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Sony Exec to Talk About Home Video, Game, Music Integration
By
May 10, 2006, 13:49

Two years ago Howard Stringer, while he headed Sony Corporation of America, was focused on finding new efficiencies within its various units. Among the initiatives on the drawing board was putting Sony’s three packaged media divisions for music, movies and games under one centralized distribution unit.

Sir Howard ascended to the chairmanship of Sony Corp. in March 2005, and since then the company’s three content units — Sony BMG Music, Sony Pictures Home Entertainment and Sony PlayStation (games and consoles) began getting integrated into a centralized operation known as Sony Entertainment Distribution (SED) just over a year ago.

SED Executive Vice President Michael Frey will give a status report on the integration during a solo presentation at the Entertainment Supply Chain Academy on June 20.

Frey traces Sony’s content units being focused on supply chain efficiencies ever since the company established the first compact disc factory in the U.S. in 1984 in Terre Haute, IN.

“Manufacturing became a strategic advantage [for Sony],” Frey noted.

Unlike competitors Warner and EMI, both of which divested its replication manufacturing facilities in the past few years, Sony has no interest in doing the same. Frey found it interesting in the case of EMI, while it sold its replication plant it held onto its distribution because of the importance of that function.

With the advent of the DVD the company’s manufacturing/distribution operations became more sophisticated. The supply chain has also absorbed new variations on optical media like next-generation DVD Blu-ray movies, but also non-optical disc media containing pre-recorded content like UMD, memory sticks and phone cards.

SED has learned that while music, movies and games share some common characteristics (e.g., returns), they are unique in other ways, Frey noted. For example, 20 to 60 percent of the volume for new DVD releases are merchandised in special displays, whereas new release CDs usually get that kind of treatment, he added.

“You need to have people who understand the synergies as well as the the differences,” Frey said.



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