Sony’s chief executive, the recently appointed Kenichiro Yoshida, surprised the CES audience in Las Vegas with a renewed focus on the Japanese company’s content division, emphasising a wider shift in which high-end, infrequently purchased hardware, is best coupled with a service and content arm that can deliver more stable growth.
This is according to a report in the New York Times, which quoted the Sony boss ahead of his appearance of the world’s most high profile consumer electronics trade show. “I want to convey the message that Sony is a creative entertainment company,” Yoshida said, suggesting a shift that few saw coming.
Upon his appointment in April 2018, Yoshida, a veteran of the company, was seen as a numbers man unafraid to push through painful changes. However, those changes led to the company steering its global brand through a recovery since 2012. His favoured strategy indicated that Yoshida is not an executive to suffer passenger divisions gladly.
Until recently, Sony Studios had been such a passenger and was ripe for the chop when Rupert Murdoch chose to jettison 20th Century Fox through a sale to Disney, having understood that the future of the content game would require the kind of scale and might deployed by Netflix and Amazon.
Now, the PlayStation maker appears to be promoting its second tier entertainment businesses to the front of the whole company’s offer. The Times reports that the three components – music, gaming, and motion pictures – have been instructed to work more collaboratively, having operated more or less separately throughout their history. Together, the three divisions made up 47% of the company’s operating profit in the last fiscal year.
Core to the shift is, ironically, the stalwart PlayStation console and the network that fuels it. Yoshida insisted that the games console was more than just for games; it is “a very strong entertainment platform for all of Sony – very suitable for video and music content”. After all, PlayStations tend to be hooked up to the largest screen in the house, which also happens to be the screen most suitable for watching films.
Other technology companies may offer instructive analogies. Consider the (slight) downturn in Apple’s sales forecasts, which has led to a predictable hysteria among Wall Street’s typically skittish inhabitants. Analysts have suggested that with significant penetration in rich markets, ever-more-sophisticated competition from Chinese manufacturers, and the sheer cost of the thing, the world may just be reaching peak iPhone.
Apple’s total offer may be diverse, but the company remains dependent on the fortunes of its flagship product. The troubles for the company come from the (slightly) misplaced bet that the smartphone could generate more revenue through price increases at the expense of volume sales growth.
The question for Apple is whether its services business can follow its rival Microsoft and find growth in a more frequently bought, or, better still, subscription product. These parallels, of shifting a company’s business model to reflect the fortunes of both single-purchase hardware, and an ongoing business of selling service or content-based intangibles, are not lost on Kenichiro Yoshida as he takes the stage in Las Vegas.
This is according to a report in the New York Times, which quoted the Sony boss ahead of his appearance of the world’s most high profile consumer electronics trade show. “I want to convey the message that Sony is a creative entertainment company,” Yoshida said, suggesting a shift that few saw coming.
Upon his appointment in April 2018, Yoshida, a veteran of the company, was seen as a numbers man unafraid to push through painful changes. However, those changes led to the company steering its global brand through a recovery since 2012. His favoured strategy indicated that Yoshida is not an executive to suffer passenger divisions gladly.
Until recently, Sony Studios had been such a passenger and was ripe for the chop when Rupert Murdoch chose to jettison 20th Century Fox through a sale to Disney, having understood that the future of the content game would require the kind of scale and might deployed by Netflix and Amazon.
Now, the PlayStation maker appears to be promoting its second tier entertainment businesses to the front of the whole company’s offer. The Times reports that the three components – music, gaming, and motion pictures – have been instructed to work more collaboratively, having operated more or less separately throughout their history. Together, the three divisions made up 47% of the company’s operating profit in the last fiscal year.
Core to the shift is, ironically, the stalwart PlayStation console and the network that fuels it. Yoshida insisted that the games console was more than just for games; it is “a very strong entertainment platform for all of Sony – very suitable for video and music content”. After all, PlayStations tend to be hooked up to the largest screen in the house, which also happens to be the screen most suitable for watching films.
Other technology companies may offer instructive analogies. Consider the (slight) downturn in Apple’s sales forecasts, which has led to a predictable hysteria among Wall Street’s typically skittish inhabitants. Analysts have suggested that with significant penetration in rich markets, ever-more-sophisticated competition from Chinese manufacturers, and the sheer cost of the thing, the world may just be reaching peak iPhone.
Apple’s total offer may be diverse, but the company remains dependent on the fortunes of its flagship product. The troubles for the company come from the (slightly) misplaced bet that the smartphone could generate more revenue through price increases at the expense of volume sales growth.
The question for Apple is whether its services business can follow its rival Microsoft and find growth in a more frequently bought, or, better still, subscription product. These parallels, of shifting a company’s business model to reflect the fortunes of both single-purchase hardware, and an ongoing business of selling service or content-based intangibles, are not lost on Kenichiro Yoshida as he takes the stage in Las Vegas.
Sourced from New York Times, Fortune, Sony, Financial Times; additional content by WARC staff
