Sony's development and vertical integration


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Sony's development and vertical integration

  1. 1. Sony and Vertical Integration• Multinational conglomerate corporation headquartered in Tokyo, Japan; one of the worlds largest media conglomerates with revenue of $78.88 billion U.S.• The company initially developed from a company building electronic broadcasting and recording equipment to a one that also built the ‘software’ to play or record onto – including, along with Phillips, the CD - thus, potentially, cutting out the middle man and maximising profits.
  2. 2. • Sony’s mergers and takeovers have allowed it to become a vertically integrated company• Key deal: in 1989, Sony acquired Columbia Pictures Entertainment, the American Film and television company – it could now make films with Sony equipment that could be watched in homes and (in some cases, Sony-owned) cinemas on Sony hardware. Beyond that, it had acquired Columbia’s back catalogue to be released on video and DVD which, in an ideal world, could be played on Sony hardware.
  3. 3. • Sony has since created numerous other film production and distribution units, such as Sony Pictures Classics for art- house fare, by forming Columbia TriStar Pictures after merging Columbia Pictures and TriStar Pictures in 1998• The Columbia TriStar Motion Picture Group has a library of more than 4,000 films and as of 2004 this unit of Sony distributes about 22 films a year under its various brands in 67 countries. The group owns studio facilities in the United States, Hong Kong, Madrid, Mexico, the United Kingdom, Brazil and Japan. Columbia TriStar also has a contract to distribute films for independent Revolution Studios and select films by MGM and United Artists.• 2005 – a Sony-led consortium acquired the legendary Hollywood studio Metro-Goldwyn-Mayer (MGM) in a deal worth nearly $5 billion. Again, in an ideal world, the back catalogue releases would be played on Sony equipment.
  4. 4. • Profits from its major studio successes allow it to back smaller, independent films through “niche” companies like Destination Films, which it purchased in 2001 and Stage 6 Films, a direct to video/DVD label created in 2007. It used to have its own cinema chain in which to exhibit its products; it has Sony Pictures Home Entertainment: manufactures and distributes the Sony film library on Blu-ray Disc (a Sony product) and DVD. It has its own (or co-owned) film distribution companies around the world, so it doesn’t have to look for a distributor abroad
  5. 5. • It also owns Sony Music Entertainment, formed by successive mergers of various other companies, including Columbia Records, Epic and RCA. Sony completed its acquisition of the German Bertelsmann Music Group on October 1, 2008. The company Sony Music Entertainment Inc. became a wholly owned subsidiary of the Sony Corporation of America.• Artists signed to Sony can be found on Sony produced soundtracks of Sony films, like Spider-Man (2002), for example. If you like Chad Kroeger, you may go out and buy music from his band Nickleback on Road Runner Records, which is owned by Sony, or perhaps you enjoyed Aerosmith on the Spider-Man soundtrack, in which case, you might prefer to buy CDs from their back catalogue, which is owned by Sony!• 2010 - Sony continues to branch out and buys the publishing arm of EMI records
  6. 6. • Sony Pictures Digital oversees the digital production and online entertainment assets of Sony Pictures Entertainment - consists of Sony Pictures Imageworks, Sony Pictures Animation, Sony Pictures Mobile, Sony Pictures Digital Networks and others.• It is known as the digital website interactive creator for SPE.• Sony Pictures Digital designed websites for Sony Pictures, Screen Gems Network, SoapCity, Sony Pictures Imageworks, GSN, among others for SPE.• Again, rather than look for a third party to do the work, Sony has its own facilities for digital production and special effects and can promote its product on company created websites. In fact, it also serves other companies who pay Sony to do what they can’t – Sony Pictures Imageworks provides special effects – at a profit – for non-Sony movies too.
  7. 7. • Another branch, Sony Computer Entertainment, specialises in the production of hardware and software for ‘video’ and pc games, which often promote Sony (or Sony-licensed) product, like Spider-Man.• In 2001 Sony joined with the Swedish company Ericsson to manufacture mobile phones. The stated reason for this venture is to combine Sonys consumer electronics expertise with Ericssons technological leadership in the communications sector. They now produce phones on which Sony movies can be watched, Sony websites can be accessed, Sony music can be listened to and Sony games can be played.• A recent move has seen a Sony deal with the major cinema chain AMC to install its digital projectors in all of the companys screens by 2012.