Vita TV points the way to Sony's future

It's a clear sign of the times that right now, the most valuable thing Sony owns in the consumer electronics sphere isn't a piece of hardware at all. That in itself isn't entirely new - for many years, Sony's most valuable properties have been words, not items, with the Sony and PlayStation brands being worth far more than any individual product which carried them. Now, though, Sony has reached the point where the most valuable thing it owns, and the company's best if not only chance of navigating the extremely tough circumstances in which it finds itself, is networked software - the Sony Entertainment Network, to be precise.

Sony Entertainment Network is the slightly cumbersome name given to the wider network of which the rather more familiar (and less stuffily named) PlayStation Network is a part. It's Sony's answer to the Apple infrastructure behind iTunes Music Store and the App Store, or Google's Play. Its roots in the PlayStation are clear - it's by far at its most developed and refined as a service on PlayStation device, but it's gradually rolling out across other Sony devices, even if the implementation on some of those devices is shockingly poor and clunky.

"A fantastic online shop and network service has become the vital, beating heart of any consumer hardware business"

Sony Entertainment Network is far from perfect. If you use something like an Xperia phone or tablet (devices which are rapidly becoming best-of-breed for Android platforms after years of lagging embarrassingly far behind Samsung), you'll find bits of SEN littered around the phone, poorly integrated with the operating system, fighting for mindshare with Google's own Play and even - in the case of PlayStation Mobile, a mobile game platform built on SEN - not actually installed by default, a bewildering and inexplicable piece of foolishness. Use a PlayStation 3 or a PS Vita, though, and you'll have seen SEN evolve into a slick, attractive, functional and cleverly designed service that sells, rents, stores and promotes content extremely effectively.

The temptation is to say "right, yes, but it's just an online shop" - which is absolutely true, and yet completely misses the point. A fantastic online shop and network service has become the vital, beating heart of any consumer hardware business. Customers build up libraries of content - games, movies, TV shows, music, books, applications - from online stores, and this hugely influences their decisions in future hardware purchases. An iPhone user is vastly more likely to buy an iPad than a Nexus 10 tablet, because lots of the stuff in their library will work seamlessly with it. Conversely, a Samsung Galaxy Tab user isn't likely to end up carrying an iPhone 5 because their Google Play content won't run on it.

Sony's most powerful tool in this entire situation is the PlayStation, because the PlayStation has a mature network platform and store as well as an absolutely enviable library of software and a strong reputation among gamers - who are core consumers of all sorts of consumer technology, not just games. Sony needs an iron in this fire, because otherwise, it risks being just another box-shifter - a company who ekes a profit out of selling hardware that runs someone else's OS and someone else's highly profitable content store. For a company which owns the world's biggest movie studios and directly publishes some of the biggest and most critically acclaimed games, that would be a daft and humiliating defeat to accept.

"It can access everything you've bought on your Sony Entertainment Network account for Vita, including your PSP software, PSone and PS2 games and other non-game media"

The relevance of this discussion is that this is exactly the strategy which we saw being pursued at Sony's autumn update this week. The slimmed down Vita redesign is a sidenote in many respects (it looks nice, but many people will hold fire until there's a final verdict on whether the new LCD display matches the quality of the old model's OLED - don't rush a negative judgment, as modern IPS LCD panels are a comfortable match for OLED). The real story was Vita TV, a cunning piece of obvious-in-hindsight maneuvering which leverages the network effect of Sony Entertainment Network superbly.

Vita TV is a $100 box which runs PlayStation Vita games - including a huge range of great indie titles whose number is exploding in slow motion as Sony continues to loosen its grip on publishing, giving more and more creators access to its platform. It can access everything you've bought on your Sony Entertainment Network account for Vita, including your PSP software, PSone and PS2 games and other non-game media. It can cross-play with PS3 titles that support it, and some PS3 games also give you a second copy for the Vita for free. When PS4 arrives, you'll be able to use Vita TV as a second screen for the console - pop a Vita TV in a bedroom and you'll be able to play PS4 games on it remotely when the main screen is in use. Moreover, if you have a PS Plus account for your PS3 (or PS4), you'll also be getting a steady feed of Vita games to play for free on your new box.

Notice how many other Sony hardware items were mentioned above - and that's without mentioning that some content (limited for now, but bound to grow in future) will also work on the suddenly-very-desirable Xperia tablets and phones, too. This is a network effect in full swing. Vita TV does take much of the wind out of the sails of devices like Ouya and Gamestick, as plenty of commentators have noted, but that's almost by accident - it knocks them out of the way in the midst of a full-bodied lunge at the Apple TV, a minor Apple product which has been sitting on the periphery of the TV market scaring the living crap out of every incumbent for the past three years. Apple will almost certainly upgrade the Apple TV to be a more serious TV device in time; Sony fully intends to be right there ready for them, with devices that do much of what you'd expect from an Apple TV rather well - a $400 PS4 for the high-end, a $100 Vita TV for the low-end and interesting benefits for any household that ends up with both.

"One has to hope that this is only the beginning. It's a fascinating seed of a strategy but not actually a strategy just yet"

One has to hope that this is only the beginning. It's a fascinating seed of a strategy but not actually a strategy just yet. For this to really work, SEN needs to extend its tendrils fully across the Sony range - a fixed and fully integrated implementation on the mobile and tablet devices is an important first step, but it will also be important to see Vita TV technology worming its way into the Bravia TV line-up, not as a premium feature but (at least eventually) as an absolutely standard element of every TV Sony makes, should they choose to remain in that perilous business at all. Buy a Sony TV and get the instant ability to access all your SEN content, to use it to play your PS Plus freebies or to connect it to a

PS4 somewhere in the house and use it as a secondary screen? Tempting - perhaps even tempting enough to give Sony the differential from Samsung it so desperately needs. Of course, focusing on SEN is not a fail-safe strategy. There are many pitfalls - the company needs customers to trust and like SEN and the Sony brand overall, it needs to ensure its content library is a match for anything available elsewhere and it needs to make sure people are aware of the possibilities opened up by staying within the Sony brand for their future devices.

But not pursuing the potential of its network store to its fullest is a certain recipe for disaster for Sony. The company finds itself in a position that is like a dark mirror of Apple - whose founder was famously a huge fan of Sony itself. It cannot compete with rivals from South Korea or China on price, yet its focus on hardware engineering has consistently produced features that don't differentiate enough to let its technology sell at a higher price point, as Apple's do. The answer lies not in hardware but in software and networks - and SEN is, if not the entire answer, then at least the cornerstone of an answer. A few more clever, aggressive moves like Vita TV, and we might start to see the clouds lifting from Sony's horizon.