Sony is bleeding money - business strategy discussion

rockaman said:
That's exactly what Apple will say when they see a 14% chunk of that foreign stashed cash disappear soon.
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I believe their stash is aroujnd $150Bn, so 14% would reduce that by $21Bn. This sounds terrible, I don't know how life will continue to Cupertino! :runaway:
Plus.... what's so good about all that cash reserve they are too scared to bring back to the US to use?
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They certainly don't want it all in the US.

eastmen said:
I'm sorry I forgot that losing 1.2B last quarter is a good thing. This quarter they have the hack to blame things on , the next quarter I doubt will be much better as their mobile division will continue to loose them money
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Losses are not good but Sony's losses are now heavily concentrated in one division: MC. Previously Sony had three lines of business that was dragging down performance: 1) their PC business which is now gone, 2) their TV buisness which although not doing as good as they'd like is still in the profitable HE&S division and 3) mobile communications (MC) which is about undergo some crtiical corporate surgery.

Once the MC is addressed, either by heavy downsizing or going the way of their Vaio division, Sony will be highly profitable Kaz Hirai took over as CEO at Sony in April 2012 and immediately set about a three year plan to turn around the company's [lack of fortunes]. Looks like he's on track and it's not as if this is a complicated problem to solve.
 
For MC, they can downscale to rebalance, or they can hammer deals with american carriers (selling their phones unlocked was a bad idea in the US, carriers hate that, and carriers seem to control sales there). It depends on what their R&D department managed to do for the next iteration, which we don't know. They spend a huge amount in R&D every year, and the result can take many years before ending up in a product, or be canned. The Z series brought them back on track in terms of product competitiveness, and they get great reviews, everything they did sucked before the Z.

They should improve their tablet display, maybe a deal with LG for oled panels would help, cross-licensing their patents, etc... The quantum dot backlight was great for gamut and power consumption, but it's still LCD. Sony's oled tech is the best right now, but way too expensive to use on a tablet. So this production is more useful for their professional AV division, where Sony gets a lot of love in the big budget film industry (nice competition with ARRI). It's low volume, high margin.

(sorry, I surreptitiously inserted a new 'vs' topic here, hopefully nobody will bite)
 
MrFox said:
For MC, they can downscale to rebalance, or they can hammer deals with american carriers (selling their phones unlocked was a bad idea in the US, carriers hate that, and carriers seem to control sales there).
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I think they'll downscale, dropping the low-margin markets and seeing if they can build a market in the juicy profitable segment. A few people have commented that Sony should just exit the market but I don't know many companies who, believing they have something to offer in a market where there are profits to be made, would willingly give up without trying everything possible first. Once they have the current massive loses under control they can begin to experiment.
 
Jwm said:
How about spinning off SOE?
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Holy crap, I was NOT expecting that. I still remember when Sony spun off their online game development company into RedEye Interactive which was then renamed to Verant Interactive. After the launch and wild success of Everquest (which is still receiving active support and expansions, 21 as of Oct. 2013) it was re-aquired by Sony and renamed Sony Online Entertainment.

I'm wondering if the lackluster media and consumer reaction to H1Z1 was the tipping point for them finally giving the OK to let it go. AFAIK - SOE was still profitable. But since they don't break down divisions, perhaps it wasn't doing well. Then again it couldn't have been doing worse than the train wreck that is their mobile communications division. As well, with the financial difficulties that Sony is experiencing, continued development of expensive MMOs was likely something they couldn't sustain. At least not until the company could return to profitability.

Or maybe Columbus Nova just made them an offer they couldn't refuse considering the great financial difficulties Sony finds itself in, yet again (and again due to their mobile communications division). I'd imagine that if the offer was good enough, they may have seen the cash infusion as a way to reduce the losses they'll be suffering for FY 2014 versus continuing profits from SoE.

Regards,
SB
 
When I saw it, first I looked at the date... Nope not April, then I looked to see if it was really the Sony website.

I am sure SOE was not cheap to run, and all those datacenters. I wonder if they were (I used to follow SOE more closely to know - RIP SWG) if the datacenters were SOE or if SOE was using PSN datacenters?
 
DSoup said:
I think they'll downscale, dropping the low-margin markets and seeing if they can build a market in the juicy profitable segment. A few people have commented that Sony should just exit the market but I don't know many companies who, believing they have something to offer in a market where there are profits to be made, would willingly give up without trying everything possible first. Once they have the current massive loses under control they can begin to experiment.
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Considering that even Samsung is now seeing rapidly declining smartphone sales and even more rapidly declining revenue (high end sales shrinking now as well as being assaulted from the bottom by the Chinese handset makers), good luck Sony. The only smartphone makers seeing growth in unit sales volume right now appear to be Apple, Chinese Smartphone makers, LG and oddly enough Microsoft (smartphone sales up, feature phone sales down).

And yes, I know you think Sony may have a chance in the high end. And while they may, I don't think it's more than a very small chance. 2 years from now, I'll be surprised (but happily so, as I'd like to see Sony profitable and able to experiment more in various markets) if Sony still has a mobile communications division.

Regards,
SB
 
Silent_Buddha said:
Considering that even Samsung is now seeing rapidly declining smartphone sales and even more rapidly declining revenue (high end sales shrinking now as well as being assaulted from the bottom by the Chinese handset makers), good luck Sony.
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Samsung make, or have made, very few actual premium handsets. They have done well for a few years in Android market by focussing on featureset victories but now they're having their clocks cleaned by Chinese manufacturers, like Xiaomi, who aren't sticking 100 questionable features in the phone but are, like Apple, focussing on the UI and designing their handsets better and building them out of better materials.

Remember the gap in the Note 4 that Samsung claimed was a "feature"?
 
Jwm said:
How about spinning off SOE?
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The timing is frustrating as we likely don't find out what Columbus Nova paid for another three months - Sony's Financial Report 2014 Q4. I am deeply curious how much Columbus Nova valued SOE given they've not really had a runaway MMORPG success since the original EverQuest, some fifteen years past.
 
wco81 said:
Is any company making money in MMORPGs any more other than maybe Blizzard?
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Yup. Everquest is still profitable. I can't imagine they'd still keep it running for 16 years if it wasn't. Everquest 2 is still profitable. It received its 11th expansion pack Nov. 2014. Guild Wars 2 has just announced its first expansion pack. LOTRO is still profitable, it actually went from losing money to making money as soon as they went F2P. And with regards to F2P MMOs, there's a ton that are profitable and expanding. Many of the Korean MMOs are so profitable that they first expand into China, then Russia, then Europe and NA and other regions. On June 26th, Rift announce its next major expansion.

I could go on and on.

Just because they don't have WoWs subscription numbers doesn't mean they aren't profitable. Just remember when Everquest first hit 250,000 subscribers (I think they had a high of around 500,000) it was considered a wild runaway success.

Regards,
SB
 
DSoup said:
The timing is frustrating as we likely don't find out what Columbus Nova paid for another three months - Sony's Financial Report 2014 Q4. I am deeply curious how much Columbus Nova valued SOE given they've not really had a runaway MMORPG success since the original EverQuest, some fifteen years past.
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While not considered a runaway success, EQ 2 surpassed Everquest quite handily in subscribers and thus revenue. However, by that time, it was being compared to WoW which skews comparisons considerably.

Regards,
SB
 
Weird timing, I was expecting Sony to sell or spinoff SOE, but not before EQN comes out. It's always been crazy that Sony maintains a PC gaming company, which was headed by a (let's be honest) PC-master-race guy, and SOE wasn't making money. It was always treated separately and never integrated under WWS.

Vaio PC gone, PC games gone... so, uh... sony is now finally all in with playstation?
 
Silent_Buddha said:
I'd imagine that if the offer was good enough, they may have seen the cash infusion as a way to reduce the losses they'll be suffering for FY 2014 versus continuing profits from SoE.
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You think SOE are profitable? I'm not so sure. If you look at the brief statement SOE LLC made on 22 January they reported a gross profit of CNY 2.47654 trillion which looks impressive but Sony's only reference to SOE in recent reports was in 2013 where SOE LLC was associated with losses attributed to a write-down. I.e, SOE sunk the gaming division's profits during PlayStation 4's launch :runaway:

Given the state of the MMORPG market outside of Korea, and SOE's lack of any particularly successful titles, I'd be quite surprised if they were doing much more than skating by.

edit: typos
 
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Silent_Buddha said:
While not considered a runaway success, EQ 2 surpassed Everquest quite handily in subscribers and thus revenue.
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I am shocked. :yep2: My understanding was that EQ2 didn't really do that well until it went F2P but I've not seen any figures over time.
 
DSoup said:
I am shocked. :yep2: My understanding was that EQ2 didn't really do that well until it went F2P but I've not seen any figures over time.
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From what I remember, before they stopped divulging numbers, EQ2 had hit somewhere between 750,000-1,000,000 subscribers. Which is good versus EQ, but wasn't so good when investors and internet pundits compared it to WoW, which at the time had hit around 4 million or 5 million subscribers, IIRC.

Around that point is when they started to abandon their vision for EQ2 and started to try to make it more WoW-like. And thus aliented a fair chunk of their EQ fan base without siphoning off much, if any, WoW subscribers. And thus challenge and difficulty were slowly expunged from the game, and at the same time subscribers started to leave the game. If they wanted something like WoW, they would have played WoW.

Regards,
SB
 
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