Following the debut of its financial business on the Tokyo Stock Exchange on Monday,
Japanese conglomerate Sony Group is set to step up its efforts to acquire intellectual property in the entertainment sector.
Its strategy in the field resembles that of Japan's major trading houses.
But as investors focus their attention on the entertainment business, Sony will likely need to better explain the performance of big investments to win them over.
Rather than creating its own IP from scratch, Sony has pursued a strategy of investing in IP holders such as
Bandai Namco, which owns the Gundam franchise, and publisher
Kadokawa, which has a portfolio of popular young adult novels.
Over the past seven years, Sony has invested 1.9 trillion yen ($12.8 billion) into IP, with the IP and businesses it has acquired being combined with Sony's various operations -- games, movies, anime and so on -- to maximize value.
On Sept. 25, Sony's U.S.
anime streaming subsidiary Crunchyroll announced that it would launch new platform Crunchyroll Manga in the U.S. and Canada on Oct. 9, offering Japanese titles such as "One Piece" and "Jujutsu Kaisen." If manga become popular, they are more likely to be adapted into films or games overseas without waiting for anime versions first.
A Sony veteran described this model of buying, developing and then combining businesses and IPs to create added value as an "entertainment trading house." The strategy mirrors that of Japan's major trading houses such as Itochu, Mitsubishi and Mitsui, which shifted their main revenue streams from resource and commodity trading commissions to returns from corporate and business investments.
"There's a gap between the company's current value and its stock price," said Ayaka Inomata, an analyst at Daiwa Securities who in September raised the rating on Sony to a "1 (buy)," the highest of five possible rankings.
"One factor may be that the company is not disclosing enough information to enable a proper evaluation of its entertainment business."
Sony will "enhance our disclosures moving forward," a company representative said.
The positioning of cross-business collaboration as a core part of its growth also echoes the trading house model. In September, Sony said that it had introduced an internal talent search system called the "Pollinator Network," using generative artificial intelligence to improve matching accuracy. It has led to over 200 cases of professional expertise and opinions being shared,
such as applying gaming technologies to film production.
The spinoff of Sony's finance business should theoretically lower Sony Group's stock price by the value of Sony Financial Group's shares. Despite reaching a record high of 4,578 yen on Sept. 25, Sony could face a widening gap in market capitalization of about 1 trillion yen with U.S. rival Walt Disney.
