Sony Group Corp. said Thursday it is considering a spinoff and listing of Sony Financial Group Inc. in the next few years as the Japanese conglomerate has been stepping up efforts to better focus on its entertainment and chip businesses.
Sony plans to retain a stake of around 20 percent in the financial unit, which includes a bank and a life insurance firm, after the listing, the group's president, Hiroki Totoki, said at a press conference outlining its business strategy for fiscal 2023.
The announcement comes as Sony is faced with increasing competition from companies like Netflix Inc. and Samsung Electronics Co. as it transforms itself from an electronics company to a group with diverse operations, including gaming, music, movie and chip businesses.
"We are going to need an unprecedented amount of investment for medium- and long-term growth," Totoki said at the press conference, adding it will allocate more resources to its entertainment and image sensor operations, its key growth drivers.
"Many of the rivals we are competing with are extremely large global companies," Totoki said. "As we grow bigger, we have to raise the level of our investment accordingly," he said, adding mergers and acquisitions are an option for further growth.
Sony Financial was previously listed on the Tokyo Stock Exchange, but the parent company made it a wholly owned unit in 2020 to speed up decision-making.
Sony, which also makes TVs and digital cameras, earns more than half of its operating profit from its entertainment business which spans from PlayStation 5 game consoles to Spider-Man films.
Entertainment is one of the fastest-growing sectors, with companies such as Walt Disney Co. and Amazon.com Inc. investing heavily in content creation.
Under the new strategy, Sony said it will ramp up entertainment operations in India, adding the emerging country with a population of 1.4 billion has a huge potential as a market for the content business.
Sony's chip business, which has a large market share in image sensor components used in smartphone cameras, is also becoming increasingly important as demand booms for chips to be used in high-performance phones and the automotive sector.
The group last month reported a record operating profit of 1.21 trillion yen ($8.8 billion) for fiscal 2022, which ended in March. Sales exceeded 10 trillion yen for the first time due to robust video game sales and a weaker yen.
Sony Financial booked revenue of 1.45 trillion yen and an operating profit of 223.9 billion yen for the last business year.