Sony (NYSE:SONY) is a player in the streaming video market. That's a good thing: by virtually every measure, streaming video is a growing space.

But, Sony's strategy in the space is... less good. In its pursuit of streaming market share, Sony has let muddled branding and a lack of killer instinct undermine its efforts.

Sony's streaming video strategy does not make sense

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Sony, Sony Crackle, and the on-demand market

The first real streaming video and cord-cutting services operated on the streaming video on demand (SVOD) model. This is the model used by Netflix: users pay a subscription fee in exchange for access to a library of content. Users choose what to watch and when to watch it.

Ad-supported video on demand (AVOD) services work similarly in the sense that they let users choose what to watch and when to watch it. However, AVOD services serve up ads along with the content in exchange for eliminating subscription fees.

Sony was the first major player in the AVOD space. It acquired Grouper in 2006, rebranding it as Crackle the following year (Crackle became Sony Crackle in 2018). AVOD seemed like a good fit for profit-minded Sony: since ad income scales with streaming volume, rights deals can be structured in a way that's fairly safe for streaming companies.

Unfortunately, Sony Crackle hasn't exactly dominated the AVOD space. When Tubi TV arrived in 2014, it debuted with a library that was already larger than the one offered by Sony's service. Tubi TV has taken off since then, effectively relegating Sony Crackle to second place in a small and poorly differentiated AVOD market.

PlayStation Vue and the live TV streaming market

Sony also competes in the live TV streaming market. Its "skinny bundle" service, PlayStation Vue, was the second such service to hit a nationwide market when it joined Dish product Sling TV in 2015.

Live TV has been a headache for Sony

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PlayStation Vue's struggles have been well-documented. Here, again, Sony seems to have squandered a head start. While Sling TV has grown to 2.2 million subscribers, Sony still has somewhere north of 500,000. Several services that debuted after Sony are now beating it in subscriber count, including AT&T's DirecTV Now, which has an amassed more than 1.8 million subscribers.

Sony claims it isn't giving up on PlayStation Vue, but rumors of the service's demise are nothing new. It's a weak entrant in a space that is becoming less chaotic, but not much more profitable.

Muddled branding

For Sony, headaches in the streaming space have a lot to do with failures of branding and failures of cooperation.

PlayStation Vue is the most dramatic example of this. The service debuted on Sony's PlayStation family of video game consoles, but it has long been available on many other platforms. Users can watch PlayStation Vue on Roku devices, Fire TV devices, iPhones, Android tablets, and many other devices and platforms. Yet the branding of the service remains tied to PlayStation video game systems.

That makes it harder for PlayStation Vue to court cord cutters who don't own PlayStations, especially older or less tech-savvy consumers who might be confused by the branding.

As of this writing, PlayStation Vue is running commercials that make a point of clarifying the difference between PlayStation Vue and PlayStation video game consoles. But it's 2018, and PlayStation Vue debuted in 2015. Where were those commercials then? And why is PlayStation Vue still called PlayStation Vue at all?

Crackle's branding is better, but still not ideal. After renaming the newly acquired Grouper in 2007, Sony ran with the Crackle brand for a decade. Then, in 2018, Crackle got its parent company's name tacked onto it and became Sony Crackle.

Muddled strategy

Branding mistakes have compounded mistakes in strategy. Other companies have integrated their offerings vertically and horizontally in ways that Sony has just failed to do.

Take Amazon, for instance. Amazon's SVOD service is rolled into its Amazon Prime brand, and the company has been able to integrate its own video streaming options into its Fire TV streaming platform to admirable effect.

Sony? Not so much. Crackle didn't become Sony Crackle until 2018, and Sony Smart TVs still don't do enough to surface Crackle's free content. Meanwhile, Amazon is actively undermining Sony Crackle by planning their own AVOD service -- reportedly called Free Dive -- on Fire TV devices.

SVOD service Hulu debuted a live TV streaming service called Hulu with Live TV in 2017. Users can subscribe to Hulu's SVOD service on its own, while the skinny bundle service always includes the SVOD service. Both, of course, as well-branded under the Hulu brand.

Sony has an AVOD service and a skinny bundle service, but they aren't connected in this way at all. That can be blamed partly on complexities related to the rules and details of AVOD versus SVOD streaming rights deals, as well as Sony Crackle and PlayStation Vue's different roots within and outside of Sony. However, the basic reality remains: unlike Hulu's streaming offerings, Sony's are not unified.

Sony's halfhearted streaming presence

It's true to say that Sony has footholds in both live TV streaming and AVOD, and that both of those spaces are growing. But Sony has been far too tentative in its streaming strategy so far. It hasn't been able to put together a strong brand or strategy for either of its two offerings, much less a unified brand and strategy for both.

All of this is bad news for Sony, which will need to make big-picture changes to its streaming lineup if it is going to stay in the streaming content game. If that isn't in the cards, Sony should cut its losses and hope to hold onto some streaming-related business through its smart TV products.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.