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Sony Pictures Entertainment (SPE) predicted annual sales of $10 billion to $11 billion for 2018, driven by a fast-growing TV network business, program production and more focus on profitable blockbuster movies, the company said at an investor day at its Tokyo headquarters Tuesday.
SPE was forecasting revenues up to March 2018, and the figures are a significant uptick from the $8.1 billion the film unit of Sony Corporation is predicting for the current year (the Japanese financial year runs from April to March). SPE also said the company will see profit margins of seven to eight percent by 2018.
SPE also predicted strong growth in its music division, citing streaming services as an increasingly important source of revenue.
“The entertainment businesses have been profitable for 18 consecutive years, they are a steady source of income for Sony,” said Sony Corp. CEO Kaz Hirai in his opening remarks. “Sony Pictures, which is celebrating 25 years as part of the group, provides a steady stream of income, releasing 90 movies that have taken the number one spot at the U.S. box office.”
“We are positioning our television and movie and movie production businesses as growth sectors for Sony,” said Hirai.
SPE CEO Michael Lynton said: “We forecast SPE to have $10-11 billion in sales with a profit margin of seven to eight percent, through, a sharper focus on tentpole releases, along with stronger revenues from the television businesses.”
“As each of these platforms, such as Beats, Spotify, Netflix, or LoveFilms in the UK, come online, each of those provides a new distribution channel for us. We seem them as opportunities,” said Lynton in response to a question about the disruption to traditional content distribution models.
During the Q&A session after the presentation, Lynton explained that the dedicated entertainment business investor days were partly a result of outside pressure.
“Third Point asked for more transparency in the entertainment division, and we embraced that idea. We view this as a tremendous opportunity to speak to the market about what is happening in the entertainment side of the business,” said Lynton, referring to the calls from Daniel Loeb’s hedge fund to spin off part of the entertainment division and provide more details about its financial performance.