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Sony Wants It Both Ways


As it enters a holiday selling season that could prove crucial to the long-term viability of its Blu-ray high-definition optical disc format, consumer electronics giant Sony is also continuing to look for new ways to use the Internet to bring content to Sony HDTV sets.

At a press briefing in New York last month, Sony executives admitted that Blu-ray sales have lagged behind their own projections, but said they expected significant growth for the format during this holiday buying period despite a weak economy that has seen retail giant Circuit City file for bankruptcy. Sony Electronics President and COO Stan Glasgow said that the current $299 price for Blu-ray players—an item that initially debuted for $1,000—is proving attractive to consumers, as are bundles of Blu-ray players and Sony HDTV sets.

Of course, the biggest boost for Blu-ray is that the format war with Toshiba's HD-DVD format officially ended last February, making it easier to promote a new disc player to consumers.

“If it was about formats last year, this year it's about upscaling DVD vs. Blu-ray,” says Sony Consumer Sales President Jay Vandenbree, referring to the upconverting standard-def DVD players that Toshiba and other manufacturers are pushing as cost-effective alternatives.

But Blu-ray is also getting fresh competition from file-based Internet movie services like Apple iTunes, Netflix and Vudu, which have figured out how to facilitate on-demand viewing of movies and TV shows on the living room TV without the clunky workarounds that have historically been required to connect a computer to a TV in order to view Web video.

Such services deliver high-definition movies through the Internet to big-screen sets using either dedicated set-top boxes, TiVo digital video recorders or high-end game consoles like Microsoft's Xbox. Vudu, which uses a proprietary $299 box sold online and at Best Buy, has even introduced a new high-end format called HDX that uses the same 1,080-line progressive scan format as Blu-ray, albeit at a much lower bitrate.

Sony has responded to the burgeoning Internet movie on-demand market. It has started its own movie download service for its popular PlayStation 3 console, which already had the ability to play back Blu-ray discs.

“We're going to continue to develop that,” Glasgow says. “We would like to expand the PS3 store to other studios.”

Besides the online movie download capability of the PlayStation 3, Sony is also pushing the delivery of streaming content to the TV through the Bravia Internet Video Link, a $300 add-on module that connects to a home network through an Ethernet link.

In addition to delivering Web video content from partners like Yahoo and YouTube, the Bravia Internet Video Link was used by Sony in late October to deliver a streaming version of its movie Hancock in advance of the Blu-ray release last week. The streaming version of Hancock sold for $9.99; consumers who bought it will also get a hard copy of the movie on Blu-ray.

Glasgow acknowledges that Internet movie delivery might be competitive with Blu-ray but says the two distribution methods can coexist in the long run.

“I don't think everybody is going to move to downloads,” he says. “I don't think there is enough bandwidth for everyone.”

He also believes that many consumers will still prefer purchasing their movies in the physical form of a Blu-ray disc.

But that hasn't stopped Sony from looking for new ways to use the Internet to deliver content. Glasgow hinted that the company might unveil products at the CES show in January that directly integrate Internet connectivity into the TV set, eliminating the need for a separate device like the Video Link or PlayStation in order to watch movies through the Internet. Such products might also incorporate the tru2way software specification, developed by the cable industry and supported by Sony and other major TV-set makers, which eliminates the need for a cable set-top box in order to watch premium cable programming.

“We're taking steps to make it easier,” Glasgow says of Internet movie delivery. “We believe that Internet content will be part of TV-watching in the future.”