Sony lays out vision for cloud gaming and chips amid a trade war

Sony is developing a successor to the PlayStation 4 while laying the ground-work to ensure Sony can thrive if consumers embrace cloud gaming.

Kenichiro Yoshida, chief executive officer of Sony Corp., speaks during a news conference in Tokyo, Japan, on Tuesday, May 21, 2019. Yoshida for the first time laid out his full long-term vision for the Japanese entertainment and electronics giant, detailing plans for dealing with big changes in the game industry and an escalating trade war. (Bloomberg)

Sony Corp. Chief Executive Officer Kenichiro Yoshida for the first time laid out his full long-term vision for the Japanese entertainment and electronics giant, detailing plans for dealing with big changes in the game industry and an escalating trade war.

Yoshida, who took the helm a little over a year ago, addressed shareholders at the company's investor day on Tuesday at Sony's headquarters in Tokyo. Here's a look at what he and his lieutenants had to say about the company's prospects.

The Evolution of Gaming

Faster internet speeds are making it possible to play games on remote servers without local hardware. That's a threat to the PlayStation, which generates a third of Sony's profits. Still, without a clear timetable when (or if) a shift could happen, Yoshida is developing a successor to the PlayStation 4 while laying the ground-work to ensure Sony can thrive if consumers embrace cloud gaming.

That Microsoft Partnership Will be Key

Executives stressed that a wide-ranging partnership with Microsoft Corp. announced last week was preliminary but key to prepping for cloud gaming. Sony is approaching with an "open" mindset toward areas for collaboration, PlayStation deputy head John Kodera said.

About the Trade War and Sensors

Yoshida announced he was increasing total capital expenditure to 1.2 trillion yen ($10.9 billion) from 1 trillion yen for the three years ending March 2021, driven mostly by investments in camera sensors. The boost comes even as a U.S. ban on doing business with Huawei is raising fears of a hit to already-shrinking smartphone demand.

Addressing Mobile and Asset Sales

Yoshida said the company and board will "look at our portfolio" but suggested that the mobile phone division isn't on the selling block. "Smartphones are an entertainment product, but PCs are ultimately a productivity tool, which is why we sold that division," he said. The CEO stressed that finance and technology are a great fit as payments go digital. "I often tell my employees, especially in the tech division, what it means for Sony to have a finance division." Yoshida was responding to pressure from investors to shutter or sell under-performing or non-core businesses

Sony Wants to Lead in Entertainment

Yoshida proclaimed Sony the largest music company in the world and said profits from streaming will keep rising. Its operating margin is expected to rise by 6.5 percentage points this fiscal year compared with 2017, it said. Sony will focus on expanding via local artists in China, a growth market. For film, the company mostly stuck to its prior message that more synergy means lower costs. The efforts are already saving about $135 million a year, it said. Sony also announced a production team focused on turning video games into movies. That follows the success of the recent Pokemon movie, which could become the highest-grossing film based on a video game in history.