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Posted by: Kenji Hall on November 20, 2009
Sony’s Kazuo Hirai has a lot of ideas about what he would do if it had an iTunes-like online store. The company wouldn’t just sell digital music, movies and books for Sony products, said Hirai, executive vice-president for networked products and services. It would also try to connect users with each other.
Hirai, who unveiled plans for the service—tentatively called Sony Online Service—on Nov. 19, said he hopes for a release next year. “Earlier in the year would be a lot more preferable,” he said, during an interview at Sony headquarters in Tokyo.
Since taking over in mid-2006, Sony’s CEO and Chairman Howard Stringer has repeatedly said he wants to create a link between the company’s electronic products and digital content such as music from Sony’s recording label and TV shows and movies from Sony Pictures Entertainment. What’s taken so long? “There was always a vision,” Hirai said. But before Stringer appointed a new management team and changed the organization chart in February, the company was riven by too many warring factions, he added.
The new online service online is expected to see a gradual rollout to different Sony products. The company plans to have consumers register for the service the moment they pull a TV or music player out of the box. That would lock them in, much like Apple does with its iTunes Store. If done right, the online store concept could also win a following for the brand.
Hirai said Sony would take the iTunes idea a step further: social networking features. So consumers could use their online accounts to save home videos or photos they shot for friends and family to see. “It’s not just access content, stream it, and enjoy,” he said. “What are your friends watching right now? There’s a screen that says all the programming that’s available. It highlights all the things that your friends are watching, for example. It’s a community experience.”
The hope is that all of the online content available would differentiate Sony’s products from competitors. “Take LG or Samsung,” he said. “They have some great devices. No services.”
The store has huge potential to become a fount of cash. Consider the PlayStation Network. The Web-based gateway for PlayStation 3 video game consoles has been Sony’s most successful push into online commerce so far. Launched three years ago, the PlayStation Network has 33 million registered users and sells thousands of downloadable games, TV shows, and movies. It has helped win converts inside the company, Hirai said.
Sony expects the PlayStation Network to bring in $500 million in revenues this fiscal year through March 2010—triple last year’s total. Add in the new online service and the hundreds of millions of networked products Sony expects to sell, and the company’s revenues from downloads and other paid-for services on the PlayStation Network and the new online service could top $3.3 billion by March 2013, Hirai said.
The new online service will be based on the PlayStation Network. Sony will encourage gamers to sign on to the new service by letting them do so through their PlayStation Network accounts.
In the future, Sony could connect its online service to other Web sites. That might let users easily flip between Sony's site and YouTube's video sharing site, photo site Flickr, or Facebook.
Still, there are plenty of things the company has to work out. For instance: Will users get to share their content with family? And how many gadgets will work with movies or music downloads that users have bought? "That debate is still going on," Hirai said.
And there are limitations to linking devices. You would download a movie to watch on your big-screen TV at home, a laptop, a portable gaming console or a cell phone. But you wouldn't do the same on a digital camera.
At some point later on, Sony might consider selling its products below the cost of manufacturing them, making up the difference with revenues from digital content and online services. "But the most important thing now is that we hit our revenue targets," he added.
BusinessWeek’s team of Asia reporters brings you the latest insights on business, politics, technology and culture from some of the world’s biggest and fastest-growing economies. Eye on Asia’s bloggers include Asia regional editor Bruce Einhorn, Tokyo reporter Ian Rowley, Korea bureau chief Moon Ihlwan, Asia News Editor and China Bureau Chief. Dexter Roberts, and Hong Kong-based Asia correspondent Frederik Balfour.