Sony expects profit boost: announces PS3 movie service

Chief Executive Howard Stringer said Sony will win back its electronic leadership by improving its Internet-linked gadgets, wiping out losses in video games and TVs and pushing services and software, not just hardware.

"This is not your father's Sony," he said Thursday at Sony's Tokyo headquarters, outlining a strategy for growth.

Stringer vowed the company will become profitable in its TV and video game businesses during this fiscal year, which ends March 2009. He said he wants to beef up networking gadgets, making sure 90% of Sony's electronics products wirelessly connect to the Net by March 2011.

Stringer said Sony has rebounded from a bottom in 2005 by exiting or downsizing 15 product categories, reducing 10,000 global workers and shutting down 11 manufacturing sites.

When Stringer, a Welsh-born American, became the first foreigner to head Sony in 2005, the manufacturer of the Walkman portable player and PlayStation 3 game console had been battered by cheaper rivals, and fallen behind in key products to innovative makers like Apple.

"Our job, however, is not complete," he said Thursday. "We must complete our transformation."

Stringer said Sony must come up with better software and services that match its longtime reputation for gadgets and entertainment content.

For example, in the autumn, Sony will start a U.S. service that uses the Internet to deliver feature films and TV shows directly to Bravia TVs, without using satellite or cable distribution systems. He called it an industry first.

That service will start with Hancock from Sony Pictures, which is becoming available before it comes out in DVDs, Stringer said.

A movie download service also will come for the PlayStation 3 game console in the summer in the U.S., said Kazuo Hirai, who heads Sony's video game unit. The service will be offered in Japan and Europe at later dates.

Koya Tabata, analyst at Credit Suisse in Tokyo, said it was good news Sony will be networking its products, noting that Sony products, including mobile phones, TVs and game machines, total 200 million worldwide — about double Apple's iPod players, iPhone and other devices combined.

"There is potential for growth because of the scale of Sony's platform." he said. "But I'm assessing it as neutral so far," he added, saying more time was needed to see how the strategy will play out.

Sony is widely viewed as having erred in not pursuing flat-panel TVs soon enough, and in sticking to proprietary software with its gadgets, battering its earnings early in the decade. But it has posted a remarkable recovery recently, racking up a record profit of $3.5 billion for the fiscal year ended March 31.

Now, executives said, Sony is investing $16.7 billion over the next three years for future technology.

Sony made its announcements shortly after trading ended on the Tokyo Stock Exchange. Its U.S. shares were up 32 cents to $46.54 Thursday morning.