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SONY PICTURES ENTERTAINMENTSPE Innovation LAB
October 2013Proposal to launch a Collaborative Innovation program to help grow
Sony’s Entertainment Business
The Need
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There remains a substantial disconnect between technology startups and old media companies. The two continue to exist in fundamentally different worlds and at times have a contentious relationship
Goal: Help SPE identify disruption early & engage with startups
Innovators & industry disrupters Traditional Media companies+
Our Proposed Solution: SPE Lab
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Mission
Identify external innovation that can help SPE strengthen existing businesses and identify disruptive trends that can fuel future business
Key Tasks
1. Strategic Partnerships with startups Help identify startups that are relevant to strategic needs of SPE divisions. Help divisions engage with startups via:
• Licensing agreement• Co-Development• Co-Marketing agreement• Commercial/Distribution • Warrants/equity investment
2. SPE IncubatorCreate an environment and a process where SPE will be able to engage with and nurture high-quality startups in the Entertainment industry
Create environment to nurture innovation
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Utilize underutilized space on the lot to host startups and nurture innovation
SPE Lab – Potential Structure
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Motion Pictures Group Corporate TechnologiesHome Entertainment Television / Crackle Digital Productions
SPHE Pod SPT Pod MPG PodSPDP Pod
SPE Lab
SP Technologies
PodStartup 1Startup 2
SPEDivisions
Incubators/Accelerators
Venture Capitalists
StartupsUniversities /
R&D Labs
Sony Growth Ventures & Innovation team (part time)SPE Lab Coordinator (full time)
Shared Resources
Startup 3
Employees from various divisions
collaborating together, but
representing their individual divisions’
needs and engaging with innovative
startups
Startup 4
1. Process for Strategic Partnerships with startups
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• Release marketing and promotion
• Digital influence, social targeting and analytics
• App developers• Online advertising• Discovery &• Recommendation
Social TV & 2nd Screen
• Automatic content recognition and sync
• Foreign language dubbing
• Remote collaboration tools
• Real time image Acquisition
• Energy management
Understand BU Needs Start-up Radar Match with BU Needs BU Filter
# Start-ups 100+ 20+ 8+
Timing 1 day
Online Video
Discovery & Recommendation
Social TV
Social Analytics
Production Optimization
New Biz Models
2-3 Months 15-30 days
Release Marketing & Promotion
Introduce selected startups to SPE divisions
SPE Lab
Help SPE division engage with startup
3-5
3-4 months
Divisional Participation
Optional Mandatory
ILLUSTRATIVE ONLY
As Needed Recommended
2. SPE Lab benefits
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ACCELERATOR
Accelerate Innovation
• Harness fresh thinking from the outside
• Drafts off of flexibility and nimbleness of start-ups to make quick decisions and pivot often to find the right solution
Lower Investment Risk
• Necessitates only small amounts of project funding for many ideas/startups
• Requires no commitment to engage in a partnership or provide follow-up funding
Strategic Partnerships
• Facilitates screening and access to early stage ideas
• Provides opportunity to engage in strategic partnerships, e.g., contract work, commercial and co-marketing agreement, investment or acquisition
Positive Image Effect
• Increase SPE brand presence• Increase buzz and positive press
through hosting accelerator on SPE lot
Benefits go beyond revenues…
Employee Development
• Provide opportunity for employees to engage with entrepreneurship and negotiations with start-ups
• Maintain exposure to external innovation
Organize for success
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R. BergerM. Corcoran
SPHE
K. LeGoyC. Mansoliollo
M. Fisk ?
MPG SPDP
C. Taylor
SP Technologies
Directors (part time) : M. Singer , S. StephensCoordinator(full time) ??Venture Advisor (part time): A. Noronha
SPE LabTbd – if needed
Steering Committee
SPT
B. Franke ?
Owners
1) Each BU assigns 1-2 of their most innovative employees to spend 10% of their time to experience ‘innovation in action’
2) These individuals work with and leverage the broader Sony Ventures & Innovation team to access startups and the Venture ecosystem
3) Each employee has a 3-6 mo. assignment – the rotation helps more BU employees experience entrepreneurship and innovation
4) Encourages BU’s to work as ‘One SPE’ and ‘One Sony’ to leverage engagement with startups
Fund for success
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Key activities Annual Budget
Funding for Shared resources- Full-time Coordinator- Part-time venture partners- Organize min. of 4 events/year- Misc. Market Research
$500K*
5-6 projects – engagements with startups and/or Universities @ $75K each- tbd
(note: SPE would also likely receive some option to take warrants in the company at completion of the program)
$450K**
Total $950K
* Does not include charges for employees working part time within the SPE Lab – this will be born by their individual business group; Also does not include facilities costs for SPE Lab** Reserves – Average of 1 project/division. Also, budget does not get used if the project is not launched
Sponsor Operational Budget
Project Budget
SPHE $100K $100K
SPT $100K $100K
MPG $100K $100K
SPDP $100K $100K
Corporate $100K $50K
Total $500K $450K
Innovate collaboratively and leverage shared resources and expertise
Proposed timeline
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• Planning, BU sponsors etc: Oct. 28, 2012 – April 1, 2013
• Announce & Launch SPE Lab: April 1, 2014
• Startup Selection: April – June 2014
• SPE Incubator Session: July – Dec 2014
• SPE Innovation Demo Day: January 2014
Appendix
Trend: Growth of accelerators
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Mentorship
• 1-on-1 mentors
• Subject matter expert
coaches• Biz guidanceConnections
• Expert speakers
• Hacker/ Strategist matching
• Free legal & accounting• Typically a 3-4 month program
• Startups are given ~$25K in exchange for 3-6% in convertible notes & right to invest 8-25% of Series A
• A mentor-driven approach – each startup gets at least one dedicated mentor
• DEMO Day is scheduled end of program to attract investors and partners
Accelerators provide intense, hands-on, boot camp approach to venture creation
Community
• Free office space with
fellow entrepreneur
s• Alumni
network
Capital• Pre-seed
funding up to $25K
• Access to angels & VCs
Independent Accelerators
Corporate Accelerators
1. Independent Accelerators
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Most prominent:– Y Combinator, Mountain View, CA – Tech Stars, Boston MA, Boulder CO, NYC, Seattle WA, – 500 Startups, Mountain View, CA – DreamIt Ventures, Philadelphia, Austin TX & NYC, Israel
Today there are least 20-30 around the country, with a few focused on specific domains (healthcare, energy, mobile etc)
Requires $0 as budget. Depending on the relationship with the Accelerator, corporate may get access to startups. Follow on investment in the startup is also restricted
Unfortunately, Corporates have no say in setting accelerator theme/focus, do not get access to all submitted ideas, and do not have a say in selecting the startups in the program
2. Corporate (operated by 3rd party)
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Microsoft Kinect Accelerator funded and hosted by Microsoft, managed by TechStars
• Microsoft had the final say in setting theme, had a first look into all ideas and was involved in selection process
• Microsoft hosted the accelerator, but paid TechStars to manage the program; The XBOX team, Microsoft R&D, the Emerging Business teams were actively involved in the program
• Microsoft did not take any financial stake in the startups• Demo day was well attended by press from around the world, investors, entrepreneurs, mentors (total
attendance of about 250)Smaller budget, but no direct financial upside into success of startup
2. Corporate (operated by 3rd party)
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• Not a typical incubator or accelerator. This isn’t an investment move and Red Bull is not looking for a partial ownership, instead consider it to be a marketing spend
• Red Bull is seeking innovative, creative, change-the-face-of-music startups and like-minded people to work together with us to make music experiences better
• Successful applicants to the accelerator will gain access to the Red Bull's global network of Red Bull Studios, the Red Bull Music Academy, the brand's artists and audience (brand claims it has more than 35 million followers across its social channels)
• Criteria is broad and appears to include interest in possibilities from the hack level to the ready for market exposure level
• Red Bull is working with design and innovation consultancy Sidekick Studios on the accelerator program
Red Bull startup Accelerator funded by Red Bull, managed by Sidekick Studios
Smaller budget, but no direct financial upside into success of startup
3. Corporate (operated by Corporate itself)
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Darcy AntonellisPresident, Technical Operations, and
Chief Technology Officer, Warner Bros.
Debra Baker, SVPGlobal Business Development,
Warner Bros. Home Entertainment
Thomas Gewecke, President, Warner Bros. Digital Distribution
Don Loheide, VP Advanced Video, Turner Broadcasting System
Scot M. Safon, EVPCNN Worldwide, Turner Broadcasting
THE MENTORSMedia camp Accelerator funded and managed by Turner Broadcasting & Warner Bros. A Turner/Warner Bros. initiative Comprehensive accelerator program
Educates entrepreneurs and enables them to build innovative media businesses.
Campuses: SF + LA Provides early stage startups creating disruptive
innovations an opportunity to: Access Warner Bros. executives Mentors Gain valuable insight into the Studio’s business Develop next-generation technologies and
products for the entertainment industry. Startups worldwide who are selected to participate will
receive:o 12 weeks of mentorship.o Guided insights and access to executives.o Financial incentives ($20,000 by way of
convertible note) including partnerships and vendor relationships
Growth Ventures & innovation GroupSony Confidential
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Program has much greater benefit to the Corporate. But requires a large corporate team and significant $$