Actions and Words

A Welsh-born US citizen may have seemed an odd choice to lead one of Japan's premier corporate conglomerates, but it's tough to describe Howard Stringer's tenure to date at Sony as anything but a success. The firm's consumer electronics business is firmly back on track, exciting products like the futuristic ultra-thin OLED displays are the talk of the industry, and the flotation of the company's banking arm will be a useful shot in the arm for Sony's finances.

The PlayStation division, however, has experienced a major fall from grace in the past two years. Once the shining jewel in Sony's crown, the games business has lost face - and money - after a disappointing launch year for the PlayStation 3 and unexpectedly strong competition from Japanese rival Nintendo.

Certainly, the situation isn't remotely as bad as some commentators would like to suggest. The PlayStation Portable is enjoying a much needed renaissance after being in the shadow of Nintendo's DS since launch, the PlayStation 2 continues to be a remarkable powerhouse for the industry, and the trend in sales as we approach the end of 2007 suggests that 2008 will be a far, far better year for the PlayStation 3.

Sony's efforts to ensure that 2008 isn't a repeat of 2007's annus horribilis for PlayStation must be redoubled, however - because despite the recovery of its consumer electronics business, the company's future still largely pivots on the success of PS3 and, to a lesser extent, PSP.

Howard Stringer himself underlined this fact in a Financial Times interview earlier this week. He spoke about the importance of PlayStation Network as a content delivery platform of the future, serving up games, movies and music to an audience of connected consumers using PlayStation consoles and compatible platforms.

It's a fine vision, and Stringer is partially right to say that Sony has an advantage over its rivals, Microsoft and Apple, when it comes to creating such a service. Whereas Apple is a hardware and software firm, and Microsoft is a software firm, Sony is both a consumer hardware company and a media giant. Its music business is one of the biggest publishers of music in the world; its movie business is estimated to fund, directly or indirectly, as many as 50 per cent of all films created in Hollywood each year.

So yes, Sony's inherent advantage is significant. Which leaves just one burning, glaring question; why is Howard Stringer talking about the PlayStation Network leveraging this advantage at some point in an ill-defined future, when his rivals are doing it now?

Last week, even as Stringer was speaking about providing music and movies over PlayStation Network in the same terms you and I might use to describe flying cars, Microsoft was rolling out its TV and movie rental service to European countries in the wake of a successful launch in the USA earlier this year. Apple, with the world's most successful (arguably its only really successful) download music store under its belt, is rapidly extending into video products.

Meanwhile Sony, with all the power of the world's top music and movie businesses at its back, is trying to set the world alight by promising to, er, follow meekly in the footsteps of its rivals.

As good as Howard Stringer may have been thus far at Sony, both he and the entire company need a bucket of cold water in the face over their digital distribution plans. The battle in this sector is far from over, but it will end damned quickly if Sony doesn't even bother turning up.

What Sony needs now is not rehetoric - it's a product, a working, solid service that actually convinces people that the company is a genuine contender in this area. The Xbox 360 is still a less attractive consumer brand than PlayStation, and remains largely confined to a hardcore gamer market; the iTunes Music Store's roll-out of video is slow, and most consumers still aren't on board. It's all to play for - for now.

The "for now" is important. A couple of years ago, it was all to play for in the music download space as well - but no more. The race to create a strong, credible online music store ended some time ago - iTunes won, and it's eminently unlikely that any Johnny-come-lately music download service is going to change that fact. Sony's own previous effort at digital distribution of music, Connect, was flawed and unpopular.

With iPods continuing to lead the music player market by a huge margin, and iTunes' hated DRM being phased out at last thanks to the iTunes Plus initiative, this war is over - everyone who isn't Apple lost. The battle over digital video distribution is unlikely to end quite so quickly, but Sony would be foolish to assume that it can sit on its hands and trickle out a service when it's good and ready. The other players in this space won't give it that kind of leeway.

Part of the problem, I suspect, is that there's a tug of war within Sony itself over digital video distribution. After all, the company has much riding on the success of Blu-Ray, and doubtless hackles are being raised by Microsoft's increasingly overt attempts to sabotage both Blu-Ray and HD-DVD by propping up a format war for as long as possible - all in favour of keeping the discs' success muted until such time as the mass market is ready to embrace download media.

It's not hard to see how Sony, frustrated by the slow adoption of Blu-Ray, would be wary of pushing its own download solution too hard. The internal conflict, however, must be resolved - and fast. If pushing downloads kills off Blu-Ray's chances, then so be it - Sony should view this as an opportunity to hedge its bets, not as a maddening conflict of interest. I suspect Howard Stringer already believes that. Now it falls to him to make sure that belief expresses itself in a great product and service, rather than just more rhetoric.