Emily Rogers wrote a great summation of Sony's decline on her now defunct Not Enough Shaders (NES) blog. Thankfully, I was able find a good archived version of the article, with the graphs and everything, on the Wayback Machine
here. Though it was written in 2012, it did a good job charting Sony's epic decline from 2002 (arguably its peak year or close to it) to 2012. Sony's market cap value that year was nine times less than what it was in 2000, its Return on Assets and Return on Equity had fallen year on year and its liabilities had increased dramatically in the same period. The company was overburdened by debt and budget deficits. Sony's market cap was $100 billion in 2000. By 2012, it was barely above $11 billion, which was actually lower than Nintendo's $15 billion market cap (currently, it hovers around $124 billion, while Nintendo's, for reference, is at around 8 trillion JPY, which translates to a little more than $77 billion). Sony had more total liabilities than Microsoft, Apple, Google, and Electronic Arts combined. She goes into more depth, but clearly, Sony started nose diving after 2002 and it never really stopped until recently. Sony mainly squeezed value in recent years with cost cuts: laying off staff, selling old headquarters, selling underperforming divisions. But the fact is, during this time, Sony came to be almost entirely reliant on Playstation to keep it afloat, a fact that largely still remains true to this day. So the question remains: why did Sony falter so badly?
Emily places the root on Sony's issues with an internal war within Sony, between the Engineers and the Executives. I'll quote her directly here:
She continues:
The way she explains it, the engineer guys in Japan
hated the, primarily American, content guys, who wanted to produce music and television, and this led to an internal split within Sony itself:
You ever wanted know why Sony produced those overpriced memory sticks for the Vita? Here's your answer:
Even Kaz Hirai was getting tired of it:
And of course, it all comes back to the Japanese being Japanese:
Then, we finally comeback around to the clusterfuck that was the PS3 and we realize its all come full circle:
She finally brings it all home with this:
She was completely right.
Though she gives her own final thoughts, allow me to present an idea. Take everything that was told in Emily's article, and reconsider Sony's decision to move the headquarters of its video game division from Japan to the USA. What does that tell you. I'll you what it tells me: the content people in America eventually won the internal power struggle. The Japanese engineers were eventually marginalized,
corralled into their own little subsidiary which can keep making products that don't sell while the rest of Sony tries to go Hollywood. They are legacy businesses that Sony remains invested in out of misplaced pride and good old-fashioned Japanese stubbornness. Sony moving its gaming business to America and subsequent decisions to introduce censorship, force Japanese companies to go through their American business to despite the obvious difficulties of that, then close its Japanese studio, its main way to interface with Japanese developers to make games for its platform was a way of making it clear what had transpired. The Content people, no, the
Hollywood people had taken over. Content was king, tech is secondary, and the Japanese better get used to it. I'll just quote The Verge here and link their article on the subject:
Sony is no longer an electronics company.
www.gematsu.com
