Japan's AV retreat is home cinema's breaking heart

As Japan's electronic brands retreat from the world stage where does that leave the home cinema?

Home cinema s breaking heart

Home cinema and AV were created in Japan and, with the country committed to live 4K TV broadcasts in time for the Tokyo 2020 Olympic Games, it remains the capital of 4K.

That much seems obvious from a trip around the stores of Tokyo, Osaka and anywhere else in electronics-obsessed Japan. Each store is packed with primarily 4K TVs, with even Full HD TVs of old succumbing to the new era; when you do see a 1080p set (which is rarely) it's now labelled '2K'.

'Japan Premium' stickers are attached to exclusive high-end TVs, each supported by marketing campaigns featuring cultural imagery of geishas, pagodas and mountains. The message is clear; buy Japanese.

Not that there's much choice – Korean and Chinese TV brands are almost invisible here.

Panasonic is running a Beautiful Japan 2020 campaign to boost national loyalty
Panasonic is running a 'Beautiful Japan 2020' campaign to boost national loyalty.

Embarrassment of riches

But this embarrassment of riches glosses-over a massive retreat of Japanese TV brands from the rest of the world.

The late 1990s saw CRT TVs explode in both size and quality thanks almost entirely to Japanese companies like Sony, JVC, Panasonic, Toshiba, NEC, Fujitsu, Hitachi and Sharp.

Pioneer then brought us the 42-inch plasma, and nothing was ever the same again.

But something cataclysmic has happened since then, and most of those companies escaped the TV business long ago. Under pressure from Korean and Chinese brands, Japan-made TVs sold around the world crashed from 35% in 2011 to just 20% last year.

Amid massive losses, Japanese companies that still market TVs have become little more than brand licensees outside of their home country.

Little known Japanese brands like Funai or Orion are the budget choice in Tokyo
Little-known Japanese brands like Funai or Orion are the budget choice in Tokyo.

Domestic domination

Luckily for anyone fearing the very worst for the most famous names in electronics, the Japanese public are exceptionally loyal.

Nobody in Japan wants to buy a TV made in China or South Korea unless they absolutely have to. Doing so would be akin to treachery.

"Japanese consumers are traditionally very loyal to domestic brands such as Sharp and Panasonic," says Hiromi Yamaguchi, an analyst for Euromonitor International and based in Tokyo.

"Even when there were Korean brands such as Samsung and LG attempting to penetrate in the Japanese market with more affordable price offerings, consumers stayed with Japanese brands," says Yamaguchi.

Sharp s luxe Purios TVs are only available in Japan
Sharp's luxe Purios TVs are only available in Japan.

At the Sharp end

In fact, Japan-origin companies accounted for 93% of the total TV market in 2014, according to IHS Technology. Oddly to Western eyes, the biggest brand is clearly Sharp – its logos are everywhere – while Sony takes a surprisingly small chunk of the Japanese TV market.

"Sharp dominates the domestic market with a projected 37% market share in 2015, but struggles in other markets," says Yamaguchi. "Similarly, for Panasonic and Toshiba, the domestic market is critical to the companies' bottom line, and there will be Japan exclusive models."

The market share doesn't lie; IHS Technology reports that the dominant Sharp is followed by Panasonic (21%), Toshiba (17%) and Sony (11%) on 2014 figures.

LG has a meagre three per cent, but its domination of the global TV markets, along with Samsung and a clutch of Chinese brands, has forced Japanese brands to become little more than logos used by third party TV manufacturers.

Full HD TVs are known as 2K TVs in Japan
Full HD TVs are known as '2K' TVs in Japan.

A new business model

"Most Japanese TV makers are now moving from direct TV production business model to brand-licensing," says Jusy Hong, Principal Analyst, TV Systems at IHS Technology.

Sharp-branded TVs in Europe will be made by the Slovakia-based Universal Media Corporation, while in the USA the brand is completely operated by Bestbuy. Sharp sold its Mexican factories to Chinese competitor HiSense.

Over 70% of Sony's TV is made by Foxconn according to Hong, who adds Toshiba TVs in North America and Europe are under brand licensing with Taiwan-based Compal.