Friday, December 30, 2011

TV Really Going Down the Drain in Japan

I've written extensively on the fall of television in Japan. In July of 2011, all terrestrial television stations in Japan stopped analogue broadcasting and switched to digital. That cost all the stations 20% of their viewership. Japanese major TV stations were losing money before the switch to digital, how shall they make money when they spent a cumulative $5 billion dollars on the switchover and then lost 20% of their audience?

I can't figure that out no matter the size of my abacus.

While on vacation to Guam the other day, I saw a sign along the road that made me chuckle. In Guam, there are a very many people who are quite a bit overweight... No! Make that quite obese. The sign along the road said,

"You need more fiber in your diet and less cable TV"

Yep. Sitting around and watching TV while munching on chips and junk has seriously fallen out of favor with the active and young crowd.

Another sign that TV viewership is collapsing in Japan is the fact that, after initial fanfare and many years of positive spin on poor sales, Sony has decided to get out of flat TV manufacturing. The sales projections do not make up for poor sales ( and high manufacturing costs) which have lead to wide price dumping across the board. 

Bloomberg reports:

Sony Corp. sold its stake in the venture with Samsung Electronics Co. to make liquid-crystal displays to the South Korean company after predicting an eighth consecutive year of losses from TVs amid sluggish demand.
Samsung will pay 1.08 trillion won ($935 million) in cash for Sony’s stake in S-LCD Corp., a venture formed in 2004, the Suwon, South Korea-based company said in a statement today. Sony, which invested 1.65 trillion won in the venture, will take a charge of about 66 billion yen ($846 million) in the quarter ending Dec. 31 after the deal, Japan’s biggest consumer- electronics exporter said in its statement.
The stake sale enables Sony Chief Executive Officer Howard Stringer, 69, to shed the responsibility of panel manufacturing amid losses in the TV business, where Samsung is the world’s biggest. To turn around Sony, which has forecast a fourth consecutive annual loss this year, Stringer has teamed up with partners to announce acquisitions worth a combined $8.4 billion in 2011. The purchases are designed to bolster the profitable phones and music divisions and introduced tablet computers to challenge Apple Inc.’s iPad.
Catch that? It doesn't take a rocket scientist to figure out what Sony has figured out: There's no future in TV sales; they're best off investing in the future of hand-held devices... Hand-held devices and tablet computers are generally not used to watch TV.

Tissue Time was a famous Japanese TV show in the mid-80's... No more.
How much clearer could the writing on the wall be? 


Anonymous said...

A month ago, a zai-nichi gaijin friend of mine said, "If the Japanese government stopped all its subsidies, the country would grind to a halt." Bit extreme, eh what? Since then, I keep coming across examples of businesses or charity groups that are partly funded by government grants or subsidies. All "private" colleges and unis are subsidised to the tune of 50%, for a start. Even a local pottery school, located in a famous potter's former residence (privately owned) gets a subsidy from the local government!

But perhaps the TV stations in Japan just rolled over with no quid pro quo whatsoever and said "Wakarimashita!" when forced to go digital and lose 20% of viewers, Ya know: so as not to "cause confusion". Wa. 'N all that. Ya think? By the way, I have this great bridge. You'll love it, and it's a steal! Just drop me a line...

Tom Picard ( said...

Um, didn't we work together at Interac like 30 years ago? -Tom

Anonymous said...

Here in the USA I think the digital switchover was somewhat similar. Even Nielson admits that they have lost TV viewers since the digital switchover. See:

Radio is in bad shape. There are many people who listen to music in their car with their cellphone. Not just MP3s, but, Pandora, and the like. Satellite radio doesn't help. Factor in that, plus the horrible advertising climate, the further consolidation of the industry, and it doesn't look, or sound, good for radio in the USA.

Cable TV is affected too. The local cable companies charge $15 a month more for internet service if you don't have it bundled with a cable TV package. For only $10, you can get their basic TV package. It seems strange doesn't it? You wind up saving $5 a month AND you get basic cable TV. Why are they doing it? It used to be until recently, that pay TV numbers kept on increasing, year in and year out, that is until ca. 2008-2009. They are declining badly, so they are using gimmicks to prop up the subscription numbers for Wall Street. Obviously, that doesn't count the people who used to spend $100+ per month on cable TV, and who currently still have it, but have reduced the cost to something cheaper.

The old landline telephone companies are trying similar gimmicks, with bundling packages, and 5 year price guarantees. Will they still be around in 5 years?

I remember reading about Sony a few years ago, there was a saying, that if it wasn't for their entertainment division, meaning video games, TV shows, and films, they would have gone broke a long time ago. Also, based on market cap, Samsung was bigger than Sony. I know with the under-30 set, Sony no longer carries the reputation or status it once did.

The consumer electronics market for Japanese companies generally is pretty bad. I'm frankly amazed that it took this long for Sony to leave the TV market. All the consumer electronic companies wanted products like the VCR and the tube TV from the 1970s-90s; a proven mature market where they could earn decent margins for decades. They thought they could do the same with DVD players; crank them out for 10-20 years and watch the money roll in. China changed that. In a short period of time, there were a huge number of mainland companies that were willing to sell players at around 1-3% margins. Now the same has happened with computers, Blu-ray players, and TVs.

The USA has to big to fail companies. It seems Japan has too big to fail industries. The recession is deep, and has affected almost everything. Everything seems to be in a tailspin with no way to pull out of it. Advertising is down, because people aren't buying, and they aren't buying because the economy is down. Hence the tailspin. People have started to watch every penny. Most of the "oldline" businesses haven't realized that people want their media essentially everywhere, and at their fingertips immediately...

I wish Sony the best of luck in handheld devices, but I don't think they will be very good, or lucky. They seem to be an "also ran" in almost every field they've enter in the last decade.

I know people who have cut all of the above, landline/cable/satellite/radio, and gone to a cellphone plan with unlimited data, and a laptop/ipad. Add in Netflix, and they can get all the phone service, internet, video, TV, audio, and radio, they want for about $60 a month. On the physical side that's no TV, no DVD/Blu-ray player, no video game system, no radio, no audio device, no landline telephone, and no camera. How can all of the previously mentioned companies compete?

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