Last year, I wrote about how Sound United planned to acquire the Japanese audio brands Onkyo & Pioneer. There was some reason why the deal failed. Now, news from Japan may explain why.
According to Nikkei Asia, Onkyo Home Entertainment filed for bankruptcy yesterday at Osaka District Court. The total liabilities are estimated at Y=3.1Billion, which is approximately $24 million. The company is located in Osaka, and was delisted in August.
Its inability to adapt to the rapidly changing audio market, which is increasingly software-based and focuses more on streaming music than listening to it on CDs, was responsible for the company’s failure. We are more likely to use our smartphones for music listening and watching movies.
Onkyo’s two subsidiaries that manufactured speakers and other equipment for third-party customers had filed voluntary bankruptcy in March this year.
Onkyo has been closed down since then. Nikkei was told by the company that they tried to keep business small but couldn’t stop cash flow problems from getting worsened.
Onkyo, a well-respected brand with an excellent reputation among audiophiles, was established in 1946. The company’s range of amplifiers, tuners and CD players was well-known in its early days. The company’s revenues dropped steadily with the shift to music streaming on smartphones and multi-room audio systems.
Onkyo raised the possibility of delisting in January 2021. In that year, shareholders approved a plan to give stock options to an investment company in the Cayman Islands. This would allow them to raise as much as Y=6.2billion in equity. However, not all stock options were exercised at the end of the company’s financial year, March 2022. Onkyo was delisted from the Tokyo Stock Exchange as a result of this failure.
Sharp and US-based Voxx International purchased Onkyo’s consumer audio-visual business. In September, it also sold its headphone business and invested in an investment fund. Sharp and Voxx will continue to develop products under the Onkyo brand.
Although it is always disappointing to see a well-known brand go out of business, it is a sign of the state of the consumer audio market. Many Japanese brands lack the interface design and software skills necessary to adapt to streaming. This aspect of business seems to be more successful in the US.