Sony Corp. began offering a video-downloading service Tuesday for its PlayStation 3 videogame console, part of its aim to broaden its audience and grab a piece of the growing content-downloading market.

The launch also reflects the fruits of a three-year push by Sony Chief Executive Howard Stringer to revitalize the company by getting its business units to work more closely with one another.

Sony said its service will let users rent or buy movies and rent television shows produced by major studios and production companies -- including Paramount Pictures, Warner Bros. and Sony Pictures -- and watch them on TV sets through its PlayStation Network in the U.S.

Sony's video-downloading service will face stiff competition from rivals such as Microsoft Corp. and Apple Inc., which are already a step ahead in such services. Microsoft on Monday announced a deal with Netflix Inc. to stream movies over the Internet to the Xbox 360 game console.

Park Associates, a market-research and consulting firm, estimates that annual revenue from Internet video, including ad-based and user-paid services, could reach $5.3 billion by 2010 and $12.4 billion by the end of 2012 in the U.S.

Sony hopes to gain an edge in that market by letting users take programming they have purchased and view it on their hand-held PlayStation Portable devices as well as on TV sets. The company previously said it plans by March 2011 to make the service available through other key products, such as its Vaio computers, Walkman music players and Sony Ericsson mobile phones.

In announcing the service at E3, the gaming industry's big annual conference in Los Angeles, Sony said its TV-show rentals will cost $1.99 per episode and that movie rentals will cost $2.99 to $5.99. Movie purchases will start at $9.99. Some of the programming will be viewable in high definition.

Sony's new service will be a test of how well the company has been able to change its traditional hardware-oriented mind-set and move toward integrating software, services and content in a way that appeals to consumers. Mr. Stringer has been laying the groundwork for that transition by promoting executives with strengths in software and content.

Sony owns a movie studio and a music business, but it had historically considered electronics as stand-alone products rather than devices that could be linked together with the Internet. Sony also had fiercely independent product groups and subsidiaries that didn't want to communicate or cooperate with each other. One of its worst offenders in that regard had been the PlayStation videogame unit.

When Mr. Stringer took over Sony's helm in June 2005, Ken Kutaragi, the renegade creator of the PlayStation business, was running the unit as though it was separate from the rest of Sony. Videogame consoles would have seemed a natural choice to double as home-entertainment devices because they were already meant to be hooked up to TV sets. Mr. Kutaragi had intended the PS3 to be powerful enough to be more than a videogame console, but his reported unwillingness to work with counterparts in other units got in the way of that goal.

A year ago, Mr. Kutaragi resigned. His successor, Kazuo Hirai, a former U.S. PlayStation executive, reportedly has been more amenable to working with the other parts of the company. "There is a change at Sony Computer Entertainment," said Mr. Stringer about the unit last spring. "Occasionally they might be kicking and screaming, but they are taking the company forward."

Many analysts believe Sony has an advantage over rivals in offering a video-downloading service, because it has access both to content and a vast array of electronic devices.

Over the past year, Mr. Hirai has focused on beefing up the lineup of PS3 games to increase demand for the console after it had a disappointing launch in late 2006. Now, he must try to attract a broader audience to the new video-downloading service while continuing to woo game players, who form its core fan base.

Separately at E3, Nintendo Co. showed off a new version of Wii Sports, a game that comes bundled with the Wii videogame console and helped introduce players to its motion-sensing controller through simple tennis, bowling and other sports. The new Wii Sports Resort, due out next spring, will allow players to Jet Ski through slalom courses, engage in sword battles and play fetch with an animated dog using a Frisbee. The game will be the first to use a new hardware accessory called WiiMotion Plus that will attach to the standard Wii controller, giving it greater accuracy.

Nintendo also said that its Nintendo DS, a hand-held game player, will reach nearly 100 million units sold by the end of March, the close of the company's fiscal year. The device has been a hit, especially with younger gamers, on the strength of titles like Pokemon and Nintendogs. In a bid to expand the audience for the Nintendo DS, the company said Rockstar Games, the development team responsible for the Grand Theft Auto urban-action series, will release a new version of the game this winter called Grand Theft Auto Chinatown Wars.

Source:wsj.com