Junya Ayada

Junya Ayada inquired about gaming engagement during the holiday season, specifically analyzing play time, spending, active users, and software/network revenue trends, and the factors influencing them. He also asked for Sony's view on the impact of AI on the entertainment industry, considering its potential effects on content creation, platforms, and production processes across music, games, and video.

Answer

Corporate Executive Officer and CFO Lin Tao described gaming engagement as transitioning well, attributing play time fluctuations primarily to the availability of hit games. She expressed optimism for large-scale titles launching next fiscal year. Regarding AI, Ms. Tao sees it as a positive long-term force for content creation, particularly in games and animation, but noted it's early to assess cost impacts. She emphasized Sony's strategy to promote AI use in production and be a disruptor rather than being disrupted.

Junya Ayada asked about gaming engagement during the holiday season, specifically if flat playtime indicates dwindling engagement due to economic/console cycles, title lineup, or other activities. He also inquired about the impact of AI on the entertainment industry, considering potential positive effects on platforms from increased content versus negative effects from users spending time on casual AI content.

Answer

Lin Tao, Corporate Executive Officer and CFO, described gaming engagement as transitioning well, with playtime influenced by hit games and a shift from older large-scale games to new ones, expressing optimism for next fiscal year's large-scale titles. Regarding AI, she acknowledged its high affinity with games and animation, seeing it as positive for long-term content creation. She noted potential changes in development/production processes but stated it's too early to assess cost impact, emphasizing Sony's promotion of AI use in game production to be a disruptor.

Junya Ayada of JPMorgan Chase & Co. asked about the primary drivers behind the record-high active user growth in the Game & Network Services segment during the third quarter and its sustainability. He also inquired about the respective roles of the past three CEOs and the development of future management talent.

Answer

Executive Hiroki Totoki attributed the record MAUs to strong console sales, high-quality third-party titles, and seasonality, expressing confidence in continued momentum from a strong upcoming game pipeline. Executive Kenichiro Yoshida reflected on the management transition, noting his focus was on a 'creation shift' towards content and technology, and he expects Mr. Totoki to advance this with a 'creative entertainment vision' centered on computing and sensing.

Junya Ayada from JPMorgan asked for a breakdown of the significant growth in gaming add-on sales. He also inquired about the JPY 100 billion inventory increase in the I&SS segment and the outlook for production utilization.

Answer

Executive Hiroki Totoki clarified that the add-on sales growth was driven mostly by third-party titles. Regarding I&SS, he explained the inventory increase was primarily due to seasonality, finished goods levels are reasonable, and mobile image sensor utilization is expected to be near full capacity from Q2 onwards.

Asked about Sony's expectations for successful third-party free-to-play titles and whether the contribution from add-on sales is factored into the next fiscal year's profit forecast for the Games segment.

Answer

The executive confirmed that these third-party titles are significant contributors and that collaborations are a positive development. He could not comment on the specifics of the next fiscal year's plan, as it is not yet finalized, but stated the company hopes to capitalize on the momentum from growing third-party titles.

Junya Ayada of JPMorgan Chase & Co. asked about margin volatility across different product categories within the GEM Power Grid business and questioned the reason for the profitability decline in the DSS Services & Platforms sub-segment.

Answer

Hitachi Energy CEO Andreas Schierenbeck acknowledged that different product mixes can cause margin volatility but noted the new global ERP system provides better visibility to manage it. Executive Tomomi Kato attributed the DSS margin pressure to intensified competition and rising memory costs in the storage business, but expressed confidence in a second-half recovery driven by new midrange products and cost countermeasures.

Junya Ayada of JPMorgan Chase & Co. asked if margin volatility in the GEM Power Grid business is caused by the product mix between categories like HVDC and transformers. He also questioned the reasons for the profitability decline in the DSS servicing platform (Vantara) and the outlook for its recovery.

Answer

CEO Andreas Schierenbeck confirmed that product mix does cause margin volatility, but the new global SAP system should improve forecasting. Executive Tomomi Kato attributed Vantara's weaker Q2 profit to project timing, competition, and rising memory costs. He expressed confidence in a second-half recovery driven by new midrange products, though acknowledged it would be challenging.