Sony Group Chair & CEO: Future of gaming, music, AI and Japanese culture

I'm Nicola Tangen, the CEO of the Norwegian Sovereign Wealth Fund.

In this podcast, I talk to the leaders of some of the largest companies we are invested

in so that you can learn what we own and meet these impressive leaders.

Today I'm speaking to Kenichiro Yoshida, CEO of Sony.

Sony is behind the iconic Walkman that revolutionized how we listen to music, to PlayStation, Blu-ray,

and Alpha series cameras that capture the world in stunning detail.

Sony is also in movies, different electronics, semiconductors, financial services, and much

more.

We own almost 2% of Sony, translating into 17 billion kroner, or 1.7 billion US dollars.

We have been invested in Sony for more than 20 years.

Proper long-term thinking.

Ken is an impressive leader, and Sony is a fascinating company.

You don't want to miss this one.

Well, it's a huge pleasure and honor to be here with the CEO of Sony.

We all know Sony.

Sony is all over, all around us, and has been for a long time.

So big thanks, Ken, for taking the time this morning.

Do you want to just give us a brief recap of some of the ways you have changed consumer

electronics?

its business based on its origin in sound.

The Sony name and brand comes from Sonus, which is Latin meaning sound.

Since 1946, we have developed businesses in electronics, entertainment, and semiconductors.

Our electronics products initially focused on sound, such as tape recorders and transistor

radios.

Sony's entertainment business also began with music.

We launched a joint venture, CBS Sony Records, in 1968, and our move into pictures came in

1989 with the acquisition of Columbia Pictures.

And then, in the mid-90s, we started our gaming business, PlayStation.

We also engaged in transistors, which were used in transistor radios through our semiconductor

business.

Sony has the largest share of seamless image sensors.

So, I'll stop here for now.

And one of your biggest fans ever was actually Steve Jobs, and his famous turtleneck even

is inspired by the uniform you had at Sony.

So, what do you think it was that he admired so much with Sony?

such praise.

So, tell us about the shift that you made after you took over.

Entertainment content used to be our method for packaged products such as CD and Blu-ray players.

And at one point, the method itself became our purpose.

People are emotionally moved by the content.

It plays an important role in filling people's desire.

So, this will remain unchanged.

So, entertainment is now our purpose.

That is one point.

The other point is focus on creativity.

So, entertainment has become our purpose.

So, the most important decision was to shift our focus to creativity.

In other words, our pursuit of Kando.

Kando is a Japanese word for emotion.

First, we exited from our PC business.

Then, for TVs and smartphones, we focused on premium bikes.

Second, we divested battery and display panel businesses and focused on Demos image sensors.

Third, we invested in entertainment.

We strengthened our ability to create IPs, but also invested in direct-to-consumer services in specific areas.

What is the key to spurring creativity?

Since I became CEO in 2018, we have been investing in content.

That is, games, music, and pictures.

These investments have been led by our acquisition of EMI music publishing business, which was a $4 billion deal.

In addition to producing hardware like TVs and smartphones, we are also focused on making products that support creators like photographers and cinematographers.

The same applies for our semiconductors.

In the past, we produced batteries and display panels, but now we are concentrating on CMOS image sensors.

The primary use for these image sensors is smartphone cameras.

It plays a role to turn users into creators.

It influences execution, which is more important than strategy.

Culture is what ensures the ability to execute.

What I especially value is the culture of not fearing failure and learning from failure.

I have one example to show you.

Back in 2015, we launched a DTC service that covered general entertainment such as live TVs, movies, and sports.

However, we were not able to obtain many subscribers, and we learned that covering broad entertainment requires a high level of capital.

After less than five years, we had to announce the closure of the service.

This was a business failure.

However, through this initiative, we learned a great deal about DTC services.

It has led us to the idea of focusing on communities, specific areas of entertainment.

Examples are PlayStation Network, Crunchyroll, and Anime DTC service.

Is that a particular challenge in Japan where you are not supposed to lose face?

You want to preserve your face.

Is it more difficult to get that kind of culture embedded in the firm?

I think the culture of challenge is now being nurtured in the Japanese culture or Japanese society.

Thank you, Mr. Tangin, because the Somon Wealth Fund has been a shareholder in Sony for 25 years.

I thought it was an amazing thing.

Long-term thinking, in my mind, is completely underrated.

Sam Altman, who we had on recently, said it was a competitive advantage because nobody thinks long-term anymore.

Tell us about the way you think long-term in Sony.

I also believe that for all of us, the most important stakeholder is planet Earth.

The time horizon differs depending on the stakeholder.

However, I believe it's important for companies to have long-term thinking

to build a sustainable future for the next generation.

When we read the books about Sony, the whole thinking about employees as part of the family is really interesting.

How do you view this?

There are merits to having employees who know the company well.

However, I believe that having diverse backgrounds and experiences is important for your career.

Sony has many businesses, and we provide opportunities to our employees to work at different groups.

We also have a program called Sony University designed to foster global leaders.

Through this program, employees from diverse backgrounds can interact with each other

and build relationships that go beyond business boundaries.

Now, last question on the corporate culture.

We recently did an interview with a leading expert on perfectionism.

Now, how do you view perfectionism?

This is because people can learn and grow from mistakes.

It was a complete failure.

That is called PlayStation View, but that was the general entertainment DTC service.

And perhaps if we kick off with gaming and PlayStation, which is truly an iconic product for you,

how do you see the future of gaming?

Wherever there is computing, users will be able to play their favorite games seamlessly.

Gamers will be able to find a place to play in different spaces.

While PlayStation will remain our core product, we will expand our gaming experiences to PC, mobile, and cloud.

But I am personally looking forward to playing Marvel's Spider-Man 2.

How are you looking at these models compared to what you are doing?

At the same time, people usually play one game at a time.

So all you can type on many games may not be so valuable compared with video streaming services.

So we have kind of a balanced or hybrid service on PlayStation Network.

Subscription as well as paper content.

At Sony, we believe it is important to provide gamers with different options to play.

So we will continue our efforts to achieve this.

You have a lot of labels, vast catalogs, and so on.

How do you see Sony's role in the music industry going forward?

Our top artists include Beyoncé, Harry Styles, and SZA.

Many of the CEOs have had close relationships and close friendships with some of the leading musicians of the times.

Both classical and more pop-related, I guess.

Do you have musician friends?

We do not own the general entertainment DTC service.

So as an independent studio, we work with our partners and identify the best place to distribute creators' content.

However, we directly deliver content to users in specific categories, such as anime.

We share the data gained through our service so that creators can utilize it to enhance content creation.

So again, we are focusing on the creation side.

but hardware in order to make us experience AI in a different way.

Be it telephone, headsets, these kind of things.

How do you think AI will change the way we consume entertainment?

And AI is also born out of computing.

So we cannot get in the way of technology.

But at the same time, entertainment is a people business.

For example, it is technically possible to create a movie scene in which Tom Hanks speaks Japanese with a perfect lip sync.

But should we? That is the question.

The content that forms the basis of entertainment is creator-generated and copyrighted.

Creators' involvement is essential.

Therefore, Sony positions AI as a technology that supports creators.

AI should not replace them.

One example is a game.

Games are computer software.

It is made by programming language.

LLM, large language model, will help streamline game development, allowing creators to focus more on creativity.

Were there any moments in your upbringing which formed you as the leader you are today?

But if I were to choose one, it would be my experience as a president at Sony.

After becoming president and going public, I changed the company name from Sony Communication Network to Sony Entertainment.

I believed that the 21st century would be the era of entertainment.

And in that, the Internet would play a central role.

So I managed the company with a vision to make it a strong presence in this field, network entertainment.

I also removed the Sony brand, aiming to become independent from Sony.

The experience I gained at Sony has definitely helped me to become the leader I am today.

which potentially could land you a blockbuster further out?

Communication with our people, at the same time, communication with our stakeholders, including shareholders.

So our vision is quite long-term. Our purpose is quite long-term.

So I think as a CEO, direction and decision and people are the most important thing.

How can we see your curiosity in your everyday life?

Dreams and curiosity is actually the first value that I define, along with a purpose, which I would like our employees to cherish.

He spends weekdays at a group home and comes home on weekends.

So during the weekend, we go out by car or train and have lunch together.

It's usually Japanese noodles or Japanese omelette rice.

Actually, for me, spending time with him is relaxing.

Those on the autism spectrum are very diverse.

In my son's case, he can remember the full names of people he meets and never forget them.

But he cannot communicate in the same way that you or I can.

While my son has a different way of communicating, he has an incredibly pure perspective.

My wife and I often talk about how much we are influenced by his innocence.

He also makes me realize that people operate differently.

We have 110,000 people and we have diverse businesses and diverse people.

And Sony's diversity is a strength.

And I strongly believe one of my missions is to leverage this diversity.

What is your best advice to young people?

But if I was to provide one piece of advice, it would be always challenge yourself.

I let Sony to try working at an internet service provider.

And I tried many things such as online games, network services, and animation.

Many of them were not successful.

But they have led me to where I am today and have become assets for me.

Even if you fail, you can learn from your failures.

So I encourage you to continue to take on new challenges.

I am still on the learning journey.

I very much look forward to my next visit to Tokyo.

I hope we can share a bowl of noodles together and continue this very interesting conversation.