Support NeoGAF

[Dr.Bergenstein]

Sony will be fine. They are making all the right moves they need to. Their TV business is fucked and making Sony look bad as a whole. They make a nice quality TV, but most people don't give a shit about quality in their TV, just size and price.

This is sadly true. I'm in the market for a new TV right now (40'' or above) and the newest Sony KDL model is $600, which is hard to justify when I can buy another brand like Vizio for $400 or less if I look hard enough. I haven't done any direct comparisons before, but are Sony sets really that much better than their competition? Like, is there such a noticeable difference in picture quality that that extra 150-200 dollars = money well spent?

I have really bad electronics OCD, so if I'm buying Playstation stuff, I want it on a Sony TV. Something to me just doesn't feel right about hooking a PS3/4 up to a Samsung or Vizio set, when the Sony ones are still out there. I have the same issue with smartphones/computers. Yeah, I won't buy an iPhone unless I'm going to get a Mac also to compliment it, but I guess that's more justifiable since everything is based around ecosystems these days.

I'm (functionally) crazy.

 

[Starfish Hero]

Around $10 billion. Nintendo has about half that. And just in case you were curious, (although it's not really a fair comparison) Microsoft has nearly $90 billion.

However, Nintendo has basically zero debt, while Sony can only feasibly cut down on its massive debt through downsizing, since they aren't profitable.

 

[RipRamsey]

This is sadly true. I'm in the market for a new TV right now (40'' or above) and the newest Sony KDL model is $600, which is hard to justify when I can buy another brand like Vizio for $400 or less if I look hard enough. I haven't done any direct comparisons before, but are Sony sets really that much better than their competition? Like, is there such a noticeable difference in picture quality that that extra 150-200 dollars = money well spent?

I have really bad electronics OCD, so if I'm buying Playstation stuff, I want it on a Sony TV. Something to me just doesn't feel right about hooking a PS3/4 up to a Samsung or Vizio set, when the Sony ones are still out there. I have the same issue with smartphones/computers. Yeah, I won't buy an iPhone unless I'm going to get a Mac also to compliment it, but I guess that's more justifiable since everything is based around ecosystems these days.

I'm (functionally) crazy.

The vizio is $429 msrp and Sony kdl40w600b is $499. Go take a look at them in store. There's a pretty dramatic increase in picture quality.

 

[Massa]

This is sadly true. I'm in the market for a new TV right now (40'' or above) and the newest Sony KDL model is $600, which is hard to justify when I can buy another brand like Vizio for $400 or less if I look hard enough. I haven't done any direct comparisons before, but are Sony sets really that much better than their competition? Like, is there such a noticeable difference in picture quality that that extra 150-200 dollars = money well spent?

I don't know how Sony TV's are priced in your country compared to others, but there are shit TV's and there are great TV's, and that's reflected in the price difference. I wouldn't consider getting what passes for low end TV's these days, the investment in a good set is more than worth it.

 

[El-Pistolero]

Yeah, no. You can't project your feelings ("the PS4 is selling a bunch!") onto a balance book. Their gaming division has lost a TON over the last decade, and is still posting losses. Even thinking that they might show a profit a year from now doesn't mean that it was a good choice to keep going.

And thinking that mainstream PS4 players are going to be sitting around with headsets on is ridiculous. That's a straight-up money sink, they should have made a deal with Oculus if anything and called it a day. That will probably help keep them out of "very healthy" status for a while on the gaming side.

Euh, no. PS3 costs are sunk costs, as such, not relevant to the PS4. The new console is sold at a minimal loss, with a high attach rate and a paid subscription. It does not take a genius to figure out that it is going to be profitable shortly...

 

[Surface of Me]

Gaming loss is cause of PS4 R&D right?

 

[Habib Marwan]

there is no spin, they are cashflow positive $1.6 billion and had operating profit of 257m.

Everything is in their financials:
http://www.sony.net/SonyInfo/IR/financial/fr/13q4_sony.pdf

Yeah, when Sony posts losses because of restructuring charges, most of those losses are on paper only and don't actually cost them present money. Granted, they absolutely did cost them money in the past, so they are not insignificant, but there is no current cash loss. It would be different if they were operating at a loss, and actually bringing in less cash than they spend, but Sony is actually operating OK.

Gaming loss is cause of PS4 R&D right?

Network costs too... they need more PS+ users, but they will come in time.

 

[Gorillaz]

Gaming loss is cause of PS4 R&D right?

RnD and everything else that is needed to make a new infrastructure for a new product

 

[jryi]

Isn't that $10 billion number their cash on hand?

If you want to know the liquidity of a company, you compare the current assets to current liabilities. These are $37.7M and $45.8M, so their current ratio is 0.82, which is not catastrophic, but it is not great either (1.5 - 2 is good).

Not sure, what I can say about their solvency. Their long term debt isn't bad, but other liabilities are huge, which must have something to do with the insurance business. But still, depending on their credit rating it could be that their gearing is decent enough.

 

[ItIsOkBro]

Sony needs to stop thinking they have to do everything. I mean, was anyone surprised when their ereader store shut down? ereaders.

 

[HyperionX]

there is no spin, they are cashflow positive $1.6 billion and had operating profit of 257m.



Everything is in their financials:
http://www.sony.net/SonyInfo/IR/financial/fr/13q4_sony.pdf

Isn't their cash flow based on selling off assets? Operating profits exclude a lot of things, like R&D or taxes. Plus a lot of that is from their finance wing.

 

[DarkFlow]

And lose literally the biggest movie IP among all of the other superhero IPs today? LOL No. Sony isn't giving up Spidey for anything.

Yeah, after ASM2's lackluster take at the box office these last 3 weeks. It's safe to say it's no longer the biggest. Winter solider is beating it, and that's not even marvels 2nd biggest IP. Sony would be wise to sell it while it's hot for a few billion rather then let Disney pick the corpse after its too late.

 

[Marvel]

Sony would be wise to sell it while it's hot for a few billion rather then let Disney pick the corpse after its too late.

Horrifying thought.

 

[Sandfox]

Yeah, after ASM2's lackluster take at the box office these last 3 weeks. It's safe to say it's no longer the biggest. Winter solider is beating it, and that's not even marvels 2nd biggest IP. Sony would be wise to sell it while it's hot for a few billion rather then let Disney pick the corpse after its too late.

I'm predicting Sony to continue rebooting it until they devalue it to the point where they screw themselves over and they just lose the license without Disney having to buy it back. I'm expecting Garfield to walk after his contract ends with the third movie and everything to go downhill from there.

 

[cheezcake]

This is sadly true. I'm in the market for a new TV right now (40'' or above) and the newest Sony KDL model is $600, which is hard to justify when I can buy another brand like Vizio for $400 or less if I look hard enough. I haven't done any direct comparisons before, but are Sony sets really that much better than their competition? Like, is there such a noticeable difference in picture quality that that extra 150-200 dollars = money well spent?

YES

Currently have a part time job in a big retail electronics store, the image quality is night and day. I find Sony TVs generally have the best out of box calibration, and overall the best IQ in the high end TVs.

But the truth of the matter is IQ doesn't sell TVs. That's why despite Samsung having great TVs they tell us to play their already oversatured demos on the "vibrant" preset, looks like shit to people more familiar with display tech but it grabs customers attention.

 

[GAF]

Sony needs to focus on very few products and execute on the highest level of R&D and marketing. They need to be more like Apple if they want to enjoy big margins and sales.

Their phones are great but they need to put more marketing dollars behind them. Playstation is on a good course and it's probably the only super healthy business they have left.

They also need to understand the importance of strong software for their CE products. Look at something like LG smart TVs with WebOS. That thing looks amazing and way better than thee stuff coming out of Sony, Samsung, etc. these TVSs are already pretty great from a hardware standpoint, UX/UI is how you stand out.

"Super healthy business"? Are you sure we are watching the same numbers?

As far as I know, game business is currently pretty bad for everyone: MS, Nintendo and Sony.

P.s Super healthy business for Sony would be financial business.

 

[heidern]

Game
Sales increased 38.5% year-on-year (a 16% increase on a constant currency basis) to 979.2 billion yen (9,507 million U.S. dollars). This significant increase was primarily due to the launch of the PS4 as well as the favorable impact of foreign exchange rates. PlayStation ®3 (“PS3”) hardware unit sales decreased, although PS3 software sales increased.

Operating loss of 8.1 billion yen (78 million U.S. dollars) was recorded, compared to operating income of 1.7 billion yen in the previous fiscal year. This year-on-year deterioration was primarily due to an increase in costs related to the launch of the PS4 as well as the recording of a 6.2 billion yen (60 million U.S. dollars) write-off of certain PC game software titles sold by Sony Online Entertainment LLC, partially offset by the above-mentioned increase in sales.

Most of the loss was from PC games. They didn't mention Vita and PS3 probably contributed some profit. This coming fiscal year will be modest for the games division as most gains from PS4 will be offset by further declines in PS3 and maybe Vita being a drag as well. 2015-2016 or maybe 2016-2017 is when they would be able to start posting really good results from the game division.

 

[AdventureRacing]

The PS4 is a more important product for Sony than just gaming, it gets boxes under TVs that people interact with. The reason that Samsung and LG are going so hard into smart TV is because they have no product like the PS4 which is connected to the internet to serve consumers directly, TVs are now a conduit for other people's services rather than the profit centres they used to be, so monetising them through smart services is necessary. Smart TV has never really taken off though, those who are inclined to use advanced functionality of their TVs usually have cable or some other premium service and they are also likely to have a PS4 or XB1 as well.

Therein lies the importance of the PS4, it feeds into their media divisions and even smartphones with companion apps and off screen functionality. Once their IPTV service launches, that will increase profits not only within the game division, but also for SPE. If they do it right and bundle 6 months of IPTV with certain smartphones, it will also help their smartphones and tablets division and help differentiate their products from the myriad of competition.

The PS4 is not just about games, and also remember that the PS4 is sold at a loss, this will improve over time and once the hardware becomes profitable the division level operating profit will look a lot healthier.

Sorry for the late reply, been really busy. What you're saying makes sense and i see the logic in that. I feel like that has been talked about for a long time but still hasn't come to fruition. It's the same reason MS is in the console business but when will it actually start paying big dividends?

 

[Captain Tuttle]

And lose literally the biggest movie IP among all of the other superhero IPs today? LOL No. Sony isn't giving up Spidey for anything.

Well apparently they don't the rights to the merchandising which is where the easy money is. I'm not sure what kind of ROI they get on the movies.

 

[FranXico]

And lose literally the biggest movie IP among all of the other superhero IPs today? LOL No. Sony isn't giving up Spidey for anything.

Literally not.

We're not in 2005 any more.

 

[zomgbbqftw]

Yeah, after ASM2's lackluster take at the box office these last 3 weeks. It's safe to say it's no longer the biggest. Winter solider is beating it, and that's not even marvels 2nd biggest IP. Sony would be wise to sell it while it's hot for a few billion rather then let Disney pick the corpse after its too late.

What would be more sensible is getting rid of those two idiot hacks called Orci and Kurtzmann. Getting rid of Avi Avrad would also be a good idea. Getting rid of Amy Pascal would be great as well. SPE needs a massive clear out to save the studio, the cost cutting has just started to deliver, but Michael Lynton needs to go much further. Another area in which they could make huge savings is to shit can Image Works' special effects division and outsource SFX to Weta. IW have done an expensive and terrible job for all of the SM and ASM films, SPE management need to swing the axe and reduce them to an animated movie production house, which they do very well.

Sorry for the late reply, been really busy. What you're saying makes sense and i see the logic in that. I feel like that has been talked about for a long time but still hasn't come to fruition. It's the same reason MS is in the console business but when will it actually start paying big dividends?

Well their IPTV platform is still under construction, I expect it will roll out with on similar schedule to PS Now as the underlying technology is basically the same, but with content servers instead of PS3 racks. What Sony really needs is its own premium content channel, but that means a lot of investment, time and good management. They need to hire the best people out of HBO and get building.

I read that Loeb wants to try again, but if anything Sony needs to rid itself of legacy businesses and transform itself into a proper media company and transition PlayStation from an electronics division into a media division. The fact is that the PS4 is likely to be the last Sony home console, PS Now is their future, and that means SCE becomes a content division like SPE and SME. Pooling resources and IP is the key to making Columbia Pictures/SPE successful again. The biggest problem for SPE is that they have very poor ROI, a couple of years back people raved that they had the biggest box office takings in the US of all the major studios, but for FY12 SPE made just $500m globally. A pittance compared to Disney, WB and Fox.

Dan Loeb has the right diagnosis of SPE, but he has the wrong solution. Sony needs to realign the studio to make it more efficient and to push for higher quality. ASM2 is a classic example. While I enjoyed it, I also admit it is a poorly written film with flimsy plot points and unnecessary scenes. The first one had a better written plot that hung together more easily but the villain was poor and it redid the origin story. Instead of keeping Steve Kloves who did a decent job they hired "AAA" writers Orci and Kurtzmann who are known for horribly low brow scripts, proper "popcorn movies". While globally ASM2 will outperform Cap 2 because Spider-Man is a much more popular super hero, in the US ASM2 won't reach anywhere near what Cap will do because the story is too contrived and it treats viewers like idiots. The only saving grace is the chemistry between the leads. The other issue I have with Sony's mishandling of SM is that they spend around $350m per film on production and advertising which means they need to do around $750m BO to break even. ASM just about made the grade and they probably made some level of profit after home video revenues, ASM2 will do slightly better because of strong RoW revenues and the expansion of western cinema in Asia, but it will also barely beat the break even point. The goal of SM movies shouldn't be to barely break even. They should be looking for at least 10-15% RoI from BO receipts for SM movies (if not closer to 25%) otherwise it is not worth risking $350-375m every single time unless they take in between $850m and $1bn BO globally. SM movies should be the centrepiece of the profit plan to allow the studio to try their hand at riskier projects elsewhere. But they don't, SPE management seem to content breaking even on them.

Anyway, I think SM is a microcosm of what is going wrong at SPE in terms of movie making, they seem to be too happy with hitting the break even mark and too happy with making poorly reviewed movies. They need a big rethink for the third one before they begin production. In Andrew Garfield they have a truly talented actor and great SM, I just hope they don't waste their final movie with him. The story is still recoverable and they have all the right elements in place for a solid third entry if they can get good script writers involved who want to make a decent movie rather than a piece of crap with a few big set pieces to "wow" the audience. Out of the dead hand's of Sony management SPE could actually be very successful, but this desire to create "popular" movies rather than good ones means they will never have real success. Their TV management is excellent though, they really seem interested in funding and creating great TV shows rather than aiming for mindless popular crap. Audiences have responded, 5 seasons of BB, 5 seasons of Community, The Blacklist got renewed, plus a whole bunch of other shows and they have a decent pipeline AIUI. If only the Pictures side would learn from that and realise quality and success go hand-in-hand.

 

[Captain Tuttle]

Great post zomg, informative as always

 

[zomgbbqftw]

I would like to add that the $500m global operating profit was boosted by strong performance in their TV division and asset disposals, it is actually highly likely that in the year that SPE topped the BO charts in the US they made an operating loss overall. That situation has repeated itself this year, though there have been some restructuring costs and a couple of outright bombs to deal with like After Earth and White House Down. Excluding the bombs it's possible that SPE had some kind of operating profit.

The reason Dan Loeb is even bothering with his line of attack at Sony is because of this situation, how can the studio that owns Spider-Man and has the ongoing distribution and most of the production rights to James Bond not be making money overall. It is horribly mismanaged, and if Sony were forced to sell 49% of it to the market for $7-8bn it would force them to open up their books so investors could see exactly where the money is being wasted and exactly where savings can be made.

What's worse for SPE is that until around 2012 they had it easy, movies were internally financed because Sony had so much cash on hand, now with costs elsewhere weighing down their balance sheet and operating losses in their core electronics divisions sucking up resources, SPE has had to go for external finance. That raises their operating cost to a level that may be unsustainable with their current model of being happy breaking even on large projects.

No worries, Captain. Always enjoy dissecting Sony's horrible financial performance and piss poor management!

 

[Sandfox]

What would be more sensible is getting rid of those two idiot hacks called Orci and Kurtzmann. Getting rid of Avi Avrad would also be a good idea. Getting rid of Amy Pascal would be great as well. SPE needs a massive clear out to save the studio, the cost cutting has just started to deliver, but Michael Lynton needs to go much further. Another area in which they could make huge savings is to shit can Image Works' special effects division and outsource SFX to Weta. IW have done an expensive and terrible job for all of the SM and ASM films, SPE management need to swing the axe and reduce them to an animated movie production house, which they do very well.



Well their IPTV platform is still under construction, I expect it will roll out with on similar schedule to PS Now as the underlying technology is basically the same, but with content servers instead of PS3 racks. What Sony really needs is its own premium content channel, but that means a lot of investment, time and good management. They need to hire the best people out of HBO and get building.

I read that Loeb wants to try again, but if anything Sony needs to rid itself of legacy businesses and transform itself into a proper media company and transition PlayStation from an electronics division into a media division. The fact is that the PS4 is likely to be the last Sony home console, PS Now is their future, and that means SCE becomes a content division like SPE and SME. Pooling resources and IP is the key to making Columbia Pictures/SPE successful again. The biggest problem for SPE is that they have very poor ROI, a couple of years back people raved that they had the biggest box office takings in the US of all the major studios, but for FY12 SPE made just $500m globally. A pittance compared to Disney, WB and Fox.

Dan Loeb has the right diagnosis of SPE, but he has the wrong solution. Sony needs to realign the studio to make it more efficient and to push for higher quality. ASM2 is a classic example. While I enjoyed it, I also admit it is a poorly written film with flimsy plot points and unnecessary scenes. The first one had a better written plot that hung together more easily but the villain was poor and it redid the origin story. Instead of keeping Steve Kloves who did a decent job they hired "AAA" writers Orci and Kurtzmann who are known for horribly low brow scripts, proper "popcorn movies". While globally ASM2 will outperform Cap 2 because Spider-Man is a much more popular super hero, in the US ASM2 won't reach anywhere near what Cap will do because the story is too contrived and it treats viewers like idiots. The only saving grace is the chemistry between the leads. The other issue I have with Sony's mishandling of SM is that they spend around $350m per film on production and advertising which means they need to do around $750m BO to break even. ASM just about made the grade and they probably made some level of profit after home video revenues, ASM2 will do slightly better because of strong RoW revenues and the expansion of western cinema in Asia, but it will also barely beat the break even point. The goal of SM movies shouldn't be to barely break even. They should be looking for at least 10-15% RoI from BO receipts for SM movies (if not closer to 25%) otherwise it is not worth risking $350-375m every single time unless they take in between $850m and $1bn BO globally. SM movies should be the centrepiece of the profit plan to allow the studio to try their hand at riskier projects elsewhere. But they don't, SPE management seem to content breaking even on them.

Anyway, I think SM is a microcosm of what is going wrong at SPE in terms of movie making, they seem to be too happy with hitting the break even mark and too happy with making poorly reviewed movies. They need a big rethink for the third one before they begin production. In Andrew Garfield they have a truly talented actor and great SM, I just hope they don't waste their final movie with him. The story is still recoverable and they have all the right elements in place for a solid third entry if they can get good script writers involved who want to make a decent movie rather than a piece of crap with a few big set pieces to "wow" the audience. Out of the dead hand's of Sony management SPE could actually be very successful, but this desire to create "popular" movies rather than good ones means they will never have real success. Their TV management is excellent though, they really seem interested in funding and creating great TV shows rather than aiming for mindless popular crap. Audiences have responded, 5 seasons of BB, 5 seasons of Community, The Blacklist got renewed, plus a whole bunch of other shows and they have a decent pipeline AIUI. If only the Pictures side would learn from that and realise quality and success go hand-in-hand.

IIRC the director for ASM pretty much said that there will probably be a 4th movie even if Spider-Man isn't in it and that would probably just magnify some of the things you mentioned.

 

[Elios83]

Kaz Hirai today hosted a corporate strategy meeting.
Here's the report:

http://www.sony.net/SonyInfo/IR/info/strategy2014/pdf/pressE.pdf

A few interesting things mentioned:

1. Completion of Electronics Business Structural Reform

As announced on February 6, 2014, Sony is proceeding with the withdrawal from its PC
Business, the split out of its TV business and the structural reform of its sales companies and
headquarters functions. The Company expects to complete these initiatives within FY14.

Sony will withdraw from the PC business following the completion of sales of its Spring
product lineup currently on sale in global markets. Sony has signed definitive agreements to
transfer its PC business operated in Japan under the VAIO brand and certain related assets
to VAIO Corporation, a newly established special purpose company to be funded by a
subsidiary of Japan Industrial Partners, Inc. The target for completion is July 1, 2014. Going
forward, Sony will provide customer support for PC products that have already been sold, and
support the smooth launch of VAIO Corporation.

Sony is targeting July 1, 2014 to start operation of a new TV business company, “Sony Visual
Products Inc.” Sony will also execute fixed cost reduction measures across the sales
companies, headquarters and indirect functions that support the TV business in order to help
establish a business structure capable of minimizing the impact of external market
fluctuations. Sony expects to return the TV business to profitability in FY14 by executing the
above measures, accelerating the implementation of its strategic shift towards high
value-added models, including 4K, and establishing more flexible operations capable of
responding rapidly to fluctuations in demand or the business environment. Masashi Imamura,
currently SVP, Corporate Executive and President of Home Entertainment & Sound Business
Group, Sony Corporation, will be appointed Representative Director and President of Sony
Visual Products Inc.

Game and Network Services
In the game and network services business, Sony aims to expand the installed base of
PlayStation 4 (“PS4TM&#8221 and reinforce its network services in order to drive increased profit
growth. As of April 6, 2014, PS4 had achieved cumulative sell-through of 7 million units, with
Sony aiming to further consolidate its No.1 position in the home console market in FY14.
Approximately half of PS4 users have registered for the PlayStation®Plus subscription
service, and the number of active users registered to PlayStation Network and Sony
Entertainment Network already exceeds 52 million. In the U.S., Sony plans to start an open
beta version of the PlayStationTMNow game streaming service this summer and introduce a
new, cloud-based television service within the calendar year 2014. Sales from the network
business, including game, music and video services, for FY13 exceeded 200 billion yen and
Sony is expecting continued sales growth in this business going forward.

So basically, the Vaio brand and PCs will probably live on, VAIO Corporation will be formed and controlled by Japan Industrial Partners.
Also about TVs Sony will create a spin off company called Sony Visual Products, they expect it to post an operative profit this fiscal year.

About gaming they plan to be aggressive in keeping and consolidating number one position with PS4, Playstation Now will be launched on consoles this summer in the US as a open beta, a la Home. The service will be available for TVs by the end of this calendar year.

 

[Dinjooh]

Approximately half of PS4 users have registered for the PlayStation®Plus subscription service

Did not know this - interesting.

 

[DieH@rd]

Did not know this - interesting.

Well, who knows if all of them purchased subscription. After all, free trial vauchers were present in each console.

 

[shinra-bansho]

...and then 4K TVs undergo commoditization and again Sony finds itself trying and failing to compete for the position of price leader.

200B yen revenue from digital content sales, wonder if there are any older figures to compare to.

 

[AuthenticM]

FY12 = Last year

FY13 = This year

FY14 FCT = Projections for next year

Why are they making so little money from so many sales ?

 

[Captain Tuttle]

Why are they making so little money from so many sales ?

Too much fat

 

[davepoobond]

PlayStation now on TVs is interesting.