Victor Company of Japan, Limited History
Telephone: (045) 450-2837
Fax: (045) 450-1574
Sales: ¥916.31 billion (US$6.94 billion) (1998)
Stock Exchanges: Tokyo Osaka
Ticker Symbol: VJAPY (ADR)
SICs: 3577 Computer Peripheral Equipment, Not Elsewhere Classified; 3651 Household Audio & Video Equipment; 3652 Phonograph Records & Pre-Recorded Audio Tapes & Discs; 3663 Radio & TV Broadcasting & Communications Equipment; 7812 Motion Picture & Video Tape Production
JVC is a world leader in audiovisual and related software products. The Company is being transformed from an audiovisual innovator to a digital systems integrator. Its position as one of the few companies in the world with large-scale operations in both hardware and software, along with the innovative technology that led to the development of VHS, provides JVC with a competitive advantage in the development of digital systems. Based on these strengths, JVC looks forward to a new stage of growth in the multimedia age.
Victor Company of Japan, Limited (JVC) is one of several Japanese companies that has evolved to dominate the international consumer electronics market. The company has achieved its current position not only through effective marketing but also by consistently developing new products that establish standards within the industry. Like Matsushita Electric Industrial Company, Limited and Sony Corporation, JVC was strongly influenced by a single dominant personality; as the man most responsible for the success of JVC, Kenjiro Takayanagi is also considered one of Japan's most important inventors. Today, JVC makes VCRs, audio equipment, televisions and monitors, video cameras, computer peripherals, and other electronics items--both for the consumer and professional markets. The company is also active in the field of entertainment, where it produces music CDs, video game and karaoke software, and movies. The focus of the company is increasingly on digital technologies. JVC is an independently operated affiliate of Matsushita Electric, which holds a 52.4 percent stake.
JVC was founded in 1927, as the wholly owned subsidiary of the Victor Talking Machine Company of the United States, to manufacture and market phonographs in Japan. Victor, however, was purchased in 1929 by the Radio Corporation of America and renamed RCA Victor. As part of an effort to enlist the marketing and sales expertise of well-established Japanese conglomerates, minority shares of the Japanese Victor Company (JVC) were sold to the Mitsubishi and Sumitomo financial groups. JVC was thereafter operated as a U.S.-Japanese joint venture.
In 1930 JVC built a large phonograph-and-record plant in Yokohama, at the time the largest in Asia. Japan, however, soon came under the domination of ultra-rightwing militarists who in 1937 launched Japan into a war with China. The war soon led to hostility with other nations and caused many U.S. interests to reassess their investments in Japan. RCA Victor sold a majority of its shares in JVC to Nihon Sangyo (later the Nissan Motor Company), which assumed managerial control of the company. In an unrelated move, JVC shares held by Mitsubishi and Sumitomo were transferred to the Dai-Ichi Mutual Life Insurance Company.
RCA Victor sold its minority interest in JVC to Tokyo Shibaura Electric (now Toshiba) and Nihon Denko in 1938, making the company an entirely Japanese enterprise. The following year JVC successfully produced the first television set manufactured entirely from Japanese-made components. The television never entered mass production, but it did establish JVC's reputation as a leading electronics company.
The television was developed by an electrical engineer named Kenjiro Takayanagi. Takayanagi began work on the first Japanese-made television at the Hamamatsu Technical College in 1924, and succeeded in projecting images two years later. Takayanagi developed improved designs and was later awarded a full professorship. He was appointed to a number of positions with the Japan Broadcasting Corporation, where he led the development of television technologies, often in cooperation with companies such as JVC.
World War II had a dramatic impact on JVC, as it did on nearly every Japanese company. In 1943, as part of a government-imposed industrial reorganization, JVC's name was changed to Nippon Onkyo (Japan Acoustics), and in April 1945 its Yokohama plant was destroyed by aerial bombings. The facility was rebuilt shortly after the war ended, when the company also returned to its former name.
Kenjiro Takayanagi joined JVC as head of the television research department in July 1946. The company resumed full production of radios, phonographs, and speakers in 1950, and introduced televisions in 1953, the year that Takayanagi was promoted to managing director of JVC.
Became Affiliate of Matsushita Electric in 1953
As a result of the anti-monopoly laws imposed by the U.S. military occupation authority, Tokyo Shibaura (the primary owner of JVC) was forced to sell its interest in the company. For the next several years JVC endured labor problems and persistent financial instability. Japan's anti-monopoly legislation was relaxed in stages, so that by 1953 the Matsushita Electric Industrial Company was permitted to purchase a 50 percent interest in the nearly bankrupt JVC.
Konosuke Matsushita, who had founded Matsushita Electric in 1918, decided to maintain JVC's operational autonomy, offering only managerial direction and capital infusions. Initially JVC was considered a good investment for Matsushita because the two companies competed in relatively few areas. As it evolved, however, the relationship between JVC and Matsushita became one of competitive cooperation. Matsushita permitted JVC's managers great latitude in making decisions about investments in research and development, joint production, and licensing agreements. One of the ideas JVC developed was a videotape recorder.
In the field of audio technology, JVC developed the 45-45 system, one of the first systems to enable phonographs to reproduce sound in stereo. In conventional monaural systems, a small needle ran through a V-shaped groove that varied in depth, and the vibration of the needle was amplified to produce sounds. The 45-45 system required that depths vary on both sides of the groove. Two separate mechanisms measured the vibration of the needle in perpendicular directions. These vibrations were then amplified independently to produce two sounds simultaneously, or in stereo.
JVC introduced 45-45-system stereo phonographs in 1957, and the following year developed a color videotape recorder. The company began commercial production of color television sets in 1960, at a new plant in Iwai. Color television broadcasting began that same year and greatly increased demand for JVC televisions. In order to take better advantage of the company's growth, JVC shares were listed on the Tokyo and Osaka stock exchanges, and capital raised through subsequent share issues enabled the company to increase production capacity. Favorable economic conditions and low production costs allowed JVC to gain substantial market shares in foreign countries, particularly in the United States. In 1968, in an ironic reversal of 1927, JVC established a wholly owned U.S. subsidiary called JVC America, and three years later the company created a West German subsidiary called Nippon Victor (Europe) GmbH.
Kenjiro Takayanagi assumed a more influential role in the management of JVC during the 1960s, further diminishing the company's system of consensus management. Trained as an engineer, however, Takayanagi was not able to avoid the prolonged drop in profits that lasted from 1970 to 1976. The management of Matsushita continued to provide the guidance and support necessary to keep JVC from encountering more serious financial difficulty.
During those six years, JVC devoted considerable resources to the development of a commercial videocassette system. As part of a reorganization program in 1973, the company's management separated the music division from JVC and established it as a subsidiary called Victor Musical Industries. During the mid-1970s JVC established additional subsidiaries in Great Britain, Canada, and the United States.
Introduced VHS System in 1976
A few months before his 76th birthday, in 1974, Kenjiro Takayanagi retired from JVC, but continued to serve the company as an advisor. The video division, which was largely his creation, introduced the video home system (VHS) format videocassette recorder in 1976. The system was introduced after Sony's Betamax VCR, but was superior in several ways. Matsushita Electric, which had been independently developing a third format, was so impressed with the VHS that it abandoned its project and arranged for cross-licensing of the JVC technology.
Matsushita and its allied brands, Quasar and Panasonic, adopted the VHS format and, with JVC, worked diligently to establish VHS as the industry standard. Their efforts succeeded and, despite a full year of monopoly, the Sony Betamax was superseded by the VHS; Sony's market share rapidly diminished.
With the tremendous success of VHS, JVC's profits had risen by a factor of ten by 1982. The video division which had accounted for six percent of total sales in 1976, accounted for 69 percent in 1982. JVC established several additional subsidiaries, particularly in Europe, to handle sales of VHS video recorders and other products.
JVC engineers developed a laser-operated videodisc system in 1978. Although the technology gained favor among consumers, the product's inability to record television broadcasts was such a drawback that it curtailed its further development. A subsequent compact disc (CD) format developed by Sony and Philips, however, proved highly successful for audio reproduction. JVC applied certain videodisc technologies to the CD and developed a VHD videodisc system that was interchangeable with conventional CD players. JVC introduced the VHD to Japan in April 1983, and licensed VHD technology to 13 other Japanese manufacturers in addition to Thorn EMI, AEG-Telefunken, and General Electric. JVC was also expanding its VHS market through the 1982 development of VHS-C, a compact format that became a popular base for camcorders, and the 1987 launch of the Super VHS format, which offered sharper resolution than standard VHS. The 1987 introduction of digital audio tape (DAT) recorders, however, proved to be a failure.
JVC first entered the computer market in 1978 when it began making CRT displays and floppy disks and drives. Six years later, JVC introduced a line of personal computers while production of 3.5-inch disk drives began in 1985. At this time Ichiro Shinji was serving as president of the company, becoming the first person in 25 years to gain promotion to the company presidency from within JVC ranks.
Diversified in the 1990s
In April 1990 Takuro Bojo was appointed president of JVC; at 51 he was the youngest president in company history. Bojo began a diversification drive that aimed at expanding the company beyond the mature consumer electronics sector. The aim would be to expand sales in the areas of professional electronics (such as video cameras), telecommunications devices (such as cordless telephones), and entertainment. The last of these included production of video games and karaoke software as well as music and feature films. JVC's involvement in motion pictures had begun in 1989 with the production of Jim Jarmusch's Mystery Train. The company that year also took a stake in Largo Entertainment Pictures, a production company headed by entertainment veteran Larry Gordon which in the early 1990s developed such films as Point Break (1991), Malcolm X (1993), and Time Cop (1994). JVC was also involved in the production of such award-winning films as The Piano (1994) and Carrington (1996). In 1992, meanwhile, JVC entered into a joint venture with Hughes Aircraft Co. to develop projectors for large-screen televisions.
The early 1990s were difficult ones for most electronics firms in Japan as the country's economy entered an extended slump following the bursting of the bubble economy of the 1980s. Still largely a maker of consumer electronics, JVC was hurt not only by slumping sales of electronics goods in Japan and overseas markets but also by its failure to develop any breakthrough audiovisual products. The company consequently posted pretax losses for 1992, 1993, and 1994. It announced in August 1992 that it would cut 700 workers in its video plants. Less than a year later JVC said it would reduce its staff by 3,000 and cut capital spending by 36.3 percent. Soon after the conclusion of the 1994 fiscal year, Bojo resigned as president, taking responsibility for the poor financial performance. He was replaced by Takeo Shuzui, a director at Matsushita.
Shuzui led JVC on the comeback trail with a new emphasis on high-value-added digital technology, including digital camcorders, the D-VHS digital videocassette format, digital video disc (DVD) software and hardware, and high-definition television sets. The company thereupon posted healthy profits in 1996 and 1997, resuming dividend payouts in 1996, before returning to the red in 1998 as the Japanese economy entered a recession. In April 1998 JVC Europe Ltd. was established as the headquarters for European operations. This subsidiary joined three others--JVC Americas Corp., JVC Asia Pte. Ltd., and JVC (China) Investment Co., Ltd.--and the parent company as the centers of the five business spheres in which JVC operated: Japan, the Americas, Europe, Asia, and China. Each of the regional headquarters were locally managed. Although the short-term outlook for JVC did not appear favorable given the weakness of the Japanese economy, the company's long-term prospects seemed brighter based on a resurgence in successful product development.
Principal Subsidiaries: Victor Entertainment, Inc.; Victor Media Products, Inc.; Victor Interactive Software, Inc.; Victor Leisure System Co., Ltd.; JVC Advanced Media Co., Ltd.; Victor Arcs Co., Ltd.; Sanin Victor Sales Co., Ltd.; Okinawa Victor Sales Co., Ltd.; Victor Service & Engineering Co., Ltd.; Victor Data Systems Co., Ltd.; Victor Real Estate Co., Ltd.; Victor Finance Co., Ltd.; Victor Logistics, Inc.; JVC Belgium S.A./N.V.; JVC Canada Inc.; JVC (China) Investment Co., Ltd.; JVC France S.A.; JVC Deutschland GmbH (Germany); JVC Video Manufacturing Europe GmbH (Germany); JVC Italia S.p.A. (Italy); JVC Electronics Malaysia Sdn. Bhd.; JVC Nederland B.V. (Netherlands); JVC Finance B.V. (Netherlands); JVC Asia Pte. Ltd. (Singapore); JVC Electronics Singapore Pte. Ltd.; JVC España S.A. (Spain); JVC Manufacturing (Thailand) Co., Ltd.; JVC Components (Thailand) Co., Ltd.; JVC Europe Ltd. (U.K.); JVC (U.K.) Ltd.; JVC Manufacturing U.K. Ltd.; JVC America, Inc. (U.S.A.); JVC Americas Corp. (U.S.A.); US JVC Corp.; JVC Entertainment, Inc. (U.S.A.).
- "JVC Undergoing Major Restructuring," Television Digest, July 16, 1990, pp. 12+.
- Much, Marilyn, "JVC, Who?," Industry Week, September 3, 1984, pp. 57+.
- Nakamoto, Michiyo, "JVC Records Pre-Tax Loss for Third Consecutive Year," Financial Times, May 25, 1994, p. 32.
- "Sony and JVC Shoot from the Shoulder," Economist, January 18, 1986, pp. 55-56.
- Terazono, Emiko, "Victor Resumes Dividend After Four Years," Financial Times, May 23, 1996, p. 36.
- Trachtenberg, Jeffrey A., "JVC, in Bid to Mute Sony, to Introduce Digital VCR That Plays VHS Tapes," Wall Street Journal, April 3, 1995, p. B3.
- Turner, Richard, "How Larry Gordon Got His $100 Million Movie Deal," Wall Street Journal, August 23, 1989, pp. B1, B5.
Source: International Directory of Company Histories, Vol. 26. St. James Press, 1999.