Sony 2015 Annual Report Download - page 35

Electronics
Sony believes that its product planning and product design expertise, the high quality of its products, its
record of innovative product introductions and product improvements, its price competitiveness derived from
reductions in manufacturing and indirect costs and its extensive marketing and servicing efforts are important
factors in maintaining its competitive position. Sony believes that the success of the game and network services
businesses is determined by the availability of attractive software titles and related content, downloadable
content, network services and peripherals. Sony Mobile manufactures and sells mobile handsets, primarily
focusing on the smartphone market, specifically products using the Android operating system as a platform.
Many of the retailers and carriers who distribute Sony Mobile’s products also distribute the products of
competing mobile handset companies. Sony Mobile believes that its product design capabilities, technological
innovation, price competitiveness, user experience and the ecosystem that supports such an experience are key
factors in establishing and maintaining a competitive position. So-net faces competition in the Internet service
provider business from other service providers in Japan, including telecommunications companies that possess
their own telecommunication lines. Rapid technological advancement has created many new opportunities but it
has also increased the rate at which new and more efficient services must be brought to market to earn customer
approval. Customer sensitivity to prices is high, and they are able to change Internet service providers with
increasing ease. In the Devices segment, due to slower recent growth of the smartphone market, plans to increase
the production capacity for image sensors have been revised. While much effort will be put into keeping Sony’s
strong competitive position in this business, Sony believes that it is equally important to try to match capital
expenditure with future customer demand and plans to reduce its investment in this area which requires a large
amount of initial capital investment.
Pictures
SPE faces intense competition from all forms of entertainment and other leisure activities to attract the
attention of audiences worldwide. SPE competes with other motion picture studios and, to a lesser extent, with
production companies to obtain story rights and talent, including writers, actors, directors and producers, which
are essential to the success of SPE’s products. In motion picture production and distribution, SPE faces
competition to obtain exhibition and distribution outlets and optimal release dates for its products. In addition,
SPE faces intense competition to acquire motion pictures and television programming from third parties.
Competition in television production and distribution is also intense because available broadcast time is limited
and the audience is increasingly fragmented among broadcast and cable networks, direct broadcast satellite
(“DBS”) providers, the Internet and other outlets both within and outside of the U.S. Furthermore, broadcast
networks in the U.S. continue to produce their own shows internally. This competitive environment may result in
fewer opportunities to produce shows for U.S. networks and a shorter lifespan for ordered shows that do not
immediately achieve favorable ratings. SPE’s worldwide television networks compete for viewers with broadcast
and cable networks, DBS providers, the Internet and other forms of entertainment. The growth in the number of
networks around the world has increased the competition for advertising and subscription revenues, acquisition
of programming, and distribution of SPE’s television networks by cable, satellite, the Internet and other
distribution systems.
Music
Success in the music industry is dependent to a large extent upon the artistic and creative abilities of artists,
producers and employees and is subject to the vagaries of public taste. The Music segment’s future competitive
position depends on its continuing ability to attract and develop artists and products that can achieve a high
degree of public acceptance as well as offer efficient services.
Financial Services
In the Financial Services segment, Sony faces strong competition in the financial services markets in Japan.
In recent years, the regulatory barriers between the life insurance and non-life insurance industries as well as
among the insurance, banking and securities industries have been relaxed, resulting in new competitive pressures.
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