Sony's (NYSE:SNE) CEO Howard Stringer has unveiled the company's three year plan and one key to its growth strategy is a new video service called the PlayStation Network. Stringer said at a news conference: "Our mission is simply to be the leading global provider of networked consumer electronics and entertainment."
The key word there is networked: Sony is the leading seller of TVs in the U.S., and has a huge library of content, but so far it hasn't been able to directly link the two. Now Sony is planning for 90 percent of its devices to connect to the Internet by 2011 -- and the Internet means access to content.
Starting this summer PlayStation3 owners will be able to access this new online content network, allowing you to download movies and TV shows. And the PS3 has got to keep up with Microsoft's (NASDAQ:MSFT) XBox 360, which has an "XBox Live" service that allows users to download games as well as video content, i.e. TV shows and movies. As of this fall, Sony Bravia TVs will also be able to access the PlayStation Network, making them the first TVs to stream movies without a set top box.
Sony won't make a huge amount of money from these downloads--especially at first--but it's a key service to distinguish its hardware. And after Sony was embarrassingly late to the whole digital music thing (you'd think the creator of the Walkman would be able to create the iPod), it doesn't want to miss this digital revolution. Eventually though, the digital-download-to-your-TV market is expected to be worth billions of dollars in the U.S. alone. The key to the business taking off is getting enough of the movie studios on board to create a fairly comprehensive library.
Sony is jumping into a competitive space: Apple (NASDAQ:AAPL) has the Apple TV gadget which accesses iTunes, which now sells movies in addition to TV shows. Microsoft sells movies and shows through its XBox 360 Live. Netflix (NASDAQ:NFLX) just this summer started selling a set top box to allow you to instantaneously rent (no need to walk to your mailbox) about 5,000 of its titles. Amazon (NASDAQ:AMZN) Unbox allows you to download select TV shows and movies, which you can now access through your TiVo (NASDAQ:TIVO). And even Blockbuster (BBI), the ultimate in brick and mortar movie rental, is getting into the digital download game.
None of these have really taken off--largely because each option only has a sliver of content. The movie studios are starting to open up to the idea of selling their content over the internet to your TV. The reality that the DVD market is in decline has gotten them over their fear of getting their biggest DVD customers, Wal-Mart, Target and Best Buy angry.
But the movie studios are sort of afraid of letting one of the distribution mechanisms become dominant-- they don't want one single system to be able to set the rules the way iTunes does with the music industry. That being said, more content needs to become available in an easily searchable, accessible system, in order for this business to take off.