Is Sony Set To Exit TV Market?, Is A Partnership Looming?, Sony Executives Talk
Globally Sony has seen their share of the TV market slump during the pats 10 years from highes of 50% to just 8%, Samsung has 27% and LG Electronics 15% according to research firm Display Search.
For the past 10 years Sony has bled TV profits racking up an a$8Billion in losses.
When Sony first started making losses and the Company moved to close factories and sack people in the tens of thousands, Sony executives in Australia demanded that the stories appearing on SmartHouse and ChannelNews be pull down as they were seen as being “negative” and “upsetting for staff, we refused.
Both the senior executives, Jenny Geddes then Corporate Communications Director and CEO Carl Rose who banned 4Square Media, have long gone.
Now just as the TV market has peaked Sony is looking to make a profit for the first time since entering the flat panel TV market.
Sony who is set to show several new products at CES 2015 predicts sales in its home entertainment and sound segment, which includes TVs as well as hi-fi systems, DVD players and other audio-visual devices, will shrink this year but will be profitable.
It was only 12 months ago that the Company was looking to pull out of the TV market or minimise their losses. Instead they chose to form a new separate TV Division operated by a new Sony Company.
Masashi Imamura, who oversees the TV division, says there is still value in it for Japan’s most famous consumer-electronics company, even at a time when traditional television viewing is losing out to other kinds of digital content, and Chinese brands such as Hisense.
“Without a TV, Sony can’t deliver the emotional experiences to customers that we’re committed to doing,” the Sony veteran told the Wall Street Journal recently.
The new Sony TV operation that is emerging from a decade of poor management will post a slim operating profit for this year, with the margin rising to between 2% and 4% by fiscal 2018, Sony forecasts.
Some analysts say that short of a 5% margin, it makes little sense for Sony to keep making TVs, and the company should focus instead on its more promising operations, including PlayStation videogames, smartphone camera sensors, movies and television programming.
“If the segment can’t lay out a realistic blueprint for growth, it should be a candidate for spinoff,” said Eiichi Katayama, head of Japan research at Bank of America Merrill Lynch.
Sony Chief Executive Kazuo Hirai has said the company would consider entering a TV-making partnership. And Mr. Imamura didn’t rule out a sale if the business falters again. He said “many plans,” including a further paring-back of the division, are being considered “at various levels” if consistent profits remain out of reach. “Keeping the TV business is important, but sustaining Sony’s business management as a whole is more essential.”
Now is looking to partner with a major TV brand in an effort to cut production costs, Sony Chief Executive Kazuo Hirai has also said that he would not rule out a sale of their TV business if it falters again.
He said “many plans,” including a further paring-back of the division, are being considered “at various levels” if consistent profits remain out of reach. “Keeping the TV business is important, but sustaining Sony’s business management as a whole is more essential.”
The Company could end up doing what Philips did two years ago when they created a joint venture with Hong Kong based TP Vision, since then Philips has seen a resurgence in demand for their TV’s.
The Wall Street Journal said that even if Sony’s TV unit returns to the black, Sony faces difficult choices as it tries to navigate what is an increasingly tough, low-margin business.
During the long slump, Sony concentrated on price and design by introducing entry models or thin-bezel lineups in order to stay competitive in TVs, but the latest sets build on its traditional strengths in picture and sound quality, Mr. Imamura said.
Mr. Imamura said that instead of chasing market share, Sony will focus on high-end TVs, including 4K TV Model, which offer four times the resolution of conventional high-definition TVs. Sales of 4K sets have driven the company’s TV revenue growth since 2012. The goal, he said, was to ensure profitability even if sales fall by 20% to 30%-the same objective Sony has set out for its struggling smartphone unit.
“Our commitment is we will be profitable, no matter what happens to the industry,” said Mr. Imamura, who has been leading the TV turnaround effort since 2011. The 57-year-old Sony executive previously made the company’s digital-camera business a success.
DisplaySearch projects that 4K TVs overall will account for 19% of industry revenue world-wide this year, despite representing only 8% of sets sold, with the portions rising to 45% and 27%, respectively, by 2017. In the third quarter, Sony captured 19% of 4K revenue in the USA where the company otherwise struggles. Its share paled compared with Samsung’s 52%, according to DisplaySearch.
In the era of so-called smart, Internet-connected TVs, Mr. Imamura said he wants to improve software interfaces to make it easier to access cloud-based content so that users have to push fewer buttons on their remote controls.
Mr. Imamura said his team was working closely with engineers in the PlayStation division and in Sony’s Xperia smartphone unit, in order to streamline connections with the Internet-based devices. As boundaries between digital media continue to blur, Sony recently disclosed plans for a service called PlayStation Vue, which will provide TV content to viewers via its game consoles.