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Pictures: An Interview with Top Management
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| Sony Pictures Entertainment Inc. (SPE) has achieved great success with numerous motion pictures, including the Spider-Man series, The Da Vinci Code and Casino Royale, as well as with television programming around the world, and other businesses. Michael Lynton, Chairman and CEO of SPE, gives his view on earnings for the fiscal year ended March 31, 2007, as well as business strategies going forward. |
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Hit movies and popular programs led to strong performance in both the motion picture and television businesses
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Obviously the fiscal year was fantastic for the studio. Could you elaborate on this success?
First of all, it's worth noting that we did really well without Spider-Man, which demonstrates the power and viability of our diverse film slate, though we have the good fortune of releasing Spider-Man 3 this year.
Thanks to the efforts of my co-chairman, Amy Pascal, and many others in our Motion Picture Group, there were many movies that performed extremely well and contributed to the bottom line. The Da Vinci Code was obviously a big success for us. Click also did very well, as did Casino Royale. The Pursuit of Happyness was very gratifying because it succeeded in both the U.S. and international box offices, which is not common for a U.S.- based drama. We also launched Sony Pictures Animation's debut film, Open Season, and it did quite nicely in a market where there's strong competition.
Can you talk a little bit about the growing importance of the international market? |
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| Under the leadership of Jeff Blake, Chairman of the Columbia TriStar Motion Picture Group (a division of SPE), Worldwide Marketing & Distribution, we have brought in new country managers and streamlined the whole international theatrical marketing and distribution network. We are also making more pictures with global appeal. Two movies that really stood out this past year were The Da Vinci Code and Casino Royale, both of which did about two and a half times as well internationally as they did in the U.S. That was gratifying evidence of the success of our global strategy. |
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We've also seen certain markets grow significantly in the last several years that hadn't been real players in the past, such as Russia and Korea. We have also had more of our films being shown in the Chinese market. In addition, we stepped up our investment in international motion picture production in recognition of the growing popularity of "local language" films in markets around the world.
Let's talk about the Home Entertainment division.
Home Entertainment performed well on two fronts. The first is catalog product, which are films and television shows in our library that have been previously released. The second front is new releases, which also did extremely well. For example, Casino Royale broke first week records with 1.6 million units sold when it came out on DVD in the U.K.
How about your television business results?
The television business in the U.S. has done very well. Besides selling our films to television and cable networks, we produce shows and had recent success with comedies in the U.S., including 'til Death and RULES OF ENGAGEMENT. We continue to have the best game shows and soap operas in the U.S., and did a tremendous job in having a number of pilots picked up by U.S. broadcast and cable networks. The division also has a vibrant advertising sales business and is now overseeing domestic digital distribution.
Our international television division had a great year as well. We had considerable success not only in selling films and television shows to TV networks, mobile phones and digital outlets around the world, but also by producing local language programs in places like Russia and Germany, where we are among the leading providers of TV programming.
Let's talk about digital distribution of content. As we look at the next few years, what are the key opportunities?
The big opportunity is for people to be able to digitally download movies to a portable device. It's clear that people are willing to buy movies in a digital format as long as they have a device they feel comfortable storing them on. There are some obstacles to deal with, namely rights management, price and other market issues, but this is a huge opportunity for the future. |
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Strengthening collaboration with the Electronics and Game divisions through "Sony United"
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Let's turn our attention to "Sony United." What are your views on the Sony United initiatives?
Sony United is a vision of the company that has wide support up and down the line within Sony.
Here's one example of Sony United in action. When PS3 was launched in the U.S., the first 500,000 buyers received a free copy of our movie Talladega Nights: The Ballad of Ricky Bobby on Blu-ray Disc weeks before it was made available to the general public. We also made Casino Royale on Blu-ray Disc available for free to the first 500,000 buyers of PS3 in Europe who registered on the PLAYSTATION®Network. That couldn't have happened without people across the company being committed to the idea of Sony United. And it paid off. When we polled PS3 customers in May 2007, we discovered that nearly 90% intend to purchase at least one Blu-ray Disc movie in the next 12 months, and the average respondent already owns at least four movies on Blu-ray Disc.
We also worked closely with other Sony divisions on the latest installment of the James Bond franchise. Casino Royale featured such Sony products as VAIO PCs, BRAVIA televisions and Sony Ericsson mobile phones. In addition, the Electronics division was extremely helpful in helping us market the picture around the world. This cooperation demonstrates both the viability and the promise of Sony United.
Can you give me some more examples of SPE working with the Electronics and Game divisions? |
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Sony Online Entertainment (SOE) helped develop the PLAYSTATION®Networks' infrastructure. SOE is a part of Sony Pictures with a lot of technical expertise, especially when it comes to building the backbone for multiplayer game systems. So Sony Computer Entertainment turned to the folks at SOE to help them out in this area, and this arrangement proved to be highly successful.
Sony United also comes into play when Sony has a new product like a professional-use camera or a digital projector. We reach out to filmmakers and theater owners to help explain how it can benefit their business to use Sony equipment. |
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Utilizing the Sony Group's technological strength and global competitive edge
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Does being part of Sony give Sony Pictures a unique competitive advantage?
Yes, in two important ways. First, we can respond more quickly to opportunities presented by technological advances because we are part of one of the world's great technology companies. That's why we're leading the way in digital cinema and the introduction of Blu-ray Disc technology. It's also evident in the success of our Imageworks studio, which is producing some of the best visual effects right now, as everyone can see in Spider-Man 3. Sony represents the perfect blend of content and technology, creating something great.
The second big advantage is that Sony is a truly worldwide business, and that helps us recognize growth opportunities in the international marketplace, especially in terms of our international television and motion picture businesses. We think and act globally.
What are your thoughts on the Sony brand?
When I think of the Sony brand, what immediately comes to mind is superior quality, innovation and style. Most important, it's a brand I can trust. Sony is also unique, because it brings together hardware and content, technology and entertainment. |
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Aiming to produce the best movies and television shows while delivering consistent financial results
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Please give us your vision of your mid- to long-term goals.
Over the mid-term, we want to be a consistent performer financially, and we have made great strides in reaching that goal. At the same time, while watching our bottom line, we must also make every effort to produce the best possible movies and television shows around the world. There is no substitute for quality.
Over the long-term, we intend to keep building our business on a global scale, and we also want to ensure that we have a balanced and diverse portfolio of assets. We are well along that path with our excellent motion picture business, where we expect to be producing more family entertainment films, which is why we're building up our animation business.
What should people know about your business that perhaps they are not aware of today?
What I'd like people to know is the breadth of the businesses that make up Sony Pictures. When most people think about us, they think of motion pictures. Some may even know about our domestic television business. But very few realize the extent of our expertise in visual effects, ad sales, games and online entertainment, or how much work we are doing internationally. |
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| Of course movies like Spider-Man and The Da Vinci Code are going to get the headlines and that's definitely warranted, but Sony Pictures stands for a truly broad range of exceptional entertainment. As the vision and values of our company make clear, we take pride in trying new things. We believe that profits come from creativity and out-of-the-box thinking. And we believe the people of Sony Pictures, and their passion, help us produce, market and distribute great entertainment to audiences around the world. |
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