Bits Blog: Sony’s Next PlayStation Will Be Late to Japan

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Sony’s Bread and Butter? It’s Not Electronics

Sony has made money making Hollywood movies and selling music. That profitable part of the business is what Daniel S. Loeb, an American investor and manager of the hedge fund Third Point, wants Sony to spin off to raise cash to resuscitate its electronics business.

But as Mr. Loeb pressures Sony executives to do more to revive the company’s ailing electronics arm, some analysts are asking, Why bother?

Sony, it is suggested, might be better off just selling insurance.

Or just making movies and music. But not electronics.

A new report from the investment banking firm Jefferies delivered a harsh assessment of Sony’s electronics business. “Electronics is its Achilles’ heel and, in our view, it is worth zero,” wrote Atul Goyal, consumer technology analyst for Jefferies, in the report, released this week.

“In our view, it needs to exit most electronics markets.”

The maker of the Walkman and the Trinitron without electronics? What would it do?

Although Sony sells hundreds of products as varied as batteries and head-mounted 3-D displays, it so happens that Sony’s most successful business is selling insurance. While it doesn’t run this business in the United States or Europe, Sony makes a lot of money writing life, auto and medical policies in Japan.

Its financial arm accounts for 63 percent of Sony’s total operating profit last year. Life insurance has been its biggest moneymaker over the last decade, earning the company 933 billion yen ($9.07 billion) in operating profit in the 10 years that ended in March.

Sony’s film and music divisions, which produced hits like the Spider-Man movies and “Zero Dark Thirty” and recorded musicians like the cellist Yo-Yo Ma and the electronic music duo Daft Punk, have contributed $7 billion to the company’s bottom line over the last decade.

In that time, Sony’s electronics division has lost a cumulative $8.5 billion.

Hardly Sony’s crown jewels, experts say.

“The problem is that the board is still absolutely focused on fixing electronics,” said Kouji Yamada, a visiting professor at Hitotsubashi University in Tokyo and research director of Mission Value Partners, a Sonoma, Calif., investment company.

Sony’s chief executive, Kazuo Hirai, said last Wednesday that its board would consider Third Point’s proposal, even as it emphasized that the discussions were preliminary and that it had not set a time for a response.

But to a small band of analysts, Mr. Loeb’s prescriptions for Sony are shortsighted, merely milking the company’s profit-making content business for good money to throw after the bad.

As proof of the untenable future facing Sony’s electronics, critics point to its televisions and smartphones. Competition is intense, and in cellphones Sony remains a bit player. Even where it is more successful, in digital cameras or game consoles, it is struggling to stay abreast of stronger companies.

Sheer lack of managerial attention could soon start to hurt Sony’s insurance and entertainment divisions, Mr. Yamada warned. Sony Financial Holdings, a publicly traded company of which Sony owns 60 percent, has been underperforming its peers on the Tokyo stock exchange. Its share price has risen just 4 percent this year, compared to a 36 percent increase in shares of its rival, Dai-ichi Life Insurance.

And in the entertainment business, where alliances and tie-ups are starting to dominate strategy, Sony’s film and music units could be slowed by having to deal with a board that sits in Tokyo and does not have its hand on the pulse of a fast-moving industry, Mr. Yamada said.

“Maneuvering three completely different industries, that’s too much,” Mr. Yamada said. “These should all be separate companies.”

Sony maintains that its varied units make up a coherent whole. But the history of how it acquired its hodgepodge of companies suggests otherwise.

Sony’s co-founder, Akio Morita, first got the idea of buying a finance company on a trip to the United States in the 1950s to promote the company’s new transistor radio, according to an official recounting of its corporate history. On that trip, Mr. Morita was stunned by the sight of Chicago’s skyscrapers, especially the Prudential Building that dominated the Chicago skyline.

This article has been revised to reflect the following correction:

Correction: May 28, 2013

An earlier version of this article mistakenly identified Norio Ohga. Mr. Ohga was the president of Sony at the time of the acquisitions of Columbia Pictures and CBS Records; he was not a co-founder of Sony.

Sony's Third Mystery PlayStation Ad: The Aftermath

This morning, Sony has released a third mysterious video on YouTube, this one called The Aftermath. You can view it below.

In this ad, which runs for 19 seconds, the same woman from the first two videos (and from the Michael ad as well) walks down a corridor with keys in hand. As soon as you see her, you can see Sly Cooper’s staff hanging from the jail door on the left. One of the keys on the keyring she’s holding has a skull on it, perhaps a reference to MediEvil and its protagonist, Sir Daniel Fortesque.

Eventually, you see the ground in a room ahead, littered with bullets and a lone ice cream cone. The cone is no doubt a reference to Sweet Tooth. The bullets -- if this is indeed a PlayStation All-Stars Battle Royale ad -- could be from Nathan Drake or, more likely, Colonel Radec from Killzone.

At the end, a man is sweeping up the bullets (this appears to be the barkeep from the Michael ad). He then picks up a large blade that appears to be the one Sweet Tooth uses. The same date that ended the last two videos -- 10.23.12 -- ends this one as well. That date , October 23rd, is this Tuesday.

With references to Sly Cooper, Sir Daniel Fortesque, Sweet Tooth and Colonel Radec, it seems clear now that these ads are aimed at PlayStation All-Stars Battle Royale, Sony’s biggest first party release of the fall for both PlayStation 3 and PlayStation Vita.

For reference, watch the video released this weekend, called The Arrival. In it, Ratchet & Clank, Jak & Daxter and Uncharted are referenced, with what appears to be Nathan Drake himself driving a jeep:

And feel free to watch the first of the three teaser videos -- The Reload -- which references Ape Escape and more:

And of course, let the speculation flow in the comments below, including what you've taken from these three videos. Perhaps most importantly though, what does the date signify? Does it have to do with PlayStation All-Stars Battle Royale's beta, or is it something else?

Colin Moriarty is an IGN PlayStation editor. You can follow him on Twitter and IGN and learn just how sad the life of a New York Islanders and New York Jets fan can be.