Sony To Get Away From Gadgets And Shift To Entertainment And Gaming

Kenichiro Yoshida, who took over as chief executive officer of Sony in April, will unveil a three-year plan that embraces the Japanese company's reliance on entertainment and gaming on Thursday, Bloomberg reported.

Although it has not been made official, the transition is already happening and the company is slowly, but surely moving away from what they are famous for - gadgets. According to Bloomberg, Sony was able to make a profit in the first quarter of 2018, in spite of selling fewer hardware products.

In a monumental shift for the company, Sony is embracing entertainment and gaming subscriptions, ditching their famous hardware products such as PlayStation consoles, cameras, televisions, and smartphones.

Famous for giving the world its first Walkman and producing some of the best-known television sets in the world, the Japanese company has been struggling to profit due to the rise of Chinese manufacturing, which has made selling gadgets a business with thin profit margins.

Investors have applauded the shift, Bloomberg noted, and the shares have climbed. In fact, they have been climbing ever since Kazuo Hirai took over as CEO in 2012.

Yoshida, who was chief financial officer at Sony before his promotion, may plan to spend Sony's money on acquiring more content, which could turn out to be a concern for investors.

new ceo sony stock
AP Images | Richard Drew

"Sony is proving that it can evolve with the landscape... with a shift from a hardware-to content-driven profit model. The real key is whether it provides investors with a clear road map." Nikko Securities Inc. analyst Ryosuke Katsura told Bloomberg.

As The Verge reported yesterday, Sony has officially ended its production of physical games for most of the world, at least when it comes to the handheld console PlayStation Vita. The production of physical games for the console will be halted by the end of 2018, in America and Europe, but not in Japan. The Vita, however, lives on, because this will not impact digital sales.

According to Bloomberg, PlayStation's online network has been making money for the company. Although the shift to online content has not been smooth, paying subscribers for the service have jumped 64 percent over the past two years.

Sony's online TV service PlayStation Vue, however, continues to lose money. It has recently lost access to NBC, Fox, CBS, and ABC.

On Thursday, when he unveils the new three-year plan, the new CEO Kenichiro Yoshida is, according to the same outlet, likely to address the issues of patent licensing and intellectual property.