More Than Just Media Consolidation

While this story yesterday, Sony-Led Group Makes a Late Bid to Wrest MGM From Time Warner, could easily be interpreted as just one more step in a media consolidation death spiral, there’s the fact that Sony has more than one iron in the fire. And this article, Sony Set to Exert Influence on Discs, gives one indication of other rationales behind the action.

The purchase of Metro-Goldwyn-Mayer by a group led by Sony will not only give the company an enormous film library but also considerable power in its fight to set the format for the next generation of digital video discs.

The transition to the new discs, which are not expected to be widely available until next year at the earliest, could generate billions of dollars in royalties to the developers of the technology that runs them. Sony, as part of the Blu-ray Disc Association, a consortium of major electronics makers, is at the forefront of efforts to develop the new technological standard.

[…] By buying MGM’s studio and its library of movies, industry experts say, Sony is trying to tilt the long fight over the new DVD format in its direction.

[…] The key to resolving the tug of war between the two groups, experts say, will depend on the Hollywood studios because they provide most of the content that will go on the discs. The studios also have a huge stake in the change to the new technology because they now make more money from DVD sales than from box office sales. They also lose millions of dollars a year from pirated DVD’s.

But with the exception of Sony’s movie division, which includes the Columbia and TriStar studios, that naturally backs the Blu-ray format, the movie studios have so far avoided backing one standard despite intense lobbying by both the Blu-ray and HD DVD groups. By buying MGM, Sony will be adding another studio to the list of Blu-ray backers, and a catalog of 4,000 movies that could be issued exclusively in the Blu-ray format.