Sony’s Q2 2014 net income rose by just over 757% year-on-year (YoY) to reach 26.8 billion yen (262 million dollars), up from 3.1 billion yen (24 million dollars) the previous year. This improvement occurred not only in to its Game and Network Services (G&S) segment, whose performance has recently been spurred by the ongoing success of the PlayStation 4 console, but also within its Home Entertainment and Sound (HE&S) segment, responsible for its TV production and sales. Overall, the HE&S segment saw a 127.5% rise YoY in its operating income from 3.4 billion yen (26 billion dollars) in Q2-13 to 7.7 billion yen (75 billion dollars) IN Q1-14.
As Sony also noted in its Q1-14 financial report (corresponding with the calendar quarter Q2-14), its gains in operating income have been significantly driven by a boost in television sales revenues, which rose by 10.5% YoY from 186 billion yen to 205 billion yen. This boost has been noted to have primarily occurred in Western and Eastern Europe, as well as Asia Pacific. This concurs with what IHS observed in its quarterly Q2-14 TV Systems Tracker, showing in Q1-14 that Sony’s shipments rose significantly by 74% in Western Europe, by 176% in Eastern Europe, as well as a 21% rise in sales to the entire Asia Pacific region (including China and the Japanese home market).
These successes have been accompanied by a number of factors. First of all the, run-up to the FIFA World cup did see TV shipments rise overall, though it is interesting that Sony capitalised these gains in Western Europe instead of Latin America where it has traditionally maintained a substantial presence. This seems also to be related to the suitability of their product and marketing mix to Western Europe. Western European consumers have traditionally been discerning of performance quality promises made by TV makers and are also well accustomed to Sony as a premium brand. This match is illustrated well by Sony’s efforts with UHD technology, where Sony has integrated its efforts between its content producing Pictures division and HE&S TV making division to ensure a production chain that can reliably supply UHD video. As a result, in Q1-14 Western Europe accounted for 28.7% of its UHD TV shipments, more than in any other region, 32.6% of Sony’s overall sales increase YoY came from FHD TVs sold into Western Europe.
A similar story seems to have played out in Eastern Europe; FHD TVs accounted for 67.4% of Sony’s sales gains into the Eastern European market YoY during Q1-14, which further underscores how important its marketing placement as a premium brand for higher resolution TVs has become. Its performance in Asia Pacific outside of China and Japan has been boosted by world cup anticipation. On the other hand, its Japanese sales gains can be seen to be associated with the recovery taking place in that country’s market; while in China, along with other foreign brands like LG and Samsung, Sony is steadily building a presence in the premium market, with 74% of Sony’s sales coming from shipments of FHD TVs compared to 40% for shipments into the Chinese market overall.
Across the board therefore, we are now seeing the fruits borne by Sony’s decisions to focus not only as a premium brand but to simplify its marketing and portfolio around a premium business model. According to data from IHS’ Worldwide TV Price and Specifications tracker, the number of Sony models listed on online retail sites sampled in the price tracker survey fell from 3290 in Q2 2012 to 2543 in Q2 2014 (with Q2 running from April To June), representing a significant 23% consolidation in portfolio size, while FHD and UHD TVs accounted for 92% of Sony TV models listed in Q2 2014.