Sony Tightens ES Distribution Strategy

By Joseph Palenchar -- TWICE, 7/19/2010

LOS ANGELES — Sony will limit distribution of its high-end ES series of A/V receivers and Blu-ray players to custom installers and A/V specialty retailers while prohibiting telesales and sales over the Internet.

Sales through SonyStyle.com will also come to an end.

Sony executives drew a sharp contrast between their new distribution strategy and the policies of competitors who are broadening distribution and expanding Internet sales.

The changes were announced here in conjunction with the introduction of a new 2010 ES lineup and the July 1 replacement of a unilateral pricing policy with a more flexible minimum advertised price (MAP) policy. The MAP policy makes it possible for installers to pass through dealer-cost reductions announced after a customer contract is signed but before a product is delivered to finish off a months-long install.

All three new ES multizone A/V receivers (AVRs), priced from a suggested $1,099 to $1,999, are believed by Sony to be the industry’s first AVRs with embedded Ethernet hubs to connect TVs and Blu-ray players to the Internet. They’re also Sony’s first with 3D-ready HDMI 1.4a inputs and outputs with Audio Return Channel, Dolby Pro Logic IIz post processing to add front-height channels, and an iPhone/iPod Touch app. The app controls AVR functions, including multizone functions and connected sources, from anywhere in the house if the AVRs are connected to the home network. An Android-smartphone version of the app is in the works. Other features, such as IP-Ethernet control and embedded DLNA-certified network client, have expanded throughout the line, and other features, such as two HDMI outputs, expand to more models from only one.

With the new models, Sony is expanding embedded DLNA-certified network clients to all three models from one to stream music, video and photos from a networked PC. The top model also serves as a DLNA server, a feature that last appeared in the 2008 ES lineup.

The new $399-suggested ES Blu-ray player will be the first in the series with built-in Wi-Fi, iPhone/iPod app and Quick Start startup time. It is 3D-capable out of the box and is the first ES single- play Blu-ray player with IR input.

All new ES products are due in August, except for the top-end AVR, which is due in September. They’ll join a carryover $499 two-channel receiver and $1,899 400-disc Blu-ray megachanger, which lacks 3D capability but features IR input.

During a press briefing, the company also:
• previewed its first 3D front projector, a non-ES model due sometime this year. The prototype used in a demonstration delivered 3D in 720p, but the finished product will deliver 1080p 3D.
• introduced a mainstream-series $799 AVR that is the company’s first mainstream AVR with Ethernet hub. It sits at the top of the mainstream-series AVR line.

The ES distribution change “will help reinvigorate” the specialty and custom channels, reward those installers and specialists “who have been loyal to Sony for many years,” and provide an opportunity for ES to expand its custom/ specialty dealer base, said Brian Siegel, VP of Sony’s home A/V group.

“ES has been for the past few years essentially widely distributed” and available through “many national accounts” and Internet sellers, Siegel said. A/V specialists and installers, he continued, have said ES offers great products and programs but that the previous distribution strategy “made it easier to do business with other manufacturers.”

Sony ES “should be the No. 1 AVR brand in the specialty channel, and this [distribution strategy] is a way to do that,” Siegel asserted.

Although the company is tightening ES distribution, it will continue to use distributors to fulfill shipments to ESapproved dealers and installers, Siegel noted. Sony will continue to manage the dealer/installer accounts centrally.

Regarding MAP policies in general, Siegel said dealers view them as a positive, especially when MAPs are similar to suggested retails. ES’s shift to MAP is part of a corporate-wide move, he added.

The new policy prohibiting Internet sales will begin with the new 2010 models, allowing time for inventories of previous ES models to be sold out through Internet channels. Under that policy, ES dealers aren’t allowed to sell online but can continue to use the Internet to promote ES and educate consumers about ES advantages, Siegel noted.