Once upon a time, Sony was the undisputed king of televisions. Sharp and Panasonic, too, were once forces to be reckoned with in the TV manufacturing space. But while these companies still offer excellent product quality (Panasonic still makes some of our top picks in plasma televisions), the inescapable truth is that all three are in some deep financial hot water. Where these companies once made headlines garnished with terms such as ‘potent’, ‘valuable’, and even ‘dominant’, today it is more common to see ‘losses’, ‘downsizing’, and ‘struggling’ associated with the Japanese giants.
Perhaps the most damning adjective of all is the one that Fitch ratings recently applied to Sony and Panasonic’s debt ratings: “junk.”
In light of that, it’s less surprising that the aforementioned triumvirate represented three of Japan’s worst-performing companies in 2012. This is according to a Japan Daily Press report that also indicates that the trio has been “financially ruined” by lack of demand for its televisions.
What happened? Is the blame to be placed squarely on Japan’s Korean competitors, LG and Samsung? Have these once cutting-edge companies lost touch with what consumers want, or are they simply being undersold? And how much can we chalk up to Japan’s stubbornly-strong Yen?
The root cause behind their slumping sales isn’t fully clear, but it speaks to a fact we’ve found ourselves pointing to often in the recent past: nobody quite knows what to make of today’s TV market. It’s a melange of entrenched, old tech and burgeoning new tech, a market with a formulaic and well-defined past, and a chaotic and nebulous future.
That reality has never been clearer than in 2012, which saw Sony, Sharp, and Panasonic’s stock prices all dip to 30-year lows. Analysts suggest that even a tentpole product won’t be enough to bail out the companies’ respective ships, each of which is rapidly taking on water. It seems staying solvent in this brave new world will likely require the embattled outfits to pursue even deeper cost-cutting strategies and reform.
That’s a tough pill to swallow for companies that have typically been concerned more with thriving than surviving, but it looks as if each has got a glass of water in hand. In total, the three companies eliminated a total of 29,000 jobs this year.
Though the problem is highlighted by the struggles of Sony, Sharp, and Panasonic, it is not limited to them. Al Jazeera quotes Gerhard Fasol, founder and CEO of Eurotechnology Japan, as saying, “”If you just look at the sales, the top eight companies of the Japanese electrical sector have about $600bn in sales combined… but for 15 years they have had no growth… so it is very clear that their business model doesn’t work anymore.”
Mr. Fasol makes an astute point, but more important to consider is the resultant question: What does work? For now, that remains largely unanswered.