In News.com's Can Sony reinvent itself as cool, US CEO Howard Stringer, practically concedes Sony's mismanagement of it's strategy to provide seamless computing, communication and content through its electronics and content businesses. Sony's flailing stock price and misfiring strategy is no surprise. Like the sinking stocks of AOL Time Warner and Vivendi-Universal (very nearly Comcast-Disney too!) before it, Sony has been entranced by the Siren Song Of Convergence - the imprisonment of content within closed networks and appliances. Well, that's just plain idiotic:
Imprisoning TV In Networks
Vodafone seems to have ignored the lessons of working with Vivendi-Universal (Vizzavi), with the recent launch of Fox's one-minute 'mobisodes' of 24; this content will only be available to Cingular and Vodafone customers. I would pay to watch, but I'm not prepared to switch from Orange to Vodafone. Hence, Vodafone has lost my custom and Fox has reduced the overall value of its content...perhaps Fox should have granted Vodafone the rights to distribute to all networks, bringing revenue back to Fox and Vodafone, but also maximising the audience size.
Imprisoning Music In Devices
The lacklustre performance of Sony's Connect store and line of ATRAC-based music players is a direct consequence of putting the needs of Sony Music ahead of the needs of Sony's customers. In the process, rendering its Network Walkman range irrelevant to consumers, handing market leadership to Apple's iPod, killing potential digital download revenues and reducing the value of key corporate assets such as the music library. It took four years for Sony to add native MP3-support to their Network Walkman range. Any wonder Sony stocks and revenues have plummeted?
Imprisoning TV In Territories
The producers of Battlestar Galactica chose to launch in the UK several months ahead of the series' US launch. Consequently, much of the potential American audience had already viewed the show courtesy of illegal online distributions. The producers then went on to blame US viewers for jeopardising the possiblity of the show's renewal for a second year. Perhaps if the SciFi Channel had released downloadable, albeit DRM'd, episodes simultaneously in all markets, it could have opened a valuable revenue stream to an expanded global audience, created a daring video-on-demand business and nullifying piracy and ratings issues. Thanks to BitTorrent, I am currently watching episodes of The Daily Show, ER, West Wing and Enterprise that are unavailable in the UK - those content owners are losing my custom. I would be happy to compensate them, but would they even know what to do if I sent them a cheque?
Preference For In-House Content
Pressplay and Musicnet's exclusive licensing deals with their parent companies (AOLTW and Sony respectively) resulted in stillborn, stagnating music services. iTunes Music Store succeeded by working without preference for content owners and providing a fair DRM compromise for users with Fairplay.
With the infinite shelf-space of the internet, the economic performance of all types of licensed content is driven by widespread availability. Barriers to such availability, including restrictive DRM, preferred content providers, content exclusivity and paralysing content+network+device lock-in only harms content owners, networks and the consumer electronics industries.
At a grassroots level, consumers have already created the infrastructure neccessary for delivering music, movies and TV inspite of network, device and content owner restrictions. Content owners must now demonstrate courage and disrupt their own business models to capitalise on existing user demand.
My message to Sony and Stringer - 'turn off DRM and release-windows for a year and see what happens, you can always go back, butyou might be pleasantly surprised...'.