Sony Strategic Plans Target Expansion in Music, Games, Anime – and India

Sony Group Corporation senior executives Thursday delivered a resoundingly robust exposition of their hardware-plus-software business mix, of continuing to grow Sony’s position in entertainment and acceleration of a strategy to address a diverse, globalized marketplace.

Speaking at Sony’s annual corporate strategy day presentation, chairman and CEO Yoshida Kenichiro gave an almost Biblical explanation of the group’s origins. The Sony name, he said, is an extrapolation of the word ‘sound.’ One possible implication: in the beginning was the word.

The corporation’s present is a hybrid, six division structure with entertainment functions music, games and pictures (film, TV networks and TV production) making up three of the six.

The group’s future, he said, will be shaped by amassing and exploiting more intellectual property, more cross pollination between business units and by big bets on India. The South Asian colossus is not only now the world’s most populous nation, it is young and creative in Sony’s eyes.

Sony’s India head NP Singh was called up on stage to join Yoshida and Sony COO and CFO Totoki Hiroki to give a glimpse of the future.

“Sony Research India is actively collaborating with Sony Pictures Releasing India to develop AI models, such as video analytics, recommendation engines and speech recognition,” said Singh. He hailed other developments in the country, including Sony Talent Ventures and the Hero project initiated by Sony Interactive Entertainment that is grooming game development talent.

The merger of Sony’s Indian TV business with that of rival Zee has now waited some 18 months for regulatory approval, but is still keenly anticipated. “Upon closing [the merger] will enable us to expand our kind of content creation and strengthen connection with diverse communities within India,” said Singh.

Even, pre-merger, Sony is no dwarf in India. It currently operates the world’s third most subscribed TV channel, SET, and India’s third most popular streaming platform, SonyLIV which counts 33 million subscribers.

All three executives deployed the concept of ‘Kando’ or the Japanese word for ‘emotion’ as the through line in their presentations. Kando is the bedrock of corporate strategy – across entertainment and electronic hardware manufacturing (high end image sensors, studio-quality cameras, PlayStation5 consoles and virtual production studios).

“In order to strengthen its creativity in areas such as music, pictures, games and anime, Sony has focused on getting closer to creators and creating Kando, and at the same time has invested in the ability to create Kando. In terms of content IP, Sony has invested approximately JPY1 trillion ($7.25 billion) over the past five years,” the company said in an accompanying statement of purpose.

Kando creation is even said to include partner collaboration and intra-group collaboration on content IP.

“The Last of Us,” a first-party PlayStation title that was made into a TV drama, has become one of the most-watched shows in both Europe and Latin America in the history of client HBO Max.

Kando is also defined as building “communities of Interest” or development of local content. The group said that this might mean emphasis on anime and games or the harvesting of viewer data from the Crunchyroll anime streaming service that it acquired two years ago, for use by creators.

Sony also wants to bridge the gap between hardware and content creation. It gave the example of “Gran Turismo Sophy,” a racing AI agent that enhances the value of the experience within the game space. “Sony intends to continue to promote research and development in this area, alongside social implementation,” it said.

In the pictures division, the Japanese executives said that they will continue to “leverage Sony’s strengths as a strategic supplier, limiting the burden of investment we would incur by having our own distribution platform, and instead allocating these investment resources to the creative side, enhancing production quality, and supplying to the distribution platforms that best understand the appeal.”

This is HQ-level vindication of the strategy elaborated by Sony Pictures Entertainment some two years ago when it chose to be an “arms-dealer” producing and selling content to streamers and broadcasters, rather than attempting to develop its own late to the party global streaming platform in a space already dominated by Netflix, Amazon and Disney.

The executives also gave a big shout out to theatrical releasing of movies. They said that theatrical releasing improves profitability and is increasingly supported by the industry.

“Recently, it appears that industry players with distribution platforms are gaining renewed awareness of the value of theatrical releases, and we look forward to the return of movie fans to theatres and the excitement they provide,” said Totoki.

In the games segment, Sony said that its top priority is to engage more active users – both on its own consoles and on other platforms. The executives said that PS% manufacturing is currently at full capacity and that some 6.3 million units were shipped in the most recent quarter. Sony’s recently acquired Bungie would “enhance Sony’s ability to develop and operate live service games” and grow the PC user base.

In music, where Sony has long been a global powerhouse, its aim is to outpace the market growth of streaming services and emerging media. This it aims to achieve by: promoting new songs from Sony Music’s wholly owned labels and signed artists to increase market share; expanding services for distributed labels centered around The Orchard; improving early contact with emerging artists through channels such as AWAL; expand in emerging markets, including unearthing local artists; and strengthening initiatives to monetize emerging media such as social media and live concerts within games and increase returns for artists.

Sony also wants to grow its position in location-based entertainment. Recent developments have included the “Columbia Pictures Aquaverse” in Thailand, a dark ride in Spain that projects the world of “Uncharted” and “Sword Art Online – Anomaly Quest,” an indoor interactive attraction in Tokyo.

The group will hold further division-by-division presentations next week.

Away from either the entertainment or electronic hardware businesses, Sony announced that it has begun moves to spin-off its financial services business. Although plans have not been finalized, it foresees its 100% stake being reduced to slightly below 20%, but the unit continuing to use its Sony brand name and to maintain synergies with the remaining Sony Group companies.

And, while the executives repeatedly suggested that the portfolio of businesses is “dynamic,” they were quick to close down questions about the disposal of other parts of the group, such as semiconductors or entertainment. Rather, they are looking to further acquisitions that would boost entertainment activities.

“Content IP still remains priority number one in terms of strategic investment. The fields of opportunity could be in games, music or anime, or many other things,” said Yoshida.

That is a far cry from the 2010s when Sony was delivering inconsistent profits and when Sony Pictures Entertainment was considered to be among Hollywood’s weakest studios.

Leave a Reply

Your email address will not be published. Required fields are marked *