In the West, Sony is known for being an electronics giant. Despite falling brand confidence in recent years, the company is still favorably remembered by many for the Walkman portable music players of the 80s, for the PlayStations of the 90s and 00s, and their high-quality CRT TVs, before HDTVs became a household thing.
Ask most people, and they’d probably tell you that selling electronics is how Sony makes most of its money. Some particularly insightful persons might suggest that it’s royalties from their substantial music collection. Ask a Sony customer in Japan, however, and you might get a different response.
As it turns out, the electronics giant doesn’t make most of its money from electronics. Quite the opposite, in fact: Sony’s electronics arm continually neglects to turn a profit, costing the corporation at large billions of dollars per year. In part, these losses are subsidized by Sony Music Entertainment profits.
The lion’s share of Sony’s money-making business, however, comes from insurance sales.
That’s right, insurance sales. A new piece in the NYT looks at Sony’s financials and how analysts are calling for Sony to potentially exit most of the electronics markets in which it currently plays.
Over the last ten years, Sony’s electronics business has lost over $8 billion dollars. Its movie and music segments have earned a total of $7 billion. Its financial arm, however, responsible for managing the insurance part of the corporation (apparently, the biggest moneymarker is underwriting life insurance policies) has brought in over $9 billion in the last ten years.
It’s difficult to imagine the impact that Sony leaving the electronics market would have on the industry as a whole, but one thing’s for sure – it wouldn’t be minor. Despite setbacks in the PlayStation division, it’s unlikely that Sony would cede the gaming console market entirely to Microsoft and, to a lesser extent, Nintendo. Likewise, the company has won several awards for its powerful line of compact cameras – though the market appeal for such a device is increasingly limited.
Despite being founded in 1946, Sony didn’t get the chance to start offering insurance until 1981, when it opened a joint venture with Prudential in Japan.