At CES 2023, Sony’s ‘Gran Turismo’ flags new entertainment strategy By Reuters

By Dawn Chmielewski

(Reuters) -When Sony Corp (TYO:) Group teases “Gran Turismo,” its long-awaited adrenaline-fueled film adaptation of Sony (NYSE:) PlayStation’s hit car-racing franchise at the CES 2023 technology trade show this week, it will really be showing off its new identity as a content-driven company.

The movie reflects the transformation of the maker of the Walkman and Bravia TVs from a primarily hardware-focused innovator to broad-based entertainment provider. It also represents a significant bridging of the divides between Sony Pictures Entertainment, Sony PlayStation and Sony Music, according to a dozen current and former senior executives interviewed by Reuters.

“I defined our identity as a creative entertainment company with a solid foundation on technology,” Sony chief executive Kenichiro Yoshida said.

The film’s appearance at CES on a stage typically reserved for big-screen TVs and robot pets caps $10 billion in investments in music, games and anime over the last five years.

“Gran Turismo” is one of 10 game-inspired film and television projects in various stages of development.

HBO’s “The Last of Us,” about a man hired to smuggle a 14-year-old girl across a pandemic-plagued America, debuts on Jan. 15. “The New Yorker” suggested the series could break the curse of bad video-game adaptations.

Last month, Amazon (NASDAQ:) Prime Video ordered “God of War,” a live action adaptation of the PlayStation hit based on Greek mythology.

Sony’s “creative entertainment” company approach extends beyond content.

A Sony-Honda electric vehicle, scheduled to reach consumers by 2026, is being framed as a rolling showcase of Sony’s entertainment, gaming and camera sensor prowess. 

It will also generate recurring subscription revenue like other content services.

“Eventually, we think in the long term, the mobility space will become an entertainment space,” Yoshida said.

The high-profile projects, which could not have happened even three years ago, grew out of regular conversations among Sony executives, as they sought a way to work together more effectively.

Sony resisted chasing after Netflix (NASDAQ:) with a rival service and fended off an activist shareholder’s call to sell or spin off its media and entertainment assets in 2020.

Instead it struck deals to provide movies to Netflix and Walt Disney (NYSE:) Co’s Disney+ and series to HBO, Amazon and Apple Inc (NASDAQ:)’s Apple TV+.

The shift is reflected in Sony’s results, with two-thirds of operating profit coming from games, music and the film studio. Operating profit rose 8% to 344 billion yen ($2.6 billion) for the July-September quarter, beating analyst estimates. In November, with the music business offsetting weakness in the games group, Sony hiked its full-year operating profit forecast.

“This is a complete pivot of this company into something that’s no longer an electronics company,” said Ulrike Schaede, a professor of Japanese Business at UC San Diego’s School of Global Policy and Strategy.

Schaede said the company now has a coherent corporate narrative that would make it easier to unite the company’s divisions.

“That’s the new Sony,” she said. “Now, can they deliver? I don’t know.”

TREASURE CHEST

When veteran media executive Tony Vinciquerra was recruited as chairman of Sony Pictures in 2017, the division was reeling after a string of box office flops including the 2016 reboot of the “Ghostbusters” franchise. DVD and Blu-ray disc revenue had plummeted under pressure from streaming services, and there were rumors of a possible sale, media executives said.

But Vinciquerra was attracted by the opportunity to leverage the company’s assets: “Sony is the only company in the media business that has not only television or film, but music, PlayStation, and technology,” he said in an interview.

Sony had struggled for decades to achieve the “synergy” the company touted with its 1989 acquisition of Columbia Pictures Entertainment.

At best, these forced collaborations ended up as product placement in a movie or marketing promotion. At worst, they got in the way of adapting to the digital era.

Entertainment executives then came up with PlayStation Productions: a division within the games group located on the Culver City studio lot and dedicated to film and television adaptations.

It acted as a cultural attaché to Hollywood, “someone who could talk in their language,” PlayStation chief Jim Ryan said in an interview, “in a non-confrontational, non-adversarial way just, you know, just try to do the best thing for both divisions.”

The result was “Uncharted,” last year’s release starring “Spider-Man’s” Tom Holland and Mark Wahlberg in a hunt for Magellan’s lost treasure. The film delivered $401 million in global ticket sales and became the most-watched film on Netflix when it was released on the streaming service in August.

Meanwhile, one of the most popular artists distributed by Sony Music, the Puerto Rican rapper Benito Antonio Martínez Ocasio, who performs as “Bad Bunny,” will star in “El Muerto,” a film drawn from Sony’s Marvel Universe of characters, due out in 2024. Bad Bunny is a Rimas Entertainment artist.

Sony Music Entertainment CEO Rob Stringer said Yoshida’s “light touch” has proven successful. “Quite frankly, the ideas are flying around, and everyone’s much, much more comfortable about talking to each other,” Stringer said.

This August will bring another test of Sony’s strategy when “Gran Turismo” hits theaters after languishing for 12 years.

The movie is based on British racer Jann Mardenborough, who won the 2011 GT Academy Europe at 19 and went on to a podium finish at the 24-Hours of Le Mans in 2013.

Academy Award-nominated director of “District 9” Neil Blomkamp directs a cast that includes “Lord of the Rings” star Orlando Bloom and “Stranger Things” actor David Harbour.

“We’re telling a true story about wish fulfillment,” PlayStation Productions chief Asad Qizilbash said. “This kid loved playing Gran Turismo, and at the same time, we’re celebrating the game.”