Victor Company of Japan, Limited

3-12, Moriya-cho
Kanagawa-ku
Yokohama, 221-8528
Japan
Telephone: ( + 81-45) 450-1445
Fax: ( + 81-45) 450-1425
Web site: http://www.jvc-victor.co.jp

Public Subsidiary of Matsushita Electric Industrial Company
Incorporated: 1927 as Victor Talking Machine Company of Japan, Limited
Employees: 30,481
Sales: ¥806.9 billion ($6.9 billion) (2006)
Stock Exchanges: Tokyo Osaka
Ticker Symbol: 6792
NAIC: 334310 Audio and Video Equipment Manufacturing; 334419 Other Electronic Component Manufacturing; 334612 Prerecorded Compact Disc (Except Software), Tape, and Record Reproducing; 334613 Magnetic and Optical Recording Media Manufacturing; 512220 Integrated Record Production/Distribution

Victor Company of Japan, Limited, is one of several Japanese companies that has evolved to dominate the international consumer electronics market. Known as JVC, particularly outside Japan, 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 and is known as the father of Japanese television. The JVC of the early 21st century is a maker of a variety of electronic equipment for both the consumer and professional markets, including high-definition and LCD televisions, digital video cameras, DVD players and recorders, VCRs, home and professional audio equipment, car audio and video equipment, video surveillance equipment, and projectors. The company also produces electronics components and devices, including motors for hard disk drives and optical pickups for car CD and DVD receivers, as well as recordable media products, such as DVD-RW discs; and is active in the field of entertainment, with its Victor Entertainment, Inc. subsidiary ranking as one of Japan's major record companies. More than two-thirds of the company's revenues are generated outside of Japan. JVC is an independently operated affiliate of Matsushita Electric, which holds a 52.7 percent stake.

JAPANESE-AMERICAN ROOTS

Victor Talking Machine Company of Japan, Limited was founded in 1927, as a 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-right-wing 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 Co., Ltd.), 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 Company, Ltd. (later Toshiba Corporation) 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.

BECOMING AFFILIATE OF
MATSUSHITA ELECTRIC IN 1953

As a result of the antimonopoly 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.

COMPANY PERSPECTIVES

Using superior audio and visual technologies and communications networks, JVC will create new ways to communicate through music and images—vehicles that inspire people and expand the possibilities for creative expression.

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.

INTRODUCTION OF 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 (he died in July 1990 at age 91). 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 6 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.

KEY DATES

1927:

Victor Talking Machine Company of Japan, Limited is founded as a subsidiary of the Victor Talking Machine Company of the United States, to manufacture and market phonographs in Japan.

1929:

U.S. Victor is acquired by Radio Corporation of America and renamed RCA Victor, leading to the sale of minority stakes in the Japanese Victor Company (JVC) to the Mitsubishi and Sumitomo financial groups.
RCA Victor sells its shares in JVC to various Japanese companies, making it an entirely Japanese enterprise.

1939:

JVC produces the first Japanese television set.

1953:

Matsushita Electric Industrial Company, Limited acquires majority control of the nearly bankrupt JVC.

1957:

Company introduces 45-45 system stereo phonographs.

1976:

JVC introduces the VHS format videocassette recorder.

1990:

Company begins diversification drive.

1994:

Under a new president, Takeo Shuzui, JVC begins emphasizing high-value-added digital products.

2006:

Majority owner Matsushita considers its options but appears to take a wait and see approach with its financially struggling subsidiary.

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.

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.

SHIFTING EMPHASIS TO DIGITAL
TECHNOLOGY

Shuzui led JVC on the comeback trail with a new emphasis on high-value-added digital technology, encompassing the D-VHS digital videocassette format, digital video disc (DVD) software and hardware, high-definition television sets, and digital camcorders (including the 1995-introduced GR-DV1, the world's first pocket-sized digital video camcorder). 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. The 1998 loss also partly reflected the shutdown of a plant in France and valuation losses from stock holdings. 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 was locally managed.

Losses continued in 1999 and 2000 thanks to weak demand and low prices in the domestic market coupled with the effects of a strong yen on exports from Japan. JVC launched a series of restructuring efforts during this period, including the liquidation of several subsidiaries and affiliates and the shifting of production to overseas plants. The company maintained its focus on the higher-growth area of digital and networking products, with one particular bright spot being strong sales of mini-digital video camcorders. Another area of concentration was on televisions and projectors using JVC-developed direct-drive image light amplifier (D-ILA) devices, delivering bright, high-definition images. In January 2001 JVC announced a three-year plan to reduce its workforce by 1,600 (or 16 percent). At the same time, the company shifted to a more cooperative relationship with its parent, Matsushita, with the two firms beginning to pursue joint development of digital televisions and digital still cameras, mutual supply of products and parts, and sharing of the distribution management infrastructure.

JVC eked out a modest profit total of ¥2.5 billion ($20.1 million) for 2001 on net sales of ¥934.35 billion ($7.54 billion). In June 2001 Masahiko Terada succeeded Shuzui as JVC president. The persistently slumping economy in Japan, where prices for consumer electronics continued to fall, pushed JVC back into the red in 2002. During the year Terada elected to drastically reduce JVC's inventories to correct the firm's traditional overreliance on using inventories to generate profits, which resulted in a deeper net loss. In December 2001 JVC introduced 36- and 32-inch cathode-ray-tube television sets equipped with the company's own digital image scaling technology (DIST), which delivered higher resolution high-definition images. Sales exceeded original projections by 20 percent. In April 2002 JVC introduced 42- and 35-inch plasma TVs that also used DIST.

By 2003, when profitability was restored, JVC's product lineup was emphasizing high-definition televisions and projectors, camcorders, and DVD players and recorders. In March 2003 JVC introduced its GR-HD1 high-definition digital video camera to strong sales. The following year, the company introduced a line of large-screen rear-projection D-ILA televison sets in North America and also launched worldwide its Everio cam-corder, the world's first hard-disk camcorder, which used a one-inch hard drive as a storage device. To support its new product push, JVC in January 2003 introduced a new brand statement, "The Perfect Experience." At the same time, JVC continued to de-emphasize low-margin analog products. For example, the company liquidated its U.S. videotape manufacturing subsidiary in early 2004.

During 2005 JVC continued to broaden its television lineup, placing greater emphasis on LCD TVs. Results for the year suffered, however, from faster-than-expected declines in prices for digital products and numerous delays in releasing new products. The company posted a net loss of ¥1.86 billion ($17.4 million) on revenues of ¥840.59 billion ($7.86 billion). Restructuring efforts continued, including the closure of the firm's video equipment manufacturing facility in Europe, located in Berlin. The production of video cameras and DVD recorders was shifted to plants in Malaysia and Japan. Late in 2005 JVC began selling large-screen rear-projection televisions in China, the second largest market for such sets, after the United States.

With the results for 2005, JVC appeared to be repeating its cycle of falling into the red, achieving a temporary, restructuring-led recovery, and then falling back into the red again. The 4 percent fall in net sales and the deeper net loss of ¥30.61 billion ($261.6 million) for 2006 seemed to confirm this conclusion. In addition to suffering in a fiercely competitive digital audio-video market, JVC also felt the effects of the discovery of flaws in its DVD recorders and delays in the introduction of LDC television models because of an unsuccessful outsourcing strategy. As JVC launched its latest restructuring effort, Matsushita began feeling pressure from its shareholders, who were concerned about how the subsidiary was affecting the parent. Among the remedies being pushed were the sale of the entire stake in JVC, a reduction of the stake, or the absorption of JVC into Matsushita's other businesses. It nevertheless appeared that Matsushita planned to continue to watch over JVC's turnaround efforts rather than take more drastic action concerning its long-term partner.

Updated, David E. Salamie

PRINCIPAL SUBSIDIARIES

Victor Entertainment, Inc.; Teichiku Entertainment, Inc.; Victor Service & Engineering Co., Ltd.; Victor Real Estate Co., Ltd.; Victor Finance Co., Ltd.; Victor Logistics, Inc.; Nippon Record Center Co., Ltd.; JVC Americas Corp. (U.S.A.); JVC Company of America (U.S.A.); JVC America, Inc. (U.S.A.); JVC Industrial America, Inc. (U.S.A.); JVC Canada Inc.; JVC Europe Ltd. (U.K.); JVC (U.K.) Ltd.; JVC Manufacturing U.K. Ltd.; JVC France S.A.S.; JVC Italia S.p.A. (Italy); JVC España, S.A. (Spain); JVC Deutschland GmbH (Germany); JVC Benelux B.V. (Netherlands); JVC International (Europe) GmbH (Austria); JVC Asia Pte. Ltd. (Singapore); JVC Electronics Singapore Pte. Ltd.; JVC Electronics Malaysia Sdn. Bhd.; JVC Video Malaysia Sdn. Bhd.; JVC Sales & Service (Thailand) Co., Ltd.; JVC Manufacturing (Thailand) Co., Ltd.; JVC Components (Thailand) Co., Ltd.; P.T. JVC Electronics Indonesia; JVC Gulf FZE (United Arab Emirates); JVC Korea Co., Ltd.; JVC (China) Investment Co., Ltd.; JVC Beijing Electronic Industries Co., Ltd. (China); JVC Shanghai Electronics Co., Ltd. (China).

PRINCIPAL OPERATING UNITS

ILA Business Group; Display Business Group; Home AV Business Group; Portable AV Business Group; Mobile Entertainment Business Group; Professional Systems Business Group; Components & Device Business Group; Media Products Business Group; Entertainment Software Business Group.

PRINCIPAL COMPETITORS

Sony Corporation; Royal Philips Electronics N.V.; THOMSON; Pioneer Corporation; Samsung Electronics Co., Ltd.; SANYO Electric Co., Ltd.

FURTHER READING

Inaba, Minoru, "JVC Takes the 'Offensive,'" HFD—The Weekly Home Furnishings Newspaper, January 26, 1987, pp. 83 +.

"JVC Faces Uncertain Future Scouting for Matsushita," Nikkei Weekly, February 14, 2005.

"JVC Undergoing Major Restructuring," Television Digest, July 16, 1990, pp. 12 +.

Kane, Yukari Iwatani, "For Matsushita, JVC Subsidiary Is an Albatross," Wall Street Journal, July 31, 2006, pp. C1, C2.

Maruyama, Hiroya, "Cyclical Losses Persist at JVC," Nikkei Weekly, January 10, 2006.

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.

Sagimori, Hiroshi, "JVC's Restructuring Hinges on Display Business," Nikkei Report, May 16, 2002.

"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.

Wiegner, Kathleen K., "Can Japan Victor Play It Again?" Forbes, January 19, 1981, p. 71.

Victor Company of Japan, Ltd.

4–8–14, Nihonbashi-Honcho
Chuo-ku
Tokyo 103
Japan
(03) 241–7811

Public Company
Incorporated: 1927
Employees: 19,560
Sales: ¥820.91 billion (US$6.57)
Stock Index: Tokyo Osaka

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 and Sony, 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.

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 an American-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-right-wing militarists who in 1937 launched Japan into a war with China. The war soon led to hostility with other nations and caused many American 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 moved, 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.

As a result of the anti-monopoly laws imposed by the American 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% 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. But as it evolved, 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 video tape 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 runs through a V-shaped groove that varies in depth, and the vibration of the needle is 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 video tape 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 markets shares in foreign countries, particularly in the United States. In 1968, in an ironic reversal of 1927, JVC established a wholly owned American 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 video cassette 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.

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 video cassette 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 succeded 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 6% of total sales in 1976, accounted for 69% 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 video-disc 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, has proven highly successful for audio reproduction. JVC applied certain video-disc technologies to the CD and developed a VHD videodisc system that is interchangeable with conventional CD players. JVC introduced the VHD to Japan in April, 1983, and has licensed VHD technology to 13 other Japanese manufacturers in addition to Thorn EMI, AEG-Telefunken, and America’s General Electric.

Although JVC introduced a line of personal computers and peripheral products in 1983, the company’s future product development will be directed toward improved audio and video systems.

While Kenjiro Takayanagi continued to advise the company from retirement, JVC returned to a more democratic form of management, greatly influenced by directors tenured at Matsushita. However, Ichiro Shinji, the first man in 25 years to gain promotion to the company presidency from within JVC ranks, has since been named chairman of JVC. The company’s relative autonomy within the Matsushita group continues, and its relationship of constructive competition with Matsushita has proven to be most profitable as well.

Principal Subsidiaries:

Victor Musical Industries, Inc.; Victor Family Club Co., Ltd.; Nippon AVC Co., Ltd.; Hokkaido Victor Co., Ltd.; Ou Victor Co., Ltd.; Tohoku Victor Co., Ltd.; Kanto Victor Co., Ltd.; Tokyo-Higashi Victor Co., Ltd.; Tokyo-Nishi Victor Co., Ltd.; Chiba Victor Co., Ltd.; Shinetsu Victor Co., Ltd.; Kanagawa Victor Co., Ltd.; Shizuoka Victor Co., Ltd.; Tokai Victor Co., Ltd.; Hokuriku Victor Co., Ltd.; Keiji Victor Co., Ltd.; Kobe Victor Co., Ltd.; Chugoku Victor Co., Ltd.; Shikoku Victor Co., Ltd.; Kyushu Victor Co., Ltd.; JVC Magnetics of Japan Co., Ltd.; Victor Service & Engineering Co., Ltd.; Sanin Victor Sales Co. Ltd.; Okinawa Victor Sales Co. Ltd.; Victor Finance Co., Ltd.; Nippon VMR Co. Ltd.; U.S. JVC Corp.; JVC Canada Inc.; JVC (U.K.) Ltd.; JVC Video France S.A.; JVC Magnetics Europe GmbH (West Germany); JVC America, Inc.; JVC Electronics Singapore Pte., Ltd.; JVC Deutschland GmbH; JVC Finance B.V.

Victor Company of Japan, Limited

12, 3-chome, Moriya-cho
Kanagawa-ku
Yokohama 221-8528
Japan
(045) 450-2837
Fax: (045) 450-1574
Web site: http://www.jvc-victor.co.jp

Public Company
Incorporated: 1927
Employees: 31,040
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

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.

Japanese-American Roots

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.

Company Perspectives:

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.

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-Tele-funken, 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.).

Further Reading

“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. Bl, B5.

—updated by David E. Salamie