Sony’s iconic gadgetry and the star appeal of Hollywood might have appeared to be a perfect match when the electronics giant bought Columbia Pictures in 1989. A quarter-century later, it’s apparent that Sony Corp has not attained the magic synergy it was hoping for.
The stolid silence of Sony’s Tokyo headquarters over the brouhaha surrounding Sony Pictures Entertainment’s The Interview underscores the longstanding divide between the Japanese parent company and its US-led and run motion pictures subsidiary, successor to Columbia Pictures.
Marrying the cultures of Sony Corp, a quintessentially Japanese company, and its Hollywood studio was such a challenge that Sony co-founder Akio Morita and Former Sony president Norio Ohga never really tried, analysts say. Instead, they left Sony Pictures to mostly run itself.
“They’re separate businesses run by separate management,” Macquarie Capital Securities analyst Damian Thong said. “Since the late 1990s it’s been run basically as a stand-alone business.”
Sony Corp in Tokyo refused requests for comment on developments related to The Interview, referring all inquiries to Sony Pictures in the US.
After first withdrawing the movie from a planned Christmas release on as many as 3,000 screens, Sony Pictures made the movie available on various digital platforms on Wednesday, a day after Sony and independent theaters agreed to release it in over 300 venues on Christmas Day.
As entertainment has shifted to digital delivery systems, technology analysts say it has become increasingly clear that Sony botched an opportunity to outdo Apple in creating a far more influential and valuable business by melding its consumer electronics expertise with ownership of a major movie studio and recording label.
“It feels like there has been a lot of fumbling and a lack of coordination there for too long,” Rosenblatt Securities analyst Martin Pyykkonen said. “They really haven’t won in anything in a long time when they could have been a leader in terms of bringing devices and technology together. So, shame on them.”
The lack of integration between Sony’s main divisions carries throughout the group and is among the reasons why the once iconic electronics giant has fallen behind, author of Samsung vs. Sony and Singapore University business professor Sea-Jin Chang said.
Looking back, Chang believes Sony’s 1989 acquisition of Columbia Pictures was mainly a trophy purchase driven by Morita’s personal whims.
“They made all the possible mistakes they could make in an acquisition,” Chang said. “It was driven by ego. It suffered from bad implementation. If you teach a class on M&A [mergers and acquisitions] this is the case study on how not to do it.”
Sony Pictures has had its ups and downs, but has been a relatively strong performer in recent years, with hits like American Hustle and 22 Jump Street adding to the studio’s brand value.
For the fiscal year ended March this year, Sony Pictures generated operating income of US$501 million on revenue of US$8.05 billion; its parent company reported total operating income of US$257 million on sales and revenue of US$75.41 billion.
“Sony Pictures overall is quite important from a marketing relationship point of view, just because it’s one of the few properties now that is really getting people to see the Sony name anymore,” China Research Group Shanghai-based senior consumer electronics analyst Benjamin Cavender said.
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