JVC 2004 Annual Report Download - page 27

Annual Report 2004 25.
grow our Software business.
In the year under review, profits
were up markedly year on year, mainly
due to strong sales of albums by the
Southern All Stars and SMAP, as well
as the benefits of business restructur-
ing. We also made progress in creating
an operating structure that will support
our next stage of growth. Specific
steps included maximizing cost perfor-
mance through the optimal distribu-
tion of management resources,
reforming the personnel system,
revitalizing our corporate culture, and
modifying operations—primarily a
radical review of content production
and business processes at Victor Enter-
tainment. We have positioned fiscal
2005 as the year when we capitalize
on this new business base to move
back onto a growth trajectory.
Using Content Rights to Expand
Business Opportunities
Together with steps aimed at strength-
ening our prerecorded software busi-
ness, we are also working to reinforce
our rights business. One important
move was the establishment of JEN
(JVC Entertainment Networks) in January
2004 through the merger of four
affiliates. Since its creation, the company
has steadily worked to strengthen its
operating structure by integrating talent
The Software Business and
the Leap Ahead 21 Plan
With the Leap Ahead 21 plan, we
aim to realize a matrix management
approach by putting in place an oper-
ating structure that ensures maximum
earnings are generated from the pos-
session and management of high-
quality content rights. Another goal is
to enhance competitiveness by increas-
ing collaboration with other business
segments in the JVC Group and build-
ing a powerful value chain.
Fiscal 2004 Operating Results
The dynamics of the music industry are
changing: the number of million-
selling hit songs is on the decline,
piracy is increasing and distribution
channels are evolving. The market in
Japan has been shrinking for the last
five years, and in fiscal 2004 alone, the
domestic music CD and DVD market
contracted by 6% year on year. At the
same time, the way people enjoy
music is fragmenting. With many
delivery options now available, includ-
ing CDs, music DVDs, online sites and
live concerts, we are increasingly see-
ing the shift to a one-source, multi-use
environment. In wider market terms
then, this is driving growth in the
music industry, and we believe this
offers an excellent opportunity to
management company Hiro Group Co.,
Ltd., a long-standing business partner,
in February 2004. Aiming to become a
Matrix Entertainment Company by
2006, we will maximize our portfolio
of content rights to develop a busi-
ness model that targets all areas of the
music industry—from prerecorded
software, online music distribution, to
merchandising, concert management,
and the planning and production of
advertising. By steadily building our
own library of content rights, we plan
to expand the scope of our business by
offering products and services derived
from our lineup of artists and content.
At the same time, we will encourage
the use of these internal assets by JVC
businesses to prevent cash outflows to
third-party owners of content rights.
This, l believe, will also lead to an
increase in business generated by joint
projects within the JVC Group.
Going forward, our aim in the
Software business will be to further
enhance the JVC brand by offering
superior content—designed to make
the most of the latest developments in
audio and visual performance, and
that dovetails with our lineup of high
value-added hardware products.
Hit DVD video
Southern All Stars:
Summer Concerts 2003
Strong-selling music CD
SMAP: MIJ
Toshiaki Shibuya
President & Chief Executive Officer,
Victor Entertainment, Inc.
Toshiaki Shibuya
Hit DVD video
Dragon Ash: POSSE IN VIDEO