BY Kit Eaton
Mon Nov 14, 2011
Sony’s CEO, Howard Stringer, has said his company is going to reinvent the television. It’s a dangerous game–and one being played by tech’s top firms. Can Sony win?
Sony CEO Howard Stringer recently told the Wall Street Journal that his company is concentrating on a “different kind of TV set.” It’s part of an effort to build a cohesive four-screen strategy to compete with Apple, and it’s something Sony absolutely has to do if its future is to be as shiny as its past.
For his “I’ve finally cracked it” moment, Stringer said: “I spent the last five years building a platform so I can compete against Steve Jobs. It’s finished, and it’s launching now.” The way Sony makes and sells TVs has to change from the way it’s currently done, Stringer thinks, because “Every TV set we all make loses money.”
The TV Market’s Dire Straits
This fact is borne out by Sony’s last financial report, from a few weeks back where the electronics giant said it expected to post a group loss of 90 billion yen (equivalent to $1.15 billion) for the financial year ending in March, due to increasing losses in its TV division. That division is predicting a 175-billion-yen loss, and the sales target for TVs for the year is now just 20 million, down from the 27 million predicted in May. Panasonic too just reported grim quarterly results and predictions, partly marred by poor sales of HDTVs. Meanwhile Sharp posted a rise in quarterly profits at the end of October, but slashed its overall outlook because of steep declines in TV sales in its domestic market.
Hence it’s emerged from its CEO that Sony’s next-gen TV strategy is vital–perhaps the cornerstone of the whole four-screen strategy Stringer described to the WSJ–because of the sheer size, power, and expense of a TV set from a consumer standpoint, and because the TV business is vital for Sony’s future.
It’s Not Just About TVs–It’s About Tablets And Gaming
The four-screen strategy is key because while Sony’s gaming division is earning good money, enough to offset some of its TV losses (earlier in 2011 it reported that its gaming revenues were up 135%), it needs to keep a tight grip on this and its portable gaming market.
Last week, Flurry Analytics revealed its latest research on the money flowing through the mobile gaming market, and the data contained a breakthrough fact: This year, iOS and Android together hold sway over 56% of the income in portable gaming in the U.S., a dramatic rise from last year’s 34% and a 19% share in 2009. The upswing comes at the expense of Nintendo–its DS income share fell from 57% last year to 36% in 2011–and of Sony, whose PSP now commands just 6% down from 11% in 2009. So Sony has its PSP Vita coming soon, a dramatic attempt to bring what was once supercomputer power and novel touch-surface controls to mobile gaming, and an attempt to shore up Sony’s mobile gaming market share.
It’s plausible Sony is worried that its non-portable gaming business, centered on the PS3, may take a hit from the trend toward casual gaming on phones and tablets (because, after all, there are only so many hours a day that consumers can devote to games) and because of innovations like AirPlay on Apple TV, where some games can be played on the big screen with an iOS device as a controller–similar systems are on the way for Windows and Android devices.
Meanwhile the time consumers spend on tablets (doing things other than gaming) is rising as tablets sell to more people, and this is definitely changing how people relate to their TV sets. And the tablet market is beginning to influence the PC market too–another market Sony operates in, at the high end.
In short, smartphones and tablets are eating away at parts of Sony’s market, and are driving a paradigm shift in the way people relate to their TV set. Which means if Sony is to tackle turn its sliding financial performance around, a redesigned TV would have to be part of a tightly integrated plan to weave together TVs, phones, laptops, and tablets.
Just a few weeks ago Sony spent a huge amount of money to buy Ericsson out of its Sony-Ericsson cell phone partnership–giving it complete control over design, interface, interactivity, and content of any future phones it makes (which it’s already asserted will all be smartphones, meaning they’re capable of running apps for playing games and TV and movie content).
Just before that Sony released its S range of Android tablets, the first slate PCs from the Japanese maker, which have made a small splash in the market because among a horde of very similar-looking machines from many makers, Sony’s devices have a distinctive look and feel that departs from the meme Apple defined with the iPad.
Last week it revealed it was cleaving its TV business into three parts: LCD TVs, outsourcing and next-generation devices–effective from November 1st, and designed to give it more flexibility (perhaps to sell off parts, like the LCD business) and focus.
Sony’s Future TV
All of this means we can make a few well-informed guesses about how a reinvented Sony TV would work. Externally we may expect Sony to be as bold with its structure as it has been with its S tablets and the controversial shape of the PS3. After all, if you’re reinventing the TV then why not reinvent its shape as far as you can, given current design trends and the restrictions of engineering.
Sony’s PSN may run through the user experience in the same way it now powers cross-platform gaming on the PS3 and PSP, and soon PS Vita. Or perhaps Sony may consider a reinvention of the PSN thanks to the damage done to this platform’s reputation by this year’s painful hack attacks.
The user interface will likely take cues from the dynamic and intuitive menus on the PS3 and PSP–simple enough for a grandparent to use, but powerful enough to allow tricks like Twitter integration. Maybe we’ll even see Sony really biting the reinvention bit, and bringing some of its virtual world experience from PlayStation Home into the picture, though we suspect this may detract from a “reinvented” TV experience rather than augment it.
In an effort to make a Sony new TV the focus of a home’s entertainment center, we could even see the set acting as a wireless audio and video-streaming hub, so other TV watchers, tablet users, and smartphone owners in the family get seamless access through its systems–if only because such a useful functionality would definitely inject desirability into the TV market where interest is flagging. Sony has the technical chops for this, for sure.
But Sony’s TV maneuvers have to be weighed in comparison to two other big players: Google and Apple. Google’s TV business is, at the moment, a mess, despite the firms recent (and, it’s believed, future) efforts to brush it up. This week Logitech also damningly blamed Google TV for wrecking its revenues–calling it a “gigantic mistake.” And Steve Jobs’s enigmatic words about the future of television, combined with a few subtle leaks, have the world expecting a totally reinvented TV from Apple in 2012–something that Stringer himself has “no doubt” is in the works.
And so Sony is reinventing its TVs not necessarily because it wants to, but because it has to. In the process it needs to think about how Apple may bring innovations and its cohesive iTunes ecosystem to the TV market, how Google is going to try to influence the TV business with its cross-platform Android OS, and, possibly, how players like Amazon are entering this game via the tablet market.