Sony’s plan:
CEO to unveil three-year plan that embraces gaming, entertainment
Kenichiro Yoshida, who took over as chief executive officer last month, will unveil a three-year plan today that embraces Sony Corp’s growing reliance on income from gaming subscriptions and entertainment.
TOKYO: Sony Corp is done working for peanuts in the hardware business.
Kenichiro Yoshida, who took over as chief executive officer in April, is set to unveil a three-year plan today that embraces Sony’s growing reliance on income from gaming subscriptions and entertainment.
The transition is already happening: even though the company sold fewer hardware products such as televisions, digital cameras, smartphones and PlayStation consoles in the year through March, it was able to post record operating profit.
It’s a tectonic shift for a company built on manufacturing prowess. Sony popularised transistor radios, gave the world portable music with the Walkman and its TVs were considered top-of-the-line for decades. With the rise of Chinese manufacturing, making and selling gadgets has become a business with razor-thin profit margins. Investors have applauded the transformation that’s been under way since Kazuo Hirai took over as CEO in 2012, with the shares climbing more than five-fold amid a turnaround.
“Yoshida is clearly sending a signal that recurring revenue from the content business, software, services, and subscription segments are important,” said David Dai, an analyst at Sanford C Bernstein & Co in Hong Kong.
“That’s what is going to drive growth and also sustain growth.”
The big question is whether Yoshida, who was chief financial officer before his promotion, can make a clear and compelling case for growth in online content, recurring subscription revenues and intellectual property licensing. The PlayStation 4 gaming console is nearing the end of its lifecycle and the company’s Hollywood division is notorious for swinging between blockbuster hits and big flops.
Other questions for investors include how aggressively Yoshida plans to spend Sony’s growing cash pile to acquire more content, whether a merger of movies and music under a single entertainment unit is in the cards, and if game streaming will be central to the PlayStation 5.
Another key area of concern is Sony’s semiconductor business, which supplies mobile-camera chips for iPhones and other mobile phones. Operating profit for that business is seen declining 39% in the current fiscal year, partly due to one-time charges but also amid sputtering global demand for smartphones.