Monday, December 22, 2014

In the short term, it hurts. In the longer term it might be positive in terms of turning the movie into a cult classic


Lost revenues related to "The Interview" are hardly the worst of the tribulations for a company that has lost money in six of the seven past years amid intense competition from Apple Inc. of the U.S., Samsung Electronics Co. of South Korea and a cheaper Chinese rivals.

Despite improved performances by its cameras, TVs and game businesses, write-offs for its mobile phone division have kept Sony awash in red ink. Before the Sony Pictures crisis blew up, it was expecting a 230 billion yen (US$2.1 billion) loss for the year through March 2015.

Often, as one part of Sony's business recovers, another area falters. By the same token, despite fiascos like "The Interview," Sony Pictures has had massive hits in movies like "Spider-Man," "Men in Black" and "Skyfall."

But some investors in Sony say the problems at Sony Pictures reflect the fundamental weakness of a consumer gadgets company trying to marry its culture with a Hollywood studio. Sony bought the predecessor of Sony Pictures in 1989.

"I doubt whether Sony, which is a hardware and electronics company, can manage Sony Picture Entertainment. I don't think Sony's management over them is really functioning," said Mitsushige Akino, chief fund manager at Ichiyoshi Asset Management in Tokyo.

Sony's one-time status as an icon that pioneered products such as the Walkman music player is scarcely known to a generation of iPad and Galaxy lovers and it has never realized the blockbuster synergies it hoped to gain by owning both electronics and entertainment businesses.

Sony was one of the first Japanese firms to successfully tackle world markets. Nearly three-quarters of its annual sales are overseas and about 42 per cent of its shareholders are foreign. But the company remains very true to the conservative values of Japanese corporate culture in how it is run.

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