SONY BATTLES WITH TWO-MEDIA ENG STRATEGY

No vendor of technology to the U.S. broadcast industry has matched Sony's high profile. Ever since the 1970s, when the Japanese company rose to rival—and eventually topple—giant domestic players like RCA and Ampex, the Sony logo has been prominent within TV station studios, newsrooms and among their field and ENG operations.

According to Alec Shapiro, senior VP of sales and marketing at Sony Electonics' Broadcast and Production Systems Group, the company has a dominant market share in broadcasting's important camera sector, and is working hard to maintain that lead against longtime rival Panasonic and others.

Over the decades, Sony has developed a series of camcorder systems that broadcasters have adopted in large numbers. In 2003, it led the way into tapeless ENG with its XDCAM line, which uses an optical disc-based recording medium. While successful, XDCAM faces strong competition from Panasonic's line of camcorders that use P2 technology, based on solid-state memory cards.

Then, a year ago, at NAB 2007, Sony announced its own entry into the solid-state camcorder fray with the XDCAM EX, a version of XDCAM based on Smart Card technology that Sony calls SxS (pronounced S by S).

In this edited transcript, Shapiro talks with TVNEWSDAY'S Peter Caranicas about Sony's strategy in the broadcast marketplace.

How important is the U.S. broadcast market for Sony, versus the prosumer market at the lower end and the digital cinematography market at the upper end?

You just outlined what has been the focus of Sony Broadcast and Production Systems for the past seven or eight years. They're all very important to us, and we've got a dominant market share in all three.

What is your share in the broadcast market?

It is much easier for us to track it in the large-station markets, and I would say we're probably between 60 and 70 percent, depending on the type of product, whether it's a studio camera or a news camera. A lot of the smaller TV markets are serviced by resellers, so that's a lot harder for us to track. But in terms of our higher-end product—our broadcast studio cameras, our XDCAM cameras—we have a pretty strong market share.

In which station groups are you dominant?

Off the top, I would say CBS, Hearst-Argyle, Gannett, Tribune, Belo, Pappas and Allbritton. ABC just purchased some XDCAM products. NBC has been using some XDCAM and some HDCAM. They've also standardized on our studio cameras and switchers, as has Fox. In cable, we're strong at Cablevision, MSG, Comcast, E! Networks and HSN. At NAB we announced that ESPN has standardized on our studio cameras, switchers and displays for LA Live, the new facility they're building in Los Angeles.

How is it decided whether a sale will be made directly by Sony or through a reseller?

It's customer-driven. All of the companies I just mentioned are ones we've had longstanding direct-selling relationships with, going back into our days with Betacam and our BVP line. They've traditionally been handled on a direct basis. Resellers focus more on the smaller-market stations that are, frankly, just a little more difficult for us to call on on a direct basis, and which are working in most cases with lower capital budgets.

How do the purchases of smaller stations differ?

We're selling a lot of HDV product into that market. Previously we sold a lot of DVCAM product to small-market stations. They use both for ENG applications. Basically, if it's something that you can buy with a credit card, you're going to buy it through a reseller. If it's something that requires training and support, you're more likely to buy it on a direct basis.

A lot of broadcasters are looking for lower-cost HD cameras, whether for the newsroom or out in the field. What are you offering them?

As of July, we'll have eight different models of HD cameras priced at $10,000 or less. They support all media, from tape to Compact Flash, to hard disc, to SxS cards. Everybody used to be wary of the transition to HD because of the cost of HD vs. SD, but quite the opposite is happening. If you look at the current range of offerings we have in HD, you'll find that the cost of ownership of HD in general is less expensive than the SD analog Betacam acquisition equipment that stations invested in many years ago.

How has HDV done among broadcasters?

It's done pretty well. Again, it's very hard for us to track because about 95 percent of our HDV sales go through resellers, so we don't get the level of customer information that we get when we sell direct. But I think HDV has done pretty well in both small market stations and in a variety of applications in some of the larger markets as well.

How is XDCAM EX doing so far?

We had a tremendous launch of EX prior to NAB; in a very short amount of time we sold several thousands of units. I would say that more than 50 percent of those sales are going to TV stations.

Direct or through resellers?

That's actually sold both directly and through resellers. We tend to stick to the traditional accounts that I mentioned earlier as direct accounts. That's where we have the relationships. Pretty much everything else goes through resellers.

Why did the XDCAM line add a solid-state version with the EX product?

For a combination of reasons. XDCAM has been designed around the needs of the ENG industry. In newsgathering there is definitely the need for a rugged, portable handheld camcorder, as evidenced by one of the most successful camcorders we've ever sold—not necessarily designed for ENG but used for that all over the world.

Our DSR-PD150/170 DVCAM SD cameras are very popular among news journalists, especially in areas where you have one-person crews, where people are being shot at and you might want to actually lose the camcorder as you're fleeing. We felt that solid-state memory was more efficient for that type of an application than actually designing a smaller-size disc camcorder.

That was one factor. Also, we were waiting for the Express Card platform to become readily available in the marketplace. We didn't want to design a camcorder based on the PCMCIA card, which was essentially declared obsolete a couple of years ago by the computer companies.

Will the optical-disc XCDAM line and XDCAM EX continue to co-exist?

Absolutely. And as both optical disc as well as solid state continue to evolve, we'll have significant plans for product development in both areas.

How does a broadcaster make the decision to use one or the other?

In the SD analog world, you pretty much had similar workflow wherever you went. However, when you get into digital and HD, we're finding that the workflows change and become different for each broadcast group. What NBC wants to do is not necessarily what CBS wants to do. A lot of the initial input when we introduced XDCAM was that many of our customers wanted to have a piece of [optical] media they could put on the shelf.

As part of their workflow, there are stations out there that don't want to give that up. On the other hand, other stations are trying to be completely medialess. I'm not sure why memory cards are considered medialess, because they are a piece of media. I guess the thinking with memory cards is that you don't put them on a shelf, so they're more reusable—although you can record on an optical disc a thousand times without any degradation of quality.

And there's a new application altogether for memory cards. You have a lot of production going on right now for the Internet, and solid state probably makes more sense for that type of distribution.

Is standard def disappearing?

It's gone. We're still selling SD in Latin America and some other parts of the world, but in U.S. it's pretty much gone. I can't imagine why you would buy an SD camera today. You can use our HDV cameras in an SD application if you want.

Jumping briefly into broadcast monitors, what Sony's market share?

We've been dominant in CRTs. In terms of the installed base among television station in the CRT world, we're probably at 65 to 70 percent. But CRTs are not being manufactured any more, and we've been transitioning broadcasters to LCD displays over the last two years. I hope we enjoy the same success in LCD displays as we had in CRT. It's starting, but the turnover in monitors is not as quick as in acquisition.