Sony has a history of being not only the last to introduce a product to the cinema, but also the last to admit its failures. The question on everyone’s mind is if history is about to repeat itself.
SDDS sound was introduced in 1993, the last of the digital-sound-for-film formats to be introduced, the most expensive of the formats to own, and the least popular in distribution. None of this is to say that the format was bad. In fact, it was considered by many sound engineers of the day to be the best sounding format. But as savvy readers should well understand, having the best technology does not always translate into sales. For Sony, nearly all releases in the SDDS format came from Sony Pictures or a subsidiary. The format’s best year was 2000, with 12 SDDS releases, of which 1/3 were by other studios. That year was never to be repeated. In 2002, the company failed to take a booth at ShoWest, but the comeback on the FilmTech forum was that “they are alive and plan on being alive for some time.” Two years later, Sony issued its formal letter of discontinuation of the SDDS format.
Sony’s position today is not good. The company has suffered four years of sustained losses. Under Howard Stringer’s leadership, Sony’s shares have lost more than 2/3 of their value. This wasn’t entirely his doing. Before taking the helm, Apple had already wrestled from Sony’s grasp the concept of an industry portable music player coupled with store. While Stringer focused on cost cutting, he wasn’t good at integrating Sony’s internally competitive divisions and shifting Sony’s intense and rarely-productive culture of vertical integration. This month, Mr. Stringer announced that he will be stepping down, to be replaced by executive vice president Kazuo Hirai.
Mr. Hirai will not be handed a pretty job. In his own words, he outlines his program as “To drive the growth of our core electronics businesses — primarily digital imaging, smart mobile and game; to turn around the television business; and to accelerate the innovation that enables us to create new business domains.” Notably, Mr. Hirai didn’t spend any time touting their presence in motion pictures and cinema. No one expects Sony to pull out of the motion picture business, as it offers a strong opportunity to build themed brands. But Sony’s product presence in the cinema deserves attention.
In terms of brand building, Sony has arguably performed well in the cinema. It has extended its brand-building reach to eyeballs in AMC and Regal auditoriums in the US. It has similarly garnered a few eyeballs in other markets, such as the UK. But it hasn’t built that connection in the best possible way. Sony’s projectors can’t light up big screens, where major movie releases open and “high quality” eyeballs reside. And the digital rollout is very much decided in major markets that are of interest to Sony. The future of Sony’s digital cinema division in the US, by example, is the maintenance of its projectors, and keeping up with innovations to prevent erosion of its footprint. For years to come, Sony’s US market, will in fact become a cost center, whose sole benefit will be the opportunity to present the Sony name onscreen in cinemas that utilize its projectors.
Notably, Sony’s projection technology is irrelevant to the value of having Sony-branded projectors in cinemas. Sony is no longer the only manufacturer of 4K projectors, but Sony continues to be the only supplier of 4K movies. Arguably, Sony’s movie making effort supports all makes of 4K projectors. While Sony will eventually take its high-res movies to the home, it’s equally unlikely to be the dominant high-res technology in the home market. This is the exactly the type of situation that should catch the eye of cost-cutters.
This has two effects within Sony. First, Sony technology has to remain relevant. Sony’s cinema technology has yet to compete head-on with that of TI, failing to light large screens, costing more to buy, and costing more to operate. Sony needs to demonstrate publicly that it can compete, and it intends to do just that at the SMPTE Technology Summit for Cinema at NAB this April. Sony plans to demonstrate both laser projection and high frame capability at the event. The challenge for Sony engineers, however, is that these are technologies that will work even better on TI projectors. Which leads to the second effect. Key Sony employees are scrambling to make themselves relevant within the company. Witness Pete Lude, SVP of Sony’s support group for entertainment solutions, who wasted no time soliciting an interview in Film Journal touting movements in industry technology that, at best, keep him employed in catch-up mode. If Sony were to make the sensible move of buying a DLP Cinema license for the replacement of its troublesome home-grown cinema projectors, Pete’s group would be downsized immediately, if not eliminated.
While all evidence once pointed to the eventual demise of SDDS, Sony denied it up to the end. That behavior, predictably, is unlikely to change.