Sony Outlines Strategy for Growth
In TV, Videogame Businesses
By YUKARI IWATANI KANE
June 26, 2008 9:18 a.m.
TOKYO – After spending the last three years restructuring the company, Sony Corp. set a new growth strategy centered around video-downloading services and electronics products that can be connected to each other and to the Internet.
The Japanese electronics maker said Thursday that it planned to offer a video-downloading service through all of its key products, such as its televisions, computers, music players, and videogame devices in the next three years.
Associated Press
CEO Howard Stringer outlined Sony's growth strategy in Tokyo Thursday, as the company seeks to regain its lead in TV and videogames.
It also plans to make 90% of its product categories network-enabled and wireless capable in the same period.
"Our mission is simply to be the leading global provider of networked consumer electronics and entertainment," said Chief Executive Howard Stringer in a press conference.
Sony said it plans to first start by offering movies and other video content through the PlayStation 3 videogame console's network service in the U.S. this summer.
It will also begin delivering movies directly to its Internet-connected Bravia LCD televisions in the U.S. this autumn. Sony said it would become the first company to stream a movie directly to a television without a set-top box, or the need for a cable or satellite television subscription.
Mr. Stringer, who was charged with turning around the struggling company when he took over the helm of Sony in June 2005, has been slashing costs, cutting jobs, and getting rid of unprofitable businesses over the past few years.
Now that he has succeeded in those efforts, the latest strategy will be a big test of whether he can also grow the company.
As Internet connections have gotten faster and consumers are getting more of their entertainment online, analysts say that downloading services for movies and television shows could be a big potential market that could be worth billions of dollars in the U.S. alone.
Establishing a dominant position in this area is crucial for Sony after its Walkman music devices lost out to Apple Inc.'s iPods because it didn't have compelling music-downloading software.
Sony, which owns a movie studio and a music company, has an advantage because it has access to both content and electronics devices and can play off the strengths of both industries. For example, the first movie it plans to offer directly to televisions is Hancock, a Sony Pictures movie which it will release before it's available on DVD.
But it is also coming in late to a market that's already crowded with big rivals. Apple, for example, offers a set-top device called Apple TV, which lets users play music and video from their computer-based iTunes library. Microsoft Corp.'s Xbox 360 videogame console also already offers video downloading.
Sony has also had problems in the past getting its notoriously independent product units to work together. A previous effort to create a portable music player and online music service for the Walkman failed in part because of internal in-fighting.
Still, Mr. Stringer has been quietly laying the groundwork to make the latest effort a success. He has encouraged employees to work together and has promoted executives who understand software and content just as well as Sony's traditionally strong area of hardware.
Last year, he enforced a decision to adopt certain digital rights management software that was key to making it possible to offer a common video-downloading service across all of Sony's products.
In addition to laying out the company's future strategy, Mr. Stringer also vowed to make the company's television and videogame businesses profitable in the current fiscal year, ending March 2009.
Sony said it plans to double annual sales overall from Brazil, Russia, India and China to 2 trillion yen ($18.6 billion) by March 2011.
AI
