Kazuo Hirai

Former president and CEO of Sony Corporation and former chair of Sony Computer Entertainment

• Born: December 22, 1960
• Place of Birth: Tokyo, Japan

Primary Company/Organization: Sony

Introduction

In 2004, Vanity Fairnamed Kazuo Hirai to its New Establishment List, labeling him a “mogul in the running.” Entertainment Weeklynamed him as one of the world's most powerful business executives. Hirai began with Sony as a young man and spent his entire career breaking new ground in the video gaming and networked entertainment venues. He is credited with making Sony's PlayStation 2 a must-have entertainment system for homes throughout the industrialized world and for turning video gaming into a popular activity no longer limited to young adult males. By 2006, the PlayStation Network, which connects all internet-capable PlayStation consoles to the PlayStation Store and to the computers of “friends” around the world, boasted more than 20 million subscribers. When Sony appeared headed for financial disaster in 2011, Hirai was chosen as the individual most likely to turn the company around. He helmed the company successfully from 2012 to 2018.

Early Life

Kazuo “Kaz” Hirai was born in Tokyo on December 22, 1960 (his birth year has incorrectly been reported as 1964 by many sources). Hirai's father was a wealthy banker with Mitsui Bank (later SMBC) who frequently had his family accompany him when he traveled to the United States and Canada. Hirai therefore grew up fluent in both Japanese and English. His interest in video gaming developed as gaming technologies constantly improved and the industry was becoming more sophisticated. Growing up, Hirai loved board games such as Life, Monopoly, Battleship, and Scrabble.

Hirai earned a bachelor's degree in 1984 from International Christian University in Tokyo, Japan. He began his career with CBS/Sony, which became Sony Music Entertainment, in 1984. As a junior marketing executive, he was responsible for marketing the music of Sony's international artists within Japan. He was also assigned the task of translating for groups such as the Beastie Boys and Journey when they came to Japan.

Life's Work

Hirai was so successful that he was soon heading the international business affairs department. Hirai's fluency in English led to a transfer to New York, where he began marketing Japanese music to an American audience. By August 1995, Hirai had been assigned to the video gaming division of Sony. Within two years, he had finished his first video game.

The PlayStation 1 was introduced in the United States in 1995, selling approximately 125 million units and becoming the best-selling console in history to that time. As the protégé of Ken Kutaragi, Hirai had been involved in marketing the PlayStation since its early days. However, it was the introduction of the PlayStation 2 in 2000 that propelled Sony to the top of the video gaming industry. The PS2 sold 100,000 units per minute on the Sony website, making it necessary for Sony to shut the site down temporarily. Hirai became instrumental in PS2's success by securing popular games such as Grand Theft Auto for the system and widening its appeal by placing Sony ads at popular sporting events.

Between 2000 and 2005, the PlayStation and PS-related products accounted for 58 to 60 percent of Sony's sales, and Sony stock rose to more than $300 per share.

By July 2006, Hirai had been promoted to vice president of Sony's Executive Group. Four months later, Sony launched the PlayStation 3, which, unlike Microsoft's already released Xbox 360, contained its own Blu-ray player and had a price tag of between $240 and $307, depending on the capacity of the internal hard drive. By 2008, the PS3 had helped to raise Sony profits to $3.3 billion. However, both Microsoft's Xbox 360 and Nintendo's Wii were outselling the PlayStation 3. Because of a major reorganization launched in April 2009, Sony's electronic and games division became Consumer Products and Devices Group and Networked Products and Services Group (NPSG), and Hirai was designated as corporate executive officer and executive vice president of Sony Corporation while continuing to serve as president of NPSG.

In April 2011, Sony reorganized again, merging electronics, games, and networked services into the Consumer Products and Services Group, and Hirai became representative corporate executive officer and executive deputy president of the entire organization. By September 2011, Hirai had been named chair of Sony Computer Entertainment.

Sony suffered substantial losses as a result of the tsunami that hit northeast Japan after the earthquake of March 11, 2011. Immediately after the tsunami, Sony workers in Sendai, which suffered massive damage, used shipping containers as boats to float in supplies to stranded victims. The tsunami created economic problems throughout Japan, and Sony was forced to shut down ten of its plants temporarily, which delayed the shipment of products outside the country as well as within Japan.

Sony received another major blow when computer hackers attacked the PlayStation Network on April 19, 2011, gaining access to credit card numbers and passwords. The following day, Sony was forced to shut down the entire system, which meant that the company steadily lost sales because 24.6 million subscribers could not access the PlayStation Store from their PlayStation 3 consoles. Total losses were estimated at $173 million. Facing the real threat of gamers deserting the PlayStation 3 for Microsoft's Xbox 360 and Nintendo's Wii, Sony enticed subscribers to the system when it was restored in early June with free games, free music, and a free membership in PlayStation Plus. Trust in Sony's security capabilities suffered additional damage, however, when hackers subsequently attacked ten thousand Sony websites around the world. In July, Sony component plants were shut down as a result of major floods in Thailand; in August, Sony warehouses were burned down during riots in London.

In 2011, Sony was reporting losses of $5.8 billion. Insiders suggested that some of Sony's losses were on paper only, resulting from the decision to move away from the practice of carrying tax losses as an asset. On February 1, 2012, Sony announced that Hirai, who was then fifty-one years old, would succeed Sir Howard Stringer as the head of the company, effective April 1. Stringer, the first non-Japanese head of Sony, had been grooming Hirai as his replacement for years and agreed that it was time for Hirai to take over the company.

Sony placed considerable confidence in the ability of Hirai to turn the company around. Almost immediately, he cut ten thousand jobs, despite the Japanese tradition of employing staff for life. Like other heads of Sony, Hirai was forced to deal with the fact that because Japanese culture promotes consensus building, the company has not always been comfortable with the cut-throat competition that thrives among international corporations. On June 5, 2012, Sony announced that Hirai and six other top executives had returned all performance-based pay received for 2011 to the company and promised that all seven would forgo bonuses in 2012. Outside observers suggested that many of Sony's woes were due to the fact that it sells more than two thousand different products. As part of a downsizing initiative, Hirai announced that Sony would shift its focus away from poorly performing products and toward top-performing products such as video games, mobile phones, cameras, and image-sensing microchips. Because Hirai was with Sony as it developed its interactive entertainment capabilities, his actions indicated that he understood that Sony's future success depended on its ability to deliver interactive content for televisions, smart phones, tablets, and computers.

Sony released the Vita in 2011 and by March 2012 had sold 1.2 million units. The Vita is the successor to the PlayStation Portable, released in 2004 and updated as the PSP Go in 2009. With its five-inch OLED screen, Wi-Fi capability, dual cameras, motion sensors, touch panels, and dual analog sticks, the Vita combines many features of a portable system with those of a regular game console, even allowing users to transfer games in progress from the PS3 to the Vita. Its price tag of approximately $250, plus the cost of a memory card (which ranges from $20 to $99), has turned away some would-be purchasers. However, the Vita continues to gain attention for its extraordinary graphic capabilities, and new applications are constantly being added to enhance its appeal. Sony is also developing the next-generation PlayStation console, the PS4. In 2012, Sony projected a profit of $381 million.

Hirai steered Sony through the introduction of new products and heightened promotion of existing products. The company released PlayStation Vita in 2011 to great success, ultimately selling an estimated 15 to 16 million units. This was followed by the PS4 in 2013, to critical acclaim. Despite some financial woes internationally, Sony under Hirai continued to be the biggest brand within Japan, and the Japanese people retained their loyalty to the PlayStation despite the dominance of Microsoft's Xbox 360 in much of the world.

Hirai stepped down as Sony CEO in 2018, remaining as the company's chairman. He relinquished the latter post in 2019, retiring at the age of fifty-eight, but remaining a Sony senior advisor.

Personal Life

Hirai retired in part to spend more time with his family, including his wife Riko, at their home in California. His hobbies include cycling, photography, and driving. He is also an avid collector of cameras, watches, model railroads, and telescopes.

Bibliography

“Back in Japanese Hands.” The Economist 402.8780 (2012): 74. Print.

Dominic, Jeff. “Sony Sales After Tsunami.” The Scotsman, 11 May 2010. Print.

Gruley, Brian, and Cliff Edward. “Sony: All Chewed.” Management Today, Feb. 2012: 50–56. Print.

Hirai, Kazuo. "Q&A: Sony CEO Kazuo Hirai Says Company Must Evolve." Interview. Wall Street Journal. Dow Jones, 29 Apr. 2015. Web. 28 Sept. 2015.

Pham, Sherisse. "The CEO Who Saved Sony Is Stepping Down." CNN, 2 Feb. 2018, money.cnn.com/2018/02/02/technology/sony-ceo-hirai-yoshida/index.html. Accessed 6 Mar. 2024.

Sugimoto, Takashi. "Ex-Sony CEO Hirai on How He Reinvented an Electronics Icon." NikkeiAsia, 17 July 2021, asia.nikkei.com/Business/Electronics/Ex-Sony-CEO-Hirai-on-how-he-reinvented-an-electronics-icon. Accessed 6 Mar. 2024.

"Sony CEO Kazuo Hirai Reportedly Faces Attack from Activist 'Old Boys'." Gadgets360. NDTV Convergence, 24 Apr. 2015. Web. 28 Sept. 2015.

Warman, Matt. “Kaz Hirai, There's a Lot to Fix at Sony.” London Telegraph 31 Mar. 2012. Print.

Westlake, Adam. “Sony Cuts Executives' Pay to Make Up for Years of Losses.” Japan Daily Press 6 June 2012. Print.