The last time Sony was worth this much on the stock market, Bill Clinton was president and the PlayStation 2 was about to debut on American store shelves. After decades of struggles, the company is trying to transition from being a legacy consumer electronics company to an original content and entertainment company.
In the past three years, Sony’s stock has started to break out of a decades-long slump. Sony’s stock price in Japan recently closed at a record high since March 2000, signifying confidence in the company’s ability to evolve its game offerings and steer itself toward entertainment.
Sony Group, Japan’s third largest company by market value, has turned itself around by innovating its games business beyond consoles and making acquisitions to expand its IP. The company acquired Anime powerhouse Crunchyroll in 2021, and it acquired American video game company Bungie in 2022 for $3.6 billion.
Sony is trying to unlock synergy across its subsidiary companies to produce original entertainment content for consumers. The strategy became apparent at the 75th Emmy Awards in January, when the TV series “The Last of Us” won eight primetime awards.
Without a streaming network of its own, licensing its intellectual property and original content is part of Sony’s strategy to compete with streaming giants like Netflix, Disney, and Amazon. Robert Lawson, the chief communications officer for Sony Group, said that since 2018, Sony has invested approximately 1.5 trillion yen into content IP across various entertainment businesses.
The company has doubled down on entertainment, which now accounts for 60% of total revenue, compared to just 30% a decade ago. This departure from its origins is significant, as Sony was founded in 1946 and was primarily known for its electronics business, including producing iconic devices like the Walkman cassette player and the world’s first CD player.
In gaming, Sony is looking to evolve beyond its console business, exploring new audiences and methods of distribution. The company has been successful in becoming a profitable channel for third-party publishers to sell videogames, and it is trying to diversify its strategy by publishing games on platforms like PC and streaming services.
In November, Sony announced a 69% jump in net quarterly profit, driven in part by its game segment. The company is now in talks to acquire Kadokawa, a Japanese videogame powerhouse that produces the popular videogame “Elden Ring.”
While there have been some headwinds, including the disappointing rollout of the “Concord” videogame and Sony Pictures’ latest installment of the Spider-Man universe, Sony’s emergence as an entertainment company was not always certain. However, the company’s recent successes, including the success of “The Last of Us” and “Uncharted,” suggest that its efforts are paying off.
With its stock up almost 18% in the past month, outpacing entertainment heavyweights like Disney and Netflix, Sony’s transformation is evident. As the company looks to the future, it intends to spin off its online banking and insurance units in 2025, further doubling down on its entertainment offerings.