Sony 2015 Annual Report Download - page 15

release of consumer products, including highly anticipated game software titles, and insufficient supply of
hardware during the year-end holiday season can adversely impact Sony’s operating results.
The sales and profitability of Sony’s G&NS segment mainly depend on the penetration of its gaming
platforms, which is sensitive to software line-ups, including software produced by Sony or third-party
developers and publishers.
In Sony’s G&NS segment, the penetration of gaming platforms is a significant factor driving sales and
profitability, which is affected by the ability to provide customers with attractive software line-ups, including
software produced by Sony or third-party game software developers and publishers, and with online services,
including network and cloud-based gaming and digital content delivery. There is no assurance that third-party
game software developers and publishers will continue to develop and release software regularly or at all.
Discontinuance or delay of software development or delays in the delivery of new online services may adversely
affect Sony’s operating results.
Sony’s content businesses, including the Pictures, Music and G&NS segments, and other businesses, are
subject to digital theft and illegal downloading.
Digital technology, the availability of digital media, and global Internet penetration have created risks with
respect to Sony’s ability to protect copyrighted content, including pre-release content, of the Pictures, Music and
G&NS segments and other businesses from digital theft and counterfeiting. In particular, software and
technologies that enable the duplication, transfer or downloading of digital media files from the Internet and
other sources without authorization from the owners of the rights to such content have adversely impacted and
continue to threaten the conventional copyright-based business model by making it easier to create, transmit, and
redistribute high-quality, unauthorized digital media files. The availability of unauthorized content significantly
contributes to a decrease in legitimate product sales and puts pressure on the price of legitimate products, which
may adversely affect Sony’s operating results. Sony has incurred and will continue to incur expenses to help
protect its intellectual property, to develop new services for the authorized digital distribution of motion pictures,
television programming, music, and games, and to combat unauthorized digital distribution of its copyrighted
content. These initiatives will increase Sony’s near-term expenses and may not achieve their intended result.
Operating results for Sony’s Pictures and Music segments vary according to worldwide consumer acceptance
and the availability of competing products and entertainment alternatives.
Operating results for the Pictures and Music segments can fluctuate depending upon worldwide consumer
acceptance of their products, which is difficult to predict. Moreover, the Pictures segment must invest substantial
amounts in motion picture and television productions and broadcast programming before learning the extent to
which these products will earn consumer acceptance. Similarly, the Music segment must make significant
upfront investments in artists before being able to determine how those artists and their recordings will be
received by consumers. Further, the commercial success of Sony’s Pictures and Music segments’ products may
be impacted by other competing products released at or near the same time, and alternative forms of
entertainment and leisure activities available to consumers. Underperformance of a motion picture or television
production, especially an “event” or “tent-pole” film, may have an adverse effect on the Pictures segment’s
operating results in the year of release or exhibition, and in future years given the high correlation between a
product’s level of success from its initial release or exhibition and subsequent revenue from other distribution
markets, such as home entertainment and television. Similarly, the underperformance of a recorded music release
may have an adverse effect on the Music segment’s operating results in the fiscal year of release.
Increases in the costs of producing, acquiring, or marketing entertainment content may adversely affect
operating results in Sony’s Music and Pictures segments.
The success of Sony’s Music segment is highly dependent on finding and establishing artists, songwriters
and music publishing catalogs that appeal to customers over the long term. If the Music segment is unable to find
and establish new talented artists and songwriters, its operating results may be adversely affected. Competition to
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