CoinWorld reported:
Sony is actively entering the Web3 industry by acquiring centralized exchanges, launching the Soneium blockchain mainnet, and developing stablecoins, aiming to build a comprehensive ecosystem and accelerate digital transformation.
Written by:
Leo Park, Jay Jo, and Yoon Lee
Translation: Blockchain in Plain Language
Summary:
Sony is venturing into the Web3 industry to pursue new growth stages. Key initiatives include acquiring centralized exchange platforms (CEX), launching the Soneium blockchain mainnet, and developing stablecoins.
Sony’s Web3 strategy focuses on three pillars: non-financial (entertainment and gaming), financial (stablecoins, security tokens), and infrastructure. By connecting these areas, Sony aims to build a comprehensive Web3 ecosystem.
Under the vision of “Beyond Boundaries,” Sony’s approach will accelerate digital transformation, create new revenue streams, and enhance synergies.
1. Introduction:
Sony was once a symbol of Japan’s economic growth and a leader in the electronics, gaming, and entertainment sectors. However, its dominance began to weaken in the 2000s. The company struggled to adapt to the rapid transition from analog to digital, facing competition from companies like Samsung. The difficulty in responding to market changes led Sony into a crisis.
As a response, Sony took decisive measures to overcome challenges and enter a new growth stage. The company significantly reduced its dependence on the electronics business, which previously accounted for 70% of its total revenue, and shifted its focus to the future-oriented entertainment industry. This bold restructuring laid the foundation for future growth and profitability. In 2023, Sony’s operating profit surpassed Samsung’s for the first time in 24 years, highlighting the success of Sony’s transformation and innovation.
Sony’s pursuit of innovation goes further. In its recent annual strategy meeting, the company announced its commitment to pursue innovation beyond industry boundaries, under the slogan “Beyond Boundaries.” This aligns with Sony’s recent ventures into the Web3 space. This report will examine Sony’s blockchain initiatives and explore its vision for the Web3 industry. Through this, we aim to gain a deeper understanding of Sony’s future vision and strategic direction in the Web3 space.
2. Sony Group Officially Enters the Web3 Industry:
Sony’s pursuit of innovation goes further. In its recent annual strategy meeting, the company announced its commitment to pursue innovation beyond industry boundaries, under the slogan “Beyond Boundaries.” This aligns with Sony’s recent ventures into the Web3 space. This report will examine Sony’s blockchain initiatives and explore its vision for the Web3 industry. Through this, we aim to gain a deeper understanding of Sony’s future vision and strategic direction in the Web3 space.
2017: Sony Global Education develops a blockchain-based digital education platform.
2018: Sony Corporation, Sony Music, and Sony Global Education jointly develop a blockchain-based digital content copyright management system.
2018: Sony Computer Science Laboratories (CSL) develops IC card-based cryptocurrency hardware wallet technology.
2020: Sony develops a blockchain-based database platform for a smart city research project in the Netherlands.
2021: Sony Pictures provides NFTs to pre-order customers of “Spider-Man: No Way Home.”
2022: Sony Interactive Entertainment applies for Web3 technology patents, including in-game NFTs.
2022: Sony Group establishes “SNFT,” a subsidiary operating an NFT marketplace.
2023: Sony Network Communications and Startale Labs form a joint venture to build a blockchain mainnet.
2023: Sony Group subsidiary Quetta Web acquires the centralized exchange platform “WhaleFin.”
2024: Sony Bank begins conceptual verification experiments for stablecoin issuance.
2024: Sony Bank develops the mobile NFT platform “Connect.”
2024: Sony Blockchain Solutions Laboratory announces the launch of the Ethereum L2 mainnet “Soneium.”
Sony has been actively investing in and developing blockchain technology since the early days. Sony’s subsidiary companies in various industries are exploring ways to integrate blockchain into their respective fields. The first significant move was in 2016 when Sony Global Education announced plans to develop a blockchain-based digital education platform.
The experience gained from developing this digital education platform quickly expanded to other areas. Sony Music Entertainment applied the technology to the authentication, sharing, and copyright management system for digital content, including music, movies, and e-books. In 2018, Sony Computer Science Laboratories launched a hardware cryptocurrency wallet based on non-contact IC cards. By 2019, Sony had established a blockchain-based database platform for the Dutch government’s smart city research project.
Since 2022, Sony’s blockchain-related initiatives have significantly accelerated, aligning with the Japanese government’s policies to promote the Web3 industry. Sony is shifting from blockchain research to turning this technology into viable business models. Recent initiatives, such as acquiring centralized exchange platforms, announcing plans to issue stablecoins, and launching their own blockchain mainnet, reflect this transformation. It is worth noting that Sony is boldly expanding into core areas of the Web3 ecosystem, breaking traditional boundaries to challenge the Web3 industry. The following section will explore Sony’s recently announced Web3-related businesses.
1) Business Expansion through CEX Acquisition:
In August 2023, Sony acquired the centralized exchange platform “WhaleFin,” marking its official entry into the trading business. WhaleFin was originally launched as DeCurret, a registered Japanese centralized exchange platform service provider, and was acquired by Amber Group in 2022 before being fully acquired by Sony Group’s wholly-owned subsidiary, Quetta Web.
Recently, Sony rebranded WhaleFin as “S.BLOX” and focuses on expanding its trading business. The company aims to enhance the user experience of the trading platform and create new value in crypto transactions by leveraging Sony Group’s diverse business connections. Despite these ambitions, S.BLOX currently falls behind other trading platforms in terms of competitiveness. The platform only offers nine cryptocurrencies, has low trading volume, and generates revenue 20 times less than Japan’s leading exchange platform, Bitflyer, raising questions about its future potential.
Despite this, there is still room for synergistic development through Sony’s acquisition. Centralized exchange platforms serve as entry points to the Web3 industry and can create significant synergies by relying on enterprises that depend on them, especially amid the challenges of cryptocurrency entry and exit. Additionally, the integration of Sony’s various Web3 industry connections is expected to help enhance the competitiveness of the trading platform.
2) Soneium: Sony’s Blockchain Infrastructure Business:
Sony Blockchain Solutions Laboratory announced its official entry into the mainnet business and plans to launch the Ethereum Layer 2 blockchain, “Soneium.” This announcement comes approximately a year after establishing a joint venture with Startale Labs.
With this announcement, the joint venture’s name changed from “Sony Network Communications Laboratory” to “Sony Blockchain Solutions Laboratory.” Sony Group holds a 90% stake in this joint venture, with Startale Labs holding the remaining 10%. Given Sony Group’s controlling position, it is expected that this joint venture will play a core role in Sony’s Web3 strategy, providing infrastructure for the application and integration of Web3 technology across various departments.
Notable about Sony Blockchain Solutions Laboratory’s strategic approach is that it goes beyond simply launching a new mainnet. By integrating Astar’s zkEVM technology into Soneium, Sony aims to leverage this technological asset to accelerate business development. This approach aligns with Sony’s recent success through bold innovation, contrasting with Japan’s traditionally conservative corporate culture.
The personnel structure is also noteworthy. Sony Blockchain Solutions Laboratory is led by Jun Watanabe, former President of Sony Network Communications and a board member of Startale Labs. He is also responsible for Sony Group’s cryptocurrency exchange platform, S.BLOX. This leadership arrangement not only highlights the potential for internal collaboration within Sony Group but also suggests closer business opportunities between Startale Labs and Astar Network.
3) Sony’s Stablecoin Business:
Sony has shown a strong intention to enter the stablecoin market. According to a report in April by Nikkei, Sony Bank, a subsidiary of Sony Financial Group, has started experimental issuance of stablecoins based on various fiat currencies, including the Japanese yen. This move seems to explore the potential of using stablecoins as a digital payment method within a broader Sony Group.
At the same time, Soneium’s involvement in stablecoins has also increased Sony Group’s interest in stablecoin-related businesses. In September, Soneium announced a partnership with Circle, the issuer of the USD-backed stablecoin USDC, planning to support USDC within the Soneium ecosystem.
This move has sparked discussions about whether Sony will issue its own stablecoin on the public Soneium mainnet. However, this plan is expected to face significant challenges. Regulatory authorities have indicated risks in issuing stablecoins on public mainnets, especially stablecoins issued by banks, and require potentially time-consuming regulatory changes.
Despite these challenges, the participation of leading Japanese internet banks like Sony Bank is seen as a positive signal for the industry. If Sony Bank successfully issues stablecoins on Soneium, it could support various applications, including cross-border payments through integration with USDC. The future development in this area is worth closely monitoring.
3. Where Will Sony’s Web3 Business Go?
Sony plans to adopt a comprehensive Web3 business strategy across multiple subsidiary companies. This strategy may be built around three key pillars: 1) Non-financial sectors, 2) Financial sectors, and 3) Infrastructure.
Non-financial sectors are expected to be led by Sony Group, with a particular focus on utilizing Web3 technology in entertainment and gaming. Sony Music has already launched NFTs based on its artists’ intellectual property and actively explores the commercialization of music IP through Web3 technology. Discussions on utilizing Web3 in the gaming industry are heating up, as evidenced by recent patents for NFT and SFT technologies.
Financial sectors are expected to be led by Sony Financial Group, which is currently preparing for a spin-off from Sony Group. They will focus on the integration of Web3 technology with the financial industry, including stablecoins and security tokens. Sony Bank has been conducting research and development on stablecoins and became the first Japanese bank to sell loan bonds as security tokens. Based on this foundation, Sony Financial Group is expected to further expand the application of Web3 technology in the financial sector.
Lastly, Sony Blockchain Solutions Laboratory is expected to manage the infrastructure that serves as the foundation for all of Sony’s Web3 initiatives. While technically part of Sony Group due to Sony’s majority stake, the laboratory is expected to provide infrastructure services to both Sony Group and Sony Financial Group, acting as a bridge between the two. By efficiently utilizing Sony’s assets, Sony Blockchain Solutions Laboratory is expected to be a key driver in promoting collaboration among Sony’s Web3 businesses.
These three sectors may organically connect with each other. For example, stablecoins issued by Sony Financial Group could serve as a payment method within Sony Group, or various intellectual property assets of Sony could be tokenized by Sony Financial Group. These collaboration opportunities are abundant and can allow Sony to establish a comprehensive Web3 ecosystem covering its diverse business areas.
4. Conclusion:
Sony was a dominant force in the electronics market during the 1990s with its Walkman, but struggled to diversify in the 2000s. The rise of Apple’s iPod weakened Walkman’s position, and competition from Korean companies like Samsung and LG threatened Sony’s market share in LCD TVs. The company failed to keep up with the rapid transition from analog to digital, leaving it in a vulnerable position.
To recover, Sony adopted a strategy of “selection and focus.” They reduced underperforming businesses and made significant investments in core areas with high growth potential. As part of this transformation, Sony has viewed blockchain technology as a new growth driver and actively explores related business opportunities. By combining blockchain with Sony’s rich entertainment content, including gaming, music, and movies, innovative user experiences and business models are expected to be created.
This approach by Sony may accelerate the digital transformation of its existing business areas while opening up new revenue streams. Aligned with its recent vision of “Beyond Boundaries: Maximizing synergies within the group,” blockchain technology is expected to play a key role in creating synergies among Sony’s various departments. We look forward to seeing how this long-standing industry leader leverages blockchain to create new value and enhance its market position.
