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Thursday, September 22, 2005

HD & Digital Cinema: Bright spots at Sony

By way of announcing a restructuring that will cut 10,000 jobs, Sony Corp. put out a press release that discussed not just lay-offs, but the company's overall strategy for the future. Digital cinema and high-definition products for the home was one small piece. From the release:

    Sony is already the world's leading HD company and is uniquely well positioned to enjoy the forthcoming consumer transition to high-definition products. We have a full range of broadcast and consumer hardware products, as well as content assets that lead the industry in HD digitization. Our goal is to make HD World [the company's high-def business] a major integrated profit pillar. Sony has superb high-end HD technological resources such as production equipment as well as the 4K projector which pioneered the era of digital cinema. We will further develop these and apply them to our consumer lineup. Blu-ray disc - the highest capacity next generation optical disc format, supported by many leading companies in every key industry - will also be a dynamic driver of HD business.

I'd say they're overstating things a bit by touting their 4K projector as having "pioneered the era of digital cinema," considering they were first demo'ed this year at ShoWest and Cinema Expo, and that none have actually been installed in U.S. theaters yet. (Landmark Theaters is apparently installing the first couple this fall. That's the Sony 4K projector above.) More accurate, I think, would be to give Barco and Christie credit for pioneering the era of digital cinema, with their lower-res 2K projectors that are actually in use today.

Here's some high-level background on Sony's current situation, from Yuri Kageyama's AP story on the restructuring:

    [Sony] has had to rely on its movie division such as the popular "Spider-Man" series and its successful PlayStation video-game consoles to maintain profits in recent years.

    Sony has also been criticized as falling behind in slimmer TV models, such as liquid-crystal and plasma display sets, that are increasing popular around the world, losing market share to relative Japanese newcomer Sharp Corp. as well as old-time rival Matsushita Electric Industrial Co., which makes Panasonic brand goods.

    Sony also fell behind Apple Computer Inc.'s iPod in what should have been its forte -- portable music players -- clinging to CD and minidisc formats and its own proprietary but unpopular format for digital music files. The iPod models are proving a big hit in Japan, where Apple began its iTunes store in August to rave reviews.

    Over the last five years, Sony shares have lost two-thirds of their value, and are trading at about 4,000 yen ($36).