Sony Music Entertainment, a fully owned subsidiary of Sony Corporation began its journey in 1929 as American Record Company. Not many companies in this highly competitive and ever evolving industry have survived for long and that too as a leader. This essay will focus on the core competencies of Sony Music Entertainment and a comparison with the competition.
The year 2007 was a landmark year for Sony Music Entertainment as the company entered into multiple innovative ventures in partnership with others to expand their portfolio and increase the revenue and market share. In this year, Sony entered into collaboration with BMG with the aim of finding more talent and gathering more fans for its existing stars by making access to their music easier. During the same year, Myspace Music, an interactive online platform for music sales, subscription and ad supported entertainment was formed as a joint venture. The company’s historical records and well known performances were included in Sony’s stock mobile phones and the company entered into an agreement with Amazon to sell Sony’s MP3s. In 2009, Sony Music Entertainment became a wholly owned subsidiary of Sony Corporation as Sony Corp. acquired 50 percent of Sony Music Entertainment’s stakes from Bertelsmann AG.
Sony continued its aggressive expansion efforts in 2009 as well starting with the formation of VEVO, a music video licensor and aggregator platform through a joint venture with Abu Dhabi Media and Universal Music Group. The company turned profitable in 2012, and was valued at $500 million in 2013. Similarly, in 2010, Sony announced Music Unlimited, a cloud-based music streaming service. Also, the company took initiatives to bundle the music streaming cloud software with other Sony devices like gaming systems, televisions, Blu-ray players, etc. The company’s strategy was to blend the businesses of Sony Music Entertainment and Sony Corp., for the sake of efficiency which the company was executing seamlessly with approximately 38 percent of all song streams available on Sony’s PlayStation 4 gaming device as of 2014. In 2011, the company introduced the music unlimited app for android devices. Sony also partnered with other music services such as Pandora whose applications were made compatible with Sony’s televisions, MP3 players, smart phones and other mobile devices. Multi-device linking was also enabled which enabled the users to access their folders on any Sony device using a single sign-on. As a result of these initiatives, Sony Music Entertainment’s income increased from ¥ 37.2 billion in 2012 to ¥ 50.2 billion in 2013.
Competition Analysis
The competitive position of Sony in 2014 with respect to its major competitors- Universal Music Group and Warner Music Group based on the market share is represented in the table below-
The next table compares Music Unlimited with its major competitors – Pandora and Spotify and analyzes how it fared on mobile distribution services- Google Play and Apple Store in 2013.
Among the internal divisions, Sony Music Entertainment garnered the least revenue for Sony Corporation for the year 2012-’13 at ¥ 441,708 million. However, the division fared better in operating income, with a consolidated number of ¥ 37,218 for the year 2012-’13.
Sony Music Entertainment has its anchor well set in the industry. With close collaboration with its parent, Sony Corporation, it has become much easier for the company to explore various sales and subscription models and compete with the other stalwarts in the industry. The key to the success of Sony for the future lies in how the company will capitalize its current position for better future prospects.
