The encyclopedia · Strategy & Leadership · Strategic decision · 2006
Metreon: Sony's 'most expensive' urban entertainment center sold within seven years
Sony's San Francisco showcase, billed as America's most expensive urban entertainment center, was sold in 2006 after projected 6m visitors never arrived.
Sony Corporation · 2006
What happened
The Metreon opened on 16 June 1999 in downtown San Francisco: a 350,000 square foot 'urban entertainment center' where Sony showcased its movie, music and PlayStation brands, alongside shops, a cinema and a food hall. It was billed as the most expensive urban entertainment center ever built in America.
The business plan assumed the mall would draw roughly 6 million visitors a year. It never came close. The dot-com bubble burst shortly after opening, hollowing out the surrounding neighbourhood, and the format found no eager repeat audience.
The cinemas that did bring in crowds were operated independently and paid Sony no rent, so the anchor that attracted footfall earned the building's owner almost nothing directly.
By 2006 Sony had sold the building. The PlayStation and Sony Style stores were gone by 2009, and the building was later reinvented with a Target as its anchor, reopening in 2012.
Why it happened
- Sony built a single, hugely expensive showcase on a projection of 6 million annual visitors that assumed the neighbourhood and the format would perform.
- The dot-com bust emptied the district just as the mall opened, and the anchor cinemas generated footfall without paying rent, so traffic did not turn into revenue.
- When the showcase did not work, Sony chose to exit rather than keep pouring money into a building it could not make pay.
The lesson
A flagship is not a business. Sony's costliest entertainment center had no tenant economics beneath the brand showcase, and when the visitors never came, the only lever left was the sale.
Aftermath
The Metreon opened on 16 June 1999 and was sold by Sony by 2006, seven years late on a plan that projected some 6 million visitors a year. The independently run cinemas attracted crowds but paid no rent to Sony, and the PlayStation and Sony Style stores were gone by 2009. The building was reinvented with a Target as its anchor and reopened in 2012.
Sources
- Obsolete Sony — The time Sony built a mall (Metreon history, openings, sale)
- Wikipedia — Metreon (San Francisco)
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