Fixing Sony
The past few weeks have been rough for Sony. This isn’t a new occurrence — it’s been happening to them for over a decade.
If it isn’t already apparent to you, Sony has screwed up pretty bad. As it has been reported by GameSpot today a new survey shows that the companies overall public perception is down at it’s lowest ever. The blows have been coming left and right for Sony the past few weeks after hackers easily accessed a plethora of their files. After being embarrassed by trade secrets being revealed a non-descript threat caused them to pull “The Interview” only to be bad-mouthed by our president, then foolishly trying to reshape what they had did into a move that was different than the original intent. Then a washout comedy star decided to reprise his role as a dictator on last week’s SNL to claim the last thing Sony did worth while was the Sony Walkman. When news broke that they would eventually bring the movie to VOD it quickly got reported that Sony’s own VOD service that no one has ever used or heard of, Crackle would stream the movie. After a few short hours of outrage on the internet from that, Sony claimed they never confirmed that was happening.
So the question is, what the hell is going on with Sony? Sony has been suffering a long, long death for quite awhile. The only markets they are able to make a respectable profit on in the first play is their media empire (music, movies, television) and PlayStation and even through each of those they have had massive gaffes. The company as a whole has been going through a slow restructuring and esssentially doesn’t know what it wants to be.
With their music market they are pretty safe; the artist and catalog they have is enough to keep their overall market value up and if the shit really hits the fan for the company then they have some market stars like Michael Jackson and AC/DC that they can auction off.
Their movie business while respectable has been finding it difficult to make a true hit. Big bets like “The Amazing Spider-Man” series are not paying off as well as they had hoped and critical reception for the last movie was pretty bad. While Warner Bros, FOX, and Disney both have pretty solid plans to spin off their top franchises into comic universes Sony has been unable to drum up as much excitement or concoct a cohesive plan. Then we have what happened with “The Interview”. Already millions had been sunk into promotion of the movie and this has undoubtedly left a sour taste in stars Seth Rogen and James Franco mouths. The duo, Rogen specifically, has been a powerhouse for Sony in the past dating all the way back to “Knocked Up”. If Sony is unable to find a solution that best suits the fans and the duo, then Rogen can likely find no problem getting funding for other projects with other frequent studio collaborator Universal. The division has had it’s share of security attacks in the past, in 2011 users information was attacked. With their television business that relies heavily on some lesser known online offerings, and sattelite tv channels, as well as syndication, the thing that has threatened this business can be summed up in one word: “Netflix”.
With PlayStation, Sony has been doing a very good job of making sure that worldwide, the system does well but it still has been having challenges. In Europe the system is hard to find and Sony is gearing up to launch in the unproven market of China, while in Japan despite selling well, has underperformed thanks to the advent of the popularity of mobile gaming in the region. In United States while the system still sells well, Microsoft’s Xbox One appears to be breaking their hold by pushing the price down below Sony’s machine and offering more value to the consumer. The PlayStation Vita on the otherhand has been a failure, with it’s biggest selling point of PS4 Remote Play going from being a Vita exclusive, to Vita + Sony Android phone exclusive to now being available on all Anroid phone hardware that can support it.
The Symptom
The problem is that none of this is new. For every good bet Sony makes, they make three very bad ones that they find it difficult to recover from. Sony’s stock and the company’s brand itself has been in freefall for quite sometime. While we can thank Sony for popularizing such staples as the CD, DVD, and PlayStation, they haven’t been able to do that next big thing that wowed everyone. In the early 2000's Sony’s stock was at it’s highest thanks to DVD and their own PlayStation 2 being the cheapest DVD player on the market at the time at $300. Every since then, every dip in their stock price correlates with major events in the tech and entertainment space that they have recovered from less and less each time. In late 2001 the Apple iPod and Microsoft Xbox threatened two of their key businesses causing the stock to drop. By 2003, it was painfully clear that the Sony Minidisc, Discern, and Sony’s MP3 players were losing to the rising star of Apple’s iPod resulting in even more of a stock drop. By 2009, the cellphone market, a market that Sony used to have a fair share of became crowded by the likes of HTC, Samsung, and Apple creating handsets that were better than Sony’s offerings. By the end of 2012, Sony was a former shell of it’s past glory and wasn’ #1 in any industry that it had business whereas before it was #1 in many.
So what should Sony do to fix itself? Apple’s late CEO and founder Steve Jobs idolized Sony’s co-founder, Akio Morita and wanted Apple to become the next Sony before he left Apple and after he came back. In a little over ten years, not only did Apple achieve that but it became the company that now Sony strives to be. Apple is probably the biggest competitor to Sony in electronics; even more recent victories like Blu-Ray becoming the high definition disc of choice had been overshadowed by the advent of the download market ushered in greatly by Apple and the companies trying to mimic Apple’s success as well as faster broadband connections. Sony continues to hemorrhage money and what has happened with “The Interview” has done quite a bit of damage to the company. So what can they do? Truly try to be like Apple. Think different.
A Four Pillar Plan
When Steve Jobs came back to Apple back in 1997 he quickly uprooted what had become the status quo at the company and made a simple plan for them to follow to get the company healthy: One consumer and pro desktop and one consumer and pro portable. Along the way, they introduced software and services that helped to extend these devices until they were healthy enough to go into other areas such as the iPod and the iTunes music store, followed by the iPhone and iPad. Now the company is getting ready to make a watch. While this may sound like an over simplifcation of one of the biggest companies in the world, this is essentially it at it’s core and every single one of these businesses intertwine with one another in a way that is incredibly sophisticated, but easy enough for the lowest common denominator to grasp. So what four pillars should Sony concentrate on and how?
Supplier
One of the businesses that Sony has been in that most of us don’t pay to much attention to is as a supplier of compontents to several different devices. These devices range from things such as camera components, television components, audio, you name it. Chances are even if you don’t own anything braned with Sony on it, you own something that has a compontent they have created. This is an area that compeititors such as Samsung have been beating them at in several areas, but with the advent of better mobile camera technologies and a strong supplier relationship with Apple, we may be seeing a whole new generation of cameras in our next iPhone, complete with DSLR quality 22-megapixel lenses. On the subject, they can better control the cost of supplies if they were to exit out of several areas including television sets, cameras and audio equipment. These are areas that while Sony shines in some areas, they have tarnished the brand quite a bit in the past few years, specifically in audio, and many other brands being associated with value or quality in television and camera equipment. For now at least, it would be a good idea for them to exit these areas until they regain consumer trust. Having a better control on their supplies can also mean that they are able to drive down the overall cost of PlayStation and mobile devices, yielding higher margins on their investment.
Entertainment
Ultimately this is where Sony can gain at least some trust as long as they aren’t making crap. In order to do that they need to keep doing what they are doing with the music business, get out of any streaming music businesses they are in, out of any VoD businesses they are in (that means Crackle) and concentrate specifcally on making high quality entertainment in music and the theatre. These theatre and music experiences can even be better by making special apps on tablets and phones that go with each, or making exclusive content on the PlayStation. When it comes to a “Superhero strategy” it could probably be beneficial if Sony were able to come up with a decent partnership with Marvel/Disney. Sony may even be able to become a gap between a bigger partnership with FOX, which also owns rights several Marvel properties for theatrical release.
Through ther movie properties and expertise in high-end electronics Sony may even be able to introduce gee-whiz technologies into movie theatres that we have only dreamed about, including holograms. Could you imagine going to a theatre, and watching a holographic movie at the IMAX? Perhaps even going to see the movie again in a different seat only to see the same movie from a totally different perspective? Sony actually has been dabbling in this technology for quite sometime, as proof from this video dating back from 2008:
Mobile
Mobile is an area that when Sony wants to, they can do pretty good. The problem is they have several different variations of the same thing every year. The solution here is simple: One phone, one tablet a year. If Sony were able to specifically concentrate efforts on these things, they would be able to show innovation far more clearly to the consumer. On top of that, get rid of the PlayStation Vita and and make their Xperia series the go to for Vita games. This would give consumers a reason to choose these over other smartphones. Build in their best camera technologies, build in their best display technologies, and build in the PlayStation store making that their one stop shop for any electronic entertainment wares. Communicate far better to consumers that your devices are more water resistant and strive to give them better battery life so they can compete better with the iPad and the other Android devices out there. While you’re at it ditch the wearables market in this space and move it to PlayStation.
PlayStation
PlayStation is Sony’s crown jewel. It has been for quite sometime. It has lead all the more successful efforts in Sony’s consumer electronics areas: DVD, Blu-Ray, and ultimately they have changed the face of gaming. The first and second PlayStation systems sold over 100 million; the PS3 however has had lower numbers in the face of increasing compeition. The PS4 so far has outdone even the most optimistic estimates, selling well over 15 million in less than a year and currently the “king” of this console generation.
So how do you make a great thing better? Sony can’t currently compete with Microsoft on price and while that may hurt Sony in the short term in North America, the recent price drop hasn’t specifically harmed their position in Europe or Asia. Sony’s VR tech “Project Morpheus” could not only replace their television business for the time being, but it could also be a segaway for technologies they introduce into movie theatres, as well as a new way to play games. This is where the disconnect to PlayStation however would have to begin. In order to make it successful, gaming could only be a part of the VR headset. If you wanted to game and get the full experience then you would buy it for use with the PlayStation 4. What if you wanted to just watch movies, or perhaps experience television or computing in a completely different way? Then it could be easily interfaced with computers, tablets, and mobile devices. Such a device would need to sell for a price that is reachable and likely sold at a loss for Sony.
As broadband connections begin to get faster in the years to come (think Google Fiber connections) then instead of being stifled by progress like they were in the past they can take advantage of it with everybody else. Become the Netflix of gaming with their PlayStation platform and take it into the next decade. Sony has already been testing this technology with “PlayStation Now” and Microsoft is rumored and likely to have a similar service in the future. It will be an uphill battle for Sony in this respect as Sony needs to invest heavily on their network infrasturcture and security, something companies like Microsoft and Apple have had over Sony for quite sometime.
To conclude I will admit I’m not a fan of Sony’s. I haven’t been for years. When I was a kid I admired their televisions and audio equipment and when I got older I bought some of their stuff. I had a TV that lasted for a decent amount of time then I bought one of their crappy audio systems. I got a Discman and then was more interested in getting a iPod that worked with my brand new PowerMac G4. I ditched my PlayStation 2 because the Microsoft Xbox delivered on launch what Sony promised for two years. This stuff with “The Interview” will pass but Sony won’t be able to recover if they don’t innovate all over and cut the fat. Sony and it’s brand used to stand for something. What does it really stand for now? Whatever magic they have in the PlayStation brand they need to distill it down to its essence, bottle it up, and inject it into the other parts of the company. If Sony is gone then companies like Microsoft, Apple, Samsung, and others have one less reason to innovate themselves. People are to preoccupied with the whats not possible to invent the impossible. Sony is one of the few companies left that can invent the impossible. There was a time when the Discman seemed impossible.. In short, they need to be brave, be bold, and innovate or die.
