Sony Corp. (6758) reached a preliminary accord to stream cable television programming from Viacom Inc. (VIAB:US) over the Internet to TVs, game consoles and Blu-ray players, a person with knowledge of the matter said.
Under the deal, Tokyo-based Sony would use the Web to deliver shows such as “SpongeBob SquarePants” and “Teen Wolf” to homes with those products, bypassing traditional pay TV providers, said the person, who asked not to be named because the matter remains confidential. The service also would sell Viacom shows and movies on demand, the person said.
Adding live feeds from other studios to Sony’s own content may help drive demand for the company’s consumer electronics by creating online services to compete with providers including Netflix Inc. Sony Chief Executive Officer Kazuo Hirai is boosting investment in content production and TV networks as he pushes his “One Sony” vision to unite products, including mobile devices and TVs, with games, music and films.
“Sony wants to enable its hardware to access contents but they also want to keep the platform open to others in order to gather more users,” said Koki Shiraishi, an analyst at SMBC Nikko Securities Inc. in Tokyo. “The only thing that matters for the content holder is if they can monetize their shows.”
Mark Jafar, a spokesman for New York-based Viacom, the owner of networks including Nickelodeon, MTV and Comedy Central, declined to comment, as did Dan Race, a spokesman for Sony.
The parties still must execute a definitive agreement, according to the person. The terms will probably mirror those Viacom has signed with traditional pay-TV providers, the person said.
After posting a profit in smartphones and TV sets, Hirai has committed to rejuvenating a film unit that slumped to No. 6 at the U.S. box office this year after being No. 1 last year.
Sony fell 0.3 percent to 1,963 yen at the close of trading in Tokyo. The stock has more than doubled this year, compared with a 33 percent gain in the benchmark Topix index.
This year, Sony moved its U.S. PlayStation and network entertainment businesses into the same building in San Mateo, California, to collaborate on offerings that could include a monthly subscription-based entertainment service, according to people familiar with the plans.
Sony bought a 32 percent stake in Multi Screen Media Pvt Ltd. in India for $271 million in March, boosting its stake in the television network venture to 94 percent, according to data compiled by Bloomberg. The transaction was part of Sony’s efforts to boost its entertainment operation, Chief Financial Officer Masaru Kato said Aug. 1.
The company expects cooperation between its entertainment and consumer-electronics businesses to increase and help drive growth in the units that makes smartphones, TVs and other devices, Hirai said in a letter to Sony shareholder Third Point LLC on Aug. 6.
Like Intel Corp. (INTC:US), Microsoft Corp., Google Inc. and other technology companies, the maker of Bravia TVs and Xperia phones has struggled to obtain movies and shows for an Internet-based entertainment service. Major film and television producers fear such services will jeopardize the $100 billion-a-year in fees they share with cable, phone and satellite TV providers. The TV industry also collects $59 billion a year in ad sales.
Intel, based in Santa Clara, California, is developing a set-top box for sale in stores this year, Eric Free, a vice president and general manager, said in June. The product will be sold with a monthly subscription providing live and on-demand entertainment.
To contact the reporter on this story: Cliff Edwards in San Francisco at firstname.lastname@example.org
To contact the editors responsible for this story: Anthony Palazzo at email@example.com; Michael Tighe at firstname.lastname@example.org