Sony CEO Howard Stringer this past Thursday announced the company’s plans to make video download services available through all of its major products over the next three years, including Sony televisions, computers, video game consoles, and music players. (See coverage in the Wall Street Journal and the New York Times.)
Just one day after Knowledge@Wharton published an overview of how technology companies are trying to close the gap of the “last three yards” between the computer and your TV in order to bring Web-delivered content to your home entertainment system, we learn that Sony intends to use its extensive catalog of consumer products to make a direct link between online content and the digital living room.
The details of these services have yet to be announced, so it’s currently not clear what content offerings will be available or to what extent the planned service will be accessible through other, non-Sony, products.
Sony is not unique in trying to emulate the content-to-device value chain that Apple has achieved with its iTunes store, iTunes software for Mac and PC, and iPod and iPhone mobile devices. And the Apple TV product now seeks to extend the Apple hegemony into the digital living room.
Sony’s previous attempts to produce similarly integrated products have generally failed because of Sony’s go-it-alone strategy that relied on unique, proprietary technology. From the MiniDisc to the Universal Media Disc (the latter of which, supported only by the PlayStation Portable, is hardly “universal”); from the Memory Stick to their proprietary ATRAC and OpenMG audio formats (the latter of which is anything but “open”), Sony’s history is littered with hardware and software that can be used with nothing but Sony’s own products.
And Sony’s previous attempts to link its consumer devices to content services were not successful, such as the SonicStage software that connects devices such as MiniDisc players to Sony’s erstwhile Connect Music Store.
Sony’s recent success in establishing Blu-Ray as the standard media format for high-definition video is a noteworthy exception. That victory was won in large part because Sony eventually persuaded most of the major movie studios to support Blu-Ray over the competing HD-DVD format (see my earlier post, “Warner Backs Blu-Ray: The Beginning of the End of the High-Def Format Wars?“). Despite Stringer’s assertions that it will be a long time before people start migrating from Blu-Ray to digital downloads, Sony is surely aware that media-based distribution is a transitional technology. And the company wants a winning strategy for downloadable content as well.
On paper, Sony should be well positioned to take advantage of the convergence of PC technology and consumer entertainment. They’re a PC company with successful consumer products in televisions, gaming systems, cameras, and audio devices. Plus, they own a movie production and distribution company (Sony Pictures) and have a half interest in a music company (Sony BMG).
Sony’s position as a provider of entertainment content could be a disadvantage, however, since it means they compete with the companies with which they need to partner to establish a successful content distribution platform. According to a report in Variety, the video download service planned for the PlayStation 3 does not yet have the backing of any of the major studios. Variety reporter Ben Fritz writes:
But while Sony may feel confident video downloads will be ready to go this summer, it doesn’t exactly have a big library lined up. Sources at numerous major studios confirmed to me that while they have all talked to Sony, none have yet made a deal. The only one that’s definitely on board so far is, for obvious reasons, Sony Pictures.
In contrast, before Apple launched the iTunes music store, the company lined up distribution deals with all the major record labels. And, as I mentioned previously (see “The Amazing Steve Show“), in a major surprise at this year’s MacWorld, Apple CEO Steve Jobs also managed to line up all the major movie studios for the launch of the iTunes movie rental service.
So while Apple controls the complete channel from content to player platform, their ability to partner with all the leading content companies provides the consumer with freedom of choice in terms of the content they consume. Sure, it’s a propriety system, but who cares as long as you can get anything you want?
Equally important, Apple was smart enough to open up the proprietary chain just enough to help establish a successful platform. So iTunes is available for Windows as well as the Mac (although it really works best on the Mac of course). And the iPod and iPhone can play open MP3 files along with content controlled by Apple’s FairPlay proprietary DRM scheme. While Apple dealt itself most of the high cards, it was open enough to let others into the game. And that helped iTunes become a dominant platform for distributing digital content.
Sony needs to understand this delicate balance between offering a completely closed system and providing a tightly-coupled series of open (or at least quasi-open) platforms.
There are indications that Sony is beginning to understand this. In the notes published from the recent D6 “All Things Digital” conference, Stringer was asked whether Sony will ever produce “software that’s as impressive as its hardware.” According to the report:
Stringer says that’s a question he hears a lot. Contrary to popular opinion, he says, we have a lot of software engineers at Sony. Stringer notes that Sony’s problem has been that software has long been viewed in the company as an embedded product and that the company’s challenge is to extend it beyond that.
If by “embedded product” he means closed, proprietary, and only-works-with-Sony-hardware — and if intends to change that — there may be hope for the company’s future products. It would be a refreshing change if Sony were to view software in a larger context and realize that by establishing more open platforms they could ultimately hold a stronger position of industry leadership.