PlayStation is not a Division of Sony. It's a Whole owned Subsidiary.

Many of the gamer web sites and the Gamer review, and forum websites have tendencies to refer to The PlayStation part of Sony as a Division of Sony..this is completely incorrect. There is a big difference between the two terms & structure in Business.

This blog post is to clarify and show just some of the Differences.

What is the difference? Look and See for yourself.

Well it's defined, by many Business structure definition as such.

Difference Between Division and Subsidiary

Division vs Subsidiary

A division is a part of a business entity. This means that a division, although it operates in a different name, is still a piece of the entity itself. On the other hand, a subsidiary is an entirely different company, a separate one, which is owned by another usually bigger entity. But in some cases, the parent company is a much smaller entity than that of the subsidiary company. In a more concrete analogy, you can say that a division is a part of the body, let us say hand, for instance, and while a subsidiary is the offspring with an entirely separate body but is still owned by the parent company.

Another difference between a subsidiary and a division is that the subsidiary can perform an entirely different operation from that of its parent company while a division cannot.

SUMMARY

1.A division still operates as part of the parent company, although it has a different name, while a subsidiary is a totally separate company from the parent company.

2.A division’s operations should be related to the operations of the parent company while a subsidiary company’s operations need not to be in line with its parent company’s operations.

3.The condition of the division will greatly affect the parent company while the condition of a subsidiary will not have any effect on the parent company.

http://www.differencebetwee...

SIE is a wholly-owned subsidiary of Sony Corporation and has global functions and regional headquarters in California, London and Tokyo.

https://www.sony.com/en_us/...

As you can See, the PlayStation is a separate structure of Subsidiaries that are several separate entities under the PlayStation Subsidiary LLC.

[joeorc]

Oh OK so if it's false , than prove it..instead of just saying it's false, why do you claim it's false? Explain why!

[Hoffmann]

I don't like to get spam PM's about submissions, no matter how good, bad, right or wrong they are.

@ submitter Joeorc

[KwietStorm_BLM]

What's your purpose in all this?

[Oschino1907]

It's obvious they are a professor of semantics at pretentious university.

[agame914]

@snake eyes huh????

[XXanderXX]

So basically Sony is the Mother , PlayStation is the daughter and no matter how old the daughter is it still must do as told by the mother. Correct

[MasterCornholio]

If it was a division they would have a lot less freedom in their decision making. One of the things that SIEA is able to decide is their budget allocation and collecting said funds for that budget. If they were a division the parent company would make all those decisions for them. There are other things as well but what I mentioned is one of the most important ones.

Thank you for the article Joeorc.

@Bak

A division and a subsidiary are not the same thing.

[LexHazard79]

It still a Sony Company. It like NBC network. Its has it own board of Directors and all that but at end of day NBC is still owned by Comcast.

When its time for financial reports Sony still has to post Playstation numbers for investors.

[joeorc]

@BakPAin

[When its time for financial reports Sony still has to post Playstation numbers for investors]

Hold on there, not entirely true..you see this right here...

What is an
'Unconsolidated Subsidiary'

"An unconsolidated subsidiary is a company that is owned by a parent company, but whose individual financial statements are not included in the consolidated or combined financial statements of the parent company to which it belongs. Instead, this type of company appears in the combined financial statement as an investment."

http://www.investopedia.com...

All would be required would be such data as how much Capitol went out from the holding into Subsidiaries, or How much is received.. Or transactions between the Subsidiary to the Capitol holding Corporation if that is how it's set up. Disclosure to another Corp about day and date expenditure of the Subsidiary spending or its own Subsidiary spending would not have to be disclosed. Only if it pertaining to the holding companies stake in said Subsidiaries.

So with how many systems it has sold in such a sales Quarter, yes..how much Capitol the hold company will gain from those sales..yes..how much the Subsidiary's cut is on those sales ..no
LoL

Some things are not disclosed for a reason if you would not have to. Since the PlayStation board members are people like Kaz, in the case of Sony's Subsidiaries it's really not a problem..except for outside investors wanting to get in on the PlayStation Subsidiary by asking to have it taken public and a repeated ...Answer of No being the result..LOL

[XXanderXX]

So if for any reason PlayStation screws up with it resources , budget or has mismanagement issue they are on their own and have to recover on their own with no extra resource backing from sony .

[joeorc]

@XXanderXX9m ago(Edited 9m ago)
"So basically Sony is the Mother , PlayStation is the daughter and no matter how old the daughter is it still must do as told by the mother. Correct"

That would depend on how the whole owned Subsidiary is set up in its structures.. Sony has as the main body is a Holding company..that's why there is a LLC..a limited Partnership, thus the Subsidiary has its very own Board of Directors it's own financial Ballance sheet , investments of its own etc..out side of the main Sony Corpus, that's playstations..those as of the very post above States.

["A subsidiary is a totally separate company from the parent company."]

Thus it's the separate child reference...

The common stock is held by the Corpus of Sony , IE: there is no stockholders or any of Playstation's stock as offered into a public stock option, now stock holders.. Do not exist except for one single stock holder and that is the created company its self..its pretty much holds the stock but does nothing else, in ver basic blunt terms is playstation is just a held Asset!

So taking the key of LLC designated listing..

"while a subsidiary company’s operations need not to be in line with its parent company’s operations."

There is no stock holders calling the shots to the LLC other than the PlayStation LLC board of directors, those just so happen to be people like Kaz anyway..lol

They have to call meetings , days minutes... Have board meeting discussion's etc..but it's not Sony calling those itself , it's the PlayStation Subsidiary's very own Board of Directors.. PlayStation is in essence a private company in of itself .

[Christopher]

Not really, actually. There are instances where the subsidiary can even work to separate itself from the company and operate as a separate company. It's harder for the business to re-absorb a subsidiary in certain situations, meaning they lack certain power other than to force certain others out of position within the subsidiary (which can be difficult as well).

[ApocalypseShadow]

Gamers like Joe and I knew this already from the jump. It's one of the reasons why they can't be touched. PlayStation is part of Sony but it isn't so that investors like the last one don't change Sony into companies like Microsoft,EA, Activision and Ubisoft: profit machines that only care about things that sell and forego the rest and wanted to break up Sony. Can I get a beyond good and evil, road rash, crimson skies, hero or pitfall game again? Nope.

That means no Sony investment in smaller niche games, Indies, etc. Basically a round Robin of uncharted, gt, god of war, etc every year like those other companies do milking Madden,Assassin's Creed,COD, Forza, etc.the bottom line is to makes profits, but there would be no bound, abzu, hot shots, etc that add variety to gamers who don't play those other games mentioned but don't sell as big.

I'm glad Sony and Kaz stuck to their guns and stayed Japanese rise or fall and didn't become more like American companies that don't care about gamers. PlayStation being a subsidiary and doing well gives us gamers variety in games and innovation like PSVR .

SIE should have called themselves "the untouchables."

[ApocalypseShadow]

http://www.gamesindustry.bi...
http://www.ps3hax.net/archi...

Investors wanted more control and Sony made it unavailable to them. SIE controls what's going on and since it makes money, a lot for Sony, they are left to the control of the directors. They are owned but you can't buy a stake into them like american companies.

[TwoForce]

Dude, I understand what you saying. But Jesus, just don't go over head of yourself.

[Cueil]

omg I'm not sure what I just read here, but I'm pretty sure this is the words of a delusional fanboy

[SonyWarrior]

dumb article if you look up definition of subsidiary it says it is synonymous with the word division.... so basically subsidiary is just another word for division..... who ever did this article is an idiot. PlayStation stock is traded under Sonys symbol SNE btw. idiots trying to act like sony doesnt control playstation.....

[joeorc]

@SonyWarrior3h ago(Edited 3h ago)
[dumb article if you look up definition of subsidiary it says it is synonymous with the word division.... so basically subsidiary is just another word for division..... who ever did this article is an idiot. PlayStation stock is traded under Sonys symbol SNE btw. idiots trying to act like sony doesnt control playstation]

No it's not..PlayStation LLC has no public traded stock! How in the hell can you trade Stock of a Subsidiary company, that when said subsidairy companies stock is not offered for public?

PlayStation's Corpus is set up as it's very own Company thus it's a LLC..not a Division.. If it was a Division it would be called a Division.. Not a LLC

A Division and a Subsidiary are not the same thing for good reason..

That's the Point..a Division is part of a corporation itself as such , if you buy stock of said company you " can " gain more control over any of said companies Divisions. That is not same as in the case of a Subsidiary.

That is not the case of if ; said company holds other Subsidiaries.

Subsidiary' is a separate company, thus if that companies stock was offered public even held by a parent company would you have to buy it's stock or could you just buy the stock of the holding company and have the Subsidiary stock also?

See that's the freaking point..you would not get any of the Subsidiary stocks, you would have to buy those because it is a separate company..

Question : is the Xbox Division have separate stock over at Microsoft? No..because Xbox is a Division of Microsoft.

PlayStation on the other hand is a private held whole owned Subsidiary of the Sony Corporation.

[MyDietEqualsGames]

If we have learned anything through the years of being on N4G, it is that people will disagree with logic and proof. It does not matter how clear things can be. People will still disagree. I think it is a fundamental flaw within certain peoples brain to go against what IS and rather believe in something that ISN'T. Some even do this when they damn-well-know! That their belief is total bull.

Makes me sad when reflecting on my own species. Good blog post, btw.

[ecchiless]

Dumb comment, search more before commenting.

[Christopher]

Not to say that the difference means too much to us gamers, but they are not synonymous. Not at all.

Subsidiaries have their own business structure, hire specific to their needs as their own company, and operate on a day-to-day basis without overlook from the owning company. This includes making business decisions with how to use money, getting investments or loans, and similar decisions aimed at the use of money. They are also operated as their own taxable company. This can be difficult if they operate internationally, which in this case does happen.

A division is constantly overseen by the owning business, you are hired as part of the owning business, the overseeing of funds and how they are utilized is done by the owning business, you operate and get taxes locally an international as a part of the business (this is extremely important difference between the two--asked my wife the accountant) .

To us, either choice could be the same. We don't know which is better since we don't know if they have a process of how they make decisions or if we're in a worse or better situation with the decisions the people have in place are making. But, as a company, the difference is extremely different.

[SonyWarrior]

if they arent synonymous then i guess you better get to all the dictionary companies and tell them all they are wrong and that you are right and your source is n4g. update me with how that goes

[rainslacker]

Think the confusion is that subsidiary and division are synonymous in the English language, at least loosely in the sometimes ridiculous connection that the Webster's thesaurus sometimes uses, however, in the business world, they actually are different things. Often times, a subsidiary can be run like a division both in management and funding, although it's rare to not have any kind of autonomy from the parent company due to legal reasons, but I can't think of any division which is run like a subsidiary on the actual legal definition of how it's meant to be used in terms of business structure, since a division has to be structured, managed, and held accountable with the parent company itself.

It's possible, and even likely in cases like this where they have complimentary products, that a subsidiary, despite being managed independently from the parent company will still have directives and work with the parent company to achieve particular goals overall.

[leoms]

You seem to be trying too hard. It is in no way synonymous. As you suggested read look up the definition http://smallbusiness.chron....

[SonyWarrior]

use a good creditable source if you want to be taken serious.... there is a lot of false information out there on the interwebs

[leoms]

Sigh, sorry your nitpicksty here is another source https://en.wikipedia.org/wi... and it's quote "Subsidiaries are the separate, distinct legal entities for the purposes of taxation, regulation, and liability. For this reason, they differ from divisions, which are businesses fully integrated within the main company, and not legally or otherwise distinct from it." Let me guess, the definition does not match yours so it is not credible.

[LexHazard79]

I understand but its still part of Sony.

[joeorc]

@BakPAin4h ago
[I understand but its still part of Sony.]

Here even though Sony Corporation itself owns all the common stock of PlayStation LLC , it's treated as a held Asset..not as it would is if it was infact a Division.

When Microsoft purchased Nokia what happened to Nokia?

[Microsoft Mobile: is a multinational mobile phone and mobile computing device manufacturing company headquartered in Espoo, Finland, and a wholly owned subsidiary of Microsoft. It is a legal body that oversees and legally represents the activities in the design, development, manufacture and distribution of mobile phones, smartphones, tablet computers, related accessories and services. Microsoft Mobile was established following the acquisition of Nokia's Devices and Services division by Microsoft, which was completed in April 2014]

See that is now a whole owned Subsidiary, that means even if you buy stock into Microsoft's own stock, you do not get Microsoft Mobile Subsidiaries stocks unless you buy those also, because they are a separate company

[LexHazard79]

Joe, yes like I said alot of facts i your comments. But then I always go back and say well if Playstation is its own company and all. Why does Sony need its financial gains losses to to add to its financial forecast. According to you Playstation runs on its own budget but when Sony was facing some financial burden it was the Playstation side that kept it moving forward in some ways. To be honest this is way abovevmy head. Im a landscaper not Michael Patcher...Lol. I think Im gonna sit this one out after this comment. Lol.. but I will continue to read as Im learning from every informative conment you guys put up. Good discussion guys.

[rainslacker]

@Bak

Sony reports PlayStation, or SIE, as one of their assets, not as money gained from a division, like you'd see with MS and their Devices division(or something along those lines).

For all intents and purposes, when you buy into Sony stock, you are entitled to whatever benefits or losses that all those assets that Sony owns through it's divisions or subsidiaries...kind of like how the investors were entitled to the money gained when Sony sold off their headquarters building.

For the most part, outside of how it's structured for operating purposes, there is no real difference in terms of how much money it brings in. There are pros and cons to both methods of structure, but they aren't actually the same, nor is SIE actually a division of Sony in the business sense.

In theory, Sony could sell off part or the entirety of SIE, and it could continue it's typical routine with little interruption in structure. If say MS were to "spin off" it's Devices division, which housed Xbox, whether through selling it off or simply making it into a "traded" company, like some investors were calling for last gen, it would require making the company from the ground up, because the business structure for it to operate autonomously or independently from the parent company does not already exist.

PlayStation does run on it's own budget. That budget is determined by SIE. SIE's budget is determined by it's operating costs, revenue, and profits/losses just like any company. Sony, the parent company, at it's discretion, can either take that money away, or give more to SIE, for them to operate as they see fit, since they are the parent company.

For all intents and purposes, a division and a subsidiary work in very similar ways. All that changes is the legal structure, and how they can operate.

[MyDietEqualsGames]

It's a part of Sony that acts independently. Said and done.

[Soulrakk]

This all just silly. Xbox also handles themselves independently. That's why they have a Phil Spencer. But Xbox isn't a sub of Microsoft it's very much a Microsoft product. Just like PlayStation is very much a SONY product. There's a major difference between a sub & division. They can say what they want or play with technical terms all they want.

[Jayszen]

And for that we are grateful. This is one of the reasons why SIE is so successful - because it is not run to the whims of investors and stockholders who usually only care about the return on their investment and therefore influence decision-making to the extent that it can seriously affect the well-being of a company. May SIE go from strength to strength (and keep the games coming!)

[Deadpooled]

Good blog post joeorc, ignore that troll

[LexHazard79]

Agree, there so many things that go under the radar. Playstation is Sonys independent colony. Has its own, laws and government, budget but still flies under the Sony banner. I Got it.

[TheColbertinator]

So Playstation is like Hong Kong?

[KakashiHotake]

PlayStation used to be a division at Sony but ever since their other divisions started to struggle, PlayStation has become the face of the company now. What's sad is they still make great products but they sell them so expensive that the average consumer just can't afford it. They insist on trying to compete with the Apples and Samsungs in the television and mobile space, but those companies are just too popular now. Sony needs to sell at a lower price than their competitors to regain popularity. When PS4 launched it was 100 dollars cheaper than Xbox One which was the major selling point. Imagine if they sold it 100 more than Xbox One at launch and we would be reading an entirely different article.

[joeorc]

@KakashiHotake
[PlayStation used to be a division at Sony]

Sorry ..it never was a Division of Sony..it was in fact and always has been a Subsidiary. Even as far back to 1993 when it was Established.

Reason being is it was very simple:

Sony backed Ken’s corporate entrepreneurial (Intrapreneurial) venture by investing $2.5 billion into the PlayStation start-up, and has gone on to build over 70% of the home-video-game-console international market share.

Guess who was the only other stock holder of PlayStation Stock until 2004..PlayStation only had two stock holders since the playstation Subsidiary's inception.

http://www.intrapreneurship...

[Ulf]

Wait, wait.

So SEGA PlayStation (DreamStation?) is a possibility someday?

Heck, yeah!

[joeorc]

Ulf12m
[Wait, wait.

So SEGA PlayStation (DreamStation?) is a possibility someday?

Heck, yeah!]

Well that would depend, 1st of all great point name..thumbs up..lol

And 2nd, PlayStation Subsidiary LLC is now a Multi subsidiaries conglomerate by itself..the picture in the Blog is their new HQ in silicon Valley, it's a very big chunk of real estate.

But in basic terms Since PlayStation as a Subsidiary is not offered for public buy in, and its very Doubtful even if the Holding Corpus folded like a cheap suit, would Sony divest themselves of offering up PlayStation.. If anything the other assets would be sold off except for Media content part of the Subsidiary and backed by the financial section of Sony..

Sony just purchased even more controlling interests in their financial holding Subsidiaries..

As a result of the acquisition, Sony's ownership of SFH has increased to 62.1% from 60.0%. The price of the shares of SFH that Sony acquired was approximately 13.5 billion yen.

https://www.twst.com/update...

Now as for Sony buying up SEGA, well I would not be holding my breath for that to happen anytime soon..lol very doubtful SEGA would want to sell anyway.

[LexHazard79]

Wait is Sega on its own again? I thought Sammy bought their controlling stakes. Wouldnt Sony have to go thru Sammybto aquire Sega. What happens to Atlus?

[rainslacker]

In theory, Sony could sell off the PlayStation brand, or SIE as a whole, to any buyer that was interested. In doing so, that company would gain whatever it is that is owned by the subsidiary. Sony, the parent company, could even sell off bits and pieces if they so choose.

Chance of that happening is pretty slim.

Difference between a subsidiary and a division, is that in a division, you can only sell off the products of that division....unless you want to sell the company as a whole However, with a subsidiary, you can either sell off products of the subsidiary, or the entire company itself....as shown by Sony selling off Sony Online Entertainment last year. When selling the parent company, the divisions typically go with it, or are sold off piece meal. With a subsidiary, you could sell the parent company, but keep the subsidiary as a seperate company or sell it off piece meal. For the most part, subsidiaries offer a bit more flexibility, but sometimes run the risk of not working for the greater whole of the company or being able to quickly maneuver management or policies like you could with a division.

That last paragraph is kind of the key difference in structure, outside the differences in how it's managed. Financially, it kind of works out the same, although a subsidiary is often more expensive to maintain since it requires it's own people to run, including a board.

[Guitardr85]

Interesting article....what is even more interesting is all the butt-hurt people are giving because they are 12 years old and don't understand how companies work lol. It's ok that PS is a wholly owned subsid....everybody take a breath...nothing has changed since you read this article! lol

[jholden3249]

Interesting.

Not particularly sure why anyone should care, but... interesting.

[Djfred1984]

Basically playstation can invest in exclusives without asking someone from sony. Great analogy of the baby and hand by the way.

[Elda]

Ok.

[Soulrakk]

You can't have it both ways. It uses the parent company brand which is SONY. SONY benefits in every way from PlayStation. This is just a massive play on technicality because SONY needs to cover their ass in every way possible.

[Brohan]

Couldn't have said it better myself

[rainslacker]

I think Joerc gets a bit disgruntled because whenever some financial thing comes up, some people act like Sony would be doomed without PS, and say that PS should be spun off into it's own company for the sake of the PlayStation brand thriving when Sony eventually fails.

However, despite him, and quite a few others, stating that's how it's already structured, people still act like that PS would be better off as it's own company, despite the fact that it already is it's own company.

What SIE is to Sony, is what some investors were asking MS to do with the Xbox brand. They were asking for that so the Xbox brand could be held accountable for itself, and not drag down other parts of the company, since MS numbers were often hidden in greater things....which some investors don't like because they feel it devalues the value of their stock. But that's kind of a high level investor thing, and ultimately, the books work the same overall as profits, losses, and revenues are still reported in much the same way.

And of course Sony uses their brand name on the PlayStation. Sony owns the PlayStation brand. Sony benefits from it. This would be the case regardless of if it were a division or a subsidiary. But again, I think the point of this blog was to vent some steam for people who really choose to remain clueless and make fan boy arguments which basically say Sony needs to do what it's already doing.

[Tzuno]

It's their last stand in electronics market :)

[opinionated]

Bro.. Emphasis on wholly owned. If semantics piss you off I can understand but don't pretend there is some huge difference between a division and a subsidiary. Especially in Sony's case lol.

[Saito]

Stupid people can't enjoy a little clarification about business. Go figure. This post has proven informative. Thank you.

[OC_MurphysLaw]

Not really caring one way or another... their financials seem to show in Sony's Investor calls so whether investors have a say is not as important as Sony itself having a say in their direction based on the health of the company and what they deem necessary.

[NotanotherReboot]

It's the end of sony, your companys so phony, you abandoned your audience, for a bunch of dude bro shooters. hey i say, sony, weve had enough, youre out of luck, why cant you be the sony of old, why now you have to be so bold?!?!?!?

[wolokowoh]

The reason for this distinction being important if that if the rest Sony goes down, PlayStation does not and the parent company does not go completely under either. It's essentially a business survival mechanism that allows what would normally be a division to take risks without being a severe detriment to the parent company. Most of what people would call a division in Sony is actually a subsidiary.

[feedthereaper]

Let us not forget that a Division can be closed down or expanded dependent on how the Mother is doing, a Subsidiary tends to be sold off to a different buyer who then turns it into what they want it to be rather than what it currently is.
It means that as a Division it is in greater threat of being throttled by Sony's failure, but as a Subsidiary, if Sony is struggling, it can sell it off to another party and Google/Apple/Facebook could instead own it...... and Facebook has started to spend a great deal of $$$$ this month investing in development of games that are more suited to a Console format than their usual Mobile market with some rumoured that it may be building a console of its own soon. Could they see Playstation as a way of entering the console hardware business by buying a console, rather than building one? Unlikely, but then they did buy Oculus Rift for a ridiculous amount of money and have yet to fully reveal their plans for it. There could be a hostile takeover one day down the line, who know?