So we would like to start Business Segment Meeting 2024 for Sony. So this is Hayakawa speaking, in charge of Finance and IR, and I will be your moderator. So I would like to introduce the speakers for today's session. Today, speakers are from Sony Interactive Entertainment, Mr. Nishino, SVP, Platform Experience; Mr. Hermen Hulst, SVP, Head of PlayStation Studios; Mr. Stringer, Chairman of Sony Music Group, CEO of Sony Music Entertainment. Mr. Muramatsu, President and CEO of Sony Music Entertainment, Japan; and Mr. Vinciquerra, Chairman and CEO, Sony Pictures Entertainment. And tomorrow's speakers are Mr. Maki, President and CEO of Sony Corporation; Mr. Shimizu, President and CEO of Sony Semiconductor Solutions; President and CEO; Mr. Endo, President and CEO of Sony Financial Group.
Now we would like to move on to the sessions for each business area. During each session after the presentations by the business leaders, we will take questions from investors and analysts who have registered in advance. We ask you to participate in the session in the language which you have registered. Please ask your questions in English, and we do provide the original language line. For that, please ask your questions in English for Sony Music Group and the Pictures segment and in Japanese for the Game & Network Services segment and Sony Music Entertainment.
So please refer to the invitation letter sent to you in advance for other important information. If you have not pre-registered, you will be able to listen to the Q&A session via the Internet. Please wait for a few more minutes for the start of the Game & Network Services session. Thank you. We will be starting the Game & Network Services segment session momentarily. Please wait for a few more moments. Thank you. Now thank you very much for waiting.
We would like to now start the Game & Network Services segment session. First, a presentation will be given by the SVPs of Sony Interactive Entertainment, Mr. Hideaki Nishino and Mr. Hermen Hulst.
My name is Hermen Hulst, soon to be CEO of Sony Interactive Entertainment Studio Business Group.
I'm Hideaki Nishino, soon to be CEO of the Platform Business Group.
We are both honored to be here today. I will update you on the continued success of PlayStation Studios.
And I will discuss PlayStations innovative, world-class products and services and technology.
So, we look to build on our success with PlayStation 5 and prepare for the future. We are excited to share our progress on the strategic direction of the business.
Sony Group's theme for the 5th Mid-Range Plan is Beyond the boundaries to maximize synergies across the group. Connecting to Sony Group's Mid-Range Plan theme, SIE's theme is console and beyond. PlayStation 5 and PlayStation Studios are the foundation from which we are expanding, broadening our reach, our audience and the value we create for players.
First, a quick moment to show where we are historically. This chart shows our history over the past 3 decades and 5 generation of consoles. The most recent generation started with the launch of PlayStation 5 and has resulted in a great momentum in sales and operating income. Even in our early years of PlayStation 5, this generation is already close to exceeding all others in combined operating income. While our prior goal has been to win this console generation with the PlayStation 5, we are now shifting our focus to driving profit from our position and preparing ourselves for a transformative future.
But first, let me back up and tell you how we think about our business. PlayStation is not just about gaming console hardware. It is not just about content. It is an experience and a community who shares this excitement. Our role is to connect players and the game creators. We want to provide players with the best gaming experience possible and that means enabling creators to provide players with these amazing experiences. The commitment we make to player is that we will be the best place to play. The commitment has a number of connected elements; great content, innovative hardware and a compelling subscription benefits. Fulfilling this progress enables us to serve over 118 million players with access to over 9,000 games.
As small players come to PlayStation, more publishers do too, which attracts more players and so on. This positive feedback loop enables us to attract over 2,000 publishers. The commitment to the publisher is similar to our commitment to our players. We are the best place to publish not only for our largest publishers, but all of our creators. We enable our partners to provide great play experiences with high engagement and monetization.
Through our studios, we built world-class franchisees and beloved characters. We delivered games showcasing our console, confirming that PlayStation is the best place to play. And we continue year after year with high-quality tentpole releases that demonstrate our obsession with quality, but we also continue to explore new ways to connect players and new audiences to these franchises through games and other media on console and beyond. All of these tied together in our unique business model summarized here, driven by our brand and quality. And as I mentioned earlier, it is not only about platform business nor is it only about the studio business. It's about all these interconnected components of our business are powerful experience.
Turning to our Platform Business Group. We view the console as an initial step into the PlayStation experience. Our console provides a player with access to a vast collection of content available directly from our store, a compelling subscription service and experience enhancing peripherals. Each one of these businesses has its own dynamics and value to the player, but collectively, they provide long-term engagement and unmatched value. As you can see, our PlayStation 5 user base has continued to grow significantly, driving to half of our monthly active consoles. And while the PlayStation 4 is still an important part of our business, our PlayStation 5 players are even more engaged than in the previous generation and we expect these trends to continue.
This is, of course, important, given the additional spend generated by our console. That is the spend from the content, services and peripherals. On average, each PlayStation 5 sold generates over USD 700 of additional spend, again, significantly higher than the previous generation. This behavior underpins the durable predictable nature of our revenue base. A large portion of this revenue comes from first and third-party content available on the PlayStation store and the services like PlayStation Plus, which are recurring and are consistent.
Comparing where we are at this point in the PlayStation 5 generation versus the same period in the previous generation, you can see that our business has evolved, we are continuing to expand this higher margin base of content and services revenue, which now represents 65% of our total revenue. Our store business has consistent content and revenues. The top major franchise regularly makes up half of our revenue, which are mainly live service games or annual releases of established franchises. Each of these franchises is an important part of our offerings. And similarly, we are an important enabler of these publishers relationship with players. And these top franchises are supported by a vast collection of over 9,000 other titles. These comprise the remaining 50% of our store revenues, providing diversity of content and driving regular engagement.
Similarly, our PlayStation Plus business contributes to our ongoing and consistent revenue. Over half of players choose to subscribe to PlayStation Plus. As opposed to just going after a subscriber number, we are focused on providing a high quality and a profitable service. We continue to attract players to our premium and extra tiers features, content and a value for PlayStation Plus. As a result, over 1/3 of our subscribers has chosen these higher tiers.
Peripherals are the major part of the PlayStation experience, enabling us to expand engagement, enhance experience and build loyalty. This includes our DualSense Edge controllers, access controllers, [ power ] headsets and other license peripherals and of course, the recently launched PlayStation Portal. We continue to explore new ways for players to play and express themselves through our products. Supporting the entire PlayStation experience are our exceptional engineering capabilities. In addition to hardware engineering, including automated production, we are uniquely positioned as a domain experts throughout the gaming tech stack. This allows us to continue incubating new products and innovating technology.
We see opportunity leveraging our network platform as a product, which includes hybrid cloud solutions. We also see opportunities in AI to level up our own productivity and to enhance player experiences, enabling us to better serve players and creators, create new experiences and drive organization-wide efficiencies. To wrap up on our platform business, we are confident we build on our leading position in this category. We expect the PlayStation 5 installed base to continue growing, supported by a continuing migration from PlayStation 4. This will drive predictable and consistent revenue from our store and subscriptions and a continued demand for our high-value peripherals. Meanwhile, we are shifting into a stage of PlayStation 5, where we will focus on driving profitability and the margin, while shifting investment towards the future.
I will now hand over to Hermen.
Thank you, Nishino-san. We will now move on to the Studio Business Group. PlayStation Studios is a global network of world-class development teams supported by a community of the finest technical and creative talent that there is. We have a long history of delivering some of the most beloved and successful games in our industry. And over the last 4 years, we have been fortifying our industry leadership in the single player narrative space while expanding our capabilities in live service gaming and multi-format delivery.
I am confident that we are building a strong, resilient and capable organization that can deliver future growth. To accomplish our goal of creating sustainable, consistent growth through our content, we are focused on 3 key strategic pillars, supported by a commitment to efficiency and consistency in our development and delivery practices. First, we are continuing to advance our position as an IP powerhouse, growing our existing franchises while developing new properties that can inspire and engage audiences everywhere. Second, we have broadened our business model beyond our core competency of single player narrative titles into live services, reaching new audiences like Gen Z and Gen Alpha, unlocking new revenue streams and fortifying our business for the future. Third, we are selectively bringing our content to new devices such as PC and mobile, extending the reach of our products and the commercial potential of our IP.
Underpinning all of this is an increasing emphasis on efficiency and predictability in our development and delivery processes that will enable sustainable and consistent growth. As an IP powerhouse, we own a deep, diverse and culturally resonant portfolio of world-class franchises, adored both within the gaming community and beyond, further engaging narratives, beautifully realized characters and deep immersive worlds. We have a track record of developing IP and delivering major franchises over time, both through our exceptional games and our intentional approach to expansion through film, television, merchandising and location-based entertainment.
We have also proven our ability as stewards of valuable and beloved properties such as Destiny and Marvel Spider-Man, consistently delivering commercially successful, critically-acclaimed games and content to their fans. Moving forward, we are continuing to find new ways of leveraging the power of our IP to reach new audiences within gaming and beyond. Our portfolio is designed to increase profits through the delivery of strong, predictable revenue and a clear control of production costs. To ensure the reliability of our release schedule, we have established a robust cycle of product and portfolio reviews to ensure that we are making informed decisions about what games we make and that those games are delivered on time, on budget and at the expected quality.
We are increasing our use of external development teams, outsourcing partners and co-development agreements with teams in lower-cost regions, allowing us to control the scope and scale of our games without compromising on quality. This results in more successful management of costs in the early less predictable stages of production and avoids growing teams too large too quickly. We are also adopting new technologies such as machine learning to help accelerate production processes.
Through this approach, we are confident that our portfolio can deliver excellence, innovation and strategic growth, reflecting our dedication to crafting experiences, which inspire, engage and endure. We have consistently delivered the highest quality, most beloved narrative experiences available. These tentpole single-player releases are our core strength, the foundation of our portfolio. Tentpoles are games that will be top sellers in the biggest and most lucrative genres, either existing hit franchises or new IP for which we have the highest confidence and ambition from studios with proven track records of quality and success.
Each calendar year, we plan to have at least 1 tentpole single player launch during the holiday season, showcasing our PlayStation 5 business and brand as well as the peak purchasing season for games. Maintaining this foundation to our portfolio creates the ability to invest in new growth opportunities, predominantly live service games with predictable, consistent revenue streams and proven successful genres. We will also reserve part of our portfolio for experimental opportunities, talented new teams and innovative technology, unlocking new audiences or interesting genres that we do not currently serve. Because of the experimental nature of these products, we will limit their number, scope and budget. To unlock further investment, these games must prove that they can scale and that they have a meaningful commercial opportunity and audience.
I'd like to spotlight 2 recent successes. The first one being Marvel Spider-Man 2, released in October 2023. And developed by Insomniac Games, Marvel Spider-Man 2 is a tentpole title that achieved widespread critical success and confirmed PlayStation Studio's position as an industry leader of innovation and creativity. It was also a commercial success, highlighting PlayStation Studio's ability to consistently deliver profitable games. I'm proud to announce that we've sold through approximately 11 million units of Marvel Spider-Man 2 since launch and we continue to see high levels of engagement and excitement around Marvel Spider-Man. We are excited to expand upon the success of our collaboration with Marvel and continue delivering incredible titles to our fans.
The second game we want to highlight is Helldivers 2, which was released earlier this year on PlayStation 5 and PC. Developed by Arrowhead Game Studios, Helldivers 2 captured the imagination of gamers across the globe, leading to fantastic sales and highly engaged community of Helldivers eager to spread demography across the 2. The success of Helldivers 2 highlights the strength of our life services efforts as well as the increased returns and reach we can realize by bringing our games to new formats and audiences beyond the PlayStation console. Helldivers also demonstrates the consistency with which PlayStation Studios is able to identify and partner with top quality studios across the industry. And it is also a great example of the success we expect to see from our investments in moving into live services and beyond the console.
Our portfolio approach continues to be well illustrated by our announced releases. I couldn't be more excited about Marvel's Wolverine and Destiny 2 coming to PlayStation 5, titles that will further advance to franchises beloved both within the PlayStation fandom and beyond. In addition, we are continuing to broaden the reach of our major first-party franchises by bringing Ghost of Tsushima to PC, and we are building upon our success in the live service category with an exciting diverse slate of new live service titles in [ Fairgame$ ], Concord and Marathon alongside the successful Destiny franchise and MLB The Show series. We could not be more excited about what is to come as we continue to execute on our strategy.
Supporting every area of this work is our continued leadership in gaming technology, a critical element in delivering the world's best games. We are constantly innovating in multiple areas because we want to develop experiences at the cutting edge of what is possible. Research and experimentation in AI and machine learning is a focus for us, with work being done across a wide variety of our development tools and processes. We have a wealth of knowledge and experience forged from decades of gaming industry experience that will enable us to implement AI tools efficiently and impactfully. We have been realizing the benefits of AI in several areas from asset creation efficiency to accelerating coding to optimizing translation and localization processes, all while ensuring a responsible and ethical approach across the organization. We believe that AI holds great promise for the future of gaming and we want to lead the industry in the adoption and implementation of this new technology.
In conclusion, the Studio Business Group is in an incredibly strong position. Through our strategic investments, both in our existing capabilities and in new acquisitions, we have equipped ourselves to execute on our strategy and achieve our goal of delivering strong, consistent returns. We will continue to execute on this strategy by delivering PlayStation quality experience on console and beyond in single player narrative games and in live services, all while maintaining discipline throughout our financial and process controls to drive strong returns from our investments in content.
Finally, I want to touch on our contribution to helping Sony Group achieve its goals. Sony Group collaboration is a part of everything that we do. It's been embedded into our DNA. The results have been fantastic, not only helping to expand the reach of our IP but also helping us reach new audiences and markets to accelerate innovation. The huge success of our collaboration with Sony Pictures to bring PlayStation Studios franchises to linear media, particularly underscores the unique advantage we have as part of the Sony Group. Another area where we are making a significant impact across Sony Group is in ESG; environmental, social and governance. Sony Interactive Entertainment remains committed to leading the way in responsible value creation for all shareholders as well as making our games and consoles accessible to as many players as possible through initiatives such as our access controller.
Before I hand back to Nishino-san for his final remarks, I'd like to again express my excitement about the future of the Studio Business Group. I look forward to continuing to boost the boundaries of play and entertainment. Thank you.
Thank you, Hermen. Fiscal year 2023 was a strong year for us with just over USD 29 billion in sales and USD 2 billion in operating income. We will now capitalize on this momentum by driving efficiency in our platform business and the sustainable growth in our studio business. And we aim to drive improving profitability through the natural operating leverage that our business has as well as continuing to seek efficiencies across all areas. Finally, we plan to continue to invest incrementally as we look to position ourselves strongly for the future of play.
In conclusion, PlayStation is positioned for profitable growth during our 5th Mid-Range Plan. We continue to inspire our players, creators and our partners, creating pathways to navigate possibility with imagination. And I look forward to working with Hermen and the Studio Business Group to build incredible experiences for an ever-expanding audience now and in the future.
I also am thrilled to collaborate with Nishino-san and the Platform Business Group to continue pushing the boundaries of play and entertainment.
This concludes our presentation. Thank you.
Thank you. So we are going to start Sony Music Group session shortly. Therefore, please wait for a few moments. And talking about Game & Networking session during the Q&A. So there have been some questions who raise your questions. However, please push asterisk and after that, please push #2 in order to raise your questions. Thank you.
Thank you very much for waiting. Now we would like to start the Sony Music Group session. First of all, we would like to ask Mr. Stringer, Chairman of Sony Music Group and CEO of Sony Music Entertainment in order to have his presentation, please.
It's good to be here to discuss the recent results of Sony Music, where we believe the market is heading and what our strategy is for the future of that market. As you would all hope, our top line results continue to be incredibly positive. All key metrics are heading in the right direction. For the eighth year in a row, we set a new revenue record with an increase of 12% to $8.5 billion in fiscal year 2023. Since fiscal year 2019, this revenue has grown by $3.6 billion, outperforming even industry percentages. Adjusted operating income rose $180 million to an all-time high of $1.6 billion. All this upside matched by expanding OIBDA margins in the mid-20s and double-digit CAGR in core revenue and profit metrics over the past 4 years.
Looking ahead, we expect that adjusted operating income and adjusted OIBDA will continue to rise and that we will maintain our industry-leading margins over the course of our Mid-Range Plan. Of course, the core of our exciting statistics are our artists, songwriters as creators, whether it be through our multiple repertoire sources or high-quality catalogs worldwide. In the U.S., our recorded music current market share was higher for the fifth consecutive year and exceeded a new peak of 27% frontline share of overall consumption. 5 years ago, this was one of our main strategies to improve. Now we have the advantage of delivering strong catalog sales in the years to come as a result.
Our recording art has spent 30 of 52 weeks in the last year at #1 in the Billboard global tracks chart. As a result, 5 of the top 10 Billboard Hot 100 artists are from Sony Music. Likewise, through our publishing division, our songwriters contributed the #1 song on Spotify's weekly global chart in 37 out of 52 weeks and Study Music Publishing was #1 in chart share for the calendar year. Our list of creative successes across the company is too extensive to mention all of them, but we started last year with our artist and writer, Miley Cyrus releasing Flowers, which ended up being the biggest selling song in the world in 2023 and winning the Record of the Year at the recent Grammys.
Via through the year's top 5 Billboard Latin artist, Bad Bunny, Peso Pluma and Fuerza Regida and right up to now, we've released global #1 albums in the last month from Future and Beyonce. As for the overall market, the industry continues to monitor impressive expansion with 9 straight years of recorded music revenue moving upwards and 11 straight years of publishing revenue upwards. In 2023, total recorded music revenue rose over 10% and publishing revenue jumped roughly 11%. Paid subscription is at the heart of these patents supported by higher revenue from new channels, improving country-by-country ARPU and greater revenue from sync and TV. We have confidence the industry will continue to deliver results at mid- to high single-digit CAGR over the short- to medium-term. At Sony Music, we intend to beat wider industry revenue standards in many areas.
Let's turn to the strategies we're deploying to achieve our marketplace goals and advance our creative priorities. We have built a robust ecosystem with a huge number of partnerships that enable us to be fast, flexible and entrepreneurial. In addition to our major labels that have been established for many decades, we have other [indiscernible] divisions like market leader in independent label distribution, The Orchard as well as artist services with the recently acquired AWAL. This broad-based strategy has culminated in 24% more new release tracks distributed to DSPs in fiscal year 2023 versus fiscal year 2019.
And on the publishing side, that's translated to 28% more songs administered over fiscal year 2019. We are undoubtedly the most aggressive major music group in M&A over the last 3 years. A significant amount of this M&A investment has been in emerging markets, which have become very important in our portfolio of companies in over 70 countries. We are the leader in the LatAm region, where so much the music and the global streaming charts now comes from. We have heavily invested in the label, Rimas, home of superstar, Bad Bunny. We recently bought top Spanish independent label Altafonte and we are now through the second year of our integration of the Brazilian label, Som Livre. We have focused our attention on the rapidly developing India, where we are the #1 major music company. Our acquisitions there this year include Eros and we further expanded AWAL in India through new partnerships.
Similarly, key artist signings and strategic label deals supplemented our footprint in China and we're the only global company to have artists represented on the leading top 10 streaming charts in the region. And we are entering into exciting new entrepreneurial partnerships across Asia, the Middle East and Africa, where we see 19% year-on-year market increases and we represent 4 of the continent's biggest stars in Davido, Wizkid, Tems and Tyla. New investment will be vital in future years to ensure our powerhouse status worldwide. As you're all aware, one of our core strengths of the company is our huge depth of catalog, both in recordings and written songs that provide long-term profit to us.
New technologies and consumption trends are undoubtedly elevating the role of all our catalogs. Luminate reported last year that catalog share of all streaming consumption in the U.S. increased to 73% and tracks older than 2 years commanded 41% of Spotify's Global 200 in calendar year 2023. Through targeted investments, we believe catalog is the base of our strategy to navigate a successful path to all future tech trends in the music space. We bring together some of the most iconic largest libraries from all areas of music, including the work of contemporary stars [indiscernible] today become enticing catalogs tomorrow. In the coming year, we will be smart in our purchases that are curated to this approach.
Streaming remains a consistent driver in the economics of our industry. Over the last 3 years, the number of paid streaming accounts grew by 15.3% CAGR. These accounts currently drive 73% of streaming revenue across our industry. While free tiers attract millions of monthly users, their poor contribution to streaming monetization means their primary purpose is to convert users into paying subscribers. The value of the paid music product remains incredible and we appreciate that our partners recognize that with price increases over the past year.
However, it also highlights the price gap between free and paid has gotten wider. In mature markets, we hope that our partners close that gap by asking consumers using ad-supported services to additionally pay a modest fee. This would help develop this segment of the streaming business to be more than just a marketing funnel for paid subscription and still be a tremendous value for users. We have a shared interest in better monetization of free tiers. And at Sony Music we think everyone is willing to pay something for access to virtually the entire universe of music.
The expansion of short-clip content has been rapid, driving total audio streaming consumption growth. We see similar commercial potential as with full track streaming, but some of the leading platforms must deliver greater value. Our premium quality artistry drives the appeal of these services with music being central to approximately 70% of videos created on them. These companies play a larger and larger role in music discovery and engagement amongst young listeners. More and more, these are primary consumption sources and they need to be valued accordingly. Following audio and visual streaming and short clip delivery to consumer, we are always developing relationships to further the usage of our content and the monetization model that coexists.
Gaming is the #1 entertainment activity for Gen Z. So we see this as an emerging area of opportunity. From gaming to social media platforms to Web3 to the metaverse and beyond, there is commercial potential in many new technology areas. More importantly, we commit resources to the research and development of cutting-edge formats to provide our artists with more creative outlets and ways to reach new fans. Artificial intelligence represents a generational inflection point for music and content in general. A sustainable business rights model needs to be established and respected, and we will take an active role in bringing one about. Once it is in place, AI will be a multidimensional tool for creativity, scalability and efficiency in our industry.
According to a recent IFPI survey, nearly 80% of music fans say human ingenuity is essential for creation of music. Our focus right now is on building transparent and fair partnerships with those expanding solutions in the AI stratosphere. In the last year, we have convened with more than 350 organizations in the technology space across the globe to set up these initiatives for now and the future. We will go where our artists want to go creatively in the AI space while protecting their rights at every step. And we look to find common ground with our future partners in this era.
Whilst we're optimistic about this direction, we are not naive about how complex protecting our art form will be. We won't tolerate the illicit training of AI models via reckless and unlicensed misuse of this art. We believe strongly that permission is the only way AI models can be trained with our content and followed protocols of the EU AI Act by sending over 700 letters to AI developers to opt our copyrights out of trading. We have issued over 20,000 takedowns of AI-generated soundalikes over the past year. We are constantly updating technology that allows us to identify and tag our music and video so that misuses are instantly recognized.
We are working hand-in-hand with legislative bodies around the world to shape policy and rights in connection with these key issues. With the right frameworks in place, innovation will thrive, technology music will benefit, and consumers will enjoy new experiences. We have prospered from disruptive market changes before, so we are confident we can navigate this chapter successfully. Through our Artists and Songwriter Forward programs, we are focused on understanding their perspectives and providing as much support as possible as the business changes so rapidly. We recently engaged with over 300 leading creative representatives to openly discuss the impact of AI and other new technology strands. For our creators, we have advanced real-time data reporting, commercial insights, payment solutions and expanded earning opportunity unrecouped balance programs, which are an industry first amongst our competitors.
To date, more than 70,000 artists and songwriters have used our talent portals, through which we've managed the payout of more than $140 million in real-time royalties and advances. We will become more and more closely connected in our relationships with our talent. This alignment will also be aided by our commitment to core priorities in the wider music business like merchandising, branding, studio recording and live events. Our branding and merchandising venture Ceremony of Roses has delivered CAGR of 99% over its initial 3 fiscal years. Highlighting our M&A strategy in the live sector, we have acquired more than 15 different production and service companies globally that will our content in fresh, exciting formats. In calendar year 2023, we sold more than 24 million tickets to nearly 6,700 events. We work on a widening range of multimedia audiovisual projects with our Sony Music vision team.
We now have nearly 40 recording studios in key music capitals around the world that bring us closer to the creation process itself. All these processes also help bring synergy with our sister divisions at Sony. We have a unique ability to blend our creative output with TV, films, games, anime and consumer electronics. This co-branding is a powerful asset in competition with our business rivals and in recent years, has only become stronger as a mandate for us in cooperation with Sony headquarters in Tokyo. As we create and develop new products and experiences, the opportunities for driving cross Sony partnerships are endless. Through Sony Pictures, our artists use virtual production technology from Pixomondo to create 2D and 3D assets for music videos, games and immersive entertainment.
Together with Crunchyroll, we are exploring a range of opportunities for music and anime through soundtracks, experiential events and merge. And we are helping our talent pursue various Sony brand partnerships, including Peso Pluma's recent participation in Electronics For The Music audio hardware campaign. That's in addition to our ongoing collaboration with Sony companies on TV score soundtracks and unscripted films and documentaries. We expect these collaborations to increase in the coming years to the benefit of our music creators. Across all the commercial uses of music and through all the technological innovations shaping our industry, we see the effective capture and analysis of data as essential to our success. In every category, we spend significant time, money and creative energy on tools that help us deliver what the consumer wants from our creators. Audience segmentation is an important byproduct of this strategy.
We firmly believe in directly finding the fan of our content. We acquired FanSifter, a company focused on optimizing audience contact, and we will prioritize investing in this space, so we help our roster reach every fan along the spectrum, from discovering to dedicated. This audience data also enhances our relationship with key DSP partners. We share consequential insights, which more directly connect our thousands of artists with their millions of fans on the platform. In the medium of representing art of all forms as a company, we embrace equity, diversity and inclusion. Our employee experience programs are committed to us being collective as a team. And our Global People Promise initiative gives us a common set of values and priorities for attracting new talent and supporting the careers of all our current staff.
Our philanthropic and racial and social justice campaigns and our contributions to humanitarian relief and disaster recovery efforts reflect these strong values. In the last 4 years, we have contributed nearly $49 million to over 2,000 organizations internationally. Sony Music Group is distinctive in our position at the crossroads of music, entertainment and technology. We are incredibly positive about our future. We will meet the financial targets that we set in all metrics and will be as innovative as possible in accepting the challenges of the world marketplace while fostering new areas of music that stimulate all of us.
Thank you for your time, attention and inspiration.
We will start the Sony Music Entertainment session shortly. Please wait for a while. Thank you for waiting. We'd like to start the session by Sony Music Entertainment, Inc. First, I'd like to call the President and Representative Director of the Board. CEO, Mr. Muramatsu. He will make the presentation.
[Foreign Language]
Hello. I'm pleased to discuss Sony Pictures Entertainment's business. Today, I'll be discussing our prior fiscal year results and the drivers of our successes, a snapshot of current market conditions in the entertainment space and a look at our current market position, competitive advantages and growth opportunities. As you saw in Sony Group's recent fiscal year-end earnings announcement, Sony Pictures posted sales for the fiscal year at $10.3 billion and operating income at $808 million. Like every studio, our results were greatly impacted by last year's historic SAG-AFTRA and WGA strikes, and we expect to see continued negative impacts from those strikes in this fiscal year as well.
That said, we were able to make up for shortfalls through disciplined execution and spending and by delivering some very strong results across SPE's businesses. Our franchise films did well at the box office last fiscal year. Equalizer 3 earned $191 million, bringing the overall franchise to more than $575 million. Spider-Man: Across the Spider-Verse took in $691 million worldwide in its Sony Pictures Animation's highest grossing film of all time. Ghostbusters: Frozen Empire has brought in $200 million globally to date, making Ghostbusters a $1 billion franchise for the studio. Insidious: The Red Door at $189 million globally was the highest grossing horror film of 2023. And Anyone But You showed incredible staying power during its theatrical window earning $220 million worldwide.
Sony Pictures Television maintained its position as the leading independent studio and as a market leader in several distinct businesses, including game shows and anime. The Last of Us, our PlayStation adaptation with HBO made history as the first game adaptation to earn major awards recognition. And Twisted Metal, another PlayStation Production debuted strong and was renewed for a second season. The Crown concluded its run on Netflix's global top 10 list for 8 weeks. Who is Aaron Carter, My Life with the Walter Boys and Sex Education also topped the Netflix charts.
And The Night Agent was Netflix's #1 original series in the first half of 2023. Our U.S. game shows continue to post very strong results with Wheel of Fortune and Jeopardy leading as the #1 and #2 most watch entertainment series across all TV, excluding sports. And we continue to see strong growth in our anime business. Crunchyroll, our direct-to-consumer anime platform continues to grow with more distribution channels and more opportunities to expand its audience. The platform now has well over 13 million subscribers.
Now let's take a broader look at the current media and entertainment space. The entertainment industry has never seen the kind of transformative change and challenges we are seeing today. The ongoing streaming revolution, which has upended decades old economic production and distribution models, combined with lingering COVID pandemic impacts and last year's historic labor negotiations and strikes has brought about a complete rethinking of how our industry operates and every entertainment business is being impacted by such changes and challenges. Now it's been 6 months since the SAG-AFTRA and WGA strikes ended.
And while we are now seeing writing, production and distribution getting back up to speed, the overall recovery will still take some time. The 6-month freeze in writing and production last year created a significant lag in the delivery of our film and TV content. Industry-wide box office overall has improved from the pandemic, but still is not fully rebounded to pre-pandemic levels. We, however, are optimistic about improvement, though global box office is forecasted to decline slightly this year in 2024 due to strike impacts on film production and distribution. All eyes, including ours, are watching this space for potential impacts, disruption and opportunity. Geopolitical challenges remain a significant concern, especially in China and Russia. China has started to allow more U.S. films, but the U.S. film share of China's box office has dropped by approximately 43% in 2019 and to about 16% in 2023.
And Russia, once a major marketplace for U.S. studio content is obviously now nonexistent, creating a big hole to fill. The streaming space continues to evolve rapidly with major streamers scaling back content spending, higher show cancellations, shorter series orders and the creation of ad-supported tiers. As the industry's leading independent content supplier, these changes are, of course, relevant to us at Sony Pictures. Clearly, it is a very challenging time. But given our efforts to streamline and strengthen our company over the last few years, combined with our strategic decision not to jump into the crowded general entertainment streaming space, Sony Pictures is very well positioned to meet these challenges head on.
With a strong leadership team and a clearly defined strategy focused on our IP, our independence, our outstanding library and our unique place within the broader Sony Group ecosystem, we are recognized as a strong and stable partner to talent across all of our lines of businesses. Sony's outstanding IP has been a critical part of our success and leveraging that will be a key part of our content strategies moving forward. We've grown successful franchises from Jumanji to Ghostbusters to the Equalizer and Insidious, and we're looking forward to releasing Bad Boys: Ride or Die next month, which will be the fourth installment in that franchise. We're also adapting beloved Sony IP across both film and television as with the Emmy-nominated Cobra Kai television series and our Karate Kid feature next year. And we continue to expand Sony's universe of over 900 Marvel characters across multiple platforms and genres with upcoming Kraven the Hunter and Venom: The Last Dance, that's the third film in the Venom franchise.
And our newest adaptation from the Sony Pictures Universe of Marvel characters. Noir starring Nicolas Cage will be the first live action television show in our multi-series deal with Amazon. Our dedication to theatrical exhibition and our best-in-class marketing and distribution teams have kept us as a preferred studio partner for a major talent who want the cultural impact that only a theatrical release can provide. Our partnership with Apple to release Ridley Scott's Napoleon in theaters was a great box office success, earning $221 million globally, and it led to 2 additional major theatrical lease deals with Apple. Wolfs starring George Clooney and Brad Pitt and Fly Me to the Moon starring Scarlett Johansson and Channing Tatum. Other major upcoming theatrical projects with Academy Award winning and nominated directors include Sam Mendes and his 4 Beatles Biopic project, Danny Boyle's sequel, 28 Years Later, Darren Aronofsky's crime thriller, Caught Stealing and Taika Waititi's Klara and the Sun, and in her first film since Barbie Margot Robbie in A Big Bold Beautiful Journey.
Our international productions operation continues to thrive with strong local language productions. That includes Japan's Kingdom Franchise, which has made over [ $127 million ] to date. Later this year, Kingdom's fourth installment will open in theaters shifting to television, while other major studios have now repositioned themselves as content suppliers as well without a general purpose streaming of our own to feed, Sony Pictures continues to hold the strongest possible position, providing content to all partners and negotiating the best deals. SPT remains focused on its ability to scale to higher volume, speed of deal-making and delivery and strengthen the non-scripted and game show space.
We continue to produce premium hit shows with 16 series hitting #1 on their respective platforms or networks during this last fiscal year, and expand on our successful franchises such as Outlander with prequel series, Blood of My Blood and The Boys' spin-off Gen V game shows. They continue to be a major driver for SPE as we seek to expand our premium game show IP to new platforms and audiences, especially with our top-rated syndicated shows, Jeopardy and Wheel of Fortune.
We are producing a new Jeopardy spin-off for Amazon Prime with Pop Culture Jeopardy. Jeopardy! Masters Season 2 just wrapped up on ABC. Adaptations of Jeopardy and Wheel of Fortune are now expanding to the U.K., Australia and Italy, and we are developing the IP further with kids and primetime celebrity versions. And of course, we are very excited to be welcoming the great Ryan Seacrest as our new Wheel of Fortune host this coming season. Last year, we adapted international format, Raid the Cage for the first time in the U.S. for CBS, and it was renewed for a second season. We recently announced the return of Who Wants to Be a Millionaire hosted by Jimmy Kimmel for ABC, and we're exploring potential reboots of classics, like The Newlywed Game, The Dating Game and Joker's Wild.
We also continue to grow our portfolio of kids content. We are working on our third season of SuperKitties for Disney Junior. It finished 2023 as their #1 new preschool series, and we are developing several new animated projects, including Messi and the Giants, Bewitched and a live-action kids version of Charlie's Angels. Building on our existing core businesses, we see strong additional growth potential in further collaborations with our sister Sony Group companies, and we're more fully integrating our recently acquired businesses while expanding our location-based entertainment experiences.
Our place within the broader Sony Group ecosystem, especially in our close connections with Sony's music and game businesses continues to give us a strong competitive advantage amongst our industry peers. PlayStation Productions continues to be an outstanding partnership with Uncharted and Gran Turismo adaptations posting very strong results for our film group, and The Last of Us and Twisted Metal Series success reinforcing the strength and popularity of game IP for television adaptations.
There are several other projects in various stages of development, including the hugely popular God of War for Prime Video and Horizon Zero Dawn for Netflix. We have several film and television projects in development with Sony Music Group and their artists. Last year, we released June, the June Carter Cash Documentary, and we launched Crunchyroll Presents: The Anime Effect in partnership with Sony Music. Looking ahead, our kids division is working with Sony Music to create an animated series featuring Lionel Messi called Messi and the Giants. Our nonfiction TV group is working on a music documentary about the life of legendary music artist, Luther Vandross called Luther: Never Too Much. And Sony Pictures Core, our app for Sony Pictures films is now available on BRAVIA TVs and Xperia devices and on PS5 and PS4 consoles and continues to reach very wide audiences.
Crunchyroll is expanding its audience with multiple touch points. The streaming service is our single biggest touch point with consumers with well over 13 million subscribers. But it is just one part of a flywheel approach to reach a broader audience through theatrical films, consumer products and collectibles, events, games, partnerships with distributors like Amazon Channels and Netflix. Anime remains one of the fastest-growing markets in entertainment, and we're happy to be in it.
The overall global anime market is expected to grow to $60 billion by 2030, and it remains a top growth area for Sony Pictures. SPT nonfiction is the independent leader in nonfiction entertainment with multiple premium acclaimed series. Quiet on Set, the True-Crime doc was watched by around 20 million viewers, the largest audience for an unscripted series on Max. 90 day Fiance is TLC's #1 series in key 18 to 49 and 25 to 54 demos. And American Idol is in the top 5 most watched unscripted series across broadcast primetime. And we recently announced a new lifestyle series with Meghan Markle, The Duchess of Sussex and Archewell Productions for Netflix. We continue to lean into Sony's vast technology experience and expertise to enhance our production activities. We are expanding SPE's capabilities in the video effects in virtual production space with Pixomondo, the Academy Award winning and Emmy winning virtual production and visual effects business we acquired in 2022.
Last year, we launched Torchlight, a groundbreaking advanced visualization facility, which uses unreal engine and virtual cameras and features the latest in proprietary technology from Sony Group companies. And we continue to explore opportunities to leverage our existing IP in the location-based entertainment space. Finally, we remain committed to ESG and diversity efforts across the globe as we think about our future growth plans with innovative and impactful programs such as the diverse directors, diverse actors and diverse writers programs and the creative diversity fund. And we continue to make progress on our 2025 goal to reduce carbon emissions globally and aim to eventually achieve net 0 targets through innovative carbon reduction solutions and elimination of single-use plastic.
With that, I would be glad to answer any questions you might have.
Now we would like to move on to the Q&A. Questions will be asked by the investors and the analysts. The questions will be answered by Mr. Hideaki Nishino, the SVP of Platform Experience; Mr. Hermen Hulst, the SVP of the Head of PlayStation Studios; Ms. Lin Tao, the SVP of Finance, Corporate Development and Strategy. Now we would like to move on to the Q&A. Please submit your questions to 2 questions per person. If you have a question, please press star and the number 1. Now if you are to ask a question from the original language line, please ask in Japanese.
The first question is in English. Doug from TD Cowen Securities.
I just wondered if you could maybe talk about given the backdrop of a lot of layoffs across the industry over the last 2 years, what do you think that reflects on a [indiscernible] basis? Is it something investors should be concerned about? Or is this just sort of a natural evolution of the industry, given it is an industry that has seen a lot of change?
Okay. Thank you for the question. The question is around the layoffs in the past 2 years. What does that reflect and should the investors to be concerned or it is a natural evolution of the industry. So let me start from my side and then hand over to Hermen afterwards as well. So we are observing industries dynamically changing, technology innovation, also the dynamics of the customer behavior. Those captured, we look forward to invest in the future as well. We want to grow and we want to invest in an appropriate way. So we look back ourselves. We have a room for us to pursue the opportunity of the organizational hygiene and such. So we have been -- we have done the layoffs, which the talent contributed for our business in a big, good way, but we want to keep the room for the future growth. So that's the background of our layoff in the past 2 years from the company side.
Yes. And let me just add on to what Nishino-san was saying. I think 2 points maybe to make. One is that SIE and Studio Business Group, in particular, we're always looking to optimize the resource allocation on an ongoing basis. But I think specifically what you're referring to in recent months and quarters is probably a slight adjustment on the back of the windfall that the industry saw during the pandemic. So that might be reflective of that rather than impacting the long-term growth of the studio, which -- sorry, of the industry, which I believe the industry is, in general, in a very good place, but I see this as an adjustment of the pandemic years. Thank you.
Thank you.
Let's move on to the next question. Next question will be in Japanese. From Goldman Sachs Securities, Ms. Munakata.
Munakata from Goldman Sachs Securities. I have 2 questions. The first question is about the studios and the titles. How do you manage the PL. In your presentation, you mentioned that the development cost goes up. So regardless of whether it's Sony or not, you have to do micro management of the costs. I think it is applicable to all industries. Since you have so many studios, how do you manage profit and loss? Is it able to manage it until the very end? And how do you properly look at the quality?
The second question has to do with the PC platform. The relationship between PC platform and your strategy vis-a-vis PC platform. So I think the best case would be to move from the PC platform to the games and consoles. But are you actually following that? Helldivers 2, I think PC platform did very successfully with that title. What about the cannibalization with other consoles? Also regarding mobile, I haven't received an update on the mobile. So please give us updates. Thank you very much for the question.
The first question had to do with the studio title P&L management, the process of that management and how do we do that. The second question had to do with the PC platform and the console platform relationship. From PC platform to the console, have we been confirming the customer transfer from one to the other and if there's any cannibalization. I'd like to start with the second question, and I'll respond to first, and then I'll ask Hermen to respond to both questions.
The second question about PC platform relationship with the PC platform. The customer expansion of all platforms is a strategy that the SI is pursuing. The PC platform customers will -- when that increases the entire customer numbers will increase. Ghost of Tsushima, the PC version that was released recently, the network experience that was limited in the past has now been expanded to the PC from consoles. Now the comparison of PC and console. Console is a technology stack that we developed from the bottom up. So we can provide a very, very good, excellent experience. The value of console will continue to remain and we -- our mission is to continue polishing that. From PC to console, the transfer, of course, some customers will move from PC to console. Well, customers who are focused on PC, if they find value, then they will go to console. So rather than cannibalization, I think this is an opportunity for growth. So that was the comments from the platform side.
I'd like to ask Hermen to respond to the second question as well as to the first question.
Thank you, Nishino-san. Let me first make a few comments on the first question about the profitability of our titles and development costs rising, et cetera. So 2 parts to that question. One is the revenue side of profitability. We are looking to extend the reach of our franchises by our focus on multi-platform delivery that enables us to continue to invest these substantial amounts into creating world-class franchises. So that's a real big focus area. But you are quite right that there has been pressure on the cost side of our business as well.
Alongside our portfolio strategy where we really look at what titles are commercially -- potentially commercially very successful as well as have the potential for critical acclaim. We also have a very tight development strategy. And for every title, we have a really rigorous title review processes where we focus on the sustainability of our investments in these titles. We include areas such as looking what can be outsourced, for example, to avoid too high peak resource on development teams because costs can be sticky. We're looking at co-development options in areas where the cost per resource is maybe somewhat lower than the average or on the American West Coast. So all these areas are -- they're always on process for PlayStation Studios. It's a key focus area. And you're asking about the quality as well. We have central services, including our user testing facilities that collaborate with every single individual studios very, very tightly. And the focus always is on delivering the highest quality gaming experiences.
Then moving on to the second question that Nishino-san already answered in part. Indeed, we are bringing our titles to the PC platform and we have a dual approach here. On the live service side, we are releasing our titles simultaneously, so day in date on PlayStation 5 and PC. But with our tentpole titles, our single-player narrative-driven titles that are, as you saw in the presentation, the backbone of what PlayStation Studios has delivered in recent years and in our history, we take a more strategic approach and we introduce our great franchises to new audiences. And we're finding new audiences that are potentially going to be very interested in playing, for example, sequels on the PlayStation platform.
We have high hopes that we're actually able to bring new players into PlayStation at large, but in 2 PlayStation platforms specifically. Actually, the same goes for the work that we do with extending our great properties on to other media, such as television series and film, for example, as you have seen with the Last of Us on HBO or Gran Turismo, the film that brings in new players into our franchises as well. Thank you.
If there's any updates regarding mobile, please?
Yes. Sorry, on mobile, we have been hard at work on establishing a very strong, very seasoned core mobile team. We are really excited to extend our experiences to new audiences in the mobile space as well. We're taking a little bit more of a measured approach compared to the more aggressive approach that you've seen on PC. That is because PC is obviously more adjacent to the core of our development than mobile is. Nevertheless, we're taking a strategic approach also in the sense of working with some of the leading companies in this space. We're working with various partners such as NCSoft and we're learning a lot from these collaborations. And let me conclude by saying that we're very excited about upcoming title releases that we can communicate in the future. Thank you.
Let's move on to the next question. The next question is going to be addressed in Japanese. Mr. Nakane from Mizuho Securities.
Nakane from Mizuho Securities. So I'd like to ask Mr. Nishino, PS5, the hardware supply chain, how is that being managed? The availability in the stores was one of the issues. And I understand that the sales has reached its peak. Now I think there is a question about the inventory. So I think the operation that might be similar to the smartphones might be happening. The inventory level at the end of the year and also at the time -- at the peak time, do you have any idea how to manage that? Now, the sales cash flow, how do you -- what is the cash flow -- the sales cash flow?
I want to ask Hermen. In your presentation, you spoke about the management of the studios. How do you plan to curtail costs in managing the studios? What type of constraints in costs are you looking at? Speaking about Bungie, the IC cost. What is the road map to make that look creative? In other words, to make the business black, profitable.
Thank you very much, Mr. Nakane. The first question, I think was to me about the optimization of the supply chain and I'd like to respond to that question. And about the sales cash flow, I'll ask my colleague to respond. Ms. Tao to explain. And then about the studio that was to Herman, the time control about the acquisition cost of Bungie, when are we going to break even.
So first about the optimization of the supply chain. As was mentioned in the presentation, since its release, PS5 supply has been limited. So we have caused a lot of problems. And the inventory that will be provided to the market has been recovered during the past few years and we are supplying quite successfully. The PS4 generation, well, the situation is different from that generation. The PS5 BOM cost, BOM cost compared to PS4, the cost containment is a little more conservative. So we are doing everything we can to contain the BOM cost, BOM cost would be our commitment.
The second question has to do with the optimization of the supply chain. As you said, well, we have enough inventory. So depending on how much demand there is in the market, we will provide that inventory. The end-to-end transparency of the data and we will also try to accelerate about the market transparency, so on and so forth. So we will do everything we can to reduce cost. That would be our goal. So we will do our best to achieve all these goals. And then about the inventory, the numbers at the end of the year and toward the holiday season, the seasonal trend is not so different from the previous years. So appropriate inventory control will be conducted so that we will be ready for the holiday season so that we will make sure that we don't lack products in the market. That's all from my side.
Regarding cash flow, let me comment. Last fiscal year, we have achieved a positive operating cash flow. And for this fiscal year, we're expecting more -- a much better cash flow and it's not just fiscal, this fiscal year, but across the whole MRP from this year. So the main reason from the improvement of cash flow is due to the normalization of PS5 inventory, but we're also expecting higher cash generation ability from a highly engaged PS5 installed base and growing first-party revenue, especially in fiscal year '25 and '26. Thank you.
Let me take that question on financial discipline. So there are a lot of very specific areas to cover here. We work, for example, with target budgets for our titles. This is an area where we exchange a lot of knowledge, for example, with other Sony Groups such as Sony Pictures Entertainment, that's working really well for us. Another area that's really important is the scope management. Obviously, we always work on the highest quality gaming experiences and we never compromise on quality. But maintaining the scope in tight liaison with the studio creative leads is very important. I touched on it briefly, but the cost per head is an important area. So we work with co-development. We work with outsourcing. So that's another example of an area that we manage tightly. And then there's a lot of resource sharing, a lot of tool sharing, a lot of technology sharing. We have shared services that keep the cost down. So that's another example of where we work hard to limit the cost of game development.
Then moving on to your question on Bungie, let me give you an update on what's going on there. We're working on the integration of Bungie into SIE. That remains ongoing, but we have made significant progress realizing synergies across the organization. For example, Bungie's network operations expertise has allowed us to optimize the performance of our upcoming live service titles, which is really great. We expect to see the full integration of Bungie's capabilities into our business operations by the end of this current fiscal year.
We can't disclose financials for individual studios in our portfolio that includes Bungie. But we -- whilst we don't expect a profit contribution from Bungie in fiscal year '24 on a stand-alone basis, that is obviously to do with the fact that they are working on a new IP that is yet to be released. But it's really important to state that we are already seeing returns on our investment in the form of process optimization and capability growth across SIE, particularly in live services. And this has really -- and that was always the goal behind the acquisition that has helped us to progress faster. It's helped us with cost optimization. And then obviously, with the upcoming releases of Destiny to final shape and later with Marathon, we are going to see significant revenues coming in to SIE. Thank you.
It's already time, but we would like to have just one more question. Please ask the question in Japanese. Ayada-san from JPMorgan Securities. Please ask your question concisely. Thank you.
This is Ayada from JPMorgan. Just one question. I would like to ask Nishino-san. For the operations this term, the hardware target, 18 million is the target and the P&L balance, how are you going to strike that? Last fiscal year, the sell-through was weak. And in terms you had promotion and the hardware loss was avoided. Next time, we are going to have some large titles released, but are you going to prioritize the volume of the install, but are you also going to make sure that you do not go to the level that you saw last year in hardware sales?
Thank you very much for the question. So you're asking about this fiscal year regarding the 10 million units, how are we going to strike the balance in terms of P&L profit. Compared to the previous generation, the customers who are using PS, there are still many that are using PS4. So the active users PlayStation is still very high. And for new customers acquisitions and also for the PS4 customers, whether they can migrate to PS5 is something that we would like to closely monitor. The 18 million units, it will be a focus for our install base expansion. We would have to look at supply chain optimization and the promotion. By controlling these levers, we will be checking the progress so that we can achieve our plan.
I hope that answers the question. Thank you very much.
So now it is time to conclude the session of the Game & Network Services business. Thank you very much for your participation. The Sony Music Group session will start from 9 a.m. as planned. Please wait for a few more moments.
So now we would like to start Q&A session from analysts and investors. So the respondent will be Mr. Stringer, CEO. Mr. Stringer will answer your questions. So we would like to now start the Q&A session. If you have a question, please push star mark and after that number 1. So if you are using the original language line, please ask questions in English. So please ask your question.
So Mr. Thong-san from Macquarie Securities, please.
Just like to follow up on the strong growth opportunities that you're starting to see in place of Latin America and Asia. Clearly, this is an area we've been investing heavily in. And can you give a sense of like how big do you think these markets will be in, say, 3 to 5 years and how will they contribute to your targeted growth rate for the market? And also, maybe if you can give us a sense of like how those markets might differ from, say, more established markets and whether or not you need -- you will adapt maybe obviously your efforts to develop like things like artist services in those markets. I'm partly interested in how The Orchard and the AWAL push in India might shape up in the future.
Yes. I think realistically, in Latin America, where we're already on the map, and that's almost a sort of hugely important part of our offering already, the perception of Latin America as an emerging market is a bit more complicated because, obviously, Latin music is so important in North America that I don't consider it to be in the same bracket as some of the newer markets. We are the industry leader in Latin America. We were the first to really understand distribution post the download and streaming era. So we don't see any reason why we can't continue our strength in Latin America as I said and that very much with the Latin community in North America moves into North America, too.
In terms of the smaller -- in terms of more emerging markets, I think there's not one size fits all. Every market is different. In India, we happen to be the leading market share on the majors. But India is growing at a rapid rate and is obviously, as I'm sure you're aware, a very complex industrial economy. And that would be a very different strategy to the strategy we might employ in China or Southeast Asia. But needless to say, I think our global strategy is we need to be in every one of those marketplaces in some form or other. Some we will be quicker and others will take longer to make sure we have a firm footing. We would also look at the split which you asked about. It's really going to be 50-50, really, between mature markets and emerging markets.
Maybe that even tips in eventually to the emerging markets, which you could argue, by which time they won't be emerging markets, they'll be fully fledged markets. But to be honest, we spend an enormous amount of time looking at every market in the world, shoring up our company or developing our company, whether it be through the mainstream company or through the distribution network of the Orchard or AWAL. Hopefully that answers your question.
Yes, it does. Could I just want to follow up? Actually, just thinking about that 50-50 split and maybe this -- maybe I'll come to it from a slightly different tangent. Taylor Swift has been a global phenomenon. And actually, while thinking about that, I recall we actually have seen Taylor Swift at the Sony booth many, many years ago at CES. It strikes me that if you track that course over, say, 15, 20 years, it's actually been pretty phenomenal. And I'm just wondering whether or not -- well, first of all, how you see music growth in the years to come in the era where something like Taylor Swift is possible? And whether or not you think something like Taylor Swift could ever come out from the emerging market?
Well, yes, I mean, funny enough, the biggest recording artist over the last 20 years in terms of units per album is Adele, who did 35 million records. So I think that there are more -- plenty of benchmarks. The reality is that K-pop has proved that it can come from multiple markets. Bad Bunny, who is from Puerto Rico, was the #1 streaming artist in 2022 in the world. So do I think it can come from anywhere? Absolutely. It's interesting you talk about Taylor, because the arc of that process is 20 years. So what we're building here is something that is over a significant period of time. If you look at even Adele, Adele first emerged onto the marketplace in the mid-2000s, around 2007 and here we are 17 years later with her still being a huge recording artist. So the reality is that it takes a while.
Even with Bad Bunny, he's sort of 7 years in now, BTS probably a little bit longer. But those time frames are only a fraction of the time frame you're talking about for Taylor. So yes, I think music can come from anywhere. We have, as I highlighted in the presentation, artists from Africa, who are now on the global stage. I think -- I recently went to a showcase in Singapore, which was a multi-country showcase of about 8x. And I thought the standard of potential for the world was pretty significant. So do I think that it can repeat Korea and Puerto Rico and Colombia and those markets? Absolutely. Same goes for India.
Let us move on to the next question. Please ask the question in English. Mr. Okazaki from Nomura Securities, please. Okazaki-san, can you hear us? Let us move on to the next question then. The next question is also going to be in English. BofA Securities, Hirakawa-san, please.
This is Mikio Hirakawa from BofA Securities. 2 questions, please. First one, recently, Spotify bundled audiobooks and music. This could reduce the value of music. How do you see this trend? Do you think that -- how do you see the risk that this trend is spreading wider in the industry?
And the second question. In a previous meeting, we learned that revenue from short movie is around 5% to 6% of streaming revenue. Please correct me if I'm wrong. But how do you expect mid-and long-term growth rate? It would be great if you could split that into payment share under short movie market growth. Those are 2 questions, please.
I don't quite understand the second question, but the first question, I'll answer. Yes, bundling, obviously, we're aware of bundling. We have a publishing issue at the moment on bundling. We have a very good relationship with Spotify. But we think there's a loophole that has affected our royalties in publishing on mechanical. So we are looking to fix that amicably now with Spotify, because we think that they use the loophole and the publishing community will particularly through the MPA, will fight that battle quite rightly, too. But in terms of bundling, we are always aware of what the value of music is on its own. And if there isn't a bundle that we look to extract the exact value in the audio side than that we had in the original deals. The second question, could you explain what -- sorry, I understood about short-form video, but what's the exact question? I'm sorry, I didn't understand.
Yes. Yes, my question, actually, 2 parts. So what's the portion of the revenue from short movie in your streaming revenue? And how do you expect the growth rate for the revenue from short movie?
Yes. Well, the first part of that is that it's in single digits. So probably around 5%, 6%. That isn't where we'd like it to be. And I think it's well founded and well known that we would like, as I said in my presentation just now, we would like to see there to be more revenue coming into the business from short-form video, particularly with the number of short-form video users. Single digits is not what we hope for. And we are constantly, I think, as an industry, fighting to get that number up.
So the growth rate going forward, is there any additional, like specific numbers?
On the growth rate of -- sorry, what's the -- growth rate of what?
Yes. Growth rate. Yes, long-term growth rate for revenue from short movie.
Well, the growth rate from short movies is -- as I said, it's in single digits as a percentage of our revenue. So it needs to get better. It needs to get better. That's the point. We would like it to go up in the right direction, as anybody running businesses like mine would. But it's important. It's a high proportion of users. It's -- a very high percentage of users use short-form video now, as I'm sure most people are aware, and the revenue needs to catch up.
So we'd like to ask next question. So from the SMBC Securities, Katsura-san, please.
2 questions. First, about the -- during this midterm period for 3 years, how do you see about the growth rate, both top line and bottom line, compared to the past 6 years? If you could break down by, like, recorded music, music publishing, visual media and platform, where do you find the most big growth opportunity and background of the reason? That would be the first question.
Second question...
Should I answer that now?
Okay. Yes, please.
So I don't forget what the first question is by the time I get to the third. Yes, I mean, we think -- I mean, obviously, every area of our business is complex in itself. But in recorded music and publishing, we would see high single digits. That's what we see the growth rate over the midrange plan. I think that's realistic. In terms of the other areas of our business, that's a bit more variable because merchandising would be a different rate to premium content. And we have a portfolio of all sorts of audio-visual rights would be different. But I think recorded and publishing would be high single digits.
Okay. So the second question may be related to this -- tied with this first question, but the -- about the M&A strategy. So you've been doing a very aggressive M&A for the past 3 years, and it has been succeeding past 5 years, I would say. But will there be any difference or changes in the strategy for the next 3 years, for the future? You've mentioned about this music publishing gives a pretty long tail return story. So idea on this M&A?
Yes. I think -- first of all, thanks for noticing. We have been succeeding because we believe we have. We've had a window to be more aggressive in some ways, and I think we've taken that window and that opportunity. I think realistically, we're balancing what's a good deal with also competition authorities around the world, making sure that, as we just talked about, that we're in emerging markets. So a lot of our growth is going to be in those emerging markets. So we are going to be investing in new territories. However, we still believe in our core business. We believe in catalog, principally because we think we're the best served with our people, our thousands of people on the ground to understand how to exploit catalog better than anybody else.
There's been a lot of outside investment in the music business, even in recorded music and publishing, but those investments don't necessarily have the sheer volume of people and overhead to understand how to really monetize and commercially exploit that repertoire. We do. And we think that brands and name and likeness awareness are very important. So we will be aggressive in that field. We will be sensible. Most things have a connection to something that we know how to do very well. So we're not going to be going into strands of entertainment that we don't necessarily have huge expertise in. But the truth is that we have multiple expertise in multiple areas, and we will continue to bolster those areas with M&A. And I think that goes across the board, whether it be recorded music publishing, visual concepts, merchandising, premium video content, live revenue, whatever we think is complementary to our business. And I think we will continue to be aggressive.
[Operator Instructions] From Macquarie Securities, Thong-san, please. I think it's your second time.
I'm just wondering, obviously, the interest rate environment in the U.S. is basically pretty high right now. Can you talk a little bit about in, say, maybe the last year or so, how that environment has reshaped perhaps, competition for catalog deals and how that might shape going forward? I mean, I'm looking at, obviously, the last several years where, I guess, a lot of money has been chasing, obviously, the same opportunities that you have and probably building up catalog values. Do you think that comes off? Does Sony have an advantage there going forward? And basically, is the pool of, in fact, a large catalog deals, in fact, actually starting to shrink since so much has already been bought out, including by yourselves?
Yes. If anything, I think the environment reshapes it towards us because this is our core expertise. So I know what the multiples were. For the most part, we weren't involved in that Rush and race with multiples. We weren't of that level. We were extremely strategic. The only deals we did on that scale tended to be content deals of catalog deals where we already had a relationship with the content makers and we understood the numbers better than anybody. And that won't change. Do I think the markets come back to us? Yes. Do I think we'll be able to buy deals at a different rate 5, 3 years ago? Yes.
The top content will always be highly priced because it's extremely valuable. But I don't think there's anybody better placed in the marketplace to understand those values than us. And we didn't enter the Rush for catalog acquisition. We didn't enter that. We were very careful and strategic, and we will continue to be very careful and strategic. Bearing in mind the interest rates and bear in mind the return on capital, we will be very, very sensible. But we do have inside track on how these catalogs work better than outside investment funds.
Just one follow-up for me. Would Sony do this usually by yourselves? Or would you do it like in partnership? And I'm thinking, obviously, it's probably partly dependent on the size of the deal. And obviously the numbers I'm thinking about right now, obviously, the new stories this morning of Queen's catalog in particular obviously, you're in the best position to take advantage of the asset. I would think that would tend to push you towards, like owning the whole catalog and controlling entirety of the rights.
Yes. I mean, I can't comment on anything which was speculation today. But I would say, first of all, as long as we control the asset, we would be fine with outside monetization to help us partners, but we would have to control the asset.
[Audio Gap] He's going to pose question in English.
Rob, this is Nakane from Mizuho. Just one question. I'd like you to kind of elaborate more on Page 17. The growth opportunities other than recording music and publishing. So mainly merchandising, live studios, artist management and so on. Actually, in your disclosed statement, other in recording music segment in fiscal year '23 was [ JPY 20 billion ] plus 59%. So what have been the drivers? And how do you try to increase the revenue for them in next [ 3 ] years a little more concretely? And then how about the profitability for this kind of known recording music and publishing business?
Yes. I mean, that's a sensible question, because we are just starting out on this process on the scale that we envisage it. First of all, it's very complementary. For us to attract the greatest talent, we need to have more than just a recorded and publishing company. Merchandising is very much part of any artist revenue mix, and the live and experiential events areas that we've invested in are again, very complementary to the rest of our business.
We think merchandising over a 5-year period will start to be extremely profitable. But first of all, we've had to build scale. So we are absolutely thrilled with the revenue. The revenue has gone up dramatically, almost probably 10x in the last 2 or 3 years. But the revenue is still what we -- the profit is still what we need to drive. That will come from scale. And we are probably, I guess, on merchandising 1/3 of the way to where we'd like to be maybe even 1/4, because we think the revenue can absolutely keep increasing year-on-year. So well past the mid-range plan, I think we'll have a highly profitable merchandising company. Our live and experiential events companies much -- companies around the world are much more geared to profit in their own territories, in their own companies. And several of those companies now are becoming extremely profitable.
The rest of the wider talent endeavors, studios and premium content, all of them have different types of revenue splits. Studios are more about enticing artists to remain within the Sony family. Artist management is profitable. We have a couple of deals with artist management that make us a lot of money, ticketing the same, particularly in Latin America. Neighboring rights is a growth business with a number of digital providers using music now. And premium content is kind of the same as records, in that we make money from making premium content for streaming and TV and film partners. So it's not the profit of the recorded music. It wouldn't be that yet. But in this terms of a growth and a complementary partner to our main business, we think this can be hugely profitable in the years to come.
So it's time therefore we would like to conclude the session for the Sony Music Group. Thank you very much for your participation.
Thank you.
So the next session will start from 9:50. Thank you.
[Break]
We'd like to now have questions from the investors and analysts. We have 2 people from Sony Music Entertainment, Inc. President and Representative Director of the Board, CEO, Mr. Muramatsu and Director of the Board and CFO; Mr. Nagata. So let's start the Q&A session. [Operator Instructions] Those of you asking questions from the original line, please ask your questions in Japanese. The first question in Japanese from JPMorgan Securities, Mr. Ayada.
[Interpreted] Ayada from JPMorgan Securities. I'd like to ask my question about anime on Page 12 of the slide on the right-hand side. During the past few years, I think 12% was the growth. During this midrange, what is the top line for the next 3 years if you have any figures? And if not, will it exceed this 12%?
Also, the overseas and others, especially outside of Japan in recent years, the Demon Slayer was a major hit in '23 -- 2023. And then in the next 3 years, your collaboration with Crunchyroll, will that bring about bigger revenue?
You also spoke about the generation of new IP. But last week's strategy meeting also indicated the fact that there are not enough creators in the industry. Now if you are developing a new IP, and if you're trying to increase sales and revenue, what are some of the challenges that you would be looking at?
[Interpreted] Thank you for the questions. Thank you for the 2 questions. The first question is about the anime business, about the growth of sales revenue, and also about the overseas development during this mid-range plan or period.
For this mid-range period, just like in the previous mid-range period, we're looking at the same growth rate. And also during the next 3 years, the Demon Slayer is the main title. So we're looking at more growth. And also outside of Japan, in overseas countries, as was mentioned in the presentation, the creative collaboration with Crunchyroll will be strengthened. So anime production will be targeted at Japan on one hand. And also another pillar is the overseas, especially outside of Japan. The enormous marketing data of Crunchyroll should be utilized to reach the global fans. That would be the way to grow the IP.
And the other one is the solo leveling that was released in January. And right after the release, Europe, Latin America, India, Southeast Asia, all these regions achieved #1 in streaming with the solo leveling. So this type of success should be repeated so that we can continue our growth. The second question had to do with what to do with the creators to be able to create studios in which the creators find it easy to work. CloverWorks and A1, these 2 studios, compared to other studios, have a very good environment for the creators. And as Mr. Totoki explained last week about DX in anime production, in order to augment efficiency, one Clover -- the knowledge of [ 1 Clover ] has been utilized in that area as well. Also -- well, I think I will explain that when the time comes.
Maybe, Mr. Nagata, if you have anything that you would like to add?
[Interpreted] Yes, about the overseas. Of course, the Demon Slayer is an important title for us. So that effect is significant. Anime is becoming more and more popular in the overseas market. So we will look into that to try to increase that during this mid-range period.
Thank you very much. So we would like to move on to the next question. So from Okasan Securities, Nishimura-san, please.
[Interpreted] So I have 2 questions. So the first question is about on Page 5 -- because talking about the portfolio and also the breakdown of the sales -- because I would like to know how the revenue will change going forward. So this is a point that I would like to confirm -- because there will be a more increase overseas and also more increase in the music. So therefore, please -- so therefore, what will be the impact to the revenue of the segment?
So the next question. So it's related to my first question. So talking about the cost well -- because in order to approach the growth strategy, so how are you going to allocate the cost or the expense for the growth? So therefore -- so to overseas -- because in order to increase the overseas growth, what will be the cost or the expense? And also in order to create the key IP -- because from the original story. So you need to secure the original story for that? And what will be the impact? So those are the 2 questions.
Thank you very much for the questions. Thank you very much for those 2 questions. For the first question, talking about the portfolio, so, the changes of the revenue going forward. And the second question -- well, because in order to talk about the investment or the cost for the growth strategy and what will be our policy. Those are the 2 questions.
For the first question, talking about the portfolio, we are having more healthier portfolio because -- so we'll be talking about FGO, the key Ips well because that had been a driving force for our revenue.
However, gradually, it's becoming to level off. So for the visual characters and also the artists and music, and for the solutions, well, because based on those business sessions, we are able to have the sales of more than $10 billion -- $100 billion. And therefore, we are having a very healthy portfolio. So IP 360 will be a complementary portfolio. And therefore, that's what I feel. And so, therefore, I'd like to invite Mr. Nagata because talking about the profit margin still as the overall portfolio and here well because in the coming forward, we would like to improve that. And also talking about the costs, we are going to make a good balance of the cost or the expense. And therefore, that is going to make improvement of the healthier portfolio. [indiscernible]
So talking about the growth strategy. So there will never --, there won't be a major change however, well because we are going to improve their accuracy going forward. So -- well because the IP rights itself and also the production of IPs and also to deploy the IPs in the market. And for that, those are the areas that we are going to focus. And therefore, after the integration, so we -- it is necessary to create a trust, and therefore, we are going to select our invested target going forward. So talking about [ Rasengan ], so this is a FTO development company. So we are collaborating together and this is a joint development partner. And therefore, we are able to have a very close and material discussion. And therefore, we are able to have a good ROI advance.
And therefore, we do have that kind of track record. Therefore, we are going to continue to invest. So Mr. Nagata, any additional comment?
So well, because in order to secure the key IPs, so we are going to look for the opportunities. However, we need to focus on how much return and well, because there will be more demand for the Japanese content. And therefore, there will be more funding costs. However, in that area, so well, because we are going to monitor the situation. So that concludes my answer. Thank you.
Thank you very much. Let's go to the next question in Japanese, please from Goldman Sachs Securities, Mr. Munakata.
Ms. Munakata, excuse me. Thank you for your presentation and for this opportunity to ask questions. First, on the anime business. The market is growing and you are growing as well. So what are some of the bottlenecks or the challenges that you foresee? I think you are lacking talent. That is the overall challenge in the industry. How do you plan to procure or find talent? And also, if you are going to invest in development studios strategically? I mean, if that's a plan that you have, please also comment on that point as well?
The second question for the revenue per business segment, that's been disclosed. So gaming seems to be going down. Just to confirm, is that like a competitive situation of the industry in Japan? Are you trying to streamline the pipeline or this is something that is happening naturally, this decline? So mobile games in the future, what kind of strategy do you have in mind? Please give us some update?
Thank you for the 2 questions. The first question is on the anime business segment. We are growing. The industry is growing. So what are some of the challenges? And the second one is about the mobile games. So regarding the first question, the anime production, the number of titles has become saturated. And therefore, even if we have hit titles, it's very difficult to make them into a series. If we can do that quickly, of course, the business will grow quickly as well. So I think that would be one of the bottlenecks. And within the group, the anime production needs to be strengthened. And also the outsourced or the outside studios also need to be strengthened. So we're thinking about investing in those areas. Anything from Mr. Nagata on these points?
Yes, about investment, we're looking at different opportunities at all times. And as Muramatsu said, if there are appropriate development studios, we will consider that. And then on your second question, mobile games, yes, it's declining. FGO, as I mentioned in my -- it's got to do with the -- with the Lasengle -- so -- PMI. So the decline is not as steep. So we are being supported by customers with very high loyalty, the gaming IP, the application game is continuing to show very strong presence in the Japanese industry. It's -- we're not looking at momentary hits, but a lifetime cycle of hits. Now in the gaming industry, we're looking at the balance of the portfolio. We will develop multiple titles and launch them. So the IP 360 will be the strategy and games will be one of the tools or the major weapons in IP 360 as well.
Thank you very much. So we would like to receive next question in Japanese from SMBC Securities, Katsura-san, please.
My name is Katsura. So I have 2 questions. The first question, well, because on Page 5, on the left-hand side, looking at the revenue by segment, and there's discharge. However, under this midterm business plan, there will be a huge increase in the solution business. However, well, because -- could you give us more detailed confidence about the revenue by segment? So that's my first question. And along with that, so talking about the profit in this midterm plan, well, because, as a company, you're going to have more than 10% growth.
So within that framework, so according to this segment, SMEJ, so what will be a more profitable segment or the business going forward? So talking about the second question, so you mentioned about the anime creation, and therefore, well, because anime canvas will be implemented with as a trial. So Totoki-san have mentioned about that. And therefore, what kind of deployment do you have? And also, is there any possibility that you're going to sell to the outside? What's the positioning of this business? So could you elaborate on this point?
So thank you very much for the question. So for the first question. So under this midterm plan, we are going to have a further expansion for the solution and the content for that. And so more than 10% growth, in order to achieve that, what will be the driving force for that will be the -- and the second one is about the question about the anime canvas. So under this midterm plan, under this business segments. So for the [ front-end ] business, so in the solution business, well, because, based on the front-end business with the [ front club ] and the event and also inviting the internal and also external clients, and we have received those opportunities. And we are going to maximize that business. And based on the trust with the clients and the digital service within that, because we do have this competitive edge. And therefore, we are going to exercise that. On top of that, mid- and long-term, so using the Sony's technology, we are going to incorporate in order to have further growth. And for the second question for the growth driver for the portfolio, so Nagata-san is going to explain.
So talking about the profitability and return on investment. So for the overall, so as being asked previously as a profit margin, so we are going to enhance our strength. And for our company, what we can show in this chart anime game. So those are some major driving force for the growth. And therefore, on top of that, we are going to add music and solution, and they are going to increase the growth. So that's all. So talking about anime canvas, well, because within the Sony Group and the current role and us, so therefore, we are developing together in 3 parties. And therefore, if we are able to have a disclosure, we are going to disclose in the future and our studios knowledge and expertise. And also the experiences will be included in that. And therefore, this is really a reliable technology that we can exercise. So that's all.
So the next question will be the last question. Please limit your question to just one question. The last question from Mizuho Securities, Nakane-san. Mr. Nakane?
Nakane from Mizuho Securities. Just one question then. Talking about how to foster people within your company. SMEJ, I think you practice diversity and you also try to utilize the younger talents, and that's happening and I'm sure that will impact other group companies. So YOASOBI was mentioned and other types of developments. Now -- so in order for the younger people to demonstrate their talent in the organization, how do you plan to do that, whether it's in terms of payments, et cetera? So you and other management of the company, how do you plan to nurture and create that kind of environment that would be conducive for the younger people to demonstrate their talents?
Thank you for the question. So fostering capable people, nurturing talent in our company -- thank you for your evaluation. So because of the business characteristics, young people's ideas, their sensitivity, their energy and their sense of speed, these are things the most important for our business. And therefore, we want to make sure that their talents are properly demonstrated without fearing mistakes, and we're always encouraging them to dive into that business. I know that it sounds a bit vague, but for example, YOASOBI, they're in their 30s, 2 people in their 30s, they decided to work on this on their own.
The company is allowing them to do that or just kind of watching over them. And as for incubation and new business, IP generation business is what will be lucrative for the company going forward. And we have a program within the company, where we can encourage employees to come up with new ideas, and we've already received more than 1,000 such ideas. So we also tried to exchange talents from -- with other group companies. So our own so-called ISM, SMEJ's ISM, I think, is going to be utilized more and more going forward. Thank you very much.
Since it's time, we'd like to conclude the session of Sony Music Entertainment, and thank you for your participation. The next session, Pictures, will start from 10. We will be starting the Sony Pictures session momentarily. Please wait for a few more moments. Thank you. Thank you very much for waiting. We will now start the session for Sony Pictures. First, the Chairman and CEO of Sony Pictures Entertainment will -- Mr. Tony Vinciquerra will be giving the presentation.
Now we would like to move on to Q&A from the investors and analysts. The questions will be responded by Tony Vinciquerra, the Chairman and CEO of Sony Pictures Entertainment, and Philip Rowley, the Senior Executive VP and CFO. Let us start the Q&A. [Operator Instructions] If you would like to ask with the original language line, please ask in English. The first question is in English from Nomura Securities, Okazaki-san.
This is Okazaki from Nomura. In previous session for game and music, there was some commentary for AI-related strategy. So I understand that many creators are very sensitive on AI. So -- but could you comment a bit on your Sony Pictures Entertainment AI strategy? So how to take the upside opportunity and how to protect creators' value?
Well, yes, they are very sensitive. In fact, we had an 8-month strike over AI last year, both actors and writers. That was one of the primary drivers of that strike. Actors and writers want to be protected from AI. And we're right now in the midst of negotiating with the IATSE crew union, and we will be negotiating with the Teamsters Union soon, both over AI again, and they will be a primary factor in those negotiations. So the agreements that come out of -- that came out of last year's strikes and the agreements that come out of the IATSE and Teamsters strike will define roughly what we can do with AI. But look, we are very focused on AI. The biggest problem with making films today is the expense. And we need to find ways to produce films in a more efficient way, and we will be looking at ways to use AI to produce both film for theaters and television in a more efficient way using AI primarily. Thank you.
Next question in English from TD Cowen, Mr. Creutz.
I wondered if you could comment a bit. You talked about challenges at the box office. And obviously, it's been a slow recovery from the pandemic. You still seem pretty optimistic about the longer-term trajectory. I guess my question is what's driving that confidence? It seems that audience willingness to go see films is becoming incredibly spotty. Some films do very well and yet other films that are from franchises that are pretty good and get good reviews. It seems like people don't show up. We've seen it a few times just in the last month. What do you think is keeping audiences from embracing films like the way they did pre-pandemic?
Well, as you noted, pre-pandemic, we haven't gone back to the pre-pandemic levels of theatrical revenue yet. Think about what we've been through over the past 3 years or 4 years, went through a pandemic where 2 years slowed production down, made it far more expensive, limited creativity, limited production, then we had an 8-month strike. And the unique part of the strike this time around -- the strikes this time around was that no creative work was being done. In the last writers strike in 2008, writers were actually putting thoughts on paper and making creative decisions. This time around, they didn't. So we had to go from a pandemic where production was severely limited to a strike where there was no creative work being done for literally 7 months or 8 months, and it had to restart. And that's what you're seeing right now in the theatrical area for film. One of the problems with that is that there are far fewer films in the marketplace.
People are -- if you read the industry press, and I know a lot of our industry writers are on this call right now. If you read the press, they are forecasting the demise of our business. That's not happening. What really is happening is that people got out of the habit to go into theaters. As the marketplace begins to recover in terms of having big films coming into the marketplace, you'll see people start to go to theaters again. And I think the second half of this year, you're going to see quite a resurgence of people going to theaters. One film will improve the odds of the next film.
Starting in July, you'll see every week, a big film coming out. And once we get back into the normal cadence of producing film, I think you're going to see it come back. It may not get back to the pre-pandemic level. It is more difficult to produce a film that generates cultural action within the community. But look, we're pretty optimistic about the next couple of years. I think that there is probably a year to 18 months starting back at the end of the strikes that there's a bit of a chaotic situation going on in our business, both on TV and film production.
But once we get back to a more normal cadence, I think you'll see it recover to a pretty nice level, probably not to the pre-pandemic level, at least domestic. And remember, you're talking basically domestic now, not international. The international market is very, very strong right now. So we are optimistic overall. Rest of the world will do well. Domestic will come back to some level, probably just short of the pre-pandemic levels. But overall, I think we'll be fine. You also remember that our #2 market, China, pretty much cut us -- cut the American film market off a couple of years ago, is just starting to come back a little bit, as I mentioned, in the tape piece. And Russia, our #5 market is 0. Hopefully, the war ends. Hopefully, we get these markets back online. Hopefully, the world settles down a little bit, and we get back to a more normal cadence for film and television.
Let us move on to the next question. The next is going to be in English from BoA Securities, Hirakawa-san, please.
I have 2 questions. First one, not only with streaming platform, some of your competitors are struggling with low margin in the Picture business, while SPE achieved double-digit OIBDA margin. So what are the biggest difference between SPE and others in terms of the -- creating higher margin? That's my first question.
So film margins are -- have historically been very low. It's not a high-margin business. It's a risky business. There's no doubt. But we've been pretty successful at it over the last 80 years or 90 years or 100 years, I guess. We just celebrated Columbia Pictures 100th anniversary. And it is a low-margin business. There are a lot of participants. There are a lot of people who share in the profits of films that are successful. Artists, talent -- actors, directors, owners of the IP, we share all of this money with all the profit with all of these people. So that's why it's a low-margin business, and it will remain so. I think that we are much more conscious than some of our competitors of trying to produce films at a lower cost and not spend quite as much on things that maybe don't add to the film or add to the sellability of the film. But look, it's a low-margin business. It always has been, and it probably always will be. Your second question?
Yes. Second question, what is your strategy in India after the deal with Zee got terminated?
I'm sorry, I didn't hear the end of that.
That after the deal with Zee got terminated.
Okay. The question, I think, was what is our strategy in India after our deal with Zee ended. Look, we have a very good business in India. We just announced that our CEO is retiring and we're looking to replace him very aggressively, and we have a long list of very good candidates that we can choose from to lead that business because it's a great business. The Zee situation would have been great. It took a very long time to get regulatory approval. And in that time, unfortunately, the Zee business deteriorated quite substantially. We have several other conversations going on right now that could might possibly end up in something that would help us in the marketplace.
But we're not concerned about our survival there. We have a very good business. We will survive. We will do well. We have a very, very large competitor who is merging with another of our large competitors. I'm not sure how the regulatory process will go there, but it will probably take some time, which we think will give us some opportunity in that short time to reestablish and reenergize our business to compete very strongly. And as I said, we are looking at some other options that may or may not come to [ floor ].
Let's go to the next question in English from Mizuho Securities, Mr. Nakane.
This is Nakane from Mizuho. Just one question. In Picture business regarding your effort to improve operating cash flow and the cash conversion cycle. I guess those numbers are improving by taking the balance between box office release and the distribution to the performance. But if you can share us your view on...
I'm sorry. I can't understand what -- I can't hear what you're saying. I'm sorry.
Okay. Regarding your efforts to improve operating cash flow and cash conversion cycle in Pictures business. This is my question. And I guess those numbers are now -- you can hear well?
So I think the question, if I -- if we heard it properly, it was about how we improve cash conversion. Was that right?
Yes, that's correct.
Okay. So I think there are 2 primary points of cash conversion in our business. One is, of course, to do with the investment that we make in making our programming and then the return we get from that. So that's really a timing issue, but it's underpinned by the profitability of those segments. The other thing, which we continue to work very hard on is to improve our working capital, and we've been very effective in doing that. We've certainly improved our receivables. We're tightening up our payables processes. We don't have much inventory nowadays because home entertainment is quite small. So we think our cash conversion has been good. You get some timing differences. But in the main, the cash conversion is good and will continue to be good.
And Philips Group has made great progress over the past 2 years or 3 years and speeding up the closing process and the collection process. And that obviously contributes to cash conversion.
Let us move on to the next question. Next is in English from Goldman Sachs Securities, Munakata-san, please.
This is Minami Munakata from Goldman Sachs. Actually, I have 2 questions. My first question is about strategic investment plan of the Picture business. Can I double check the priority of strategic investment within Sony Pictures done in this midterm from [indiscernible]? And I know there was a lot of dynamic structural changes that happened for picture industry recent years by COVID and AI. Have these changes impacted to your plan of strategic investment? This is my first question.
And the second question is about the Crunchyroll. I really would like to understand more about Crunchyroll growth strategy going forward. Crunchyroll has been growing strongly and subscriber base reached over 13 million as you pointed out. Can I ask how to grow further from here, particularly paid subscriber basis? Crunchyroll does a collaboration with Amazon Prime. This kind of collaboration with partners will be more -- being more important for expansion of the subscriber base going forward or any [ lesion ] to be expected strong growth from here? And also, I understand Crunchyroll announced price hike in some regions this month. Can I ask about the behind of this price hike? And also if you can update current price -- pricing strategy about Crunchyroll, it will be very helpful?
This -- the first question, I had a very hard time understanding. [ Tokyo ], can you do something to try to improve the quality of the question -- the quality of the audio of the questions. The questions are great. The audio is not so great. On Crunchyroll, Crunchyroll is going to be our primary driver of growth at SPE over the next few years. As you said, we have well over 13 million subscribers. We expect that to grow pretty substantially over time on revenue and profit. We see very substantial growth in the single -- in the double digits with CAGR over the next 4 years or 5 years. We're very confident that Crunchyroll, along with Aniplex and with SMEJ will be terrific for us, and it's a great collaboration with the Sony Music Japan and Aniplex.
We have very -- we are very tightly coordinated with both of those companies and making sure that we're working together. We also have great relationships with other producers. And as you heard in the SMEJ presentation, they're doing everything they can to find more creators to build the bridges to get more creators engaged in creating and writing manga and developing anime. So we think the future is great. And the internal numbers at Crunchyroll are very, very substantial, much more than I'd be comfortable telling you about right now, but it's very strong. And we're looking at this as our primary driver going forward. And I think you asked about something about the Amazon deal. So Crunchyroll is not distributed substantially in Southeast Asia at this point or in India.
One of the ways we're going to be doing that in addition to the fact that we put Crunchyroll on Amazon Channels here in the U.S., where it's been very successful in generating new leads for subscriptions. We're going to launch in India and several other countries in the Southeast Asia very soon next couple -- over the next couple of months on Amazon Channels. We're right now building up the inventory of product that we have on Crunchyroll for Southeast Asia. Right now, it's not to the extent that we would like it to be, but it will be soon and we're going to use that to drive subscription in Southeast Asia. And can you tell me the first question again because I didn't hear it very well.
So, my question is about strategic investment for picture business. So if you have any clarity by items or way of thinking it will be great.
Sure. Look, we're looking for strategic investments as you describe it that complement our strategy. We are not going to go outside the strategy that has been enormously successful for us over the past several years. And we saw the strategy put up on the screen just a few moments ago, and we're not going to deviate from that. We will not make investments that don't complement our current strategy. And our strategy is to have more IP, more product, more library to sell. We're not going to get into other businesses. We're not going to get into a general entertainment streaming service. We're not going to be operating other businesses that are outside the strategy that we've defined no matter what you read in the press.
[Operator Instructions] Next question next is in English. From Macquarie Capital, Thong-san, please.
It's very reassuring that the -- I guess, you say the consistency of our strategy. I just want to try on the creative side. Clearly, it's been an interesting time. I think you're doing really well with Garfield. I think Garfield, in some markets at least seems to be doing at least as well as, if not better than Furiosa. We've seen obviously the failure of a number of Marvel IP in the cinemas on television. It seems like the reign of superhero movie might actually be over. Does this change the way you will consider projects going forward?
I'm always conscious that Spider-Man, of course, is still a key asset for you, but maybe the market is changing, perhaps and obviously, and your thoughts on that? And also going forward, given that some of your key IP like you mentioned, Equalizer, at least, I guess, not be doing that in the future, perhaps to come back in a different form, but it seems like some of your IP, I think, is -- needs to be refreshed a little bit. So I'm just curious as to how you would see your slate going forward in the next couple -- maybe in the next 3 to 5 years?
If I heard your question correctly, you're questioning the strategy of theatrical films, I think. But I thought I answered that just a few moments ago. I think that the theatrical business will continue to be a very good business for us. Obviously, a low-margin business, as we discussed. You mentioned Furiosa, our film last weekend, which also started was Garfield, which we produced and distributed in combination with Alcon, did very well. We actually raised the forecast for that film from where we were a month ago and it did very well. We have a big film opening next week called Bad Boys, and that's going to do very well. Tracking is very strong, and we're pretty sure it's going to be just fine. The films we have coming up for the rest of the year, there are always a risk, but we think we're going to be fine. Production costs, marketing costs, all of those things, I think that we are the most efficient of any of the companies in our business.
And if you talk to people around town, we're probably -- not probably, we are the most stable of all of the studios in the business. We can hire people from every other studio right now if we want to. Everybody wants to come work here because they know that we're disciplined, and they know that we're focused on the right things in the business and we're looking at the right way to produce these films. Marketing costs been far less than our competitors, which makes our films probably more profitable and probably a slightly higher margin than our competitors. And we're just going to continue doing what we're doing, trying to stay off the radar screen of the press and just run our business the way it should be run.
I think probably my question, but the audio quality was an issue. But maybe I'm making more direct then. Since Garfield, and that was a great success, yes. Do you see shifting more towards animation like Garfield? I mean it feels like maybe another way to think is that with the decline of the superhero movie, genre, probably opens up more field, more -- at least more area for growth for a diverse range of films and I presume that as it plays to Sony's strengths.
Well, we do -- our animation business has been very successful over the past few years. We're going to continue to do probably 2 films a year for theatrical release and maybe another one for a streamer release, and we're going to continue to focus on that. We have one of the best animators in the business up in Vancouver that are working for us and for other studios. Your question about superhero fatigue. I think you -- let's hold that question until after Deadpool and Wolverine comes out in the summer. I think you're going to find that to be either the #1 or #2 film of the year. So is that superhero fatigue? I think it's more about making good films using the superheroes. The films that have been out -- that have not done well were produced during COVID.
So, there were some production issues. There were some shutdowns. There's was all kinds of issues that happened through many of the productions of these films. We have one ourselves, Madame Web, which was affected by so many different instances that happened and was visually attacked, virtually attacked by so many people because it didn't do as well as people wanted it to do. But it didn't do as badly as people thought it did either. We're looking at exactly what your question is, is the superhero fatigue. We think that if you produce a good film with the superhero, it's going to be fine. We're pretty sure the next Spider-Man movie will do terrific. Thank you.
We have very limited time. The next question will be the last question. [Operator Instructions] Last question, from SMBC Nikko Securities, Katsura-san.
This is Katsura from SMBC Nikko. Just one question about the location-based entertainment business. I think the -- thanks to the reopening from [indiscernible] I think you finally had a lot of learning from all the different type of trial on the location-based entertainment. My question is, what have you learned from all those trials and what you thought about the missing pieces? And is there any material impact to the overall business we can expect going forward and what time frame, et cetera? That is from me.
Great. Thank you. Just to add to the last question, Spider-Man and the Spider-Verse, our animated film, did $680 million in box office. I said that earlier in the presentation, we take that every day. So again, superhero fatigue. I don't know. You make a good film. People come watch. Your question on LBE is a very good one. We've been -- over the past 3 or 4 years, we've been experimenting with LBE in a lot of different ways. We have been licensing our IP to various amusement parks around the world. There's a water park using our IP in Thailand. We have ride areas in large amusement parks in Spain and Italy and various other countries around the world. And we've been experimenting to see how they impacted attendance and profitability at those parks with what information we get from the owners and the operators of those parks.
We think that if you put good IP on a ride, it does have some impact, probably in the 10% to 15% range. This is not totally scientific or specific evidence, but that seems to be what is happening. So we're trying to take the information that we've gathered through these location-based entertainment license deals that we've done and apply that to the future. And we're in the midst of looking at a lot of different opportunities, a lot of different possibilities for location-based entertainment. We have an experiment going on in Chicago right now with a facility called Wonderverse where it's interactive experiences for our consumers. And it's going okay. We're trying to understand what is appealing to people. We're experimenting with a lot of different IP, a lot of different types of experiences. And over the next couple of years, I think you'll see some significant forays into location-based entertainment projects. Thank you.
Since it's time, we'd like to conclude this session on Pictures segment. Thank you very much.
Thank you.
This concludes Business Segment Meeting 2024 first day. Tomorrow, we will resume at 9 a.m. Once again, thank you very much for your participation.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]
