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The audience cackles as Sony launches Crackle

It's just Grouper regrouped

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In the end there are three ways to build a video website. Leverage existing traditional content; create entirely new forms of content; or index everyone else's content. Sony is an organisation that should be able to play at doing all three and should be well into the process already.

So far it has opened and now de-emphasised its Connect music service, without ever putting up a fight and promoting it. Or like Apple, being brave enough to make it a closed network, with only its own DRM working on the site.

It says instead it will move all activity such as Connect, including music, music videos, and films to the new PS3 networking site, but given that it has had about five years to create such a network, where is it? The network at present is entirely devoted to games, with hardly a major motion picture in sight.

If it really plans to drive all of this content to new Bravia TV sets, with web streaming and searching facilitated out of the box, then it will have to come up with a far more compelling proposition for online content.

How about a website that gives away all 8,000 Sony films, but which has a DRM that we shall call Sony Only, that works with only Sony Bravia TVs, Vaio PCs, PS3s and PSPs? How can there be anything wrong with that strategy, using content to sell hardware, a trick that has driven Apple's valuation to $120bn while Sony, a far larger company by revenues, sits with a lowly $52bn. Oh yes, Sony is in fact six or so interconnected businesses, and they will never agree to that.

As we said at the time, the Grouper acquisition is about as clearly thought through as the rest of Sony's strategy over the past four years – perhaps there was an idea there, but pretty soon it will have been forgotten in the panic.

The truth is that Sony doesn't have the share value or the cash to buy a market leader like YouTube, and instead has to tie its online efforts to less successful operations, and all the time it thinks that it cannot operate a lock-in, because it is frightened of being locked out of sites like YouTube or iTunes.

Perhaps if Crackle wasn't part of Sony Pictures but was owned by the camera group within its electronics division, it might at least be advertising its cameras on the site and make some sales. Because it doesn't look like it will monetise any content with Crackle.

Copyright © 2007, Faultline

Faultline is published by Rethink Research, a London-based publishing and consulting firm. This weekly newsletter is an assessment of the impact of the week's events in the world of digital media. Faultline is where media meets technology. Subscription details here.

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