Sony plans to (re)enter the digital entertainment market by launching its version of online video service through its game console, PlayStation 3 (PS3). This service will offer movie and television shows from the Internet to the PS3 through its online PS network. This will put them in direct competition with Microsoft Xbox Live service, which has 10 million subscribers, who get movies and TV shows through Microsoft’s Xbox 360, as well as AppleTV.
This will be Sony’s third attempt to distribute digital entertainment. Its previous project was Sony Connect, a response to Apple’s iTunes, which shutdown this March and prior to that, it was Movielink, an online video store that was sold to Blockbuster last year. But according to Peter Dille, SVP of marketing for Sony Computer Entertainment America Inc., "…we'll be offering a video service for PS3 in a way that separates the service from others you've seen or used."
One way Sony plans to differentiate is by having open standards for its online video service so that it is compatible to a range of computers and hand-held devices (i.e. PlayStation Portable) in contrast to Apple’s close networks in which its service is only compatible to Apple products.
But according to Convergence Consulting Group, online movie sales are a small business and will remain small over the next year as compared to DVDs, which continue to be the dominant home video format. U.S. consumers spent $95 million for online movies while they spent $23.4 billion to rent and buy DVDs last year. On the other hand, market researcher Parks Associates predicts that online videos will become more lucrative in the future. They project an estimate of $6.4 billion in revenue by 2010 from advertising and paid downloads or rentals.
It’s clear that Sony missed out on the digital era and is trying very hard to carve out a market segment for itself. It will be interesting to see if Sony can achieve this since it was able to successfully use the PS3 console to establish its Blu-ray discs as the standard for high-definition video in the home, beating out the HD DVD format that was backed by Microsoft, Toshiba and others. Maybe third time is the charm.
http://www.latimes.com/business/la-fi-sony21apr21,1,152898.story
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