Sony's Hirai Hopes for Quick Start to Online Content Service

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Sony is hoping to launch its planned online content service early next year and expects it will give the company an advantage in the increasingly competitive consumer electronics market, the executive heading up the project said Friday.

"I'd like it to get off the ground as quickly as possible," said Kaz Hirai, executive vice president of Sony and head of its Networked Products & Service Group, in an interview at the company's Tokyo headquarters. "Earlier in the year is more preferable."

The service, provisionally dubbed the "Sony Online Service," seeks to bring movies, music, books, games and other content to networked consumer electronics devices including Bravia TVs, Walkman music players, Vaio computers and Sony Ericsson cell phones.

It's an expansion of the successful PlayStation Network that has attracted 33 million users in its first 3 years of operation and provides a mixture of free and paid content. Sony is expecting sales of ¥50 billion (US$563 million) from the PlayStation Network this year and the new online service will run on the same infrastructure. The same user ID will work on both services.

The new service has a sales target of ¥300 billion in 2012 but it will also provide a range of free content to all users. Sony isn't "closing the door on all the good stuff that we provide for free," said Hirai.

In the U.S. the PlayStation Network carries content from all the major Hollywood studios and many major U.S. TV networks in addition to Sony's own content and Sony hopes to duplicate this on the new online service. Outside of the U.S. the PlayStation Network is being expanded -- video downloads began on Thursday in France, Germany, Spain and the U.K. -- and Sony hopes the new online service will follow a similar path.

Looking a little further ahead Hirai said the service could be expanded to products offered by other manufacturers, but that isn't initially being considered.

"The first priority is for us to make sure the Sony Online Service is a point of differentiation for all Sony devices," he said.

"Given what we bring to the table, the range of content and breadth of hardware in combination, if done right will be a successful formula," he said.

But getting it right isn't perhaps as easily said as done. Sony has tried to pool its resources before.

"We've had our fits and starts," said Hirai, citing the Connect service as one example. Connect was meant to bring audio content from Sony Music and other labels to Walkman music players but failed to make a dent in the dominance of Apple in that market.

Lessons have been learnt and, perhaps most importantly, the entire company reorganized to remove internal barriers to cooperation between business units, he said.

"I think there was always a vision of doing [this] but unfortunately the company was set up in a way that the vision was not put into execution."

An important contributor to the success of the service might be how Sony handles DRM (digital rights management), electronic and software restrictions on the use of content. Consumers won't want to be prevented from sharing downloaded content between their own devices or within their family, and Hirai said the issue remains one that is continually under discussion.

Hirai took his new position earlier this year when Howard Stringer, Sony's CEO and president, reorganized the company into three main business units. Hirai's previous PlayStation group was brought together with the Vaio PC group. A consumer products division was formed to include the television and camera business and a B2B group covered the broadcast and disc manufacturing businesses.

But in a key departure from previous restructuring efforts several functions common to each business unit were spun out to company-wide groups to drive cooperation. As a result Sony's software development, sales, marketing, procurement, manufacturing, logistics and customer service are all now handled by groups that span the electronics operations of Sony.

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