For the technology group Sony with its own studios in Hollywood, it is worth doing without streaming. How Spider-Man and Co still make a lot of money - also in the streaming business. By Klaus Schachinger, Euro on Sunday
It was a sensational start in America's theaters, even during Corona: Sony's feature film "Spider-Man: No Way Home" grossed $121.4 million on its first day in North American theaters and managed the best start of all in the cinema-popular December times. Monthly, it is the second highest-grossing film debut in North America after Disney's Marvel blockbuster Avengers: Endgame, which grossed $357 million on its first day in April 2019.
The Spider Man grossed over a billion dollars in its first two weeks in cinemas worldwide, making it the most successful film of 2021. America's cinema industry, which - like everywhere else in the world - continues to be hit hard by the effects of the pandemic, is particularly pleased. According to the US stock exchange service Bloomberg, the industry expects four billion dollars in revenue from ticket sales in 2021. But that's only a fraction of the $11.4 billion that flowed into the coffers of big screen operators in 2019.
No streaming service
Japan's technology giant Sony, which is also present in Hollywood with its Sony Pictures Studios, continues to focus on the cinema. In doing so, he resists the temptation to throw himself into the big, margin-sapping turmoil of media giants such as Disney, Amazon and "Game of Thrones" developer HBO with his own streaming service. Instead, Sony is trying to capitalize on the rivalry between streaming providers: "None of them want to negotiate with their competitors, but they all want to negotiate with us," says Tom Rothman, head of Sony Pictures.
Everything for your capital!
€uro readers know more: what moves the markets, which investment ideas promise success and how they save money.
To our offersFees for later streaming a film are usually calculated based on its success in theaters. Spider-Man and Sony's other heroes also fight on the big screen for the later streaming success of the Japanese company. Sony's division head Rothman tied the net for this in the spring, when he closed big deals with Netflix and Disney. For example, Netflix has earned the prerogative to decide for all new episodes of Spider-Man and all films that Sony Entertainment will produce up to and including 2026 whether they will first air exclusively on Netflix after their time in cinemas.
After this exclusivity expires, US media giant Walt Disney can also show the Japanese films on all of its channels. Experts estimated the value of the two multi-year agreements at over three billion dollars. Sony is also negotiating streaming deals with HBO and Netflix for series.
Because Sony has its own film studios, the group's original strategy in the streaming business should pay off at least in the next four years, analysts estimate. Only then could Netflix, Disney and Co have generated sufficient reserves with their subscriptions to largely earn money with their own films and series.
Record profit in sight
Overall, Sony is also well on the way to setting a record in operating profit for the second time in a row in the fiscal year to the end of March 2022 - despite the persistent chip delivery bottlenecks for its globally coveted Playstation 5 (PS5) game console. With sales equivalent to EUR 74.5 billion, a good two percent more than in the previous year, analysts expect an average of EUR 12.8 billion in operating profit before interest, taxes, depreciation and amortization (Ebitda). That would be a remarkable increase of 23 percent.
Hardware such as flat screen televisions, cameras and game consoles provided 52 percent of sales, chips for cameras and smartphones - here Sony is the world leader - almost eleven percent. The area of entertainment with films and video games is involved with a share of almost 19 percent.
Sony filmed the popular game "Unchartered" with a star cast and plans to bring it to cinemas worldwide on February 20th. According to the group, the company is currently working on ten projects for films and series based on computer games.
For the PS5 console, the Japanese have reduced their production target for the fiscal year from 16 to 15 million devices due to the lack of chips. However, this does not diminish the popularity of the in-house gaming platform. At the end of September, 47.2 million gamers worldwide used Sony's PS Plus subscription to access the multiplayer mode of new games. Sony's cloud subscription PS Now for older games on the same terms as PS Plus had 3.2 million at the end of March. The services are to be merged in the new financial year.
Cloud gaming is still a small market. For 2030, however, experts from the US stock exchange service Bloomberg expect sales of more than eleven billion dollars from video games in the data cloud.
lead by technology
What distinguishes the technology group from its competitors is the combination of expertise in sensors, cameras, screen technology and software, which are tailored to the special requirements of computer games, film and music.
One of the innovations that Sony recently presented was a system with high resolution in every area in order to be able to shoot films regardless of weather, location and other factors. There is an extra-large LED screen for the virtual backdrop and what is happening in the background in real time. Cameras capture the scenery, the objects and the actors, while Sony's technology blends the backdrop and foreground.
The Japanese have also further developed their Hawk Eye technology. At tennis or soccer games, the cameras installed in the stadiums have so far measured the boundary lines to support referee decisions. In the future, it should also be possible to use the data collected during the games to analyze the game, which will help to improve the training and strategy of a team or individual players.
In Sony's new glasses for virtual reality in computer games, micro-LEDs deliver up to 8K resolution for a realistic representation of what is happening. The glasses displays expand the user's field of vision.
Sony has SPAD (single photon avalanche diode) sensors in its portfolio for distance measurements via laser, for example in autonomous driving. With software for artificial intelligence algorithms, the sensors should also be used for automation in industrial production. This is how Sony drives digitalization outside of its previous markets.
Robust: Sony is coping well with profit-taking in the tech sector. The share is still trading close to its 20-year high. Recommendation: Buy Target price: EUR 130.00 Stop price: EUR 80.00
