Set-Top Box Wars: Why Sony Is Launching PlayStation TV

Learn why Sony is launching its new set-top box and what this means for Amazon's Fire TV.

Jun 19, 2014 at 9:00PM

Japanese tech giant Sony (NYSE:SNE) has undertaken a long restructuring process over the past few years, eliminating product lines and cutting jobs. At the recent E3 conference, the company announced that it will release its own set-top box in the U.S., called PlayStation TV. After the successful launch of its PlayStation 4, the company seems to be aiming toward a new segment of the entertainment tech industry.

Plus, the fact that its set-top box is compatible with the PlayStation 4 allows Sony to reap more benefits from its latest console. In that sense, the launch of PlayStation TV could lead to considerable increases in revenue and user engagement, and keep pace with companies like Amazon.com (NASDAQ:AMZN), which produces its own video game set-top box.

Expanding product portfolio
Since the financial crisis, Sony has struggled to maintain positive earnings, continually accumulating net losses. In its fiscal year ended March 31, 2014, the company had a net loss of approximately $1.26 billion and losses per share of $1.21. In its attempt to adapt to the rapidly changing industry, the company has taken several measures, and continues to do so. One of these moves has been expanding its portfolio with products that are up-to-date with current market trends.

Despite incurring high restructuring costs, Sony has managed to create a very successful console, the PlayStation 4, which has surpassed its competitors, Microsoft and Nintendo. Beyond enjoying the benefits of having a No. 1 console, it seems like the company plans to amplify its success with a new PS4-compatible set-top box. Clearly, Sony's PlayStation TV is designed to draw more customers into the PlayStation ecosystem.

Promoting the PlayStation ecosystem
The PlayStation TV can connect to a nearby PlayStation 4 and stream content to another TV via remote play. As a result, gamers can use the console in more than one room. Through access to PlayStation Now -- Sony's cloud-enabled game streaming service -- the set-top box includes over 1,000 software titles, classic games, and top hits from past-generation consoles, as well as the PS Vita.

Moreover, the set will be sold in a bundle in the U.S. that's composed of PlayStation TV, the Lego Movie video game, and a DualShock 3 controller, making this new set-top box an effective way for Sony to engage new users. This engagement could attract a considerable number of users to the high-end PS4 console, further improving Sony's top line.

Facing Amazon's Fire TV
Amazon, the world's largest online retailer and cloud service company, has its own set-top box called Fire TV, which also streams video games. Through its video streaming service, Amazon Prime Instant, users can access a library rich in movie content. Moreover, Amazon offers its own video game controller for $39.99. So far, Fire TV contains game titles from renowned publishers like Rockstar Games, Electronic Arts, and Ubisoft

Due to these features, the Fire TV has raised concern for Sony, as it could potentially take away a slice of PlayStation's gamers. In that sense, Sony is answering with a very differentiated set-top box, able to draw new users into the PlayStation ecosystem. In that manner, Sony can protect PlayStation's user base, and also keep up its growth. 

Both set-top boxes are priced equally at $99, however, Sony might get a competitive advantage through its launch, as it will sell its set-top box in a bundle.

Final foolish takeaway
In the process of restructuring its business, Sony will soon launch PlayStation TV, expanding its product portfolio and further promoting the PlayStation ecosystem. The new set-top box could attract and engage new users, possibly leading to additional sales of PS4 consoles. Moreover, PlayStation TV allows Sony to properly compete with Amazon's Fire TV, which could take some of Sony's potential users. As a result, Sony can protect its PlayStation user base while maintaining its growth, increasing its top line, and getting further ahead in the market.

The way you watch television is changing, and you can profit
You know cable's going away. But do you know how to profit? There's $2.2 trillion out there to be had. Currently, cable grabs a big piece of it. That won't last. And when cable falters, three companies are poised to benefit. Click here for their names. Hint: They're not Netflix, Google, and Apple. 

 

Alvaro Campos has no position in any stocks mentioned. The Motley Fool recommends Amazon.com. The Motley Fool owns shares of Amazon.com. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Money to your ears - A great FREE investing resource for you

The best way to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as “binge-worthy finance.”

Feb 1, 2016 at 5:03PM

Whether we're in the midst of earnings season or riding out the market's lulls, you want to know the best strategies for your money.

And you'll want to go beyond the hype of screaming TV personalities, fear-mongering ads, and "analysis" from people who might have your email address ... but no track record of success.

In short, you want a voice of reason you can count on.

A 2015 Business Insider article titled, "11 websites to bookmark if you want to get rich," rated The Motley Fool as the #1 place online to get smarter about investing.

And one of the easiest, most enjoyable, most valuable ways to get your regular dose of market and money insights is our suite of free podcasts ... what we like to think of as "binge-worthy finance."

Whether you make it part of your daily commute or you save up and listen to a handful of episodes for your 50-mile bike rides or long soaks in a bubble bath (or both!), the podcasts make sense of your money.

And unlike so many who want to make the subjects of personal finance and investing complicated and scary, our podcasts are clear, insightful, and (yes, it's true) fun.

Our free suite of podcasts

Motley Fool Money features a team of our analysts discussing the week's top business and investing stories, interviews, and an inside look at the stocks on our radar. The show is also heard weekly on dozens of radio stations across the country.

The hosts of Motley Fool Answers challenge the conventional wisdom on life's biggest financial issues to reveal what you really need to know to make smart money moves.

David Gardner, co-founder of The Motley Fool, is among the most respected and trusted sources on investing. And he's the host of Rule Breaker Investing, in which he shares his insights into today's most innovative and disruptive companies ... and how to profit from them.

Market Foolery is our daily look at stocks in the news, as well as the top business and investing stories.

And Industry Focus offers a deeper dive into a specific industry and the stories making headlines. Healthcare, technology, energy, consumer goods, and other industries take turns in the spotlight.

They're all informative, entertaining, and eminently listenable. Rule Breaker Investing and Answers are timeless, so it's worth going back to and listening from the very start; the other three are focused more on today's events, so listen to the most recent first.

All are available for free at www.fool.com/podcasts.

If you're looking for a friendly voice ... with great advice on how to make the most of your money ... from a business with a lengthy track record of success ... in clear, compelling language ... I encourage you to give a listen to our free podcasts.

Head to www.fool.com/podcasts, give them a spin, and you can subscribe there (at iTunes, Stitcher, or our other partners) if you want to receive them regularly.

It's money to your ears.

 


Compare Brokers