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1、A Creative Entertainment Companywith a Solid Foundation of TechnologyContents02 Sonys Purpose&Values04 Message from the CEO10 Special Feature:Increasing Content Value and Creating New Entertainment Experiences in Kando Spaces14 Value Creation Model16 Value Creation18 Key Drivers for Creating Value22
2、 Message from the CFO26 Performance Highlights30 Sustainability34 Value Creation in Each Business 35 Messages from the Heads of the Businesses 36 Business Profiles 38 Game&Network Services 41 Music 44 Pictures 47 Entertainment,Technology&Services 50 Imaging&Sensing Solutions 53 Financial Services56
3、Corporate Governance64 Group Information2022 Sony Pictures Entertainment,Inc.All Rights Reserved.MARVEL and all related character names:&2022 MARVELUNCHARTED:2022 CTMG.“Lifeplanner”is a registered trademark of Sony Life Insurance Co.,Ltd.010203Evolution of the Sony Group Centered Around CreativityKe
4、nichiro YoshidaRepresentative Corporate Executive Officer,Chairman,President and CEOMessage from the CEO04Management with a Long-Term View Based on Our PurposeOur Purpose is to“fill the world with emotion,through the power of creativity and technology,”and our Corporate Direction is“getting closer t
5、o people”:the creators who create Kando and the users who experience it,as well as our employees who drive our businesses forward under our shared Purpose.Sony today is the result of a consistent managerial effort focused on Kando and people that began with our first mid-range plan in FY2012.Six Bus
6、iness Segments with Origins in CreativitySony has six business segments,all of which start with creativity.For the four years since I became CEO in 2018,we have been continuously investing in the growth of these segments,and we plan to continue active investment in content IP,direct-to-consumer(DTC)
7、businesses,and technology.Over the four years since FY2018,Sony has made strategic investments of more than 1 trillion in three of our businesses Game&Network Services,Music,and Pictures including the acquisition of EMI Music Publishing in 2018,which is in the content IP area and,thus,close to creat
8、ors.We also acquired Crunchyroll in 2021,which is in the DTC services area,where we connect directly to users.These three businesses have been growing continuously over the past decade,supporting creators and delivering their creations to users.The growth in these fields will play a vital role in bu
9、ilding Sonys corporate value going forward.In FY2021,the combined sales of these three segments exceeded half of consolidated Sony sales for the first time,while their operating income accounted for two-thirds of consolidated operating income.Game&Network Services(G&NS)In G&NS,we are enhancing the c
10、reation of IP and DTC services.To create IP,we plan to continue collaborations and partnerships with third-party studios while simultaneously putting effort into reinforcing the production capabilities of our own PlayStation Studios.The segment reports over 1.8 trillion1 in sales from DTC services d
11、ue primarily to the expansion of the PlayStation5(PS5TM)platform,which was introduced in 2020,and we are working to further grow the PlayStationTMNetwork(PSN),which has over 100 million2 active users per month.We have substantially revamped the PlayStationPlus(PS Plus)subscription service,and we are
12、 putting more effort into intra-Group collaborations,particularly with the Pictures and Music segments.Bungie,Inc.,which has strength in live service games,joined the Sony Group in July,2022.Going forward,we plan to expand our reach to multiple platforms beyond PlayStation by rolling out live games
13、and first-party titles on PCs and mobile devices.1.G&NS sales via network for FY20212.As of March 2022MusicIn Music,we are aiming to become the company that is closest to artists and songwriters,providing them with support from the creative side.In the music market,which has been growing since 2014
14、thanks to the expansion of streaming services,the primary growth forces,aside from the major labels,are independent labels,independent artists,and diversifying distribution partners.In addition to enhancing services for independent labels through The Orchard,we are offering more support to independe
15、nt artists via AWAL,which we acquired in May 2021.To strengthen relationships with artists in specific regions,we acquired Som Livre of Brazil in March 2022,started a new label in India,and are investing in artists in Africa.We provide our artists and creators with comprehensive support for all aspe
16、cts of their careers,including wellness and counseling services,and a robust suite of payment/royalty management and insight tools,among other initiatives.In our business,we collaborate with distribution partners,as well as a range of platforms across areas like social media,games,and fitness,so tha
17、t we can provide more opportunities for artists.PicturesIn the Pictures segment as well,support for creators and the creation and delivery of content IP are the core of our strategy.In Motion Pictures,our policy is to prioritize theatrical releases since theaters enhance the sensation of being prese
18、nt in the Message from the CEO05story in real time.We also find that this approach strongly motivates creators to come and work with us.The theatrical release of Spider-Man:No Way Home earned the third-largest3 cumulative box-office revenue record in U.S.history,and Morbius,released this past April,
19、also did well,proving the high value of content based on Marvel characters and increasing our determination to further expand the world of the Sony Pictures Universe of Marvel characters.We are also putting effort into inter-business collaboration to build content value.A case in point is the succes
20、s of the film Uncharted,based on a PlayStation title,which earned the third-largest3 box-office revenue in U.S.history among game-based films.Going forward,we plan to apply game IP to various media genres,including motion pictures and TV programs.As for digital streaming,we are increasing collaborat
21、ions with many distribution partners,taking advantage of our position as an independent studio.While there are many communities of interest in the world,Sony focuses on delivering content directly in specific areas.A good example is anime,which spans several of our business segments and represents I
22、P that we expect to expand in a multi-directional manner.In March 2022,we merged the Crunchyroll and Funimation services,affording a broader content lineup enabling us to enhance our anime DTC services.We also value culture-specific DTC services rooted in regional communities,and are working to furt
23、her accelerate digital service businesses such as in the rapidly-growing Indian market.This illustrates Sonys long-term vision of directly connecting with 1 billion people,so that we can better learn from users and get closer to their desires for specific entertainment choices.3.As of June,2022Next,
24、I would like to touch on our initiatives in the Entertainment,Technology&Services(ET&S)and Imaging&Sensing Solutions(I&SS)businesses,which provide technology,products and services to create and experience Kando content.At the core of this area are our electronics products and CMOS image sensors.Mean
25、while,through our Financial Services business we provide people with peace of mind,a prerequisite for Kando.Entertainment,Technology&Services(ET&S)In ET&S,we plan to continue to focus on television and audio products as a means of delivering Kando,and to capitalize on our strength in using technolog
26、y and services that support creators.To better deliver Kando,we recently introduced the earbuds LinkBuds series,which offer the new experience of overlaying online sound on the sound of the surrounding offline world.User reviews of the product have been very positive.As for technology that supports
27、creators,one example is Virtual Production.By combining camera and display technologies like the VENICE digital cinema camera and the Crystal LED display,which faithfully reproduces images of the physical world,and real-time image-processing technology,we are fusing the virtual and physical domains,
28、setting creators free of time and space constraints and greatly enhancing freedom of expression.Imaging&Sensing Solutions(I&SS)Smartphone mobile devices have turned users around the world into creators.CMOS image sensors,a primary component of these devices,are the core product in our PicturesET&SI&
29、SSFinancial ServicesG&NSMusic06Message from the CEOI&SS segment.We have invested approximately 1 trillion in this field over the last four years,mainly in equipment to strengthen capacity for image sensor production in Japan,and we hold the leading share of the continuously growing image sensor mark
30、et.Meanwhile,as a growth field for the future we are building a solutions business employing automotive image sensors and other technology for safe mobility,as well as intelligent vision sensors with AI processing.Financial ServicesWe made the Financial Services business a wholly-owned subsidiary,in
31、vesting approximately 400 billion in 2020.I said previously that all of Sonys six businesses originate in creativity.Sony Lifes Lifeplanner sales specialists are creators that actualize peoples needs for peace of mind.Using Sony technology,we provide convenience in daily life and support through fin
32、ancial services to over 8 million customers in life insurance,non-life insurance,banking and other areas.Becoming the Brand Chosen by CreatorsIn this way,all six of our business segments are centered around creativity.While the way in which content is delivered changes over time and with the evoluti
33、on of technology,we believe that creativity generates Kando,and that this will continue to be the case in the future.Consequently,at Sony we are focused on the creators of Kando and the users that enjoy their creations,and strive to be chosen as their most-favored brand worldwide.Initiatives in Kand
34、o Spaces,Our Future Growth FieldWe are exploring fields that can become growth centers in terms of creation and delivery of Kando.Among those fields,we are putting special focus on the metaverse and mobility.MetaverseThe means for delivering Kando are continually evolving.The current mainstay,entert
35、ainment over the internet,is broadly diversifying too,from downloading and streaming to more social,interactive experiences.Against a backdrop of technological progress,the experience of entertainment over the network is evolving into live experiences where time and space are shared with others.When
36、 people are connected in a live networked space,derived from game technology centered on real-time CG rendering,the result is an intersection of various genres,including games,movies,music and anime.In this way,Sony considers the metaverse simultaneously a social space and a live network space,where
37、 various forms of entertainment intersect and expand.In creating this new value,we are leveraging our unique strengths.On top of that,in social and live services,which are important in the metaverse,Sony is embracing the challenge of creating and delivering Kando spaces alongside partners with exten
38、sive 07Message from the CEOknowledge and experience in these areas.In games,we plan to enhance live service games by learning from Bungie.We also plan to launch more than ten live service games from PlayStation Studios by FY2025.In sports entertainment,in collaboration with Manchester City Football
39、Club,we are reproducing the stadium and athletes in a networked space and developing new experiences.As for music,we are working to create new live entertainment experiences,such as virtual concerts and virtual space projects,using our volumetric capture technology.MobilityBy developing the Walkman,
40、Sony created a new lifestyle in which people could take audio with them and enjoy it anywhere.Now,we are working to turn the mobility space into a new entertainment space.The combination of mobility with information and communication technology will make the 1 billion vehicles operating on streets w
41、orldwide into services over the long term.In other words,the functions of the vehicles will be defined by software and updated through services.There are three areas where Sony can contribute with this structural change in mind:safety,made possible by technology such as CMOS image sensors and SPAD d
42、epth sensors for LiDAR;entertainment,which transforms the mobility space into a Kando space;and adaptability,where we can apply our knowledge of cloud services to support the evolution of the vehicle.Through research and development for our VISION-S electric vehicle announced in 2020,we realized tha
43、t to contribute to the evolution of mobility we need to commercialize the vehicle and present it to the world,but we cannot do this on our own.To address this challenge,we signed a Memorandum of Understanding with Honda Motor Co.,Ltd.in March 2022 to form a strategic alliance,and in June the same ye
44、ar signed a joint venture agreement to establish a new corporation,Sony Honda Mobility Inc.,to offer high-value-added electric vehicles and mobility services.By applying Hondas development expertise in mobility,and the technology and knowledge in vehicle production it has built over decades,to the t
45、hree areas where Sony can contribute,we plan to begin selling a jointly-developed electric vehicle in 2025.Technology to Support GrowthTo enable Sony to continue growing and embracing challenges,we are focusing particularly on AI and sensing technology.Sensing technology that captures the physical w
46、orld and AI technology that allows learning from that world are becoming more important than ever,playing a vital role in ADAS for safe mobility,and in the audio-visual and entertainment fields where Sony has been engaged for many years.Earlier,I introduced our initiatives in Virtual Production as a
47、n example of technology that supports creators.A technology that allows us to get closer to people,on the other hand,is PlayStationVR2(PS VR2),our next-generation virtual-reality(VR)system.VR is a key aspect of the live networked space that enables people in the physical realm to enter virtual space
48、.Other examples of technologies that leverage our sensing and AI technology include the Gran Turismo SophyTM AI racing agent,which enhances the value of experiences in the game space,and aibo,which grows by exercising its innate curiosity and interacting with people.People,Society and the Earth:Our
49、Responsibility and ContributionSony will continue to focus on management centered around Kando.For creators to produce Kando content and for users to enjoy it,it is necessary to create a society 08Message from the CEOin which everyone can live with peace of mind in a healthy global environment.We be
50、lieve it is important for us to fulfill our responsibility to society and the environment,and to contribute through our technologies and businesses.Recent examples of our efforts in relation to this responsibility include our climate change initiatives,our use of recycled plastics,and development of
51、 packaging that is conducive to recycling.In terms of our Road to Zero environmental plan,which we have been pursuing since 2010 to achieve a zero environmental footprint,we are accelerating our target of achieving carbon neutrality across the Sony Group by ten years,from 2050 to 2040,and have also
52、moved up our target for achieving 100%renewable energy in our own operations by ten years,from 2040 to 2030.In terms of our contribution,examples include our development of new environmentally conscious materials,the SynecocultureTM initiative,and our project to protect the earth by supporting envir
53、onmental monitoring using AI and sensing technology.Corporate Culture Based on Our PurposeFor Sony to continue creating value,it is essential that our Purpose is shared among our approximately 110,000 diverse Group employees.I consider our Purpose to represent a promise to our employees,and a call t
54、o walk together on the path towards Kando creation,which is the reason for Sonys existence within society.As we invest in various companies and talent,the Groups corporate culture becomes even more vital.At Sony,our Purpose is now becoming established as our corporate culture,which I believe reinfor
55、ces our capacity to create value and is directly linked to increasing our corporate value in the long term.I feel our Purpose is resonating across the Group because it is consistent with our management direction,and is becoming the established starting point when we think about business strategy.Ple
56、ase look forward to Sony continuing to create new value based on our Purpose:to“fill the world with emotion.”09Message from the CEOSpecial Feature:Increasing Content Value and Creating New Entertainment Experiences in Kando SpacesInitiatives to Increase Content ValueSony is working to increase the v
57、alue of content it creates by getting closer to creators and users,primarily through three entertainment businesses Game,Music and Pictures while promoting the creation of new entertainment experiences in the Kando space as exploration for the future.To increase the value of its content,Sony support
58、s the work of creators who build Kando,strengthen our capacity to both forge content IP,through strategies like pro-active investment,and develop it on multiple fronts through collaborations among Sony Group businesses.From the standpoint of communities of interest,in which diverse users and creator
59、s share Kando experiences and interests,Sony is enhancing its DTC model to directly connect with and deliver content to users.Moreover,to create new Kando spaces,Sony is promoting initiatives in the metaverse and mobility as areas for future growth,making the most of its capabilities in sensing,AI a
60、nd other technologies.The metaverse,a live networking space built on shared time and space with integrated social elements,offers opportunities to leverage Sonys strengths in diverse businesses and technologies to create new entertainment experiences.As for mobility,Sony is actively exploring this s
61、phere in line with its vision of evolving mobility spaces into entertainment spaces.To ensure sustainable growth in this area,Sony will take on the challenge of contribution to the evolution of mobility while striving to provide new customer experiences and value.Example 1:UnchartedIn 2019,PlayStati
62、on Productions was established to produce film and TV adaptations of PlayStation game titles.A collaborative effort between Sony Interactive Entertainment(SIE)and Sony Pictures Entertainment(SPE),it aims to build the value of Sony content.PlayStation Productions collaborated closely with SPE and vid
63、eo game developer Naughty Dog to debut their first film in February 2022,Uncharted.The film,starring Tom Holland and Mark Wahlberg,has since made over 148 million USD in the U.S.and 256 million USD internationally,for a worldwide total of 404 million USD as of June 2022.It currently stands as the 3r
64、d highest-grossing video game adaptation in the U.S.and the 4th highest-grossing video game adaptation worldwide.Enjoying tremendous support from fans around the world,it has become a new franchise for SPE.The UNCHARTED game series is an outstanding,cinematic action-adventure experience.The game ser
65、ies stunning locations,combat sequences and great characters made it a natural fit for film adaptation.The film adaptation was written as a new story featuring the world and characters of the UNCHARTED series,rather than an outright adaptation of the series story.This represents a good example of cr
66、eators enhancing content value by taking advantage of Sonys library of rich IP.Maximizing Value by Developing Content IP in Other DomainsFrom PlayStation Productions Asad QizilbashHead of PlayStation ProductionsSonys approach relies on hiring talented filmmakers and trusting them to apply their crea
67、tivity and vision when adapting Sony game IP.There is no set formula for success,but by combining a story and characters that have already proven to resonate with millions of fans,with the strong creative vision of a filmmaker,there is great potential for making magic.Because many PlayStation game I
68、Ps have titles marked by impressive stories and characters,they are considered highly adaptable to film and TV.By collaborating with SPE,we endeavor to create films and TV series that can be enjoyed by gamers and film fans alike.10Crunchyroll Acquisition to Expand Direct-To-Consumer Anime ServicesMa
69、ximizing Value by Developing Content IP in Other DomainsTo enhance DTC services by getting closer to users and learning from them,in 2017 SPE acquired Funimation,which mainly distributes and streams Japanese anime abroad,and in conjunction with Aniplex has been strengthening its services as a film-m
70、usic joint venture.In August 2021,Sony Pictures also completed the acquisition of Crunchyroll,a DTC anime service provider in the U.S.,with over 5 million subscribers to video-on-demand services.Crunchyroll is a pioneer in anime-streaming services,offering ad-based video-on-demand,mobile games,event
71、s and merchandise to more than 120 million registered users in over 200 countries and territories.The acquisition expands the streaming networks available for Funimation,Crunchyroll and their content partners,and increases opportunities for anime fans worldwide to experience anime,as well as for imm
72、ensely talented creators to furnish excellent content.In March 2022,SPE integrated the Funimation and Crunchyroll services to focus on creating customer experiences through providing engaging content via unified anime subscriptions.The success of the Uncharted film kicked off Sonys expansion in game
73、 IP value.PlayStation Productions currently has nine other projects in the works,including film adaptations Ghost of Tsushima and Gran Turismo,and TV series based on The Last of Us and Twisted Metal.Going forward,it will continue to pursue efforts to increase content value.Example 2:Demon Slayer:Kim
74、etsu no YaibaAniplex,part of the Sony Music Group(Japan),adapted the graphic novel series Demon Slayer:Kimetsu no Yaiba for TV anime,which led to the theatrical release of Demon Slayer-Kimetsu no Yaiba-The Movie:Mugen Train.The film drew record box-office revenue as of May 2021 for a Japanese releas
75、e,and worldwide it pulled over 40 million people into theaters,grossing over 50 billion.With a theme song by a Sony Music artist,it carried the popularity momentum forward into a video package,a console game,and another hit TV series.Having decided to produce a TV anime out of the Demon Slayer:Kimet
76、su no Yaiba Swordsmith Village Arc Sony continues working to build its IP value.Comment from the President of CrunchyrollRahul PuriniCrunchyroll PresidentOver the past year,the teams of Crunchyroll and Funimation have come together focused singularly on bringing fans the ultimate anime experience.We
77、 have fused 1,000 global employees across two companies who are passionate about anime,and are now translating that passion into a 360-degree experience for fans through streaming,theatrical releases,games,events,publishing and home entertainment all under the Crunchyroll brand.Fans,licensors,partne
78、rs and the media have all responded positively to the direction we are heading in.We are only just getting started on accelerating the growth of anime worldwide.Koyoharu Gotoge/SHUEISHA,Aniplex,ufotableDEMON SLAYER KIMETSU NO YAIBA THE HINOKAMI CHRONICLES COMMITTEEInitiatives to Increase Content Val
79、ueFilmsTheme SongsTV AnimeVideo Games11Special FeatureAs part of its work to apply technologies to expand communities of interest in sports,music,and other entertainment fields,Sony signed a partnership agreement with Manchester City Football Club in November 2021.Their joint initiatives have begun
80、to create a new generation of fan communities online that will help maximize fan engagement.Combining the technology of Sony Group firms and the global IP of Manchester City,Sony is working to fuse virtual and physical spaces,for which it develops attractive new content that helps Manchester City fa
81、ns worldwide feel closer to the club.It is also conducting a proof of concept to establish a new fan community.Specifically,Sony plans to virtually recreate Manchester Citys home,the Etihad Stadium,in the metaverse as a forum for experiential value creation,where fans can socialize as they share the
82、ir feelings of loyalty to the players and team.In terms of technology,it is making the most of the SkeleTRACK tracking system from Hawk-Eye Innovations Ltd.,which became a Sony Group company in 2011.By analyzing the motion of players and balls,and reproducing high-definition imagery in real time,it
83、is possible to develop new content that connects the physical and virtual domains.Sony is also exploring ways to develop new services by combining SkeleTRACK-collected data with graphics technology.By integrating cutting-edge Sony technology with Manchester Citys knowledge and experience in sports a
84、nd fan engagement,Sony plans to create a new live networking community in which fans from all over the world can gather to interact with other fans,share time and space together,and explore their diverse passions.Collaboration with Manchester City FC for the Next-Generation Fan CommunityFrom a Repre
85、sentative of the New Business Exploration DivisionHawk-Eyes Tracking SystemsMasashige KomatsuExecutive Manager,Corporate Project Promotion DepartmentBusiness Incubation PlatformNew Business Exploration DivisionSony Group CorporationSony has various advanced sensing technologies,and can utilize sensi
86、ng data to create new value in collaboration with professionals in many industries and markets.One such partner,Manchester City,has an immense global fan base and closely analyzes fan engagement data.Learning from its findings and knowledge,Sony uses the data collected from tracked athletes and virt
87、ual spaces to strengthen fan engagement for the club.In this way it hopes the Virtual Etihad Stadium can be accessible by all fans together beyond times when games are actually happening.For the future,it is also considering partnerships with other clubs and broader applications of sensing technolog
88、y to other media,like music and anime.Hawk-Eyes officiating services lead the sports industry,and are currently used in 25 sports at over 500 venues in over 90 countries worldwide.Their flagship optical tracking system,SkeleTRACK,acquires and analyzes data collected by tracking players and ball move
89、ment,which,when combined with their HawkVISION system,can generate 3D images that virtually reproduce the action in real time.SkeleTRACK is unique in its capacity to generate a skeletal model of each player.This allows for detailed analysis of the direction and center of gravity of each players body
90、 shift,as well as specific movement,which is then visualized through HawkVISION and used to review athletes performance and to entertain fans.Sony and Hawk-Eye are working to create new user experiences and exploring avenues to monetize the collected data,as well as to apply that data to video games
91、 and other media content.Initiatives in Kando Spaces12Special FeatureVISION-S prototype,an SUV(VISION-S 02).VISION-S was developed around three concepts:safety,entertainment,and adaptability.The vehicle is equipped with 40 sensors,including CMOS image sensors and ToF sensors both inside and outside
92、the vehicle,to provide advanced driving assistance,while network connectivity enables the vehicle to continuously evolve.Additionally,as a new space for entertainment,VISION-S offers in-cabin experiences of 360 Reality Audio,games and digital video services.Understanding that commercial operation is
93、 vital to the evolution of mobility experiences,Sony established the operating company Sony Mobility Inc.in April 2022.The new company develops EV service platforms without owning many assets,and we intend to focus on collaboration with partners to leverage their assets.Sony As an initiative to cont
94、ribute to the evolution of mobility,Sony exhibited a prototype of the VISION-S electric vehicle(VISION-S 01)in January 2020 at CES.We believe the next megatrend to follow mobile communication will be mobility,and that the definition of the automobile is about to undergo a major change.The evolution
95、of mobility will cause shifts in lifestyles and society,helping to resolve social and environmental issues by promoting the transition to electric vehicles,service-oriented businesses and smart grids.With its strengths of creativity and technology,Sony is fully embracing the challenge of redefining
96、mobility.Since the VISION-S project began in 2018,we have been stepping up efforts,including prototype production and verification,testing on public roads,and verification tests of onboard 5G communication during high-speed driving.Our learnings from these exploratory experiences,as well as from col
97、laborations with our partners,have been immense.At CES in January 2022,Sony exhibited its second has been collaborating with many partners,and in March 2022,we signed a memorandum of understanding with Honda Motor Co.,Ltd.on a strategic alliance to jointly develop and sell electric vehicles and prov
98、ide mobility services.In June 2022,Sony and Honda signed joint venture agreement to establish new company,“Sony Honda Mobility Inc.”The new company is planned to begin the sale of EVs and provision of services for mobility in 2025.To support the earnings structure,we are also considering the introdu
99、ction of a subscription system through service platform,on top of hardware sales.By making the most of our AI and robotics technology,Sony relentlessly pursues possibility in mobility experiences,to offer diverse,revolutionary solutions.Izumi KawanishiExecutive Vice President,Officer in charge of AI
100、 Robotics BusinessSenior General Manager,AI Robotics Business GroupRepresentative Director,President and CEO,Sony Mobility Inc.Contributing to the Evolution of MobilityInitiatives in Kando Spaces13Special FeatureValue Creation ModelSonys PurposePurpose explains the reason for our existence,for Sony
101、Group employees to work together along the same vector and create value from a long-term perspective;in other words,why we existIdentityIdentity expresses how we want to be perceived from the outside;in other words,who we areCorporate DirectionCorporate Direction sets out where we are headedFill the
102、 world with emotion,through the power of creativity and technology.A Creative Entertainment Companywith a Solid Foundation of TechnologyGetting closer to peopleSonys Purpose,to“fill the world with emotion,through the power of creativity and technology,”defines why Sony exists,and guides the 110,000
103、Sony Group employees along the same vector to create value from a long-term perspective.Based on this Purpose,Sony presents its Identity to the world as a“creative entertainment company with a solid foundation of technology.”Its Identity and Purpose are two sides of the same coin.Finally,Sonys Corpo
104、rate Direction is“getting closer to people,”specifically creators,employees and users.Based on these foundations,Sony pursues management centered on people and Kando over the long term through six business segments:G&NS,Music,Pictures,ET&S,I&SS,and Financial Services.Sony designates creativity,techn
105、ology and diversity of employees and businesses as drivers for value creation,which are essential to evolve and grow diverse businesses,promote collaboration,and create new value.Through its businesses,Sony creates and delivers 14 Creativity Technology DiversityKey DriversValue CreationKey Drivers a
106、re the essential elements to realize value creationValue Created for people,society and the planet through diverse businesses1.Enriching peoples hearts through the delivery of emotional experiences2.Helping creators realize their dreams3.Contributing to society through the delivery of safety,health
107、and reliabilityvalue to people,society and the planet to enrich peoples hearts through Kando experiences,help creators realize their dreams,and contribute to society through the delivery of security,health and peace of mind.Connecting people through shared Kando requires a healthy planet and a socie
108、ty that allows everyone to live with peace of mind.This is why Sony prioritizes its responsibility to society and the environment,and works to make contributions through its technologies and businesses.Among the various sustainability challenges we face,Sony focuses on climate change;diversity,equit
109、y and inclusion;respect for human rights;and technology for sustainability,considering them the most important and influential factors in the creation of value*.*For the most significant material topics related to sustainability,please refer to page 30.15Value Creation ModelValue CreationSony manage
110、s diverse businesses with the aim of sustainably creating value with people at the core,thereby serving our Purpose to“fill the world with emotion,through the power of creativity and technology,”under our Corporate Direction of“getting closer to people.”In pursuing our Purpose,Sonys value creation t
111、hrough our businesses can be roughly divided into categories based on three perspectives:users,creators,and the society in which people live.PurposeFill the world with emotion,through the power of creativity and technology.Value Creation123Enriching peoples hearts through the delivery of emotional e
112、xperiencesHelping creators realize their dreamsContributing to society through the delivery of safety,health and reliabilityExamples from FY2021G&NS Release of new gaming content and experiences through PS5TM,including the highly anticipated first-party title Horizon Forbidden WestMusic Continuous p
113、roduction of music creating emotion(In 2021,SMP had a significant interest in 8 out of 10 songs on Spotifys year-end Top Global Tracks chart,Best Hip-Hop Songs chart,and Best Pop Songs chart)Pictures Provision of joy and excitement through global content such as Spider-Man:No Way Home,the renowned t
114、elevision series The Crown,and leading anime programming at CrunchyrollET&S Launch of LinkBuds:truly wireless earbuds enable new fused online-offline audio experiencesI&SS Development of worlds first 2-layer transistor pixel technology,supporting higher-quality smartphone imagesIn addition to genera
115、ting content that moves peoples hearts,Sonys content businesses,including the Games,Music and Pictures businesses,and our DTC businesses,create communities where users can gather together and share creative experiences.Sonys Entertainment,Technology&Services businesses pursue technologies that offer
116、“Reality,”“Real-time”and“Remote”to develop and provide environments for enjoying high-quality content and communication in order for people to be connected through emotion.The Imaging&Sensing Solution business provides key devices for smartphones used by people around the world to share emotions.Enr
117、iching peoples hearts through the delivery of emotional experiences116Examples from FY2021ET&S Expanding sales of ID7000TM Spectral Cell Analyzer,streamlined multicolor cell analysis with more than 44 colors Development of CGX10 Cell Isolation System,contributing to cell therapy advances I&SS Commer
118、cialization of stacked SPAD depth sensor for automotive LiDARFinancial Services Renewal of unique remote consulting systems(Sony Life)Free distribution of GOOD DRIVE app to help reduce traffic accidents(Sony Assurance)Offered special mortgage rates for environmentally-conscious homes(Sony Bank)Examp
119、les from FY2021G&NS Accelerated investment in content creators through studio acquisitions,including Bungie,Haven Studios,Firesprite,Housemarque,Bluepoint,Nixxes,and Valkyrie EntertainmentMusic Strengthening of support of activities of independent artists through acquisition of AWAL/Kobalt Neighbour
120、ing Rights(investment amount:430 million USD)Pictures Support for diverse talent and works from various backgrounds(creation of the Creative Diversity Fund,Diverse Writers and Directors Program,and increased diversity of content)ET&S Expansion of Virtual Production business through Crystal LED and d
121、igital cinema camerasI&SS Global offering of image sensors supporting smartphones,digital cinema cameras,and digital interchangeable-lens camerasSony crafts environments where creators can fully express their creativity and fulfill their potential by providing platforms,technologies and expertise,in
122、 addition to discovering,nurturing,and producing creators,and supporting Sony artists from all directions.Sony delivers the resulting content to move peoples hearts around the world across a variety of domains,including Games,Music and Pictures.Sony continues to contribute to maximizing the value of
123、 creators time through its electronic products,technologies and services that enable creators to express their vision,as well as providing remote solutions for content production and live events.Helping creators realize their dreams2Sony helps to create a society in which people can enjoy daily live
124、s filled with emotion through its businesses that support people with safety,health and reliability.Sony aims to contribute to automobile safety and a better future for mobility with its CMOS image sensors and automotive-sensor technologies,while Sonys medical business aims to contribute to public h
125、ealth through applications in the fields of imaging,display and mechatronics technologies that we have cultivated over many years.In the Financial Services business,Sony focuses on providing customers with a sense of safety and assurance through pertinent advice,products and services that leverage a
126、 variety of information sources,while improving access to our services and promoting innovation for greater convenience in daily life.Contributing to society through the delivery of safety,health and reliability317Value CreationKey Drivers for Creating Value669887,314.8billionElectronicsInsurancePic
127、turesMusicGamesFY2000287,177.6billionDevicesHome Entertainment&SoundMusicGamesFinancial ServicesImaging Products&SolutionsMobile Products&CommunicationsPicturesFY201139,921.5billionGame&Network ServicesEntertainment,Technology&ServicesMusicFinancial ServicesImaging&Sensing Solu
128、tionsPicturesFY2021Consolidated Sales and Operating Revenue/Sales Composition by Segment(%)Note:Sales compositions exclude sales within All Other/Corporate and elimination.Endeavors to Create More ValueUnification of Value-Creation DriversLooking at its business portfolio,Sony has evolved into a cor
129、poration with strength in its diversity of businesses,all of which have established solid market positions.This can be seen as a result of long-term effort on the strength of value-creation drivers.The establishment of CBS/Sony Records Inc.in 1968 was the beginning of Sonys entertainment business.Th
130、is laid the foundation for the Groups strategy going forward,that is,to develop software and hardware as the wheels on its drive axle,and led to its current principle of building on its strength of business diversity.The financial services segment,which is the origin of Sonys direct-to-consumer oper
131、ations,is working to increase the value provided to customers through Sony Group technology and enhanced collaboration with other business segments,putting its Lifeplanner sales specialists,who from the beginning have always embodied its core value,at the center of operations.One of the worlds leadi
132、ng game ecosystems,PlayStation,was built on joint investment by Sonys music and electronics segments.It is a good example of continuous value creation unifying the three value-creation drivers.Focused Initiatives Sony puts weight on value-creation drivers when investing management resources.Since th
133、e start of the third mid-range plan in FY2018 strategic investment targets have been set on content IP,DTC services,technology,and Sony-owned equities.Over the four years since FY2018,Sony has invested more than 1 trillion in content IP,which is the product of creativity,and DTC as the means to deli
134、ver it.Sony is reinforcing technology and HR strategies for each business segment as well as the entire Group in accordance with the evolution of the business.Sonys People Philosophy,redefined in 2021 as“Special You,Diverse Sony,”clearly states that diversity is the foundation of Sony.Under Sonys Pu
135、rpose,to“fill the world with emotion,through the power of creativity and technology,”and to ensure that all of its employees are on the same vector when it comes to creating value from a long-term perspective,Sony has established four Values that are shared by all employees:“Dreams&Curiosity,”“Diver
136、sity,”“Integrity&Sincerity,”and“Sustainability.”To generate Kando,Sony believes that it is essential to combine the creativity of creators,engineers and employees with continuously-evolving technologies,as well as to create new value organically across all business segments by bringing together dive
137、rse employees from various business areas,united by a shared Purpose and Values.Sony designates creativity,technology and diversity of employees and businesses as key drivers for value creation.Creativity Technology Diversity18 Sonys top priority in this context is greater unity of value-creation dr
138、ivers.Collaboration across the Group is becoming standard practice,and efforts to build IP value through cross-Group utilization and promotion,as well as Group-wide projects for the shared application of technology,regardless of segment borders,are increasing.For continuing growth and development of
139、 the entire Group under the new Group architecture effective since April 2021,Sony is promoting initiatives to unify value-creation drivers structurally and permanently.Examples include Sony University,a program to train future Sony executives and global leaders who drive businesses;the Corporate Di
140、stinguished Engineer(DE)program,which certifies engineers who formulate and execute technology strategies,while identifying signals of change and supporting the development of talent to ensure Sonys sustainable growth;and the Technology Strategy Committees,which consist of technology-specific commit
141、tees that transcend the boundaries of business segments and disseminate important technological information widely within the Group while training the next generation.A representative initiative is the Content Technology Strategy Committee,established in April 2021 as the tenth project of the Techno
142、logy Strategy Committees.The purpose of this committee is to refine content-creation technologies that address issues and expand the future of Sonys entertainment business.A key characteristic is the collaboration between entertainment and technology groups to provide production-ready technologies.I
143、t has five working groups exploring content-related technologies,conducting verification tests of the latest technologies,making assessments and prototype applications of technologies,preparing content data,and handling other tasks.Results of these efforts have already been announced in and outside
144、the Group,and some have even seen application in operations.Going forward,it plans to further accelerate these initiatives.From the Leader of the Content Creation Working Group and led by Sony PCL,and one in the U.S.led by Sony Pictures.The film was shot,edited and completed with no travel between t
145、he teams.Sonys Airpeak professional drone,the VENICE 2 digital cinema camera and the 7S III mirrorless interchangeable-lens camera were used for shooting,while Xperia 1 III/Xperia PRO 5G smartphones were sending cinema camera feeds and production site video live streaming between the U.S.and Japan i
146、n real time.Other original Sony technologies,including Ci Media Cloud Services and the 360 Virtual Mixing Environment utilizing spatial sound technology,were used in editing and other production processes.More than just a test of new technologies and proof of concept,the project was an excellent lea
147、rning opportunity for engineers,who get few opportunities for direct involvement in film production,to share opinions with creators,collaborate,and expand on various possibilities.Going forward,the working group would also like to take on new challenges like deploying AI technology for sound and ima
148、ge processing as well as budget and schedule management through script analysis.To test new technologies and ideas on the actual production floor,the Content Creation Working Group of the Content Technology Strategy Committee recently produced a ten-minute short film,Kilians Game,along with a seven-
149、minute behind-the-scenes video,in collaboration with Sony Group companies,affiliated firms and rising Hollywood creators.The short film,which echoes the beginning of a suspense drama,showcases new filmmaking techniques born from the combination of creator ideas and various Sony Group technologies.Th
150、e team took full advantage of virtual production technology,displaying 3D background images synchronized with the camera work on a large Sony Crystal LED B-series screen.The production was a collaboration between two units,one based in Japan Key Drivers Unite to Produce a Short Film Example I carrie
151、d this project forward with the conviction that“technology exists for the purpose of realizing a creative vision.”We believe it is best for filmmakers to try new tools based on their own interest,which can expand their imaginations and lead to great content for production.Both the U.S.and Tokyo unit
152、 directors oversaw production setup,lighting conditions and editing,and advised each other.This allowed the U.S.and Japan teams to share a creative vision,and helped them seamlessly complete the film.We are also confident that we established a new framework for virtual production flow in a completel
153、y remote context.We believe one of the most significant benefits of this initiative is that we own all rights related to the short film we created.Therefore,we can use it,for example,to evaluate new filmmaking technologies,such as AI dubbing.The behind-the-scenes footage is also an important asset,t
154、o be used as a learning tool in future film and sound productions.The Content Technology Strategy Committee,which has just started its second year,plans to use the knowledge gained from this project to take on new production challenges,such as sharing assets among diverse entertainment fields and co
155、ntent,including music videos and games.Yoshikazu TakashimaDistinguished EngineerSVP Advanced Technology,Sony Pictures Entertainment Inc.19Key Drivers for Creating ValueUp to three yearsTen years or moreFive to ten years Sony AIDevelopment of technologiesin field of AI/robotics andapplications for bu
156、siness Each business segmentTechnology developmentdirectly connected tobusinessesSony ComputerScience Laboratories,Inc.Creation of new technologiesand businesses Corporate R&DFundamental technologydevelopmentR&D Structure(Timeframes)Technologies Borne Out of Collaboration Within and Outside the Grou
157、pVirtual ProductionGran Turismo SophyTMSynecO,Inc.TechnologyIn line with its Purpose and Corporate Direction of“getting closer to people,”Sony works to deeply understand what motivates creators and users,and pursues related research and development based on that understanding.The Sony Group organize
158、s its R&D efforts in terms of function and role along three timeframes that lead to achievement of the intended results(see chart below).Sony undertakes financially disciplined investment for corporate growth over the longer term,placing high priority on technologies that can be shared across busine
159、sses.Creation of new business is part of corporate R&D as well.Sony AI brings together the best and brightest talent from around the world,and embraces the challenge of giving free rein to human imagination and creativity through AI technology.It also promotes technological links and collaboration a
160、bove and beyond organizational borders,producing positive results already apparent in the area of entertainment and mobility in particular.Sony is developing various content in the permanent Virtual Production studio established in February 2022,ranging from motion pictures to television commercials
161、 and music videos,making full use of its in-house technologies.Gran Turismo Sophy,an autonomous AI agent produced through collaboration among Sony AI,Polyphony Digital and SIE,is demonstrating breakthroughs in AI technology as well as its potential for building new value in the game experience.Synec
162、O,a company established as a project of the Sony Innovation Fund:Environment,powers businesses specializing in environmental technology related to augmented ecosystems,such as SynecocultureTM,a research project of Sony Computer Science Laboratories,Inc.Going forward,Sony plans to strengthen inter-Gr
163、oup collaboration to build an R&D system that allows for seamless operations flowing from exploratory research to technology development,and the application of R&D results to products and services.Using technology to create synergy and accelerating business evolution in this way will enable Sony to
164、continuously grow and develop.Message from the CTOHiroaki KitanoCorporate Executive Officer,Senior Executive Vice President and CTOOfficer in charge of R&DOfficer in charge of AI CollaborationPresident and CEO,Sony Computer Science Laboratories,Inc.Representative Director and CEO,Sony AI Inc.The glo
165、bal COVID-19 pandemic and geopolitical risks have led to enormous change in the environment for human civilization,with the accumulation of climate change and other problems of planetary scale.I think it is essential to address these problems through the application of technology,and thereby contrib
166、ute to pushing civilization forward and making our planet sustainable.To that end,we support technological development that helps businesses grow and innovation that betters society and industry for the future.Our foundations for innovation are our diverse technologies and employees.Operating in sys
167、tems where technology and employees connect organically,we respect diversity,equity and inclusion,deliver Kando to many creators and users,and strive to create new value that can contribute to the sustainability of society and the planet.20Key Drivers for Creating ValueDiversityDiversity and Value C
168、reation Ever since Masaru Ibuka co-founded Sony with Akio Morita with the belief that“Innovation is born out of the intersection of diverse ideas,”Sony has continued to grow,becoming more diverse in every respect.Starting from the electronics business,which began with the hope of using technology to
169、 contribute to society,Sony has continued to evolve,expanding the breadth of its business to include semiconductors,music,finance,motion pictures and games.From the start,Sony has had its sights set on the world,and has not only developed virtually all of its businesses globally,but has headquartere
170、d four of the eight main companies in its six business segments in the U.S.,and conducts business on a global basis with an organizational structure optimized for each operation.These diverse businesses across varied regions are sustained by Sonys diverse employees,full of dreams and curiosity,who f
171、orm the foundation for creative innovation.Sony has about 110,000 employees worldwide who are not only diverse in terms of nationality or race,but also,due to the expansion of Sonys business,range dramatically in terms of job types,a diversity which constitutes the driving force behind the growth of
172、 each business.With their diverse backgrounds and varied specialtiesincluding engineers,creators and even Lifeplanner sales specialiststhese employees connect and intersect across businesses and regions,fusing technology and creativity to create new value with the common purpose of delivering Kando
173、to the world.Sonys Purpose&Values and People PhilosophySince its founding,Sony has respected the independence and challenging spirit of individuals,and cherished a corporate culture based on the partnership of choice between Sony and each individual employee,where each party is accountable for being
174、 responsive to the needs of the other.Sonys People Philosophy,“Special You,Diverse Sony,”conveys the wish that each unique individual who shares Sonys Purpose&Values,and Sony,which embraces diverse individuals,will continue to grow together,centered on this shared Purpose.Based on this People Philos
175、ophy,Sony defines its Group-wide HR strategy as,“attract,develop and engage talented individuals,”with responsibilities led by the top HR executives of each business in an appropriate and timely manner that best suits their respective business and region.Employee EngagementSony believes that the ext
176、ent to which diverse individuals share common values and are able to maximize their individuality depends on their degree of empathy with Sonys Purpose,and on employee engagement.Sony regularly conducts employee surveys to verify both of these components,and considers engagement to be a particularly
177、 important management index,incorporating it as a component of the indices for assessing the top management of each business segment,including Sony Group Corporation executives.Employee engagement has been consistently high in recent years,and going forward,Sony will continue to advance initiatives
178、that lead to greater employee engagement and understanding of its Purpose,thereby realizing sustainable growth.Purpose&Values(P&V):Reception and Empathy With continuous messaging from management,online talk events,and other initiatives to improve P&V reception and retention,the percentage of positiv
179、e responses remained high.Employee Engagement IndexThe index hit an all-time high in FY2021,reflecting high employee trust in the company.Sony values these results as paths to ongoing dialogue and action in each organization.I understand the P&V20202021(FY)I support the P&V20202021I use the P&V asgu
180、idance in my daily work20202021 I agree I neither agree nor disagree/I disagree100%75%50%25%0%93%7%87%13%70%30%92%8%86%14%70%30%85%FY201988%FY202089%FY2021Note:Percentage of employees who did not answer unfavorably to the questions21Key Drivers for Creating ValueLooking Back on FY2021Sony is pursuin
181、g growth with a balanced focus on sales and profit under the fourth mid-range plans(FY2021-FY2023)theme of“Evolution of Sony.”To carry the plan forward,everyone in the Group is working along the same vector defined by the two themes“Exploitation and Exploration for Growth”and“Wise Pivot.”These theme
182、s together articulate our approach of maximizing profit in our existing businesses by responding flexibly to change,while transforming Sony into an even more resilient corporation by actively distributing management resources to new growth areas.FY2021,the first year of the new mid-range plan,was an
183、other year of constant change in our business environment,with the Covid-19 pandemic continuing to spread widely and geopolitical risk expanding beyond conflict between the U.S.and China.To Sony,however,it was also a second consecutive year of setting new records for sales and operating income,as al
184、l our businesses sharpened their sensitivity to change and executed strategies with flexibility and agility.ET&S,in particular,improved operations,reviewed suppliers and secured strategic inventory to report year-on-year revenue and profit growth despite tight supplies of parts and distribution disr
185、uptions throughout the year,as well as the impact of renewed COVID-19 spread in China and Southeast Asia.G&NS,ET&S and I&SS together succeeded with defensive collaboration,closely sharing information related to procurement and distribution as well as undertaking joint negotiations.In FY2021 our thre
186、e entertainment segments(G&NS,Music and Pictures)together made up more than half the Groups consolidated sales for the first time,driving growth for the entire Group.I feel a strong sense of confidence resulting from the growth-oriented policies of each business segment and their efforts collaborati
187、ng in the application of IP,such as through the creation of the hit film Uncharted.We will continue to actively pursue opportunities for Sonys longer-term growth,like the metaverse,through inter-business collaboration.While we can acknowledge the successes of FY2021,looking forward to FY2022,we also
188、 understand the need to do business with greater awareness of the risk of,for instance,a recession resulting from worldwide inflation,and we are facing these risks with heightened alertness.Message from the CFOHiroki TotokiRepresentative Corporate Executive Officer,Executive Deputy President and CFO
189、22Third Mid-Range Plan(actual)Capital Expenditure2Dividends3Strategic Investments(Trillion yen)Carry-over from Third MRP1Debt Financing/Cash/Asset Sales2Operating CFThird Mid-Range Plan(actual)Fourth Mid-Range Plan Initial PlanLatest Projection4Note:Fourth mid-range plan covers FY2021-FY2023;third m
190、id-range plan covered FY2018-FY2020.1.Improvements in cumulative operating CF for third mid-range plan from end of 3Q 2020 and delays in cash-outs related to strategic investments already decided2.Financial figures in fourth mid-range plan based on IFRS,while those in third mid-range plan are under
191、U.S.GAAP.Thus,operating CF includes the effects of differences in accounting standards for principal payments for operating lease liabilities and purchases and sales of content assets.Capital expenditures also include increases in right-of-use assets related to operating lease agreements.3.Dividends
192、 in third mid-range plan were approximately 170 billion.4.Latest forecasts disclosed at FY2021 financial results briefing(May 10,2022)Capital Allocation(Excluding Financial Services)Breakdown of Capital AllocationSources of Allocated Capital2.82.8 3.8 3.8 4.0 4.01.40.40.30.40.3 2.0 2.0 3.3 3.12.60.2
193、1.51.71.2Fourth Mid-Range Plan Latest Projection4Initial Plan Over the medium term,I think it will be more important than ever to skillfully manage geopolitical risk.In a politically divided world with a highly complex global economy,it is vital to respond to geopolitical changes and consider their
194、effects over a long timeframe.At Sony,which operates diverse businesses worldwide,the effects of geopolitical risk on the value chain and on changes to our economic sensitivity vary by business.From the standpoint of the entire Group,risks tend to be dispersed,but we recognize that,rather than being
195、 complacent,we should pursue advanced,well-balanced risk management built on the strength of our business diversity.It is essential that we evolve our risk-management systems through higher sensitivity and by constantly sharing the latest information available.Capital Allocation and Strategic Invest
196、mentThe fourth mid-range plan,which puts highest priority on initiatives for long-term growth,emphasizes capital allocation as an important strategic theme for realizing this growth.Having updated the plan based on the results of FY2021,we allocated 2 trillion or more to strategic investment and 1.7
197、 trillion to capital expenditures,out of the 4 trillion or more sources of capital we expect to generate mostly operating cash flow from the businesses excluding the Financial Services segment.By order of priority,the focus of strategic investments will remain as follows:IP and DTC,technology,and So
198、ny in the form of share repurchases.Of the 2 trillion budgeted for strategic investment,1.06 trillion was either invested or earmarked for investment by the end of FY2021.I am encouraged by the fact that any delay in strategic investment amounts may lead to a postponement of growth or a reduction in
199、 the speed of future growth,so I am pleased that more than half of Sonys strategic investment budget for the entire three years of the mid-range plan has already been invested or earmarked in the first year.Strategic investments have gone forward as planned because the target areas for investment ha
200、ve been clearly determined based on Sonys Purpose and management direction,and because each business remains focused on growth markets and has identified appropriate investment targets.We are also implementing initiatives for all businesses to share best practices when it comes to M&A processes and
201、learn from one another in order to build investment muscle.Of the capital invested or earmarked for investment by the end of FY2021,content IP accounts for the largest proportion,followed by DTC.As the means for delivering content to users evolve with the times,I believe the passion that creators pu
202、t into their content,the Kando that content generates in users,and the value of that Kando will remain constant.Sony puts top priority on getting closer to creators,and this commitment shows in our investment figures.We believe that internal and external disclosures of where our capital is allocated
203、 make our portfolio strategy and its progress clearly visible,and we plan to continue this practice on a regular basis.In making strategic investment decisions,we set a minimum level of return to be achieved for each business area and currency as a target rate,and make decisions based on our capacit
204、y to exceed this rate,as well as whether the investment in question contributes to the long-term growth of the business.We carefully review the results of previous investments on a regular basis and pay close attention to changes in the external environment in an effort to improve investment returns
205、.23Message from the CFOProgress with Strategic Investment under Fourth Mid-Range PlanProgress toward 2 trillion(As of May 10,2022)1.Cumulative total from April 1,2021 to April 30,2022 2.Excluding 100 billion invested in music catalog included in operating cash flow3.Excluding about$1.06 billion inve
206、sted in Sony Pictures Networks India in preparation for merger with Zee Entertainment Enterprises Ltd.4.Other includes strategic investment in ET&S and I&SS segments and repurchases of Sony sharesMajor Investments Made or Earmarked(As of April 30,2022)AlreadyInvestedEarmarked forInvestmentCapital Al
207、location Balance 29%24%47%Breakdown of Total Strategic Investments Made or Earmarked1:about 1.06 trillion2,3(As of April 30,2022)G&NSMusic2Pictures332%Other430%16%22%Content IPDTC/Services68%Other9%14%Repurchase ofCommon Stock9%Breakdownby SegmentBreakdown byInvestment AreaCategoryInvestmentsIPAWAL
208、acquisition(Music)Som Livre acquisition(Music)Alamo Records acquisition(Music)Investment in Scopely(Pictures)Lasengle acquisition(Music)Ultra Records acquisition(Music)Bungie acquisition(G&NS)Industrial Media acquisition(Pictures)Haven Entertainment Studios acquisition(G&NS)DTCCrunchyroll acquisitio
209、n(Pictures)Investment in NetEase Cloud Music(Music)Ceremony of Roses acquisition(Music)OthersInvestment in JASM,a semiconductor foundry under TSMC(I&SS)Investment in Epic Games(G&NS)Repurchases of Sony shares In the third mid-range plan(FY2018-FY2020),we expended about 1 trillion of the total strate
210、gic investment fund of 1.4 trillion on business acquisitions,excluding minority shareholdings and repurchases of Sony shares.We project cumulative operating cash flow of 180 billion from these businesses over the three-year period from FY2021 to FY2023.Going forward,cash flow generated as a return f
211、rom those investments will be allocated to further investment as a source of capital allocation,thereby expanding the cycle of investment return and growth investment.We repurchased Sony shares worth 300 billion during the third mid-range plan,and 97.4 billion as of April 2022 under the fourth mid-r
212、ange plan.Another component of strategic investment is our plan to undertake flexible,agile repurchasing,taking into consideration our financial position and share price,within the 200 billion annual cap set in May 2022.Strategically Emphasized IndicatorsIn setting financial targets for the fourth m
213、id-range plan,we prioritized indicators strongly associated with growth,choosing adjusted EBITDA as our benchmark.We made this choice for several reasons.First,EBITDA is a metric that can measure results for the entire Group,including the Financial Services segment.In addition,we believe it clearly
214、shows returns on investment and promotes active investment.Finally,we believe it is considered highly compatible with techniques used to value businesses and corporations.We initially set a target of 4.3 trillion,an increase of 23%or 800 billion from the cumulative figure for the three-year period o
215、f the third mid-range plan,but,taking the results of FY2021 into account,we now project an additional 600 billion,for a total of 4.9 trillion.We also prioritize earnings per share(EPS),designating its growth as an important norm for management.To continuously increase EPS,beyond simply boosting prof
216、it,it is important to control the number of our shares through repurchases if needed.Since stock-based incentives are considered effective in attracting and retaining highly-specialized personnel,I believe that preventing dilution of our shares is particularly important.We also pay special attention
217、 to the operating income margin.We see it as an indicator of how customers value our products and services,as well as an indicator of our capacity for additional investment and adaptability to environmental change.Our operating income margin has been steadily increasing over the past decade,and I th
218、ink the fact that we have 24Message from the CFOThird Mid-Range Plan2(FY2018-FY2020,US GAAP)Fourth Mid-Range Plan(FY2021-FY2023,IFRS)Actual(Reference)TargetLatest Projection31.Refer to Annual Securities Reports for adjusted EBITDA for FY2021.2.Sony calculates adjusted EBITDA by adjusting constituent
219、 line item amounts disclosed in Financial Statements,presentation materials for Earnings Announcement,Quarterly Reports,and Securities Reports,to the extent that Sony deems amounts nonrecurring.Despite accounting differences between US GAAP and IFRS,Sony believes that disclosure of actual results of
220、 adjusted EBITDA in third mid-range plan as reference may be useful information for investors.3.Latest projection disclosed in FY2021 Earnings Announcement of May 10,2022Fourth Mid-Range Plan Financial Targets3.54.34.9(Trillion yen)FY2021Results1.6Adjusted EBITDA1 Three-Year Cumulative Totalreported
221、 a double-digit figure consistently since FY2018 represents great progress.Sustainability StrategyThe fourth mid-range plan guides our actions with regards to sustainability issues in terms of the environment,human resources,and human rights,marking them as strategic challenges for our businesses wh
222、en aiming for sustainable growth.Based on this approach,each business has identified its priority issues on its own initiative and drawn up plans to address those issues through a sustainability strategy.From an environmental standpoint,reducing greenhouse gas emissions from the production processes
223、 of the I&SS segment and from the use of ET&S products is a priority issue.And socially,we have identified diversity and inclusion as major topics for discussion.We will steadily pursue solutions to these themes over the long term,while at the same time disclosing and sharing our progress with a wid
224、e range of stakeholders by making the meaning and influence of our efforts tangible.In March 2022,the International Sustainability Standards Board of the IFRS Foundation delivered two proposals setting a comprehensive global baseline for sustainability disclosures.Initiatives of this sort,I predict,
225、will encourage corporations to take similar action.Dialogue for GrowthOver the past decade,Sony has worked to secure and stabilize profitability through the course of three mid-range plans.Throughout this process,we have been committed to ongoing dialogue with various stakeholders,especially our cus
226、tomers and the capital markets.We have gained much insight into how to accelerate improvement,which we subsequently put into practice.Under our fourth mid-range plan,the goal of which is growth,we will continue to actively disseminate information about our growth strategies and progress in order to
227、ensure that everyone understands and accurately assesses Sonys growth potential.Further,we will incorporate the feedback we receive in our plans,and we will continue to endeavor to implement a cycle that further improves both the quality and the likelihood of success of our growth strategy.We welcom
228、e your support of Sonys ongoing evolution towards greater growth.Past Mid-Range Plans First Mid-Range Plan (FY2012FY2014)Second Mid-Range Plan (FY2015FY2017)Third Mid-Range Plan (FY2018FY2020)In FY2011 Sony recorded a significant consolidated loss,primarily due to the impact of natural disasters and
229、 a decline in the profitability of the TV business.We built a foundation for growing profitability mainly by withdrawing from the PC business,splitting off the TV business as a separate subsidiary,and reducing headquarter overhead costs by 30%.In addition,we invested in the image sensor and game bus
230、inesses as well as other priority areas.Nevertheless,we fell far short of some quantitative goals,such as operating income margin and ROE,as our response to changes in the business environment was inadequate.Under the theme,“Profit Generation and Investment for Growth,”we reorganized and split off s
231、ome business units as separate subsidiaries,refocused management on awareness of profitability,realigned the profit structure through restructuring,and expanded recurring-revenue businesses.We made steady progress in new areas,including medical equipment,automotive,AI and robotics.We designated ROE
232、as the most important quantitative index,achieved operating income and ROE targets,and reached new record highs.However,the Pictures and Mobile Communications segments fell short of planned targets,and profit structure improvement remained an issue.Setting the Corporate Direction as“getting closer t
233、o people,”we made steady progress under three policy initiatives:enhancing DTC services and content IP,making the branded hardware business a stable cash-flow generator,and investing in CMOS image sensors to secure profits.We far surpassed our target for cumulative three-year operating cash flow(exc
234、luding the Financial Services segment),and set a new record in FY2020,the plans final year.We reorganized the Groups architecture by establishing Sony Group Corporation for Group headquarters functions,and by making the Financial Services business a wholly owned subsidiary.25Message from the CFORevi
235、ew of FY2021In FY2021,consolidated sales and financial services revenue grew by 10%year on year to 9,921.5 billion,while operating income grew by 26%to 1,202.3 billion.This increase is attributed mainly to growth in both theatrical and licensing revenues from digital streaming services for new film
236、titles and a gain from business transfers in the Pictures segment,an improved product mix in the ET&S segment,and growth in revenues from streaming services in the Music segment.Excluding the Financial Services segment,consolidated operating cash flow totaled 813.3 billion.Meanwhile,net income attri
237、butable to Sony Group Corporation shareholders for the period was 882.2 billion,a decrease of 147.4 billion compared with the previous fiscal year,in which there was a reversal of a previous write-down of deferred tax assets amounting to 256.8 billion.Note:Since April 2022,the former Electronics Pro
238、ducts&Solutions(EP&S)segment has been renamed the Entertainment,Technology&Services(ET&S)segment.This change has not resulted in any reclassification of businesses across segments.FY2021 Sales/Financial Services Revenue and Operating Income by SegmentPerformance HighlightsFY2021 Consolidated Financi
239、al Results(Billion yen)FY20201FY20211Year-on-year Change(+/-)Sales and Financial Services Revenue8,998.79,921.5+922.9(+10%)Operating income955.31,202.3+247.1(+26%)Income before income taxes 998.01,117.5+119.5(+12%)Net income attributable to Sony Group Corporations stockholders1,029.6882.2 147.4(14%)
240、Operating Cash Flow(excluding Financial Services)21,150.3813.3 337.0Investing Cash Flow(excluding Financial Services)2(542.2)(711.1)169.0Operating CF+Investing CF(both excluding Financial Services)2608.1102.1 506.01.Average exchange rate for FY2020 was 1 USD=106.1 JPY and 1 EUR=123.7 JPY;that for FY
241、2021 was 1 USD=112.3 JPY and 1 EUR=130.5 JPY.2.Operating cash flow(excluding Financial Services)and investing cash flow(excluding Financial Services)are not measures in accordance with IFRS.However,Sony believes that this disclosure may be useful information to investors.Note:Sony adopted IFRS start
242、ing in quarter ended June 30,2021,in lieu of the previously-applied generally accepted accounting principles in U.S.(U.S.GAAP).Results for FY2020 are also presented in accordance with IFRS(applies to all following pages).(Billion yen)Sales/Financial Services RevenueOperating IncomeMain Factors in Op
243、erating Income ChangeFY2020FY2021FY2020FY2021Game&Network Services2,656.32,739.8341.7346.1(+)Decrease in loss resulting from strategic price points for PS5TM hardware set lower than manufacturing cost()Decrease in game software sales,mainly in non-first-party titles,including add-on contentMusic939.
244、91,116.9184.8210.9(+)Increase in Recorded Music and Music Publishing businesses streaming service revenues(+)Positive impact of exchange rates()Absence of gain recorded on partial share sales and overseas business transfer in previous fiscal yearPictures753.01,238.979.9217.4(+)Gain from transfer of
245、GSN Games business(+)Higher sales for Motion Pictures due to increased theatrical revenue for new film titles(+)Gain from Seinfeld licensingEntertainment,Technology&Services2,068.12,339.2127.9212.9(+)Improved product mix for digital cameras and televisions(+)Positive impact of exchange ratesImaging&
246、Sensing Solutions1,012.51,076.4145.9155.6(+)Increase in unit sales of image sensors for digital cameras and industrial equipment(+)Positive impact of exchange rates()Increased R&D and depreciation/amortization expenses()Decrease in sales of image sensors for mobile productsFinancial Services1,674.01
247、,533.8154.8150.1()One-time loss recorded at a subsidiary of Sony Life(+)Higher insurance premium revenue at Sony Life,reflecting increase in policy amount in forceNote:Due to organizational changes as of April 1,2021,from Q1 FY2021 Sony transferred some businesses and functions previously included w
248、ithin All Other and Corporate and elimination to the ET&S segment.On this page,sales and operating income(loss)for each segment for FY2020 are presented to conform to organizational structure for FY2021.262000021(FY)2000021(FY)10,0008
249、,0006,0004,0002,0000Sales 1,5005001,0000201510(%)50Operating Income,Operating Income Margin Operating income(left scale)Operating income margin(right scale)(Billion yen)(Billion yen)6,795.57,767.38,215.98,105.77,603.38,544.08,665.78,259.98,998.7226.526.568.5294.2 288.7734.9894.2845.5955.31,202.33.30
250、.30.83.63.88.610.310.210.61,200(Yen)4008000(800)(400)Cash Flow from Operating Activities,Cash Flow from Investing Activities(excluding Financial Services)8000400600200(200)Adjusted EPS(Net Income Attributable to Companys Stockholders per Share(diluted)38.52060.12015444.02016770.62017753.4
251、2018762.9257.2305.4(49.8)(332.4)(300.5)(164.0)(520.4)(363.1)(94.3)(103.7)201920202021(FY)1,150.3813.3(542.2)(711.1)2000021(FY)Cash flow from operating activities Cash flow from investing activitiesNote:Information related to cash flow(excluding Financial Services)dis
252、closed here is not in accordance with U.S.GAAP or IFRS,but Sony believes it may be useful information for investors.12.22640(102)2721151889,921.5Note:Adjusted EPS is the result of dividing adjusted net income attributable to Companys stockholders for each fiscal year(“Adjusted net income”
253、)by the number of shares outstanding.The weighted-average number of shares on diluted basis in the Form 20-F for the fiscal year is used as the number of shares outstanding.For information on adjusted net income for FY2021,please refer to the Form 20-F.Adjusted net income for FY2017 to FY2020 is the
254、“Adjusted Net Income Attributable to Sony Group Corporations Stockholders”given in the materials used in the Earnings Announcement for the corresponding year.Adjusted net income for FY2016 and the years prior is based on income before taxes for the corresponding year,adjusted with profit/loss that S
255、ony has determined is non-recurring in nature and which is disclosed in specific figures in Form 20-F for the year,including profit/loss from write-downs of tangible and intangible assets,sales of assets and businesses,reevaluation of shares owned,expenses related to natural disasters,and the like,a
256、pplying the statutory tax rate disclosed in Form 20-F for the year and reducing net income attributable to noncontrolling interests.Because the effective tax rate exhibited significant volatility between FY2012 and FY2016,the statutory tax rate is used instead to better display the trend during the
257、period.Please refer to Form 20-F for each year to see differences between effective and statutory tax rates.(Billion yen)Changes in Key Financial Metrics Note:Figures for FY2012-19 based on U.S.GAAP,and those for FY2020-21 on IFRS.27Performance HighlightsLeft:FY2019;Middle FY2020;Right:FY2021Game&Ne
258、tworkServicesMusic2,656.32,739.8Sales by Segment939.91,116.9753.01,238.92,068.12,339.21,012.51,076.4849.91,011.91,991.31,070.61,674.01,533.81,307.7100.798.8251.41,977.67.218.0All Other16.3All Other154.8150.1Financial Services129.6Financial Services145.9155.6Imaging&SensingSolutions235.6Imaging&Sensi
259、ngSolutions127.9212.9Entertainment,Technology&Services87.3Entertainment,Technology&Services79.9217.4Pictures68.2Pictures400341.7346.Operating Income by SegmentLeft:FY2019;Middle FY2020;Right:FY2021Game&NetworkServices184.8210.9Music142.3238.43,000(Billion yen)(Billion yen)2,0001,0000Perfo
260、rmance Trends by Segment Note:Figures for FY2019 based on U.S.GAAP,and those for FY2020-21 on IFRS.Note:Since April 2022 the former Electronics Products&Solutions(EP&S)segment has been renamed the Entertainment,Technology&Services(ET&S)segment.This change has not resulted in any reclassification of
261、businesses across segments.Note:Due to organizational changes as of April 1,2021,from Q1 FY2021 Sony transferred some businesses and functions previously included within All Other and Corporate and elimination to the ET&S segment.On this page,sales and operating income(loss)for each segment for FY20
262、20 are presented to conform to organizational structure for FY2021.28Performance Highlights200202021(FY)20021(FY)200212022(year)(thousand tons-CO2)200202021(FY)(%)200202021(FY)120,000900,00060,00030,0000Number of Employees Percentage of Women in
263、 Workforce Percentage of Management Positions Held by Women Composition of executives Women Non-Japanese nationalsNote:As of end of August each year;2018-2020 figures for former Sony Corporation*Composition of executives:Chairman,Vice Chairman,President,Executive Deputy Presidents,Senior Executive V
264、ice Presidents,Executive Vice Presidents,and Senior Vice PresidentsNote:As of end of August,2022Note:Totals based on data as of March 31 for each fiscal yearNote:Totals based on data as of March 31 for each fiscal year.Note that definition of“management”may vary by country,region and company.Scope 1
265、 and 2(direct and indirect emissions)Scope 3(other emissions):Purchased goods and services Use of sold products OtherScope 3Percentage of Renewable Electricity Used at Own Business SitesComposition of Executives*Composition of Board of Directors20,00015,00010,0005,0000Greenhouse Gas EmissionsEmploye
266、es(Group-wide)Corporate Governance(Sony Group Corporation)Environment(Group-wide)50403020100Percentage of Women in Workforce and Percentage of Management Positions Held by Women28Executive directors7Outside directorsNon-executive directors43Women6MenNon-Japanese nationals117,300114,400111,70025.327.
267、328.328.4109,700108,9004.64.66.618,31317,74216,24617,98617,355466233330.133.634.335.635.435.0151050(%)503020100Tenpersonsin totalTenpersonsin total14.66340Key Non-Financial Metrics29Performance HighlightsSustainabilityGeneral ApproachSony manages diverse businesses with people at the core
268、,and aims for sustainable value creation based on such diversity and mid-to long-term growth in the Sony Groups corporate value under its Purpose to“fill the world with emotion,through the power of creativity and technology,”and its Corporate Direction of“getting closer to people.”In order to have p
269、eople connected to each other through emotion,it is necessary to create a society in which everyone can live with peace of mind in a healthy global environment.Sony acts with due consideration of the impact of its business activities on stakeholders,including shareholders,customers,employees,supplie
270、rs,business partners,local communities and other organizations as well as the global environment,and focuses on building trust with stakeholders through dialogue.Through innovation and sound business practice,Sony endeavors to enhance its corporate value and contribute to the development of a sustai
271、nable society.Material Topics in SustainabilityIn FY2022,Sony reviewed material topics in sustainability from the standpoints of all its businesses.In that process,Sony designated creativity and technology,two components of its Purpose,as drivers for value creation along with diversity of employees
272、and businesses,and defined materiality as“material topics that are related to sustainability,impact Sonys value creation,and are determined with longer-term social change and diverse stakeholder needs in mind.”Based on this thinking,Sony assessed the importance of various material topics related to
273、sustainability from the perspectives of both the company and stakeholders,and specified climate change;diversity,equity and inclusion;respect for human rights;and technology for sustainability as the most important.For information on Sonys priorities and main initiatives related to sustainability,in
274、cluding the most important topics in the areas of focus,see the Sony Sustainability Report 2022 in addition to the table on page 31.Sustainability Report 2022https:/ Assessment StepsSony Group Material TopicsStep 1Identify and classify material topicsStep 2Assess topics from the perspective ofSony a
275、nd its stakeholdersStep 3Identify the most important topicsImportance from Stakeholder PerspectiveImportance from Groups PerspectiveRespect forhuman rightsClimate changeDiversity,equity andinclusionTechnologyforsustainabilityMost importantImportantGreater importanceGreaterimportance30Note:Each of th
276、e following are essential across the Group,but those especially important for each segment are indicated inblue.Area of FocusKey FocusMaterial Topics Specific to Each Business Related MaterialsG&NSMusicPicturesET&SI&SSFinancial ServicesEnvironment Strive to achieve a zero environmental footprint thr
277、oughout the lifecycle of Sonys products and business activities in order to realize a sustainable society Sustainability Report 2022 Environment Sustainability Report 2022 Addressing Social and Environmental Issues Sony Group Portal Website EnvironmentEmployees Respect and support each employees amb
278、itions to grow and take on new challenges,and provide a range of experiences and opportunities for each diverse employee to make the most of their individual strengths,skills,abilities and creativity Sustainability Report 2022 Employees Sony Group Portal Website Diversity,Equity&Inclusion Sony Group
279、 Portal Website EmployeesRespect for Human Rights Continue reasonable efforts to avoid causing or contributing to adverse human rights impacts that may arise from our operations,products,services and/or business relationships Sustainability Report 2022 Respect for Human RightsResponsible Supply Chai
280、n Address risks to human rights,labor conditions,health and safety,and the environment throughout the electronics product supply chain Sustainability Report 2022 Responsible Supply ChainQuality and Customer Service Exceed customer expectations of product quality and customer service,pursue product s
281、afety,and improve usability and accessibility,thereby remaining a highly trusted partner to all customers Sustainability Report 2022 Quality and Customer Service Sony Group Portal Website Human-Centered Design Sony Group Portal Website AccessibilityCommunity Engagement Under the slogan“For the Next
282、Generation,”contribute to the resolution of a wide range of global social issues in places where Sony does business around the world by fully utilizing Sony products,content,and technologies Sustainability Report 2022 Community Engagement Sony Group Portal Website Social ContributionEthics and Compl
283、iance Foster an ethical culture based on Sonys Values and the Sony Group Code of Conduct Continuously assess compliance risks in relation to Sonys business activities and review the compliance program based on the results of said assessment Strengthen and continue to run programs that address change
284、s in the privacy environment and technological development Strengthen systems and initiatives that tackle AI ethics Sustainability Report 2022 Ethics and ComplianceCorporate Governance Establish and enhance corporate governance system that best suits the Sony Group Manage risks that may cause losses
285、 to the Sony Group Enhance information security management system and activities Comply with all applicable tax laws and regulations of each country and region where Sony conducts business as well as the common rules and guidance regarding international taxation Sustainability Report 2022 Corporate
286、Governance Sony Group Portal Website SEC FilingsArea of Focus and Specific Actions for Sustainability31SustainabilityNote:Previous targets in grey*Suppliers equivalent to 10%of supply chain greenhouse-gas emissions will set their own targets in line with SBT.Focus Area:Accelerating Measures Against
287、Climate Change Progress to Date and Acceleration of Achievement TargetsThe transition to a decarbonized society is a pressing issue for the global community.Sony is putting effort into measures against climate change from two perspectives:responsibility to aim to reduce greenhouse-gas emissions to z
288、ero,and contribution to innovation for industry and society.Since the early 1990s,Sony has been operating under environmentally-conscious policies and action plans.Road to Zero,an environmental plan established in 2010,is designed to reduce the Groups environmental footprint to zero by 2050 by follo
289、wing a specific road map including goals set from four perspective on environment,namely:climate change,resources,chemical substances and biodiversity.To address climate change,Sony has committed to reducing greenhouse-gas emissions to zero in both business operations and in its products throughout
290、their life cycles.Sony sets medium-term environmental targets every five years,backcasting from the final goals of the plan for 2050,with each business pursuing its respective action plan to achieve them.The current mindset in society in response to the increasingly serious effects of climate change
291、 is to support requiring corporations worldwide to accelerate measures to address climate change.For example,the international Science Based Targets initiative(SBTi)now stipulates a global temperature rise of 1.5C above pre-industrial levels as the new target level,rather than the 2C target set by t
292、he 2015 Paris Agreement,as well as establishing standards for net zero targets.Under these circumstances,Sony announced in May 2022 that it will push forward its goal of achieving net zero throughout the entire value chain,moving the target year from 2050 to 2040.Specifically,this entails making dir
293、ect and indirect emissions from its own operations(Scopes 1 and 2)carbon neutral by 2030.Sony has also accelerated its goal to achieve 100%renewable energy in its own operations by ten years,from 2040 to 2030(see the chart below).Moreover,Sonys net zero target for 2040 was approved as the net zero t
294、arget for the Science Based Targets initiative in August 2022.Priority Initiatives to Achieve New TargetsTo achieve these new targets,the Sony Group will continue to make an across-the-board effort to promote the use of renewable energy at all its business sites while reducing energy consumption.One
295、 example is the new Fab5 building at the Nagasaki Technology Center for image sensor production,which commenced operations in April 2021.Here,AI-assisted advanced control technology has been employed in semiconductor production to operate clean-room chillers and boilers,along with a system to recycl
296、e waste heat from production equipment to drive boilers,resulting in clean-room energy consumption efficiency being improved by 30%compared to the FY2015 level.Across the entire life cycle of Sony products,greenhouse-gas emissions are highest when they consume electricity during customer use.With th
297、at in mind,Sony will pursue innovation in areas such as product design while accelerating initiatives promoting a net zero society.Specifically,Sony is exploring investment opportunities in startups working on technology for the environment,mainly through the Sony Innovation Fund:Environment,a corpo
298、rate venture capital fund established in 2020,as well as through making proposals to national governments and industry associations worldwide.Carbon removal/fixation is a particularly vital challenge to meet in order to realize net zero carbon emissions by 2040.Going forward,Sony is looking into var
299、ious technologies leading to solutions,such as exploring credit generation from carbon absorption associated with augmented ecosystem businesses such as SynecocultureTM being rolled out by a Group company,SynecO,Inc.Sony will contribute to carbon fixation via both technological removal and natural a
300、bsorption by ecosystems.Road to Zero Road Map OverviewCarbon emissionsfrom product use:45%reduction(vs.FY2018)Supplierengagement targets*Carbon emissions fromentire product life cycle:ZeroCarbon emissions fromentire product life cycle:ZeroScope 12Scope 3OverallScope 12CarbonneutralCarbon emissions f
301、romelectricity used inSonys operations:ZeroCarbon removal:IncrementalimplementationCarbon emissions fromelectricity used inSonys operations:ZeroCarbon emissionsfrom business site72%reduction(vs.FY2018)20302025203520402045205032SustainabilityFocus Area:Initiatives for People and SocietyDiversity,Equi
302、ty and Inclusion(DE&I)Based on its Purpose,Sony works to create value for society.When employees from many different backgrounds come together,as they do at Sony,it is important to respect their diverse values,always remember the importance of equity and foster an inclusive organizational culture of
303、 mutual acceptance.Sony undertakes DE&I initiatives based on its People Philosophy,“Special You,Diverse Sony,”as well as the Sony Group Diversity Statement.While specific DE&I challenges vary by nation,region and industry,Sony takes a global approach to addressing gender diversity issues.At the end
304、of FY2021,women comprised 35.0%of Sonys workforce and 30.1%of the Groups management positions.Sony has each Group company set goals for its respective initiatives going forward to facilitate creating working environments and systems that help every employee work comfortably,hiring diverse individual
305、s and training more women for management posts,especially in Japan,where creating more career opportunities for women is an important social priority.Sony also hires and provides workplace support for individuals with disabilities.Beyond complying with the laws,rules and regulations of each nation a
306、nd region in which it operates,Sony is devoted to creating inclusive workplaces where all employees,regardless of disability,can build careers.In December 2019,Sony joined the Valuable 500,an international initiative to help promote the active participation of people with disabilities in society,and
307、 has been named among the Iconic Companies,a list of companies that are leading the way in actively including people with disabilities.Respect for Diversity and Contributing to an Inclusive SocietyThe Sony Group as a whole makes promotion of DE&I a priority,and undertakes initiatives related to dive
308、rsity and social justice.This is seen in Sonys endeavors to make its products and services more accessible using technology.Sony is accelerating collaboration with other companies in improving accessibility and inclusion for everyone.For instance,with the truly wireless headphones“LinkBuds,”whose op
309、en ring design allows the user to hear ambient sound,Sony has collaborated with Microsoft to implement voice navigation using 3D spatial audio allowing for a natural heads-up and hands-free experience when walking outside.In 2020 Sony established the Global Social Justice Fund,a 100 million USD fund
310、 to support organizations that promote social justice and the protection of human rights in order to foster diversity,equity and inclusion around the world.As part of its assistance through the fund,in June 2022 Sony Music Group established the Sony Music Group Global Scholars Program to provide car
311、eer support to talented individuals in the music industry.Sony Corporation of America partnered with PolicyLink to fund its work in advancing racial and economic equity;and provided funding to The Steve Fund so that it may build a national platform connecting families and young people of color natio
312、nwide with mental health programs and services.Sony believes that respecting diversity,along with commitment from top management,is an important value for each and every employee to understand and work toward.By cultivating this kind of corporate culture,Sony will in turn continue its efforts to mak
313、e society more inclusive.LinkBuds:Sonys truly wireless headphonesSony Music Group Global Scholars ProgramRace Forward,one of the Global Social Justice Fund grantees33SustainabilityValue Creation in Each Business34Jim RyanOfficer in charge of Game&Network Service BusinessPresident and CEO,Sony Intera
314、ctive Entertainment LLCRob StringerOfficer in charge of Music Business(Global)Chairman,Sony Music GroupCEO,Sony Music EntertainmentShunsuke MuramatsuOfficer in charge of Music Business(Japan)President and Representative Director of the Board,CEO,Sony Music Entertainment(Japan)Inc.We represent more w
315、orld class artists and songwriters whilst building innovative support services for their creativity.Our company keeps expanding through organic growth and acquisitions.We aim to base all our global activity on transparency,integrity and fairness.We will aim to continue to provide PlayStation content
316、 to gamers around the world and across more devices with innovative technology,cross-platform development,live services,and cloud streaming capabilities.In music and anime especially,we are strengthening talent and IP development capabilities to craft hit titles that we believe will fuel excitement
317、among fans,while leveraging various solutions for providing new ways to enjoy entertainment.Messages from the Heads of the BusinessesG&NSMusicAnthony VinciquerraOfficer in charge of Pictures BusinessChairman and CEO,Sony Pictures Entertainment Inc.Kimio MakiOfficer in charge of Entertainment,Technol
318、ogy&Services BusinessRepresentative Director,President and CEO,Sony CorporationTerushi ShimizuOfficer in charge of Imaging&Sensing Solutions BusinessRepresentative Director,President and CEO,Sony Semiconductor Solutions CorporationMasashi OkaPresident and CEO,Representative Director,Sony Financial G
319、roup Inc.SPEs Four Pillar strategy is working.This year,we achieved record results while pursuing transformative M&As for future growth.We will aim to continue building on this momentum and provide audiences with deeper connections to our content.We continue to deliver Kando and Anshin to people and
320、 societies across the world through the pursuit of technology and new challenges creating the future together with content creators.We are working to have our various stakeholders understand and relate to our corporate slogan,“Sense the Wonder,”as well as to co-create new value,spark imaginations in
321、 people,and enrich society.With businesses from life and non-life insurance to banking and nursing care,and with our Lifeplanner sales specialists,SFG“stays close to people”and uses the“power of technology”to help customers enjoy peace of mind and realize their dreams.PicturesET&SI&SSFinancial Servi
322、ces35Value Creation in Each Business21531157HardwarePhysical Software 21Digital SoftwareAdd-on Content Network Services Other FY2021SalesBreakdown(%)4291011Recorded Music(Streaming)19Recorded Music(Others)Music Publishing(Streaming)9Music Publishing(Others)Visual Media&Platform(Mobile games)Visual M
323、edia&Platform(Others)FY2021SalesBreakdown(%)423424Motion PicturesTelevision ProductionsMedia NetworksFY2021SalesBreakdown5(%)Business ProfilesGame&Network Services(G&NS)Revenue SourcesIn FY2021,the second year since the release of PS5TM,G&NS enjoyed growth in hardware sales and continued carrying fo
324、rward the earnings structure of the past few years,characterized by an upward recurring revenue trend via PSN due to the growth of network services and add-on content,in addition to strong software sales.The number of monthly active users of the entire line of PlayStation consoles and total game pla
325、ying time,which together are the basis for the upward trend,are both increasing over time.Investment Areas1G&NS limits fluctuations in its assets within a certain range by outsourcing most hardware production and expensing most development costs for new consoles and software.It invests in M&A and st
326、rategic partnerships,mainly with game developers,as well as in R&D to strengthen content IP.In FY2021 G&NS announced the acquisition of Bungie,which has strength in live service games,as well as Firesprite and Haven Entertainment Studios.Revenue SourcesMusic production is a relatively capital-effici
327、ent business,as revenues from digital distribution and package sales are shared with artists and other related parties.Music publishing,with its immense music catalog,has a business structure that allows it to generate stable revenues from royalties and other sources over the long term,although ROIC
328、4 is low.Visual media and platform are characterized by solid medium-term profitability due to multifaceted application of content IP.Investment Areas1The Music segment is actively engaged in discovering and cultivating new talent.It is also enhancing its support for independent and local artists,pa
329、rticularly as such artists account for a growing part of the market.In FY2021,the Music segment acquired AWAL and Som Livre,an independent Brazilian music label.The segment is also working to continuously enrich its music catalog,which is a collection of content with a high level of liquidity as an
330、asset.It is also enhancing investment in anime content IP,which can be deployed and utilized across a wide variety of media.Revenue SourcesMotion pictures generate mid-to long-term revenue from digital distribution and television licensing in addition to box-office revenue.While theatrical film rele
331、ases have been affected by the pandemic,income from streaming and licensing has been steadily increasing,and the overall value of content,including TV programs,is trending upward.Media networks offer two stable revenue sources,subscription fees and advertising fees,while niche-market DTC services of
332、fer stable growth potential for the communities of interest they can foster.Investment Areas1While content production and acquisition costs are capitalized as deferred film production costs,the recovery of funds tends to be over a longer period of time,resulting in a larger capital investment.Invest
333、ment targets include firms that produce motion pictures and TV programs.In FY2021 Sony completed its takeover of Crunchyroll,one of the worlds largest anime distributors,and announced a merger with Zee Entertainment Enterprises Ltd.,a media content firm in India.Forerunner of Sonys entertainment businessRanks first2 globally in music publishing and second3 in music production(FY2021 operating CF:6