Sony Puts Film Unit, Music, Games at Center of Growth Strategy

Sony CEO Kiz Hirai

CEO Kaz Hirai targets an operating profit of $4.2 billion by 2017 amid further reorganization.

Sony Corp. said Wednesday that its film unit, music, games and devices businesses will be key drivers of its profitability for the next three years. The focus on the entertainment businesses to drive financial growth was among the announcements as the conglomerate unveiled its strategy over the next three years in Tokyo.

Sony CEO Kaz Hirai said the company would target annual operating income of $4.2 billion (¥500 billion) by 2017 as he outlined a further reorganization of Sony's electronics business into separate divisions.

"We will work on improved profit margins in the movie business, as well as bolstering content for regional channels, on-demand and streaming platform," said Hirai, who also identified the company's increasing focus on TV production and licensing of TV shows and music content as increasingly important revenue streams.

Further acquisitions in the TV networks business, possibly in India, were hinted at by Hirai, but he declined to provide details.

Sony will make return on equity the central measure of its performance across the group's varied divisions from now on, Hirai told the meeting, with a company-wide return target of 10 percent. Hirai explained that each business division would be classified as either a growth unit, stable revenue generator or volatile division. Pictures, games and music have all been designated as growth divisions.

Sony CFO Kenichiro Yoshida, whose no-nonsense approach has been credited as a key factor in Sony's recent recovery, will be made executive deputy president to add to his corporate executive officer and CFO titles, the conglomerate also announced on Wednesday.

Yoshida's rise has been rapid since his appointment by Hirai two years ago, and the latest reorganization and focus on return on equity fit into his approach.

"This is the second medium-term plan since I assumed my position in 2012," said Hirai, who began with a look back at the last medium-term plan. Hirai talked about his regret at the predicted operating loss for the year ending in March and canceling the dividend to shareholders for the first time since Sony went public.

Acknowledging that he had underestimated the costs of restructuring, Hirai promised a more rigorous approach, including more stringent cuts at Sony's headquarters.

Twitter: @GavinJBlair

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