JVC 2005 Annual Report Download - page 27

Victor Company of Japan, Limited 25
CD: LOVE PSYCHEDELICO
Early Times
CD: SOUTHERN ALL STARS
Only You Are A Star
CD: REMIOROMEN
ether
CD: SMAP
~Say What You Will~
Strengthening Matrix Management
The creation of a wide array of music and other content
and the employment of a business model that ensures
that maximum earnings are generated from this content
are key to JVC’s ongoing advancement. Under Leap
Ahead 21, the Software business will concentrate on dis-
covering and developing music artists and other new tal-
ent as well as bolstering matrix management to expand its
focus from CDs, DVDs, and other prerecorded software to
content rights and other areas of the music industry.
New Opportunities
In Japan, music CD production costs have declined since
their peak in 1998. At the same time, the way people
enjoy music is ever diversifying. With many delivery options
now available—including music DVDs, live concerts, and
online sites—the shift to a one-source, multiuse environ-
ment is gaining momentum. This environment offers an
excellent opportunity for enhancing earnings by generating
a tremendous amount of business from the same content
through collaboration with companies comprising our
Software business and tie-ups with parties outside the
industry. We see great potential for growth in our Software
business in this climate.
Becoming a Matrix Entertainment Company
In the year under review, sales in the Software business
declined markedly, largely as a result of the postponement
of major releases by popular artists and lower sales of
music software stemming from the expiration of sales con-
signment contracts with key industry players. Amid falling
demand for music CDs and a steep drop in the number of
million seller songs, JVC endeavored to develop new
talent and artists who can produce moderate hits. These
initiatives started to produce results in the latter half of the
fiscal year, with the emergence of such new artists as
Remioromen and Fumido and hit releases by Love
Psychedelico and other music groups. We also created a
new music label called BabeStar to enhance our capability
to develop new artists. Furthermore, we enhanced cost
performance and completed business process reorganiza-
tion in line with structural reforms, with an eye to establish-
ing a strong revenue base.
In fiscal 2006, we plan to release the first new CD
album in seven years and more than 40 CD singles,
including remixes and new songs, by the Southern All
Stars as well as numerous other CD albums by such major
artists as SMAP and Dragon Ash. We expect these releas-
es to boost revenues and earnings and are developing the
talents of several young artists on their way to becoming
hit makers. In January 2004, Victor Entertainment estab-
lished JVC Entertainment Networks Inc. (JEN) through the
merger of affiliates to generate creative synergies. JEN is
working to expand highly profitable new business and
reinforce its matrix management approach to the enter-
tainment business. In fiscal 2006, our Software business
will work to build a solid revenue base, proactively gener-
ate resources, and maximize the benefits of the merger
through such efforts. Also, in fiscal 2007, we will firmly
establish ourselves as a Matrix Entertainment Company.
Toshiaki Shibuya
President & Chief Executive Officer,
Victor Entertainment, Inc.