Last year I wrote about how Sound United was planning to take over the business of Japanese audio brands Onkyo and Pioneer. The deal fell through for some reason and now news comes from Japan that might explain why the sale didn’t go through.
According to Nikkei Asia, Onkyo Home Entertainment filed for bankruptcy yesterday at Osaka District Court. Total liabilities have been stated as being around ¥3.1 billion which is around $24 million. The company is based in Osaka and was delisted back in August.
The company’s failure has been blamed on its inability to adapt to the fast-changing audio market which is increasingly software-based and revolves around streaming music rather than listening to it on physical formats like CDs. More of us are using our smartphones for listening to music and even watching films.
Onkyo’s two subsidiary companies that handled the manufacturing of speakers and other equipment for third parties had already filed for voluntary bankruptcy in March of this year.
Since then, Onkyo has ceased its functions. The company told Nikkei that it: “tried to maintain business on a smaller scale but could not stop its cash-flow problems from worsening.”
The much-revered Onkyo brand has a strong reputation with audiophiles and was founded in 1946. In its heyday, the company was well known for its range of amplifiers, CD players, tuners, AV receivers and all-in-one audio systems. However, with the shift towards consuming music on smartphones and the shift towards multi-room audio systems, the company witnessed a steady drop in revenues.
In January 2021, when Onkyo first raised the possibility of a delisting, shareholders gave the green light to a plan to grant stock options to an investment fund in the Cayman Islands to raise up to ¥6.2 billion in fresh equity. However, not all the stock options were exercised by the end of the company’s financial year in March 2022. This failure triggered Onkyo’s delisting on the Tokyo Stock Exchange.
Onkyo offloaded its consumer audio-visual business to Sharp and US-based Voxx International. It also managed to sell its headphone business to an investment fund in September. The Sharp and Voxx deal will continue to develop products using the Onkyo brand.
It’s always sad to see a venerable brand go out of business but it’s a sign that the consumer audio market is in a state of flux. Many Japanese brands seem to lack the software skills and interface design capabilities to adapt to the new age of streaming. US-based companies seem to be better at this aspect of the business.