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©2016 Avex Group Holdings
May 11, 2016
avex group growth strategy 2020 ~towards an innovative future of entertainment~
1 ©2016 Avex Group Holdings
1. Introduction
2. Growth Strategy for the Third Takeoff
3. Individual Strategies
4. Upcoming Plans
2 ©2016 Avex Group Holdings
1. Introduction
2. Growth Strategy for the Third Takeoff
3. Individual Strategies
4. Upcoming Plans
3 ©2016 Avex Group Holdings
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88 89 90 91 92 93 94 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16
Sales Operating Income
Financial Trends
Sales (billions of yen)
Operating
Income (billions of yen)
1988
Avex
Foundation
2005
2nd takeoff: structural reform
‐
Currently facing stagnation
Unable to maintain the
growth rate,
and earnings fell
Avex group grew progressively after it was founded in 1988, and
maintained growth by pushing through a structural reform at the time
of stagnation in the 2000s. In recent years, however, we have faced a
new stagnation.
2013:
Video distribution
business and live
business led sales
2009:
Video distribution
business began
1999:
Listed on TSE
1st Section
1995:
Management operation
grew to a major business
1992:
Imported record sale and
label business began
4 ©2016 Avex Group Holdings
0
400
800
1,200
1,600
2010 2014
0
100
200
300
2011 2015
0
50
100
150
200
2011 2015
0
250
500
2007 2015
Market Situation
While the music market has been shrinking every year, the
entertainment market, LIVE , DIGITAL content, and ANIME surrounding
the music industry, has been growing steadily. Considering our
comprehensive “360-digree model” in the entertainment market, we
view this situation as a positive growth opportunity.
Approx. double in 4 years Approx. 1.9 times in 4 years Approx. 1.3 times in 4 years
The market is shrinking every year
(approx. 35% decline since 2007)
(billions of yen)
(billions of yen) (billions of yen) (billions of yen)
Source: Recording Industry Association of Japan
(total of package and digital distribution)
Source: Nomura Research Institute, Ltd. Source: Survey conducted by
Association of Japanese Animations and
publicly available statistics
Source: All Japan Concert & Live
Entertainment Promoter's Conference
Live Market Anime Market Digital (VOD) Market
Music (Software and Digital Distribution) Market
5 ©2016 Avex Group Holdings
Business diversification is blocking the sharing of the
Company’s direction, and the Group’s sense of unity needs to
be nurtured further more.
Principles
Inadequate business selection and concentration are
preventing a full shift to growth markets. Strategy
The organization’s inflexibility and progress of individual
optimization resulted in a decline in labor productivity. Organization
Not enough uptake from the growing market
Despite the growth of the entire market surrounding us, the financial
results we had scheduled in our “Mid-term Strategy 2018” had fell
behind the plans.
Problems encountered while implementing the
Mid-term Strategy 2018
Problems encountered
6 ©2016 Avex Group Holdings
1. Introduction
2. Growth Strategy for the Third Takeoff
3. Individual Strategies
4. Upcoming Plans
7 ©2016 Avex Group Holdings
Problems encountered while executing the
Mid-term Strategy 2018
Rethinking how we should be
as an entertainment company
Principles
Need for selection and
concentration
Strategy
Reform into a system for
total optimization
Organization
Details to be explained after P8 Works in progress
Positioning of the Reformation (The Third Takeoff)
We will reset the plan period and develop a growth strategy to overcome
the problems we faced while implementing the Mid-term Strategy 2018,
and accelerate and maximize our growth. We will also be carrying out a
company-wide reform that includes the organization and principles.
Position these as the “third takeoff” and implement a company-wide reform
< Strengthen growth strategy >
Define the focus areas in
which to concentrate
investments
< Review the principles >
Redefine the management
philosophy and code of
conduct (who and how Avex
should be)
< Reform the organization >
Design policies and systems to
revitalize the organization and
its members and maximize
their value
8 ©2016 Avex Group Holdings
Selection and concentration in growth market
Strategies to create
new hits
Thorough total
optimization
• LIVE:Business expansion by
incorporating content other than
music and strengthening and
entering peripheral businesses
• ANIME:Acquire new rights and
maximize existing businesses
• DIGITAL:Establish advantages
for existing businesses and
promote digitization of all forms of
entertainment
[New] artists, creative
professionals,
and content
LIVE DIGITAL
ANIME
Management
MD/
FC
Others
Package
Music
Publishing Education
Grand Image of our business scale by 2020: Consolidated net sales of 250 billion yen
Focus on LIVE, ANIME, and DIGITAL as the areas of selection and
concentration, and pursue total optimization to promote business synergies
while aiming for business expansion. Additionally, we will implement the
strategies to create new hits using our 360-degree business foundation.
Growth Strategy: Overview Reviewing
Principles
Organizational
Reform
Strengthening Growth Strategy
9 ©2016 Avex Group Holdings
1. Introduction
2. Growth Strategy for the Third Takeoff
3. Individual Strategies
4. Upcoming Plans
10 ©2016 Avex Group Holdings
1. Increase the number of live events through library expansion
• Increase new deals for the production and operation of Japanese and foreign music live concerts
through alliances with outside companies, which was not possible for Avex alone.
• Actively increase other events such as major overseas music festivals, theaters, and musicals.
2. Maximize profit per event by strengthening existing and entering new live event peripheral businesses
• Strengthen live-event peripheral businesses such as fan club operation, merchandise sale, ticket sale, and sponsor acquisition.
• Enter the transportation and lodging businesses that capitalize on the flow of people incidental to live events, and maximize the profitability from LIVE related businesses as a whole.
3. Enhance contents by actively utilizing the functions as the one and only Live entertainment platform operator
• Actively expand the merchandise and ticket businesses into the sports and other territories.
• Aim to enhance content and increase monetizing opportunities by exercising businesses meeting
the demands of artists and content owners
Business Reinforcement 1: LIVE
Expand our businesses and profitability in the
growing LIVE market and surrounding markets
using our know-how as one of Japan’s leading live
event business operators and external alliances.
LIVE DIGITAL
ANIME
[New] artists, creative
professionals,
and content
Management
MD/
FC
Others
Package
Music
Publishing Education
11 ©2016 Avex Group Holdings
2. Obtain new IP and increase rights
• Develop and acquire original copyrights for anime content.
• Acquire more rights that allow secondary use (overseas, digital distribution,
merchandise sale, game apps, etc.).
1. Maximize sales from hit content
• Focus on capitalization through the sale of games apps and merchandise
that use hit content such as “Osomatsu-san”. Build a winning model and
divert it to other IPs.
3. Strengthen content procurement business of The Anime Times Company
• Enhance the links with “dTV,” Geo Channel, etc.
• Increase the supply capacity of anime content to other digital distribution
and VOD players.
LIVE DIGITAL
MD/
FC
ANIME
[New] artists, creative
professionals,
and content
Business Reinforcement 2: ANIME
Develop the “360-degree business” in ANIME
market and maximize the sales by capitalizing the
growing peripheral businesses of games apps,
merchandises, digital distribution, etc.
IP=Intellectual Property
Management Others
Package
Music
Publishing Education
12 ©2016 Avex Group Holdings
1. Enlarge and establish presence as a video distribution platform
• Strengthen its position as Japan’s largest video distribution platform and
establish advantages in the competitive landscape.
2. Add further value and increase mutual links among digital services
• Increase the added value of the overall services by mutually linking video
distribution and digital services for fan clubs, e-commerce, etc.
3. Actively capture opportunities for other digital-related businesses
• Accelerate an increase in business opportunities such as ticket sales, fan
club operation, merchandise sales, etc. by using digital means and promote
the digitization of entertainment businesses.
DIGITAL LIVE
Management
MD/
FC
Others
Package
Music
Publishing Education
[New] artists, creative
professionals,
and content
ANIME
Business Reinforcement 3: DIGITAL
Pursue business opportunities not only in the
existing digital distribution business, but also in
the digitization of various types of entertainment
including LIVE and ANIME.
13 ©2016 Avex Group Holdings
●Structure and system to achieve total optimization
●System of sharing and using information,
other resources, and best practices
Package
LIVE DIGITAL
ANIME
Managememt
MD/
FC
LIVE
Management
MD/
FC
Others
Package
Music
Publishing Education
[New] artists, creative
professionals,
and content
ANIME
DIGITAL
Total Optimization Throughout
Despite the business expansion, each business has been more
individually optimized and the true value as a group is not fully
exercised, which leaves ample room for capitalization and cost
reduction.
Total optimization needs to be pursued in order to maximize the
Group’s business value.
Music
Publishing
Others
Education
Achieve total optimization and maximize group synergy.
14 ©2016 Avex Group Holdings
1. Incorporation of varied content
• Recruit influential and creative talents, not limited to musician or artists
• Maximize opportunities for such talents using Avex’s business functions.
2. Overseas expansion
• Locate the main hub in North America, and increase content import and export capacity by improving interregional alliances.
• Develop artists not only for both Japanese and international market, and improve business development both in Japan and overseas.
3. Venture capital model
• Invest in and support talented people, whom aspires to succeed in the entertainment
industry.
• Create new hits, defying the conventional measurement of “a hit”.
[New] artists, creative
professionals,
and content
New Strategies to Create Hits
Implement new strategies to create next hit
content. Take in a variety of content regardless of
the existing boundaries, and discover and
develop talents with new approaches.
LIVE
Management
MD/
FC
Others
Package
Music
Publishing Education
ANIME
DIGITAL
15 ©2016 Avex Group Holdings
Discover
talents
E-commerce
Marketing
Collaboration New HQ Building
Communities
Paradise for the
“creative people”
New Strategy to Create Hits 1: Incorporation of Varied Content
Being true to the basics of our business, we will continue to seek for influential
and creative people in whatever fields or categories they are talented in.
We will aim to provide a “creative people’s paradise” that offers various
opportunities and functions to support their inspirations and outcome.
Provide opportunities
and functions
LIVE Brands
16 ©2016 Avex Group Holdings
Japan
Europe and
North America
Asia
Until today From now on
Japan based
We will not remain in the domestic market, but will make strategic moves in the
international markets. We will strengthen our ties between Japan, the U.S., and
Asia, using North America as a hub, and build an organizational structure
capable of discovering, importing, and exporting content appropriate for local
preferences and needs.
• Based on domestic business development of
Japanese content
• Limited to some import of Western content and
export of Japanese content to Asia
Global development
using North America
as a hub
• Discover content in North America and promote
development into Japan and other Asian regions
• Accelerate the export of comics (manga), anime,
and other Japanese content
• Strengthen our presence in Asia, particularly in the
Chinese market
North America
Japan Asia
New Strategy to Create Hits 2: Overseas Expansion
17 ©2016 Avex Group Holdings
New Strategy to Create Hits 3: Venture Capital Model
Not only providing the environment and systems, we will invest in talents
aspiring to succeed in the entertainment industry to contribute more to the
creation of hits and the revitalization of the industry. While the factors of hits are
diversified due to changes in the users and media, we aim to create future hits
through open innovation defying the conventional measurement of “a hit”.
Entertainment
venture fund
Entertainment
entrepreneur
HR
< Support Scheme >
Activity support
(people, goods,
and money)
Discover and develop
[Use external resources]
Potential artists, TV
personalities, creative
professionals, etc.
* Launched initially as an
internal project
Composition
[Use our resources such
as schools and auditions]
Potential artists, TV
personalities, creative
professionals, etc.
Entertainment business
candidates in general public
Taking on the challenge of open innovation
corresponding to the diversification of hit factors due to changes in users and media
Establishment of new value through co-creation
that uses our resources and functions
18 ©2016 Avex Group Holdings
1. Introduction
2. Growth Strategy for the Third Takeoff
3. Individual Strategies
4. Upcoming Plans
19 ©2016 Avex Group Holdings
Upcoming Plans
Issues to be discussed by April 2017
Principles
Strategy
Organizations
and Systems
• Management Philosophy
• Code of Conduct
• Corporate Logo
• Tag Lines
• Social Contribution
• Rebuilding of Indivisual Business
Strategies
• Optimal Resource Distribution
• System to promote Group synergy
• New Management and Operation
System
• Organization for Strategy
Implementation
• Personal Evaluation system
Turn of Events
June 24, 2016 Announcement of new
management and
operation system
April 2017 Start of the “Third Takeoff”
We will fully review/reform and improve the philosophy, organization, and
structure of the entire Group to maximize the Group value with all employees
facing in the same direction and continue to provide customers with more
surprises and excitement.
Reviewing
Principles
Organizational
Reform
Strengthening Growth Strategy
20 ©2016 Avex Group Holdings
Change in the Governance System Reviewing
Principles
Organizational
Reform
Strengthening Growth Strategy
Review the system in which the Representative Directors concurrently execute business, so that
“decision and supervision” by the Board of Directors of AGHD and “execution of business” by Corporate
Executives are clearly divided by delegating the execution of business to corporate executives who take
charge of each area.
Change the system to attain the following purposes by clarifying the responsible operating officers by
assigning Corporate Executives in charge of each business and area of the Group to AGHD.
Board of Directors
Business B Business A Business C Business D
AGHD
Board of Directors
AGHD
In charge of
Business A
Opera
ting
com
pan
ies
Board of Directors
In charge of
Business B
Board of Directors Board of Directors Board of Directors
In charge of
Business C In charge of
Business D
●Increasing the promptness of decision-making ●Clarifying responsibilities
●Cultivating next-generation managers ●Promoting company-wide optimization
[Present] Representative directors concurrently
execute business
[from July] Execution of business to be
delegated to Corporate Executives
Purposes of
changing the
governance
system
Corporate Executives Representative
directors
concurrently
execute business
In charge of
Area X
In charge of
Area Y
Business B Business A Business C Business D
Board of Directors Board of Directors Board of Directors Board of Directors
Promote company-wide
optimization through the
Management Meetings,
etc.
Opera
ting
com
pan
ies
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