Author: flowie , ChainCatcher
Editor: Marco, ChainCatcher
Recently, Sony Group announced that it will launch Layer2 "Soneium" on Ethereum, trying to promote the large-scale adoption of Web3, which brings a lot of imagination space for Web3.
This Japanese giant, with a market value of over US$100 billion and a history of nearly 80 years, has businesses covering multiple fields including consumer electronics, games, film and television, music, finance, etc., and has established branches or factories in more than 140 countries and regions around the world.
According to Sony's 2023 financial report, its net profit for the whole year of 2023 was 970.6 billion yen (approximately US$6.619 billion).
Whether it is bringing a large number of Web2 users to Web3 or the potential capital investment, it seems to be a positive signal for Web3.
In fact, this is not the first time Sony has laid out Web3. Since announcing its investment in blockchain research and development in 2016, Sony has been involved in Web3 sub-sectors such as hardware wallets, metaverse/blockchain games, NFTs, stablecoins, and crypto exchanges.
However, facing the long innovation cycle of Web3, Sony may also find it difficult to get rid of the shackles of "big company disease". On the one hand, although its tentacles are wide, it is too eager for success and is prone to give up halfway; on the other hand, it often selectively applies technologies such as blockchain, and the marketing gimmick may be greater than the actual implementation.
For the Web3 industry, in this innovation-driven wave, perhaps we should not have too high expectations for the participation of traditional giants.
Web3 is broad but not deep, often only scratching the surface
"Before getting too excited about Sony and its new L2, remember that its previous crypto project was an NFT market called SNFT that virtually no one used." @beaniemaxi, a crypto kOL with 200,000 followers on the X platform, expressed doubts about Sony's high-profile announcement of its Layer2 strategy.
In @beaniemaxi's opinion, Sony may be like most large companies such as Google, launching 100 products and quickly abandoning 95 of them once they fail to gain traction.
In fact, looking back at its eight years of Web3 development, Sony is indeed good at keeping up with hot topics, but it often stops at the surface. Many Web3-related businesses have no follow-up after being announced, and the products have only remained on paper or in research, and have not been put into large-scale application.
Sony's earliest layout of Web3 can be traced back to 2016. At that time, Ethereum and ICO had not yet taken off, and crypto asset transactions in Japan had not yet been included in compliance supervision.
Sony is mainly trying to use blockchain technology to build some shared databases for encrypted transmission and sharing of data.
In early 2016, Sony International Education announced that it would introduce blockchain technology into the K12 field to achieve encrypted transmission of student data.
Since then, Sony has also made similar attempts in real estate and travel. For example, in 2019, Sony established a laboratory with commercial banks to try to maintain the transparency of information in real estate transactions through blockchain and create an environment that promotes transactions.
In 2020, Sony announced plans to develop a public database platform (BCDB) to attempt to record and share anonymous travel history data, realize revenue distribution, and improve the efficiency and transparency of travel services.
These plans are similar to the popular RWA and DePIN concepts in the past two years, but due to compliance and technical issues, it is difficult to find initial results after implementation.
In addition to software, Sony is also trying to make a crypto hardware wallet.
In early 2018, Sony followed the trend and announced the development of a contactless cryptocurrency hardware wallet. The hardware wallet is based on Sony's Felica smart card technology.
According to Nikkei Review, Felica chips shipped worldwide reached 1 billion in 2016. If Sony successfully integrates and enables Bitcoin payments, it may bring considerable adoption to the crypto market.
However, Sony has not announced any plans to put this hardware wallet into practical use.
This year, Sony, which has a large gaming business, also announced its adoption of blockchain games.
At the end of 2018, Sony announced that it would release the blockchain game "Plague Hunters" in the first quarter of 2019. Sony said that Plague Hunters is an Ethereum-based role-playing game and will become the first game to use blockchain technology. However, in 2019, there was no release news or player data for this "Plague Hunters".
In 2020 and 2021, with the popularity of Web3 concepts such as chain games, metaverse, NFT, which are strongly linked to games, copyright, etc., Sony, which has a deep layout in games, music and other fields, began to accelerate the exploration of Web3. In addition to simple cooperation with Web3 projects, Sony will subsequently carry out related businesses through the establishment of subsidiaries and other means.
When it comes to NFT, Sony's operations were relatively simple at the beginning. It mainly launched NFTs of movie tickets through partners, and developed some NFTs through strategic cooperation with NFT market platforms.
For example, Sony Music Entertainment (SME) has reached a cooperation with Solana's NFT platform Snowcrash, which can release celebrity series NFTs such as stars or artists, but the platform has rarely spoken since January 2023.
On April 13, 2022, Sony Network Communications announced the establishment of an NFT business company in Singapore. The company is a joint venture with software development company Sun Asterisk, with Sony Network Communications' investment ratio being 70%.
Its businesses include "NFT business strategy planning support", "NFT issuance support", "unique token issuance support", "NFT game development support" and "NFT promotion support". The joint venture operates an NFT market SNFT, but it does not have much presence in the market.
This summer, Sony Bank launched the Web3 mobile application "Sony Bank CONNECT" in an attempt to provide digital service content to its bank's NFT users and digital securities users.
In addition, Sony has applied for a number of NFT patents. In early 2023, Sony Interactive Entertainment has applied for NFT-related patents to allow consumers to use NFTs in the Sony ecosystem, while also supporting games from other third-party game developers such as Nintendo and Microsoft.
In the Metaverse and blockchain games, Sony has reached strategic cooperation with Metaverse infrastructure developer Hadean, Metaverse digital human avatar technology company Didimo, and others.
In March 2022, Premier League champion Manchester City Football Club established a three-year partnership with Sony, planning to build a football stadium in the Metaverse. In October 2023, the Metaverse's leading platform Roblox also went online on Sony PS4 and PS5.
As the popularity of the Metaverse, NFT, etc. fades in 2022 and infrastructure such as public chains emerges, Sony has also begun to shift to more basic infrastructure or financial services.
The Layer2 public chain plan recently announced by Sony was actually launched as early as 2023.
In September 2023, Startale Labs announced that it had received a $3.5 million investment from Sony Network Communications, and announced that it had established a joint venture with it to promote the development of Sony Chain, saying that the chain has the potential to surpass Coinbase's previously released Layer2 network Base.
On April 5, 2024, Sony Bank also announced the official launch of an empirical experiment on the issuance of stablecoins pegged to fiat currencies. It attempts to reduce the transaction fees for individuals when making payments and transfers, while exploring its potential for application in intellectual property-related businesses in areas such as games and sports.
Web3 investment exceeds $1 billion, heavy bet on metaverse games
In addition to exploring Web3 at the business expansion level, Sony is also deploying Web3 through investment.
Sony has not set up a dedicated investment fund for Web3 investment.
Sony invests in innovative technology funds focusing on emerging fields such as artificial intelligence, robotics and financial technology through its Sony Financial Ventures, Sony Innovation Fund, Innovation Growth Fund I L.P. and other funds. The funding scale of Sony Innovation Fund and Innovation Growth Fund is 10 billion yen (about 68 million US dollars) and 20 billion yen (about 136 million US dollars) respectively.
From 2019 to the present, in the past five years, Sony has made about 10 investments in the Web3 field. Its largest bet is on metaverse games, with five financings related to it.
Among them, in April 2022, Sony announced an investment of US$1 billion in Epic Games to accelerate the construction of the game ecosystem metaverse. Epic Games' post-investment valuation reached US$31.5 billion.
Epic Games is the developer of "Fortnite", the most profitable game on the entire Internet, and controls the "Unreal Engine" which is the most widely used mainstream 3A games.
Before the concept of the metaverse became popular, Sony had invested US$250 million and US$200 million in Epic Games in 2020 and 2021, respectively.
Although the Metaverse concept has faded, Epic Games is still a leading player in the Metaverse concept. In early 2024, according to foreign media GamesIndustry.biz, Epic Games once again received a $1.5 billion investment from Disney to create a new game entertainment universe.
Anzu, which focuses on inserting advertisements in metaverse games, received $20 million in financing in 2022 with Sony participating, and then received another $48 million in Series B financing in 2023 led by Emmis Corporation and participated by PayPal Ventures and others.
Entering 2024, Sony's two Web3 investments are still in games. Sony invested in double jump.tokyo, the developer of Oasys, a long-established Japanese game public chain, to promote its development on the Sony Group blockchain "Soneium".
Among the Web3 startups that Sony invested in early, the asset tokenization platform Securitize has the most stable development momentum. After the RWA boom in 2023, it has become the underlying technology provider for many RWA institutions. After Securitize received investment from Sony, it raised nearly $100 million in two rounds of financing.
BlackRock also led Securitize’s $47 million funding round in May this year. Earlier in March, BlackRock partnered with Securitize to launch a new fund, the BlackRock USD Institutional Digital Liquidity Fund.
Recently, Securitize also provided support for the issuance of securitized tokens for Sony's new film. Sony Bank and Sumitomo Mitsui Trust Bank used the Securitize platform to provide digital securities to their customers.
However, Sony's early investments in crypto banking and NFT markets have performed poorly.
Nuri, a crypto bank invested by Sony in 2019, declared bankruptcy in August 2020 after failing to find an acquirer and external investment.
In 2021, MakersPlace, invested by Sony, was one of the top five NFT trading platforms in terms of trading volume.
MakersPlace once collaborated with Christie's to auction artist Beeple's digital artwork "Everydays: The First 5000 Days" for a sky-high price of US$69 million, attracting the attention of a large number of users.
However, as of September 2, 2024, according to NFTscan data, MakersPlace has had almost no trading volume in the past 7 days and the past month.
In addition to traditional investment models, in May 2023, Sony, through its subsidiary Sony Network Communications, cooperated with Polkadot's parallel chain Astar Network to launch the Web3 incubation program, and initially reached early Web3 projects by holding "Demo Day" events.
Sony is in a state of sluggish growth after another high-profile foray into Web3
As we enter 2024, Sony's layout and voice on Web3 seem to be more high-profile.
In the past, Sony's Web3 layout was mostly limited to technologies such as blockchain, or it was based on the vaguely defined Web3 concept.
But in July this year, Sony first announced the acquisition of Amber Japan (now S.BLOX) to enter the field of cryptocurrency trading; recently it announced a partnership with Startale Labs to launch Layer2 "Soneium" on Ethereum to build a universal blockchain.
In the Japanese encryption market, which has always been regarded as closed, conservative, strictly regulated and slow-paced, Sony's recent developments have indeed attracted attention.
Judging from Sony’s own business development, Sony is indeed looking for a growth path after PS5.
In February this year, after Sony Group disclosed its third fiscal quarter results for 2023 ending December 2023, Sony's total market value in the stock market had evaporated by approximately US$10 billion.
Some Wall Street analysts said that before the January-March 2022 quarter, the operating profit margin of Sony's gaming business unit had been about 12%-13% in the past four years, and Sony's gaming operating profit margin in that quarter was the lowest in nearly a decade.
In the face of slowing growth in the gaming business, Sony Group President Hiroki Totoki mentioned a new growth strategy after releasing its fiscal 2023 financial report in May, "maximizing synergy through game, music and movie content IPs" and exploring a growth model that continues to make money from its own content. And a growth investment plan such as 1.8 trillion yen in mergers and acquisitions (M&A) will be implemented in the next three years.
Cryptocurrency exchanges and public chains have always been one of the most profitable areas in the crypto field. Sony's high profile in the crypto field this year may be to alleviate the sluggish growth.
General blockchains such as public chains are also conducive to Sony's further realization of content IP synergy. Startale Labs CEO Sota Watanabe recently revealed on social platforms that Sony's blockchain Soneium is focusing on creative IP to build a universal creation platform, which is in line with Sony's growth strategy of "maximizing content IP synergy".
In addition, the relaxation of regulation may also provide positive factors. In April 2023, Japan's largest party, the Liberal Democratic Party, released the "Japan 2023 Web3 White Paper" in an attempt to relax regulation. Officials from the prime minister to various Web3 conferences are supporting them.
With Sony’s high-profile announcement of its entry into the encryption field creating a demonstration effect, it is expected that larger Japanese giant players will announce their encryption layout in the future.
However, there are still many skeptics about the encryption plans launched by traditional Japanese giants such as Sony.
Judging from the Sony Web3 layout summarized in the previous article, most of them participate in the form of strategic cooperation or investment. The same is true for the crypto exchange acquired this year and the Sony Chain to be released soon. The official core team of Sony is not the leader.
Given its extremely broad business scope, it is questionable how much Sony can invest and persist in this part of the business.
Secondly, the limitations of traditional Web2 thinking. Crypto KOL @Lorrainelooloo said that if the final product of "Sony Web3 Ecosystem World" (Soneium) is still a "selective application of blockchain technology as a marketing gimmick, and the core is still a traditional approach from top to bottom" and cannot achieve more innovative breakthroughs, it may even hit the creativity of the Japanese crypto industry.
