Sony CEO IS A ‘Fortnite’ fan, and not just for the profits4 min read . Updated: 21 Sep 2020, 09:31 AM IST
Kenichiro Yoshida discusses the PlayStation maker’s ‘American’ comeback, videogames he loves to play and the reason for a Sony car
Kenichiro Yoshida remembers the day—Sept. 17, 2014—that he felt Sony Corp. hit bottom.
Then, as Sony’s newly minted chief financial officer, he was bowing in apology at a press conference because the company had halted its dividend payment for the first time. The maker of the Walkman and the Trinitron television had yet to embrace the internet age. It had no iPhone, no profits and, some thought, no future.
What Sony needed, Mr. Yoshida says, was perhaps the most Japanese solution available: Look to America. That is where the company had latched onto the technology for its transistor radios and TVs, the idea for a Sony music label and even Western-style corporate governance. In 2016, it relocated its PlayStation business to San Mateo, Calif. Applying the lessons of internet services like Amazon Prime, Sony also built a PlayStation subscription service with tens of millions of customers.
Now its stock is surging, profits are steady at about $5 billion a year and the pandemic has proved a boon for Sony videogames and movies in streaming. The PlayStation 5 game console goes on sale this year, and thanks to the subscriptions the PlayStation franchise is no longer a money maker only when a new box comes out. Still, Sony faces competition from Microsoft Corp.’s latest Xbox lineup, and some of its businesses, such as smartphone parts, are sensitive to economic headwinds from the coronavirus.
The Wall Street Journal spoke with the 60-year-old Mr. Yoshida, who became CEO in 2018, about what has driven Sony’s comeback and what’s next. (The interview, conducted in Japanese, has been translated and edited.)
WSJ: What have you learned from America since becoming CEO?
Mr. Yoshida: Diversity, dynamism. There are American investors I talk to who say there isn’t much value in a company having a long life span. They say if you try to live long, the result is that industry doesn’t regenerate itself. There’s no absolute answer, but within those words I sense the dynamism of America.
WSJ: Speaking of learning from the U.S., your compensation last fiscal year was ¥454 million ($4.3 million), below comparable U.S. CEOs. Is it too low?
Mr. Yoshida: Well, the labor market is different for each country or industry, and on this one I have an excuse. It isn’t me but the compensation committee that decides what the suitable balance is. Anyway, there’s no damage to my motivation.
WSJ: Sony image sensors are used in autonomous driving, and now Sony has built its own electric vehicle called the Vision-S. Why?
Mr. Yoshida: For a long time I was looking at Sony from the edge of the company (as head of a subsidiary from 2005 to 2013), and I really wanted them to make something that moves. I was thinking, “Even a Roomba, even a go-kart, can’t they make me something?"
We didn’t know a thing about cars. We figured if you want to learn, the easiest way is to try making one yourself. So we made one. And I can’t say the name of the company, but we got a lot of help from an American company. If you heard the name, you’d say, “Ah, yes." It’s a semiconductor company, system-on-a-chip. We did the assembly in Europe.
WSJ: Will people be able to buy one?
Mr. Yoshida: At this point, we have no plans for mass production, but what I really want this year is to get it driving on public roads. The decade until now has been the age of mobile, of smartphones, but where the big change seems likely to happen is mobility. If you work globally to build the best possible EV, you learn something: “Ah, this is how it’s done."
WSJ: Your market cap has reached around $100 billion, largely because of videogames. Can you really build a $100 billion business around games?
Mr. Yoshida: We’re No. 1 in the world in music publishing and No. 2 in recorded music. Yet, if you’re talking about revenue, for us games are three times what music is. The game industry is a $150 billion business. We’re targeting core gamers with immersive console games. It’s something of a niche.
WSJ: What games do you play on your time off?
Mr. Yoshida: Recently, “Fortnite" and also “The Last of Us Part II." It’s a grand tale. It’s like watching a drama. I’ve only done a little, but it’s like binge-watching for 40 to 60 hours.
WSJ: Whose side do you take in battles between content creators and platform owners, such as the dispute between “Fortnite" maker Epic Games Inc. and Apple Inc. over in-app payments? (Sony has invested $250 million in Epic, while Apple is a major customer for Sony’s image sensors.)
Mr. Yoshida: If I had to pick one, our position is on the side of the creators. The exception is games where we’re on both sides (as platform and software maker). I can’t say much more than that, but it is true that creating a platform requires some investment.
WSJ: With the coronavirus, what parts of your business will need to change long term?
Mr. Yoshida: Broadcasters are big customers for us, and whether it’s regular programming or live sports, there’s rising demand for doing it remotely as much as possible.
Or, if you’re talking about animation, we want to make it possible to do at home what you’ve had to go to the studio to do. The process of adding sound during postproduction—we’re making it possible to do that at home. Or for sets, we’re capturing it in 3-D, so you can have a virtual set without putting it together again. They have used it on “Shark Tank," for example.
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