Sony Gets a Corporate Reboot at E3 Gaming Show
The PlayStation 4 represents more than just the next generation of gaming for Sony. It could be the flag bearer for the next generation of the 67-year-old company itself.
Sony (SNE) CEO Kaz Hirai (who formerly ran the PlayStation division) has made it clear that he sees the console as one of the tentpole units that will lead the company back to prosperity. And early indications are that it plans to do that by changing the closed gate philosophy Sony has clung to for so long.
Historically, Sony has favored internally-developed solutions over those that were created by other companies—even when those other solutions had become the industry standard. (One need not look much further than the company's Memory Stick versus SD cards.)
With the PS4, though, Sony is not going it alone.
"While we're really proud of our corporate offerings, we don't have 100 percent market share of anything," said Jack Tretton, president and CEO of Sony Computer Entertainment of America. "You need to give consumers choice. And you need to be open to bringing your entertainment experiences to the devices that they enjoy purchasing. That choice and giving consumers what they want are the tenants we're living by at PlayStation. … Understand what the consumer wants, give them choice and bring them content that makes them happy."
One of the PS4's notable features is the "share" button on the system's controller, which allows players to quickly share gameplay footage. In the past, Sony would likely have handled this internally—but this time, it's partnering with Ustream to run the operations.
This increased openness and accessibility is more than a philosophical change, though. It's something that can boost the company's bottom line.
"Sony's openness is reflective of their conclusion that maximum third party support is going to be critical for the PS4," said John Taylor of Arcadia Research Corp. "Sony is as reliant on third party support as anyone is right now. The 'single vision takes you to the finish line' strategy worked with the Wii—and that's the last console it has worked with."
Looming over the system's resurgence in popularity is the proposal by hedge fund manager Daniel Loeb to spin off the entertainment business from the rest of Sony.
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Tretton didn't directly address that, noting that the company's leadership would determine any impact that proposal might have—but that Sony was constantly evaluating its business and figuring out how to make it more successful.
Right now, his focus is on making the PS4 a hit—not only in the early days, but for many years to come.
The longevity of consoles is something Sony is counting on, in fact. The system is built to be ready for expected technology standard advancements, even though the company isn't bragging extensively about those now.
High resolution 4K TVs are being heralded in the consumer electronics space as the next generation of high definition broadcasting. The PS4 is 4K capable for movies and still images (though not, at this time, for games), meaning that when those new sets become affordable, people who buy them already have a potential streaming box in their home. And while 3D TVs haven't really caught on, the system is also capable of 3D support.
The PlayStation 4, like its predecessor, also supports apps and Sony's music and video streaming services.
"Sony, historically, has been dominated by the silos within the organization," Taylor said. "Most divisions were allowed to operate on their own and be their own profit center without a excessive amount of cooperation between them. … Sony has seen the results of cooperation and teamwork between divisions. This gives it a chance to shows us what it can do again."
To emphasize that, Michael Lynton, CEO of Sony Entertainment and Sony Pictures, appeared at Sony's press event Monday to announce plans for his divisions to provide content that is tailored specifically for the gamer' audience on the console.
"Sony Pictures is hard at work on a brand new original programming plan and unique access to content that will be available exclusively on PlayStation Network and PlayStation 4," he said. "Importantly, all new and existing programming we provide to PlayStation Network will be tailored specifically to the type of entertainment gamers want and love. … Sony Pictures will do everything in our power to drive the success of PlayStation 4 by developing cutting edge programming."
Tretton said he expects other Sony divisions to follow suit.
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"I think people realize that the PlayStation 4 is very important for the company and people are looking to lend their resources because they believe it will benefit the entire company," he said. "What's good for us is good for them not only in terms of being good corporate citizen, but in helping them drive towards their financial goals."
Whether the PS4 turns things around for Sony won't be known for a few years. Console races, after all, are marathons, not sprints. But early indications are certainly positive. Before the E3 smackdown on the Xbox One, GameStop told Sony officials that 1.4 million people had signed up for alerts on the system's availability. And, if Twitter is any indication, that number jumped significantly after Monday night's announcements.
That sort of reaction is making Tretton very optimistic about the fate of both the PlayStation—and Sony.
"Things are headed in the right direction," he said. "We're doing a lot of things right, but it's a very competitive world. Corporate success waxes and wanes. We've seen that with the most successful companies [like Apple]. I'd like to think we're moving the huge aircraft carrier in the right direction."