Sony's New Initiative at Realizing Synergy

Here's a piece  from Ny Times (Feb 23), which I saw after we discussed Sony in class.  It is closing a standalone PlayStation store and launching a 14-screen cinema complex in LA.
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The theater, owned by Muvico Entertainment, will use Sony’s 4K SXRD digital projectors. The SXRD brand will be promoted on screen, as Dolby or THX sound systems are. When customers buy food and tickets, they will find updated menu offerings displayed on 16 Sony LCD televisions. And when the children become bored, they can try out the latest video games on a bank of PlayStation 3 consoles in the “digital playroom.” Muvico hopes to cater to an upscale crowd with cash to spare, just the sort of audience Sony needs. Similar to the ArcLight cinemas in Hollywood and other deluxe theaters around the country, the complex features valet parking and allows customers to take food and alcohol to the reserved seating Premier section, where the wide seats cost $20 each.

Sony thinks this theater is an ideal location to promote its products, which usually carry a premium price. “Customers in Thousand Oaks stay to watch a film’s credits because their names are probably in them,” said George Figler, director of design and construction for Muvico, based in Fort Lauderdale, Fla. Sony could use a good jolt. Revenue from electronics and the video game segment has slumped in the last year. The company expects the fiscal year to show an operating loss of $2.9 billion. Howard Stringer, the company’s chief executive, has been trying to push Sony’s divisions to work together more closely.

“Our 4K system will impact all our Sony products,” said Michael R. Fidler, Sony’s senior vice president for digital cinema. He said he was meeting regularly with colleagues in other Sony divisions to determine promotional strategies. “We are building a new synergy and business model with the theaters, which usually leave promotion to the studios.”

Sony’s high-resolution digital projection technology is an ideal way to show live musical events. The company is working with Live Nation to produce a series of at least six concerts, which in addition to their theatrical exhibitions will be shown on home TVs through Sony’s broadband Bravia Internet Video Link service and via the PlayStation Network.

Mr. Fidler also imagines turning the release of a new PlayStation game into an event. A few days ahead of a multiplayer game’s going on sale in stores and online, fans might try it out against remote competitors on one of the giant theater screens.

Sony also hopes to increase its penetration of the digital cinema market. There, its technology is now a distant second to the industry leader, Texas Instruments, which has its D.L.P. cinema projector technology in almost 5,300 screens in North America. Sony has digital projectors in just 300 theaters. But the company says its digital projectors display an image with four times as many pixels as the D.L.P. system, resulting in sharper pictures with richer colors. Sony’s hardware costs 10 to 15 percent more than the T.I. system.

Muvico has committed to use Sony technology in all its new theaters, and eventually retrofit its 12 existing houses that do not yet have digital equipment. A number of AMC and Landmark theaters also use Sony’s 4K systems, and more will follow when money is available, Mr. Fidler said.

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It will be worth seeing if it creates the cross-business synergy. Or just an expensive marketing gimmick