISTING AVEX GROUP NEXT ERA

12 Recognition of current situation Restructure of existing business Mid-term growth strategy Reinforcement of management structure Target guideline AVEX GROUP NEXT ERA

13 Adjustment of Structure for Creating Hits Challenging points Despite the change in market environment and consumption style of users, our organization structure remain the same as when the package demand was big. Position that require creative aspect is considered a profession and even without making any hits, there was hardly any personnel relocation carried out. Number of artists and release items bloated, inversely to the shrink of the market. We will make the organization structure slim enough to fit the external environment change. We will actively work on personnel relocations according to his/her past performance and ferment the new creative climate. By studying the past performance / data, we will select the genre that we need to put an effort, as well as clarifying the winning pattern. Based on the study, we plan to promote selection and concentration of release items and so forth. Although, there is no decline in demand for music, we estimate further shrinkage of both physical & digital music market. In this declining phase, we would double the current market share and keep the downturn of the music sales level to minimum in mid-term, enjoying the benefits as a remaining player in the market. AVEX GROUP NEXT ERA

14 Deepening High-value Added Strategy We will not commit on discount marketing, bur rather have premium consumption in sight. We will rather increase the products with added value and make the unit price higher by pursuing the 4 elements (collector psychology, artist support psychology, sense of superiority, sense of qualification/limitation) as well as artist brand value. Transition of unit price with concert merchandise (JPY) unit price Purchase ratio Ayumi Hamasaki iphone cover 13,500 ONE PIECE DVD BOX 14,600 Subject of investigation: Goods sales at concert (one of Avex s main artists) Kumi Koda car navigation 49,800 Tohoshinki Live, premium seat 30,000 AVEX GROUP NEXT ERA

15 Offering Business Infrastructure to Other Companies We have been developing business that centered artists and contents. We will reinforce the business which we offer our skills and know-how, that we established through our business to other companies. Our aim is to expand revenue stream that would not rely only on hits. List of business infrastructure Various Platforms Pipe line Lesson / Know-how Licensing dance lesson programs that we held at avex artist academy to nation wide sports gyms, etc. There are currently 100 participating facilities and more than 10,000 students. Digital distribution + Brand power Artist Management Athlete management Applying the management and casting skills to athlete management. Physical Distribution Promotion Contents production Merchandising sales at concert venues Providing the merchandising sales know-how that we established through our concert business to other companies. AVEX GROUP NEXT ERA

16 Restructure of Asia Strategy We aimed to create hits in entire Asia, however with the fact of difference in culture, l language and income level between each area / country, the business we should implement would need to differ and match to each area / country. From now on, we will work from ground by implementing the strategy that best fit to each area / country, while keeping the entire unified strategy as a base. Territory Japan Create hits of Korean and Chinese-style We will try to create new Chinese-style hits in Japan by applying the success of BoA and Tohoshinki, along with new Korean-style. Building Asia strategy Management of group companies in Asia Approach Japanese companies in Asia Support creativity Asia Reinforce agency business Put greater effort on approaching Japanese firms that focus more on developing in Greater China. Exporting Japanese artists to Asia will only be implemented where we can ensure firm revenue. Asia Japan Creative AVEX GROUP NEXT ERA

17 Recognition of current situation Restructure of existing business Mid-term growth strategy Reinforcement of management structure Target guideline AVEX GROUP NEXT ERA

18 Drastic Re-examination of Digital Strategy We have led the music industry in the digital domain by creating the Cyaku-uta model and so forth. However, we are now facing the following challenges regarding digital strategy. Stagnation of the music distribution market. Not quite following the trend with digital? Not enough marketing by utilizing the digital? Gap with digital users? Each service is not working together? Looking outside the music industry, we are in the situation where we are not leading the digital development. It requires drastic re-examination of digital strategy. AVEX GROUP NEXT ERA

19 Digital Strategy: Basic Concept We take the information technology innovation a chance and we will shift our main business battlefield to digital. We will actively expand to neighboring business areas by having alliances with various players inside and outside the entertainment industry. This can be done by applying the know-how of 360 degree rights operation that we established in real world. We also view a digital agent business that accept on trust of the digital rights possessed by outside companies. Outside business area Distributor / Retailer Outside contents creators Outside talent agency set aside the rights revenue share Alliance Communication carrier Apparel maker SNS Business entity Media AVEX GROUP NEXT ERA

20 Focus Points of Digital Strategy Our digital strategy will be concentrating on the following three points. Artist * Those proficient, such as talent, actors/actress, athletes collectively means Artist in this material. Holistic optimization of value chain New 360 degree model Marketing Implementation of digital marketing Platform Expansion of BeeTV business AVEX GROUP NEXT ERA

21 1. Artist: Holistic Optimization of Value Chain Digital strategy used to be the part of the value chain Discover, Nurture Management Contents Production Package Sales Music Distribution Live Merchandising mu-mo BeeTV We will raise the entire value-chain with digital strategy as its base!! Live mu-mo BeeTV Fan Club Merchandising Package Sales Management Discover. Nurture Contents Production Music Distribution Digital strategy AVEX GROUP NEXT ERA

22 1. Artist: New 360 Degree Model Utilizing Digital Until now Deliver mainly artists music Video Online live Video clip Programs by categories (contents) Portrait Digital characters Avatar Digital calendar Standby display flash Digital photo collection Dress-up tool From now on Deliver artists talents and their individuality Music Digital distribution Song application Play list Avatar live Recommendation Food Recommendation and review of food Recipe / cooking EC sales of original cooking item Artist Hobby Books of hobby Digital books Programs of interest Appear on specialized website Identity Blog Serial essay Talk show / interview Fashion Recommendation EC sales of original brand / selected items Fashion item for avatar Talent Digital drama Web advertisement Appear on outside website We aim to expand our business-universe infinitely by making the artist individuality itself a business. etc... AVEX GROUP NEXT ERA

23 2. Marketing Point to Drive Past marketing Point Typical push-type promotion, sending information via massive appearance on TV and commercial. Future marketing Drive Shift to a marketing method which promotes consumer s self-action, such as sharing information with each other. Characteristis Characteristics Approach by professionals and with artificial style. Not with artificial approach, but approach naturally. Promotion was carried out intensively at the same time as release of finished products, such as CDs. Carry out the promotion and/or make business of the process / story, which consists of the scenes of audition process and recording of the song, etc. (not depend only on finished products like CDs) AVEX GROUP NEXT ERA

24 2. Marketing Important Elements We will implement drive-type marketing with the following 5 elements as a key. Empathy - Books that introduced by friends and followers - Words of reader models - Recommendation from those have same hobby Respect - Words of those with great knowledge in specific area - Words of successors well-knowns, athletes, cooperate managers, etc) - Message of work with great number of viewing (website, video website, etc) Humility - Great person with friendliness - Well-known person with sense of ordinary people Reality Desire for cognition - Review from Kakaku.com (website that lists price and review of products) - Average rate of food related blog page - Topics that has been twittered often - Psychological of wanting to watch/listen further by watching/listening the preview - Greater number of viewing with those contents with shocking title - Good at blog = good at titling AVEX GROUP NEXT ERA

25 3. Platform: Position of BeeTV BeeTV (launched in May 2009) is the business model that indicated an entirely new possibility to our company. BeeTV differs from the other models avex has implemented in the past, having the capability of both creative and platform function, by forging strategic alliance. BeeTV posses concentrated essence of business strategy, which we should be taking in the mid-term. Creative Function Platform Function Secondary use of existing music contents Provides both internal and external contents BeeTV itself creates contents. Possible for secondary use based on its own decision Provides both internal and external contents Alliance Implement mutual complement with both internal and external players of the music industry, together with creative function and platform function. AVEX GROUP NEXT ERA

26 3. Platform: Expansion of BeeTV Business Outside Platforms Increase revenue other than the membership fee, by providing BeeTV contents to outside platforms, such as TV stations, SNS, EC sites, and also work closely on affiliate business. Devices Planning to expand to broadband-correspond devices, such as smartphones, electro books, considering the innovation of infrastructure and greater capacity available. Overseas Planning to expand to overseas, mainly in Asia AVEX GROUP NEXT ERA

27 3. Platform: Expansion of BeeTV Business By expanding the service to various devices etc, we target more than 3 million members by the end of March Sales portion of membership fee will shrink due to the expansion of new business (such as license business). BeeTV Business: Sales structure image in FY2014 AVEX GROUP NEXT ERA

28 Implementation of Alliance Strategy We used to center the self-contained business, which we deliver our contents through our own platform. With the need of expanding our view to outside of the entertainment industry, we will depart from the self-contained business and start new business by collaborating with other players from other industries. Media 6 trillion JPY x NTT Docomo = BeeTV General stores / Convenience stores 20 trillion JPY x 7&i Holdings Avex current business area Apparel 10 trillion JPY x Samantha Thavasa / Stylife And more... x???? AVEX GROUP NEXT ERA

29 BeeTV: The Very First Alliance Strategy Influential artists Name value fixed members, such as fan club, mu-mo know-how of music distribution only infrastructure among mobile phone carrier more than 50 million members mobile device development capability Currently, there are more than 1.5 million BeeTV members. Players from various business categories are raising their hands to join the business. AVEX GROUP NEXT ERA

30 Alliance with Seven & i Holdings Co., Ltd. Influential artists Name value fixed members, such as fan club, mu-mo know-how of music distribution around 39,000 stores annual sales of 9.1 trillion JPY around 38 million customer visit Products planning ability wide pipe line with manufactures Online stores Outdoor events Collaboration products In-store events AVEX GROUP NEXT ERA

31 Alliance with Samantha Thavasa / Stylife Influential artists Name value fixed members, such as fan club, mu-mo know-how of music distribution more than 1 million members handling plenty of brands know-how of operating EC website mixture of several medias BeeTV TOPPING Fashion Magazine BeeTV Paris Hilton Celebrity life BeeTV provides fashion-oriented programs which leads consumers to the EC website Stylife. Consumers are able to purchase items introduced in the program. AVEX GROUP NEXT ERA

32 Recognition of current situation Restructure of existing business Mid-term growth strategy Reinforcement of management structure Target guideline AVEX GROUP NEXT ERA

33 Reinforcement of Management Structure Improvement of mobility 4 representatives Chief Officer system Halve the board members Delegation of authority to cooperate officers Improvement of independence and objectivity 5 out of 4 outside directors are independent directors Establish investment review committee Improvement of business efficiency Enhancement of business management Establish Business Process Reengineering Room Tightening of closure rules of underperforming business Improvement of law-awareness Enhancement of compliance committee Partial revision of compliance policy Enhance compliance education to employees AVEX GROUP NEXT ERA

34 Strengthening of Human Resource Strategy We restructured our personnel system drastically in this October with our fundamental principal, growth of employees will lead the growth of the company, as a base. Rigid organization and lack of of employees skills Activate job-rotation Relocate Relocate manpower manpower to to growth growth areas areas Develop Develop employees employees skill skill to to achieve achieve their their long-term long-term career career plan plan In-sourcing In-sourcing current current outsourcing outsourcing work work Assessment and compensation system centered on on short-term results Adaption of of long-term assessment, compensation and incentive plan Revise Revise assessment assessment and and compensation compensation system system based based on on individual individual performance performance and and long-term long-term career career plan plan Improve Improve retirement retirement benefit benefit system system Adapt Adapt employee employee stock stock ownership ownership plan plan Establish Establish employee employee mutual mutual aid aid AVEX GROUP NEXT ERA

35 Recognition of current situation Restructure of existing business Mid-term growth strategy Reinforcement of management structure Target guideline AVEX GROUP NEXT ERA

36 Summary of Mid-term Business Plan We will achieve mid-term growth by expanding our business lines outside of the entertainment industry. Digital and alliance strategy will hold the key. Net sales New 360 degree business, centering the artist New alliance business New BeeTV business ( other than the membership fee) Digital agent business etc FY2010 level NEW Business Alliance strategy NEW Agency Business + BeeTV Membership Business Record Company Business High-value added strategy Digital strategy EXISISTING Restructure of creative structure Reinforcement of management structure Time frame AVEX GROUP NEXT ERA

37 Target Guideline (Net sales, Operating Income) (100 million JPY) Transition of Avex s net sales, operating income (past 10 years) Net sales Operating income margin Net sales Guideline Guideline level level more more than than billion billion JPY JPY (FY (FY 2014) 2014) Operating income Continuous Continuous achievement achievement of of more more than than 10% 10% OP OP margin margin AVEX GROUP NEXT ERA

38 Target Guideline (ROE, Dividend, D/E ratio) Transition of ROE (past 10 years) (100 million JPY) Transition of interest-bearing debt, D/E ratio (past 10 years) (TIMES) interest-bearing debt D/E ratio ROE Target: Target: More More than than 15% 15% Dividend Target payout ratio: More than 30% We plan to change are stable dividend policy to a performance-linked payment. D/E ratio Target: Target: Less Less than than We We will will reduce reduce interest interest -bearing -bearing debt debt to to achieve achieve the the above above target. target. AVEX GROUP NEXT ERA

39 Creating value through emotional experience 1. We have proactively changed our business style time to time in line with the trend. And we have regarded user-friendliness as our top priority. Flexibility and mobility as our strength, we will continue to provide new ways to enjoy entertainment. 2. By pursuing communality, one of the primary characteristics of entertainment, we will develop products and services which emotional experience can be shared between customers and us, as well as among customers. 3. We will contribute to the society through entertainment activities and provide color to customers life by creating value through emotional experience. AVEX GROUP NEXT ERA

40 Any inquiries, please contact The data and future prediction in this document are all based on statement made on the date herein and also the information available at the time of the statement was made. Thus, you should be aware that a number of important risk factors could lead to outcomes that differ materially from those presented in such forward-looking statements. These include, but are not limited to change in economic conditions and significant change in the competitive environment. In the course of its operations, we adopt measures to control these and other types of risks, but this does not constitute a guarantee that such measures will be effective. AVEX GROUP NEXT ERA