Who we are Fiscal 2013 Revenues Total 171.7 billion *The percentages are calculated on the basis of the figures of sales to external customers (including internal transactions) Multichannel Pay TV Business 66.1% Space & Satellite Business 33.9% SKY Perfect JSAT is the largest satellite-based multichannel pay TV in Japan and is the largest satellite communications operator in Asia.
01 Annual Report 2014
Multichannel Pay TV Business Media Center The media center digitalizes program content received from broadcasters for satellite transmission. The center also produces original programs for its broadcast channels. SKY PerfecTV! All Japanese digital TVs have built-in tuners preset for SKY PerfecTV! enabling any viewer to easily receive and enjoy program broadcasts. Customer Center The Customer Center operators provide customer services in all business areas from processing subscription applications, programming requests, and contract modifications to subscription billing and payments. We provide SKY PerfecTV!, Japan s Largest satellite based multichannel pay TV broadcast service. We provide a wide variety of content ranging from sports, movies and music to TV dramas and anime. SKY Perfect JSAT Holdings Inc. 02
Space & Satellite Business Mobile Station Satellite Control Center The Satellite Control Center carries out operations to monitor satellite connection conditions and quality and oversees the communications and other services utilizing the satellites as well as monitors satellite conditions and controls orbital slots. Earth Station A terrestrial satellite communications facility. Mobile stations enable satellite communications from any location using transportable broadcast and transmission equipment, such as antennas that can be mounted on vehicles. Mobile stations are often used for on-site gathering of data by TV news broadcasters and for communication connections in emergency situations. Mobile Satellite Communications Mobile satellite communications enable Internet connections on seagoing vessels and airplanes. The coverage of our 16 communications satellites spans all of Asia, Oceania and North America. We are the largest satellite communications provider in Asia and Oceania. We provide satellite communications services to companies and government agencies in Asia and are actively developing global operations. 03 Annual Report 2014
MARKET & POSITION Multichannel Pay TV Business Largest subscriber base in the Japanese satellite pay TV market The Japanese multichannel pay TV market is slowly but steadily growing as a strong offering of a wide variety of specialty channel needs is appealing to diverse viewer interests and preferences. Multichannel Pay TV Market in Japan (Unit: Thousands of subscribers) 15,000 CATV IPTVs 3.7 million subscribers 12,000 9,000 3,666 462 695 3,688 900 3,725 1,090 3,814 980 3,829 970 3,717 6,000 3,000 7,142 7,243 7,429 7,940 7,950 8,000 0 2009 2010 2011 2012 2013 2014 Years ended as of March 31 Sources: Materials from the Ministry of Internal Affairs and Communications, HOSO JOURNAL, and our own research. A Market with substantially more room to grow The Japanese Pay TV market still has substantial room to grow as the household penetration rate for multichannel pay TV broadcasts is still lower in Japan than in Europe and the United States. Penetration Rate of Multichannel Pay TV (%) 100 90 80 Major Pay TV Services in Japan Type DTH (and FTTH) DTH (and FTTH) J:COM TV Cable TV IPTV (FTTH) 60 40 50 Subscribers* channels 2.05 millions 1.57 millions 3.11 millions 70ch 170ch 77ch n/a 80ch (Basic) 20 0 24* JAPAN UK USA * Multichannel pay TV subscribers for Japan as above refers to the sum total of multichannel cable TV subscribers, SKY PerfecTV! subscribers, IPTV subscribers (except for NHK BS subscribers). See a November 2011 report from Goldman Sachs on household penetration rates for pay TV in the UK and US. STB VOD Service Not required SKY PerfecTV! On-Demand Required Required J:COM On-Demand *The number of subscribers is as of March 31, 2014. Required Video Service SKY Perfect JSAT Holdings Inc. 04
Space & Satellite Business The No.1 satellite operator in Asia, No.5 in the world Our 16 satellites make us the largest satellite operator in Asia and fifth in the world. Satellite Operators Ranking *1 in the Global Satellite Market Luxembourg Luxembourg France Canada Japan Fiscal 2013 Revenues *2 (US$ in millions) 2,640 2,560 1,790 839 608 *3 Satellites in orbit 55 55 37 10 16 *1 Companies listed here are fixed satellite services (FSS) operators (exluding MSS operators) *2 The above revenues are in millions of U.S. dollars for the year ended Dec. 31, 2013, exluding SKY Perfect JSAT. Figure for the company is only for the year ended Mar. 31, 2014. *3 The revenue figure for SKY Perfect JSAT represents sales of its Space and Satellite Business only. The translations of yen amounts into U.S. dollar amounts are for the convenience of readers outside Japan and have been made at the rate of JPY102.92 to $1, the approximate rate of exchange at March 31, 2014. Source: Spacenews dated July 7th, 2014 Global market growth led by Asia and Oceania Satellite communications business is expected to continue growing, with Asia at the forefront of the growth. We will expand operations by leveraging our strong position as the largest satellite operator in Asia and enter into collaborations and partnerships with other operators to promote our global development. Demand Forecast in Global Satellite Market (2012 2019E) Satellite Transponders Demand Forecast in the world: Ku/C-band in TPEs* Western Europe 675 to 664 CAGR:(0.2)% Eastern Europe 334 to 420 CAGR:3.3% Russia CIS 393 to 647 CAGR:7.4% North America 905 to 866 CAGR:(0.6)% Sub Saharan Africa 696 to 857 CAGR:3.0% ME & North Africa 545 to 585 CAGR:1.0% South East Asia 419 to 618 CAGR:5.7% Australia & Pacific 225 to 250 CAGR:1.5% Latin America 838 to 1,176 CAGR:5.0% * Equivalent to 36MHz Transponder * : Service areas of SKY Perfect JSAT Corporation. Sources: Euroconsult Satellite Communications and Broadcasting Market Survey by way of Goldman Sachs s discussion materials 05 Annual Report 2014
BUSINESS MODEL & STRENGTHS Multichannel Pay TV Business SKY PerfecTV! is a multichannel pay TV platform linking broadcasters and subscribers and with comprehensive operations in the multichannel pay TV business, from TV channel broadcasting to customer management and sales promotion operations. Business Framework Broadcasters/Program Providers Subscribers Program Program/ Packages Offering various content from entertainment such as music, movies, sports and documentaries to information, shopping and education Programs/packages that fit their lifestyle and tastes. Service Portfolio SKY PerfecTV! offers three service menus based on reception environment and channel lineups and differentiates its products from cable TV and other providers by specially priced basic subscription packages as well as subscription contracts for as few as a single channel. Number of Subscribers *1 (Thousands) 2,055 1,570 90 Channels (HD) 70 (35) 170 (120) 150 (120) STB Not Required Required Required *1. The number of Subscribers is as of March 31, 2014. Content catering to myriad devices Users of our SKY PerfecTV! On-Demand (video-on-demand) service are steadily growing as we develop content, led by live broadcasts of J-League games (professional Japanese soccer) in particular, and other sports, catering to myriad devices such as smart phones and tablets. SKY Perfect JSAT Holdings Inc. 06
SKY PerfecTV! available to virtually every household All Japanese digital TVs have built-in tuners, enabling any viewer to easily receive SKY PerfecTV! broadcasts via a satellite antenna. This is a formidable advantage over cable TV and other operators where reception requires purchase or rental of an external set-top box. Unparalleled number of HD channels The SKY PerfecTV! Premium Service offers some 120 high-definition channels that meet the highest image quality expectations of viewers in a wide range of genres from sports, including 900 Japanese professional soccer league games each year, to movies, music, and foreign TV dramas. Cumulative Subscriber Growth* for the Basic SKY PerfecTV! Service for TVs with a Built-in Tuner (*this figure does not include SKY PerfecTV! premium service subscribers) Number of HD Channels (ch) 150 (Subscribers) 2,500,000 121ch 120ch 2,000,000 1,500,000 CAGR: 23.2% (2008.4-2014.3) 100 72ch 88ch 1,000,000 50 500,000 15ch 0 Apr. 2008 Mar. 2014 0 Aug. 08 Oct. 09 Feb. 11 Sep. 12 Mar. 14 Viewership boosted by seniors In Japan, free-to-air TV programming largely focus on creating programs for the trend-setting younger viewers but Japan s aging demographic is boosting our subscriber numbers as active seniors are attracted to our diversity of specialty channels providing entertaining viewing in their various areas of interest. Advantages of satellites to next-generation Ultra HD Satellite broadcasting is considered the best choice for Ultra HD (4K/8K) since it is able to transmit a large volume of high resolution pictures at very high speed across the country. Percentage of Subscribers by Age Distribution 1% 10S 60S 18% 12% 20S 50S 20% 23% 30S 40S 26% 4K broadcast with breathtaking high-resolution images 07 Annual Report 2014
BUSINESS MODEL & STRENGTHS Space & Satellite Business Our satellite communication system employs the optimal method for communicating large volumes of real time data to a multitude of reception sites, uplinking data from the ground to communications satellites in geostationary orbit 36,000 kilometers above the equator then downlinking to reception sites back on earth. The satellite communication services we provide to corporations and government agencies take full advantage of the benefits of our satellite systems, including the wide coverage, multi-destination distribution, and disaster resistance. In-orbit resources Business Framework Signals Satellite Control Center (SKY Perfect JSAT) Data, Video, Audio Corporate Customers/ Government Agencies JCSAT-110R 110 E N-SAT-110 110 E Superbird-3 93 E JCSAT-85 85 E JCSAT-6 82 E JCSAT-1B 150 E JCSAT-2A 154 E Superbird-B2 162 E Horizons-2 85 E JCSAT-4B 124 E JCSAT-3A 128 E Superbird-C2 144 E N-STARc 136 E JCSAT-5A 132 E Horizons-1 127 W JCSAT-RA in-orbit back up Our Satellite Fleet Used primarily for Multichannel Pay TV Business N-SAT-110 JCSAT-110R JCSAT-4B JCSAT-RA JCSAT-3A JCSAT-1B JCSAT-2A Orbital position 110ºE 110ºE 124 E (In-orbit back-up) 128ºE 150ºE (inclined) 154ºE Launch date (Japan time) Oct. 7, 2000 Aug. 7, 2011 May 16, 2012 Aug. 22, 2009 Aug. 12, 2006 Dec. 3, 1997 Mar. 29, 2002 Launch vehicle Ariane 4 Ariane 5 Ariane 5 Ariane 5 Ariane 5 Ariane 4 Ariane 4 Satellite bus A2100AX A2100A A2100AX A2100AX A2100AX Boeing 601 Boeing 601 Design life 15 years 15 years 15 years 15 years 15 years 12 years 11 years Frequency band C band C band C band SKY Perfect JSAT Holdings Inc. 08
Satellite communications strength confirmed after the Great East Japan Earthquake Small and lightweight portable equipment allows satellite connections in any location, including mountainous areas outside terrestrial network ranges and when terrestrial lines are damaged by an earthquake or other causes. Satellite communications were used in place of landline and mobile phones for rescue and relief activities after the 2011 Great East Japan Earthquake. Satellite communications were also key to Internet connections for government agencies and evacuation centers and as a backhaul connection for mobile phones. Satellite communications are now revaluated as effective back up communications in a time of disasters. Strengthening the foundation for full-fledged expansion in Asia Satellite communication demand is increasing in Asia and Oceania, which encompasses innumerable islands and is seeing increasing mining activity for natural resources. We are fortifying our operating foundation for full-fledged expansion in the Asian region, including the May 2012 successful launch of the JCSAT-4B satellite equipped with a Southeast Asian beam and the opening of a representative office in Jakarta, Indonesia. JCSAT-4B Coverage Area of JCSAT-4B As of June 31, 2014 Used primarily for Space & Satellite Business JCSAT-6 JCSAT-5A JCSAT-85 Horizons-1 Horizons-2 Superbird-B2 Superbird-3 Superbird-C2 N-STAR c 82ºE 132ºE 85ºE 127ºW 85ºE 162ºE 93ºE (inclined) 144ºE 136ºE Feb. 16, 1999 Apr. 13, 2006 Dec. 1, 2009 Oct. 1, 2003 Dec. 22, 2007 Feb. 18, 2000 Jul. 28, 1997 Aug. 15, 2008 Jul. 6, 2002 Atlas 2AS Zenit-3SL Zenit-3SLB Zenit-3SL Ariane 5 Ariane 4 Atlas 2AS Ariane 5 Ariane 5 Boeing 601 A2100AX STAR-2 Boeing 601HP STAR-2 Boeing 601HP Boeing 601 DS2000 STAR-2 14.5 years 12 years 15 years 15 years 15 years Over 13 years Over 10 years 15 years 10 years C band S band Ka band S band C band 09 Annual Report 2014
HISTORY SKY Perfect Communications Inc., and JSAT Corporation were consistent leaders in multichannel pay TV broadcasting and satellite communications, respectively. In April 2007, SKY Perfect JSAT Corporation was established as a holding company of those two companies, now SKY Perfect JSAT Holdings Inc. Furthermore, Broadcasting: Milestones 1986 NHK commenced trial BS broadcasts 1990 WOWOW INC. began Japan s first private-sector satellite broadcast service 1997 The Ministry of Posts and Telecommunications (now the Ministry of Internal Affairs and Communications) decided to digitalize BS broadcasts from 2000 DirecTV started broadcasts in Japan using Superbird-C 1998 Five commercial broadcasters, plus WOWOW INC. and STAR CHANNEL, INC., received approval to deliver BS digital broadcasts under contract Terrestrial digital broadcasts began on a trial basis 2000 BS digital broadcasts began Multichannel Pay TV Business 1994 DMC Planning Inc. established (In 1995, name changed to Japan Digital Broadcast Service Co., Ltd.) 1998 Merged and renamed its service SKY PerfecTV! 1996 Japan Sky Broadcasting Co., Ltd. (JSkyB) established 1996 PerfecTV! started March 2000 Announcement of intention to cooperate in migration of DIRECTV Japan subscribers to SKY PerfecTV! after the termination of DIRECTV Japan s services June 2000 Company name changed to SKY Perfect Communications Inc. October 2000 SKY Perfect Communications Inc., listed on Mothers of Tokyo Stock Exchange 1985 1990 1995 2000 1985 Satellite Japan Corporation established 1985 Japan Communications Satellite Company, Inc. established 1985 Space Communications Corporation established 1993 Name changed to Japan Satellite Systems Inc. upon the merger April 2000 Company name changed to JSAT Corporation August 2000 JSAT listed on the first section of Tokyo Stock Exchange Space & Satellite Business Telecommunication: Milestones 1985 Nippon Telegraph and Telephone Corporation (NTT) formed through the privatization of Nippon Denshin Denwa Kosha 1991 The Internet services commercially started in the United States 1993 1995 NTT launched N-STAR a, the first of its own satellites The Informative Superhighway concept was declared in the United States 1989 Japan Communications Satellite Company, Inc. launched JCSAT-1, the first commercial communications satellite in Japan, at the 150 degrees east longitude 2001 Intelsat became a private company Intelsat, Ltd. SKY Perfect JSAT Holdings Inc. 10
Space Communications Corporation joined SKY Perfect Communications and JSAT in a three-way merger in October 2008, marking a new start for the SKY Perfect JSAT Group, with SKY Perfect JSAT Corporation representing the business core. 2003 Terrestrial digital broadcast began 2006 One-Seg terrestrial digital broadcasts began 2009 Satellite broadcasts separated into two parts Special Satellite Broadcasting (integration of BS and 110 E CS broadcasts) and General Broadcasting in advance of the next-stage launch of BS digital broadcastingnine companies received approval as Special Satellite Broadcasting contracted providers 2011 End of terrestrial analog and BS analog broadcasts. Start of Special Satellite Broadcasting 2004 The 110-degree CS broadcasting company Plat One Corp., Ltd. was merged into the company 2004 Company was changed to the first section of Tokyo Stock Exchange April 1, 2007 SKY Perfect Communications Inc. and JSAT Corporation announced integration of their businesses as wholly owned subsidiaries of the holding company formed by joint stock transfer Establishment of SKY Perfect JSAT Corporation and listed on the 1st section of Tokyo Stock Exchange SKY Perfect Tokyo Media Center 2004 2007 2012 March 31, 2008 Making Space Communications Corporation a subsidiary June 27, 2008 The group holding company SKY Perfect JSAT Corporation changed its name to SKY Perfect JSAT Holdings Inc. October 1, 2008 SKY Perfect Communications Inc., JSAT Corporation, and Space Communications Corporation merged and began operation as a new company, SKY Perfect JSAT Corporation 2007 Multifunctional cellular phone (smart phone), iphone started sale 2006 Intelsat, Ltd. announced acquisition of the U.S. company PanAmSat Corporation to become the world s largest satellite operator 11 Annual Report 2014