David Rosenthal: evaluation

Transcript context

…It sounds good on paper, but what ended up happening is that there was a lot of infighting between the hardware teams and the movie team, so you had misaligned incentives. We've talked about this a lot in previous episodes, but it's the vertical versus horizontal strategy issue where the devices people wanted to make it so that they could play the widest amount of content possible. By the way, including pirated content. If you're trying to move electronic devices, you want to be super-duper Switzerland—buy this thing, have as much fun, and get as much value as you want out of it. Meanwhile, the music label folks and the film studio want to leverage the channel that they have with these devices to find a way to increase sales of music and movies. Unless you can figure out some way to align incentives, you have a huge problem there. Totally agree. One other thing that is probably a bigger issue for Sony that crops up out of this is hardware. I had to do a bunch of double takes reading Sony history stuff. They refer to hardware as the consumer devices that they were making, but then they talk a lot about software. It was weird to me reading this as I'm reading about their software. I'm like, that doesn't sound like software as I think about it. Internally at Sony at this time, they think of content as software, at least in what I was reading. Maybe this was different in Japanese, but they literally thought about the music business, the movie business, and eventually the gaming business as software that would go on their hardware. In some ways, gaming is definitely the most credible.…

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