Sony Diversifies: Good Idea, Bad Idea
Showbiz is a tremendous gamble, and the big studios are specialists at bet-hedging. From an emphasis on proven names, sequels and remakes to diversification into other businesses, the media giants do what they can to keep the bottom line from sinking below your view.
And sometimes, that same strategy guarantees it won’t soar either:
Just when Sony appears to have turned around its electronics business, another part of its sprawling empire, video games, is dragging down profits.
The Japanese electronics and entertainment company on Tuesday blamed the launching costs of its PlayStation 3 game console for much of the 5 percent drop in group net profit for the last three months of 2006 to 159.9 billion yen ($1.3 billion).
Later this year they have a third SPIDERMAN movie coming out, so Spidey will probably save the day again, even as the SPIDERMAN III game runs out of webbing and plummets to the jagged concrete streets below.
Credit Howard Stringer, the Welsh-American who runs Sony, for trimming a lot of the fat from the company. Had he not dropped several other profitable ventures in the last two years the profit margin would surely have looked much, much worse. Still, I can see him at the roulette table — “Why did I put those chips on 00? Damn!” By the way, Sony is lucky to have been able to put some chips on 007 this last year, so the metaphor is even twistier than I thought when I started.