Minami Munakata

Minami Munakata inquired about Sony's perspective on generative AI, particularly in light of Project Genie, and how Sony views its opportunities and threats. He specifically asked about the strengths of Sony's game studios and development in a world where generative AI is rapidly advancing.

Answer

Corporate Executive Officer and CFO Lin Tao characterized generative AI as a powerful tool in a toolbox, not a business in itself. She emphasized the need to integrate AI with artistic sensitivity to create new business opportunities and entertainment. Ms. Tao stated that Sony does not view AI as a threat but rather as a means to help creators commercialize products faster, seeing this as Sony's mission.

Minami Munakata asked about generative AI, specifically Project Genie, and its perceived threat versus opportunity in game creation, inquiring about the strengths of Sony's game studios and development in this evolving landscape.

Answer

Lin Tao, Corporate Executive Officer and CFO, viewed generative AI as a powerful tool in a toolbox, not a business itself. She emphasized the need to integrate AI with artistic sensitivity to create entertainment and business opportunities. She stated AI is not a threat but a means for creators to innovate faster, and Sony's mission is to help them commercialize these innovations.

Minami Munakata asked about the monetization strategy for AI agents, the timing of the LINE app renewal, and whether the flat EBITDA margin guidance for FY'25 signals a strategic shift from cost optimization to top-line growth.

Answer

CEO Takeshi Idezawa outlined three potential AI monetization paths: a conversion-based model tied to GMV, integration into the LYP premium subscription, and the creation of a novel model. He confirmed the LINE app renewal is on schedule for FY'25. An executive added that FY'25 is a year for strategic investment in AI to foster future growth while still maintaining high single-digit profit growth, rather than a singular focus on cost reduction.

Minami Munakata inquired about the progress of the LINE and Yahoo! account linkage, the impact of the recent security incident on user engagement, and requested a breakdown of the media business's low single-digit revenue growth guidance.

Answer

CEO Takeshi Idezawa confirmed that account linkage is progressing well, reaching about 50% based on Yahoo! Japan ID, and stated that no impact on user engagement from the security incident has been observed. Executive Ryosuke Sakaue detailed the media guidance, expecting 15-20% growth in Account Ads, flat-to-lower results for Search Ads, and low single-digit growth for Display Ads, noting the overall guidance is conservative due to uncertainties around third-party cookies.

Minami Munakata asked about the drivers behind the negative growth in display advertising, seeking a breakdown between Yahoo! and LINE, and questioned the reasons for postponing the LINE app renewal to fiscal year 2025 and its potential impact on business performance.

Answer

Yuki Ikehata explained that the display ad slowdown was due to weaker demand from the cosmetics and health food industries and the absence of large game and entertainment campaigns that were present in the prior year. Takeshi Idezawa, CEO, added that the LINE renewal was postponed to thoughtfully integrate generative AI and ensure profitability, with a phased rollout starting in FY 2025 that is not expected to have a major impact that year.