business strategy briefing€¦ · strengthening business portfolio and view for mid to long term...

Copyright © DeNA Co., Ltd. All Rights Reserved.

DeNA Co., Ltd.

Business Strategy Briefing

July 19, 2017


Today’s Presentation Topics and Speakers

1 Overall Company Strategy Isao MoriyasuPresident & CEO

2 GamesTakeshi Matsui

Executive Officer, Head of Game & Entertainment Business Unit

3 EC & Net Services Akinori HaradaExecutive Officer, Head of E-Commerce & Incubation Unit

4 Healthcare Jun OiExecutive Officer, Head of Healthcare Business Unit

5 Automotive Hiroshi NakajimaExecutive Officer, Head of Automotive Business Unit

6 Sports Shingo OkamuraExecutive Officer, Head of Sports Business Unit

1


1. Overall Company Strategy

Isao MoriyasuPresident & CEO

2


Mission:Delight and Impact the World

Vision:As an eternal venture, bring delight to the world using the internet and AI

1. Mid to Long Term Strategy

Establish a solid foundation by FY2020 to create new business pillars in addition to strengthening the game business

Become a company able to create significant and stable value over the long term

2. Strengthening Business Portfolio

3


Mid to Long Term Outlook and Business Environment

2000Growth of the Internet* Expectations for AI Market

2000 2017 forecast 2017 2020 and beyond*Source: Zenith Media Services

(Unit: billion dollars)

2

1

Advertising Expenditure By Media

Rise of the Internet Rise of AI

2017

4



Internet➔ IoT ➔ AIAmount of Data,

Connected Devices Connection Speed Processing Speed

Max 14Mbps

Max 150Mbps

Max 10Gbps

Info

rmat

ion

Proc

essi

ng C

apab

ility

Information Processing Capability Will Leap with Advances in CPU Performance

5


Reforms to Realize Society 5.0, part of Investments for the Future Strategy 2017 (Excerpt from provisional translation provided by the government of Japan)


Potential to Solve Social Issues Using the Internet and AI

Extension of Healthy Lifespan• Establishment of Data Using Base• “Full-fledged Change of Individuals’ Behavior”

by Insurers and Business Operators, etc.

Realization of Mobility Revolution• Experiments Ahead of the World• Development of Systems Looking to

International Inter-system Competition, etc.

Creation of Next-Generation Supply Chains• Establish Systems for Data Coordination• Creation/Development of Advanced Precedents on Data

Coordination Ahead of the World

Building and Developing Pleasant Infrastructure and Towns FinTech

6


Aim to Contribute to Society Using the Internet and AI over the Mid to Long Term

Healthcare

Automotive

Sports

Games & Entertainment

E-Commerce & Net Services

Pure Internet ServicesCollaboration with Key Industries Outside the Internet

7


DeNA’s Strengths

Internet + AI

Service development, operation, infrastructure and serversEx: E-commerce, Mobage, partnership games

Partnering

Enabling Business Creation

Create businesses and services with external partners from a variety of industries and of different sizesEx: KDDI, NTT Docomo, Nintendo, Preferred Networks,

Yamato Transport, Nissan Motor Co., Ltd., etc.

Successfully created and accumulated different business models and growth drivers in e-commerce, SNS, and games

8


Mission:Delight and Impact the World

Vision:As an eternal venture, bring delight to the world using the internet and AI

1. Mid to Long Term Strategy

Establish a solid foundation by FY2020 to create new business pillars in addition to strengthening the game business

Become a company able to create significant and stable value over the long term

2. Strengthening Business Portfolio

9


Strengthening Business Portfolio and View for Mid to Long Term Growth

FY2016 Actual FY2020 Long Term Goal

Continue to strengthen the core game business Over the long term, create multiple new business pillars Use FY2020 as a checkpoint to confirm our progress towards achieving our long

term goals Proactively utilize M&A opportunities to strengthen our portfolio

Operating Profit23.2 billion yen Game

Business

Operating Profit100 billion yen level

Other Pillars

Checkpoint to Long Term Goal

10


Strengthen Core Game Business

Allocate sufficient resources to our core business, and solidify our competitive advantage through our mid to long term strategy

Market Environment and Our Strengths Current Resource Allocation*

*As of March 31, 2017, regular employeesRefer to slide 14 for the breakdown of accounting segments into organization names.

1) Access to IP, 2) operating capability, and 3) large-scale operation able to continuously deliver new titles are all becoming key factors to build an advantage in the market

Continue to draw on our experience collaborating with partners with strong IP

Accumulate development and operation capabilities in our organization, and further strengthen initiatives to create new IP

Sports

E-Commerce & Incubation

Healthcare

Other Businesses & Corporate

Automotive Game & Entertainment

11


DeNA’s Business Portfolio

Internet+ AI

Games & Entertainment

Healthcare Automotive

Sports E-Commerce & Net Services

12


Overall Company Structure (As of July 1, 2017)

13


Reference: Accounting Segment Breakdown into Organization Names

Game Business

E-Commerce Business

Sports Business

New Businesses and Others

IP-Generating Platform

Healthcare

Automotive

Segments Organization Name

Game & Entertainment Business Unit

E-Commerce & Incubation Unit

Sports Business Unit

Healthcare Business Unit

Automotive Business Unit

Mobile Social Incubation

14


2. Games

Takeshi MatsuiExecutive Officer, Head of Game & Entertainment Business Unit

Creating Excitement that Leaves a Mark on People, and History

Aim to Strengthen Core Advantage in Entertainment Businesses

15


Initiatives in the Games and Entertainment Space

Game Business

IP-Generating Platform Business,

Other Content Businesses

1st & 2nd party game app development for Japan and overseas

Partnership with Nintendo Browser games Mobage platform AndApp (PC platform)

Manga Box (manga comic app) Everystar (UGC novel site) MyAnimeList (anime fan site for English-speakers) Hacka Doll (news app)

16


FY2016FY2015

Current Status

Steadily pursue existing strategy, aim to achieve further success in game apps

Apps• Proactively allocate resources toward the

Nintendo partnership • Enhancing operations for key existing titles in

Japan• New game apps currently in development in

Japan and China, outside the Nintendo partnership

BrowserContinue live operations to generate ongoing profit and cash long term

17


Mission & Vision

Entertainment’s true value is in making life richer A massive amount of diverse content is created and then vanishes, but we

aspire to provide content that leaves a mark on people Through our initiatives, we aim to grow along with our customers and

partners, and to further expand the market and the industry

To pursue our mission, increasing business stability is key Our strategy is to continue focusing on game development and operations,

while pursuing collaboration and expansion opportunities in the broader digital entertainment space

Strengthen ability to create and grow our own IP Increase the possibility for expansion into a variety of services, business

arrangements, and regional approaches

MissionCreating excitement that leaves a mark on people, and history

VisionAim to strengthen core advantage in entertainment businesses

*Content shown on screens in photos is ©1985 NINTENDO 18


Long Term View

Present Mid Term Long Term

Buildup from Existing Strategy

Continue developing IP titles with major partners, such as Nintendo Long term operations for 1st and 2nd party browser games and our platform Enhance game development and operation abilities as a base for game business

Form Core Advantage

Enhance development of original games Invest in creation of, involvement in, and use of IP, to promote the expansion of our own assets

and media mix Increase diversity in regional strategy and device strategy

Strengthen core advantage in the entertainment space, with games at the core

19


Key Factors for Long Term Perspective (Entire Space)

Other Company IP

Existing Major IP New IP

DeNA IP

IP from GamesIP from Manga & Novels

Harvest

Grow

Sow Seeds

Continuous game development with

major partners

• Enhance game development and operation abilities as a base for game business• Increase diversity in regional strategy and device strategy

Greater diversity of partnership styles in game development

Strengthen involvement from

early stage(Ex: involvement in

anime creation)

Strengthen editing capability

(Ex: Manga Box, Everystar)

Strengthen development of original games

Strengthen expansion of media mix(Ex: novels, manga, anime, games, live-action, etc.)

20


Broad-scale enhancement of development capability

Key Factors for Long Term Perspective (Game Development)

Server Side

Analytics & Planning

Client SideUI & Gameplay Vision

Art DesignScenario Writing

Proactively built up the following strengths:・Handling of more complex and diverse game systems・Improve efficiency and expand service coverage

Utilize major IP Utilize new IP Strengthen originals

＋＋＋

21


Roadmap: Accumulate software and knowledge from all titles, and create a deep library of assets and resources

Subsidiary use: Accumulate user-oriented operations knowhow, and utilize effectively to ensure availability of resources for new development

Hiring: Share information about the variety of development and expansion achievements to attract engineers and creative personnel to form the core of our game development team

Broad-Scale Enhancement of

Development Capability

Strengthen Originals

Studio system: Set vision in each development unit, and aim to develop and brand games with unique characteristics, creating dedicated fans and high expectations for each in the long term

Improve Efficiency and Expand

Service Coverage

Expand partnership methods: Create more diverse portfolio by increasing capability and handling a variety of partnerships more efficiently

Handling more regions and devices: Increase efficiency by expanding service coverage

Key Factors for Long Term Perspective (Game Development)

22


3. E-Commerce and Net Services

Akinori HaradaExecutive Officer, Head of E-Commerce and Incubation Unit

23


E-Commerce & Incubation Unit

1. E-Commerce

Present Mid Term Long Term

Stable profit generation

Initiatives in social live streaming services

2. Incubation

Continuous initiatives in new services

24


Major Services in the E-Commerce Business

Good transaction volumes for international airfare tickets

Making progress on initiatives to expand the business internationally

Solid growth driven by usage outside DeNA services Focus on coordination with major players to increase

presence in growth markets

Pace of decline in the number of paid members is softening

Pursuing transformation into smartphone-optimized service

*Mobaoku

*

25


Paradigm Shift for Internet Services

2009

Social games

2012

Growth of dating

services in West

2013

Rise of sharing economy around the world

(Challenges for passenger &

accommodation services in Japan)

VR, AR, AI, IoT…

(More time possibly needed to bring

true added value)

2014

Smartphones x Video

(Clear demand,

but multiple possible

approaches)

2017Live Streaming x Social

Already ascendant in China, Asia, and the West

Promising signs of growth in Japan

26


Incubation Business

Live streaming platform that enables performers and users to interact

App that makes individual smartphone experiences social

App that allows anyone to live stream or tune in easily

Live C2C market app

Keep up with recent internet trends and create new services to continuously explore those possibilities• Aim to create products utilizing new technology, environments, or paradigm shifts• Build services from the bottom up, and use an MVP (minimum viable product) approach• Invest more resources (personnel and budget) as the product grows

Allocate additional resources to new services showing promise

Social Live Streaming Services

*Service image is provided for illustrative purposes only. Source: KaptureHouse/Shutterstock.com 27


4. Healthcare

Jun OiExecutive Officer, Head of Healthcare Business Unit

Making the shift from “sick care” to “healthcare”and lengthening healthy lifespans

28


• Information asymmetry(Information gap between patients and medical experts)

• Informed decision-making(Empowering individuals, self health management)

• “Sick care”(Care only given after illness)

• Rising medical and caregiving costs • Sustainable social security

Mission & Vision

Sick care HealthcareCare given only after illness Managing health and preventing sickness

Lengthen Healthy Lifespan (Keeping you healthy and active)

GoalsChallenges

• “Healthcare”(Manage health and prevent sickness)

29


Self Health Management

Personal Information

･･･

Lifelog &daily habits

Medical history

Expert Information

Information from various

tests

Medication history

Genetic information

Nutrition management

Exercise methods

Disease information

Recent research

Medical checkup

information

･･･

30


Initiatives in the Healthcare Space

Lifelog

Genetic information

Insurance claiminformation

Medication history

Medical checkup information

Daily steps taken converted to “d points” Jointly developed with docomo Healthcare 1.5 million downloads (as of March 2017)

Data health service for health insurance societies Centralized management of medical checkup data,

health information relevant to that data Joint venture with Sumitomo Corp. Works with about 80 health insurance societies,

with 2.2 million members (as of March 2017)

Direct-to-consumer genetic testing service, derived from joint research by DeNA and IMSUT

About 90% of users agree to participate in research platform

Personal Health/Medical DataHealthcare Services

April 2015

April 2016

Present

August 2014

*Aruite Otoku

*

31


Shift from “Sick Care” to “Healthcare”

Shift Major Industries to “Healthcare”

Pharmaceuticals and R&D Market Size:

10 trillion yen

Life InsuranceMarket Size:

40 trillion yen

Present Future

Refine & Expand Services(drive changes in awareness

and behavior)

Utilize Health and Medical Data

(evidence)

IT x Data x AI

32


Trends in the Insurance Market

Up to now

Going forward

Standardized by age/gender

Personalized to match health activities, etc.

CharacteristicsInsurance Products

Occurrence rates byage/gender

Medical checkup and lifelog(checkup results,

pedometer steps, etc.)

Necessary Data

InsurTech

33


Join Benefit

Only useful when sickGuarantee (payment)

only when sick

Join Benefit

Use healthcare services tominimize the risk of getting sick

＞＞＞＞＞＞＞

Guarantee+ Healthcare

Service

Shift from “Sick Care” to “Healthcare” in the Insurance Market

Up to now(“Sick care”)

Going forward(“Healthcare”)

InsurTech

34


Realizing “Healthcare”

Up to now

Going forward

Creating foundation to realize “Healthcare” Support for driving positive changes in behavior

(Ex: MYCODE, Aruite Otoku, KenCoM) Engagement science Begin accumulating data (genetic, medical checkup, and

lifelogs)

Creating businesses that utilize services & data Create “Healthcare” insurance market (combining

insurance and services), and engage in related initiatives 1) Build unique user base, 2) utilize AI for R&D and

broader initiatives, and 3) contribute to scientific advancement

35


Making the Shift from “Sick Care” to “Healthcare”And Lengthening Healthy Lifespans

36


5. Automotive

Hiroshi NakajimaExecutive Officer, Head of Automotive Business Unit

Anything, AnywhereCreating a world where people and things get where they need to go

in safety and comfort

37


7 million people with limited access to transportation,

about 30% of population expected to be 65 and over by 2020

Partial reduction of provided home delivery services

Personal vehicles only used about 5% of the time

Driver shortage in taxi industry

500,000 traffic accidents every year

Transportation is a key issue for the economy of Japan

Reform transportation from its foundation, using the internet & AI

Source: METI survey results regarding those with limited access to transportation (Japanese only), Cabinet Office’s 2016 Annual Report on the Aging Society (Japanese only), Institute for Traffic Accident Research and Data Analysis, MLIT 2010 survey regarding Japan’s urban transportation characteristics (Japanese only)

38


Auto Tech will boom in 2020 and beyond Define areas where we expect a cross-industry shift to Auto Tech, and establish

solid position by expanding businesses in multiple layers

Existing non-self-driving services x internet & AI

Establish next generation self-driving

services

1. Build base system and data• Platform = foundation for

transportation service• Monetization system for surrounding

areas

2. Build user assets• Build user base through early

promotion of service beneficial to users

3. Build alliance assets• Relationships with key alliance

partners

Transportation Space Structure and the Shift to Auto Tech

Parking lots, traffic lights, highways

Maintenance, leasing, used car circulation

General insurance

Vehicle manufacturing and sale

Passenger TransportRental Sharing

Self-driving passenger

service

Self-driving transport

service

Approach

DeNA’s Structural Approach to the Transportation Space

39


Mobility Industry Structure for the Auto Tech Age

ServicePlatform

Base Platform

Mobility Service Provider

Embedded Systems(self-driving system, etc.)

Vehicles

Infrastructure

Taxis

Buses

Logistics

Companies in each layer must coordinate closely to ensure success

The Mobility Service Provider will be a key space in the Auto Tech era

40


DeNA’s Initiatives

Surrounding Area Transportation

Service

Bus Car Sharing B2C Logistics B2B Logistics

BasePlatform

Taxi

ThingsPeople

Service Platform

Transportation Support Systems & Services

Trucks

Government, telecom companies, road system providers, etc.

Nissan, EasyMile, Ligier, etc.

Next Generation Transportation Service

Next Gen ServiceMobility

Service Provider

Vehicles

Infrastructure


Next Gen Service

Next Gen Service

Next Gen Service

*This logo is a registered trademark of Yamato Holdings Co., Ltd.

Next Gen Service

*

Next Gen Service

Next Gen Service

41


Taxi Demand Forecasting &Efficient Dispatch

Field Tests Aiming to Reduce Traffic Accidents

Plan to run field tests this summer using an AI-driven taxi dispatch app, in cooperation with the City

of Yokohama and the Kanagawa Taxi Association

Driver’s Dedicated

Device

Dispatch

App

Taxi User

System

Increase revenue for taxi

companies through

matching and AI-driven

demand forecasting

Support safer driving by utilizing AI-supported, sophisticated driving diagnosis technology that analyzes the driving environment and driving

behavior

42

Existing Non-Self-Driving Services x Internet & AI


Becoming a Key Regional Transportation Method

Status of Each Service and Initiative

Mobility Service Provider in the Next Generation Transportation Service Area, Making Life More Convenient and Enjoyable

Making Car Life Easier and More Enjoyable

Making Car Life Easier and More Enjoyable

Solving Logistics Problems

*This logo is a registered trademark of Yamato Holdings Co., Ltd.

New Transportation Service

DeNAx

Nissan

Anything, Anywhere.Creating a world where people and things gets where they

need to go in safety and comfort

43


Focus on preparations to create next generation self-driving service

Business Establishment Roadmap

Next Generation Self-Driving Services

Accumulation of technology Promote maintenance of social

systems Develop cooperative relationships

with other companies Invest to solidify businesses, including

establishing next generation services

Commercialize and mass produce self-driving vehicles, utilizing new technology such as AI

Long TermMid Term (FY2020 onward)Short Term

Non-Self-Driving Services x Internet & AI

Prof

it Ge

nera

tion

Inve

stm

ent

44


End Users

Vehicles


Infrastructure

DeNA’s Core Competencies Applicable for the Automotive Space

Mobility Service Provider

Service development, operation, infrastructure & servers(Apps, cloud systems, etc.)

Partnering(business expansion involving multiple stakeholders)

Enabling Business Creation

45


6. Sports

Shingo OkamuraExecutive Officer, Head of Sports Business Unit

Delighting People and the Community through Sports

46


DeNA’s Sports Business

1. Appealing, strong team x support by solid business structure

2. Community Ballpark Concept

3. Baseball and more

©YDB 47


DeNA’s Sports Business

Stadium Attendance* Sports Business Operating Results**

New Team Record

1.94 million1.1 billion yen

profit

*Total stadium attendance for home games each regular season (end of March – end of September) **DeNA has disclosed the performance of its Sports Business in a dedicated financial accounting segment from FY2014. The results for FY2014 onward shown above reflect the performance of this accounting segment. The results shown for FY2013 and earlier are reference numbers adjusted from the baseball team’s fiscal year results.

2012 2013 2014 2015 2016 FY2012 FY2013 FY2014 FY2015 FY2016

48


Future of the Sports Business

Events

Merchandise SalesConcessions Services

EducationTourist Resorts

Sports Facilities Operation

Sports Equipment

Health and Wellness

Sports Promotion

Apps & Web Services

Broad Connection Possibilities in the Sports Business

DeNA’s Sports Initiatives

©YDB

49



Maximize Business × Smart Venue* Business

Improve operating results of the baseball team• Pro baseball business

Joint operation of Yokohama Stadium and the Yokohama DeNA Baystars• Synergies from joint operations, initiatives outside stadium• Pursuing Smart Stadium Concept for the mid to long term

Smart Venue* Business• Bring together Sports, IT, and the greater

community in the operation of sports facilities

FY2017 FY2020 Long Term

*Term promoted by the Development Bank of Japan Inc. to refer to multifunction complexes to promote regional exchange 50



Comprehensive Agreement to Promote Sports and Energize Regional Economy with the City of YokohamaI☆YOKOHAMA Agreement

Expansion of Yokohama Stadium for 2020

• Agreement among the City of Yokohama, DeNA, Yokohama DeNA Baystars, and Yokohama Stadium

• Involved in initiatives to promote enjoyment of both competitive and cooperative sports using DeNA Sports Business assets, working to energize the regional economy using DeNA’s insights and technology, creating new industries, and working to solve regional and governmental issues

City-level expansion of the Community Ballpark Concept

Yokohama Sports Town Concept

©YDB

51


Future OpportunitiesThe Japanese government has identified “Changing sports to a growth industry” as a key

policy measure for the Japan Revitalization Strategy 2016. Aim to be a catalyst for energizing the region.

52


DeNA Co., Ltd.

The information and data contained within this presentation and thesepresentation materials have been determined based on information available as ofJuly 19, 2017. The company disclaims any obligation to update or revise suchinformation and data, whether as a result of new information, future events orotherwise.In addition, any forward-looking statements contained in this presentation orthese presentation materials are based on our opinions and information availableas of July 19, 2017, and involve uncertainty. Please be aware that the actualperformance data and similar information are subject to influence from diversefactors and may differ from the forecasts presented herein.

53

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