Sony’s Stringer Sees 3D as Next $10 Billion Business

Sony Corp. Chairman Howard Stringer forecast 3D movies, pictures and games will be the electronics maker’s next $10 billion business, challenging investors and analysts who say the technology isn’t ready to become mainstream. The maker of Bravia televisions and PlayStation 3 game consoles said 3D-related products, excluding content, will generate more than 1 trillion yen ($11 billion) in the 12 months ending March 2013. The Tokyo-based company will begin offering TVs, Blu-ray players and game consoles that adopt the technology starting next fiscal year, it said.

Stringer’s bet that 3D will spread from the movie theater to the living room highlights part of his strategy to revive a company that’s forecasting its first back-to-back annual losses in half a century. The move may signal a shift in focus as the Welsh-born executive nears his target of cutting 330 billion yen in costs by eliminating 20,000 jobs and shutting 10 factories.

“We plan to make all the existing PS3 systems to be stereoscopic 3D compatible through a system software update but the timing is not yet decided at this time. As for the stereoscopic 3D game titles for PS3, the plan is to release them in conjunction with Sony’s 3D TV launch next year,” a Sony Computer Entertainment America spokesperson confirmed.

“I doubt 3D will become a hit,” said Naoki Fujiwara, who helps oversee $4 billion as chief fund manager at Shinkin Asset Management Co. in Tokyo. “Investors want to see how the company will make money.”

Sony is not alone in pushing 3D. Osaka, Japan-based Panasonic Corp. and Tokyo-based Toshiba Corp. also aim to introduce 3D TVs by as early as next year as Japanese electronics makers seek to compete against South Korea’s Samsung Electronics Co. and LG Electronics Inc.

Kyung-Soo Ahn, the executive vice president in charge of Sony’s business products unit, said this week sales of projectors, cameras and other equipment capable of producing 3D images are expanding faster than expected. Sony received orders for more than 11,000 3D projectors in the U.S. as movie-theater companies such as Regal Entertainment Group and AMC Entertainment Holdings Inc. adopt the technology, the company said yesterday.

Stringer, 67, said Sony’s reach in the entertainment industry puts the company in position to lead the 3D market. The company’s movie unit, producer of 2012 and Michael Jackson’s This Is It, is Hollywood’s third-largest studio, generating $1.3 billion in ticket sales this year through Nov. 15, according to researcher Box Office Mojo.

“Sony is the only company with end-to-end filming production, 3D conversion, home delivery and home display of 3D content,” Stringer said in briefing in Tokyo yesterday. “This is another example of how the breadth of Sony’s operations give us a significant advantage versus the competition.”

While Sony hasn’t disclosed prices of its 3D TV models, Fumiyuki Nakanishi, a strategist at Tokyo-based SMBC Friend Securities Co., said such sets will probably be too expensive initially to attract a mass audience.

“These 3D products will no doubt be pricier and it will take years for them to penetrate the market,” said Nakanishi. “Sony often makes bold statements to shore up its share price and I see its 3D plan as being one of those announcements.”

Not all analysts are skeptical. Because its operations span from hardware to content, Sony will be able to expand 3D related products without “huge” investments, said Yoshiharu Izumi, an analyst at JPMorgan Chase & Co. in Tokyo.

“It may not be so hard for the company to attain the 1- trillion-yen goal,” Izumi said.

The company is projecting sales to fall 5.6 percent this fiscal year as Sony seeks to weather through the global recession, which led Sony to cut jobs, shut plants, outsource production and reduce its number of suppliers. Sony pushed back its key profitability targets -- a 10 percent return on equity and a 5 percent operating margin -- by two years to the 12 months ending March 2013. The company is forecasting a net loss of 95 billion yen this fiscal year after losing 98.9 billion yen the previous year.

“Before dreaming about 3D, the company needs to achieve real profits,” said Masahiro Mitsui, a Tokyo-based investment analyst at Federated Advisory Services Co. “The technology requires users to wear specialty glasses and it may work with games, but not for sports and documentaries.”

By Mariko Yasu and Maki Shiraki, Bloomberg