Onkyo's Bankruptcy A Cautionary Tale For Japan Audio Manufacturers

Not too long ago, major electronics retailers stocked shelves with stereo systems, speakers, and other devices with the brand of Onkyo, one of Japan's leading audio equipment manufacturers.

Photo Insert: Onkyo's fall from grace illustrates not simply changes in how people listen to music, but also a problem shared by many Japanese manufacturing firms: an inability to adapt to new circumstances.

However, the electronics titan progressively fell on hard times over the years. Then, in May, Onkyo Home Entertainment Corporation voluntarily filed for bankruptcy, as reported by Ryo Jozuka for the Asahi Shimbun.

Onkyo's fall from grace illustrates not simply changes in how people listen to music, but also a problem shared by many Japanese manufacturing firms: an inability to adapt to new circumstances. And such arrogance might be fatal.

Atsushi Osanai, an economics professor at Waseda University's Graduate School of Business and Finance, remarked, “The age has ended when simply producing quality items without making other efforts leads to good sales.” Onkyo is a prime example.

The predecessor to Onkyo was established in Osaka Prefecture in 1946, one year after the end of World War II. Its most prominent goods were speakers. In the 1960s, when customers began to favor vinyl records, Onkyo concentrated on manufacturing devices that spun vinyl. It showcased a succession of high-quality goods that impressed audio equipment enthusiast.

Kenzo Konoike, a critic on audio equipment, believes that Onkyo failed to keep up with all the shifting fashions, and Konoike feels that this was its grave error. In light of the proliferation of cellphones, subscription services have gained widespread acceptance, as pointed out by Konoike.

Smartphones have profoundly altered how people listen to music. Young people and others today listen to music via YouTube, Spotify, Apple Music and other subscription services as opposed to CDs. And Onkyo was left behind.

In December, the Recording Industry Association of Japan performed a poll to establish how Japanese customers aged 12 to 69 listen to music. A quarter of respondents still use CDs, while thirty percent use subscription applications and forty-five percent obtain music through YouTube.

Despite the decline in demand for CDs and CD-compatible audio systems over the years, sales of smartphone-connectable players and speakers did not improve.

Onkyo wasn't the only one who lost. According to the Japan Electronics and Information Technology Industries Association, the market size for audio and vocal products declined by half between 2011 and 2021, from $152.1 billion yen to $72.3 billion yen.

In 2014, one of Japan's three most prominent acoustic equipment manufacturers, Sansui Electric Co., ceased operations. In 2015, Pioneer Corporation had no choice but to sell its audio and video division to Onkyo. The increasing number of high-performance music players currently available on the market, according to Konoike, has hampered traditional brands and manufacturers.

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