Company history

JVC did not begin as a company anyone founded. In September 1927 the Victor Talking Machine Company of the United States put up the entire ¥2 million of capital for Nihon Victor Chikuonki — a gramophone plant built inside Japan chiefly to get around the high tariffs on imported machines — and installed an American, B. Gardner, as its first president. The factory went up in Yokohama, and the products, gramophones and records, would stay recognisably the same for decades. What refused to stay the same was the ownership.

Mitsubishi and Sumitomo money came in in 1929, turning it into a joint venture; Tokyo Shibaura Electric (Toshiba) bought in in 1937; RCA, by then Victor’s American parent, pulled its capital out in 1938. Wartime policy finished the job of erasing the foreign name — in 1943 the company was renamed Nippon Onkyo and designated a military-controlled plant, and Allied bombing destroyed most of the Yokohama works. It took back the name Nihon Victor in December 1945, spent the post-war years insolvent and under bank supervision, and in February 1954 was rescued by a capital injection from Matsushita Electric Industrial.

So within a quarter-century the controlling shareholder changed four times, and no owner ever stayed long enough to take the research and product work in hand. The company was left to assemble its own technology — which is precisely how a habit of building things itself survived inside a firm that had never owned itself. Strong products, borrowed capital: the shape was set at the start.

Under Matsushita the company was rebuilt, and in November 1960 it listed on the Tokyo and Osaka exchanges. But in general appliances it was outgunned — Matsushita itself, Sharp and the rest had scale it could not match — and the losing fight pushed it towards the one field where its gramophone pedigree still counted. It concentrated on audio: turntables, amplifiers, high-fidelity equipment, sold on quality rather than volume. New plants at Yamato (1962) and Hachioji (1965) gave that line a production base, US JVC Corp. opened in 1968, and the music business was spun out as Victor Musical Industries in 1972.

The strategy was deliberate avoidance — do not meet the big diversified makers head-on — and it bought the company a decade of independence in form if not in ownership. It also had a ceiling. By the year ended March 1975 competition had turned into falling profits, and the audio market itself was visibly plateauing; the trade press of the day was already asking whether this was a famous name in decline or one about to rise again.

What saved the answer was work that had been going on quietly in the background. Home video recording had been a research race among Japanese makers since the 1960s, and JVC’s inheritance from the gramophone — precision analogue recording mechanisms — was directly applicable. Being a subsidiary that its parent largely left alone in R&D turned out to matter: the freedom to develop a format Matsushita had not asked for is what made 1976 possible.

In 1976 JVC put forward VHS, its own home video cassette format, against a Sony Betamax that had reached the market first and was technically well regarded. The decisive move was not engineering but distribution of the standard itself. Where Sony kept Betamax largely within its own camp, JVC licensed VHS out — first persuading its parent Matsushita to pass over Betamax and adopt VHS, then supplying Western majors such as Zenith and Thomson on an OEM basis. Once Matsushita’s manufacturing capacity and dealer network stood behind it, the contest stopped being a comparison of decks and became a count of factories and brands, which VHS won decisively by the mid-1980s.

The scale that followed was of a different order from anything the company had known. Deck and tape demand carried revenue past $2.9B (¥700bn) in the year ended March 1985, new plants went up at Fujieda (1981) and Yokosuka (1982) to keep up, and royalties from the licensees turned the format itself into an earnings stream. A firm that had started out making gramophones held the world standard for video recording — a transformation half a century in the making, and one credited above all to the engineer Takano Shizuo, who had both the development ability and the diplomacy to hold a multi-company camp together.

The victory carried its own decay. The wider VHS spread, the more makers built decks, and prices fell faster than anyone had forecast; royalty rates came down with them. S-VHS, launched in 1987 as a higher-definition upper tier, was an attempt to slow that slide, and incremental format upgrades proved no answer to a structural one. A rising yen squeezed export margins on top. The business that had made the company was eroding while it was still the largest thing the company had.

In the year ended March 1993 JVC reported a net loss of roughly ¥43.0 billion and passed its dividend for the first time since listing. President Bonjo’s restructuring and the “new wind” ventures reporting directly to him were an attempt to unpick the habits that success had hardened: patent income had been covering weakness elsewhere, and the confidence of an engineering corps that had beaten Sony had let investment in production technology and product planning slide. That the surgery began only after the dividend was cut, rather than while the company was still strong, is the measure of how hard the format’s own legacy was to let go.

The following fifteen years were a search for a replacement pillar that never ended. JVC set up regional headquarters in Singapore (1995), the US (1997) and Britain (1998), adopted an internal company system in 2000 and unwound it in 2005, and drew up the “Leap 21” plan in 2002. Digital camcorders and new audio lines ran into Sony and Panasonic without a clear point of difference, and as a consolidated subsidiary of Matsushita the boldest restructuring options always needed a parent’s consent that slowed every decision. By the year ended March 2008 revenue of about ¥660 billion carried a net loss of roughly ¥47.5 billion, and going on alone was no longer possible.

The ending was arranged above its head. Matsushita, holding a stake with little industrial logic to it, looked for a buyer; after talks with a fund collapsed, JVC was placed with Kenwood — a company a fifth its size, but one whose chairman Kawahara Haruo had already brought an insolvent business back. A third-party share allotment in August 2007 was followed by delisting in September 2008 and, in October, a share transfer creating the holding company JVC Kenwood. The remade group later shifted its centre of gravity away from consumer AV altogether, buying the American public-safety radio maker EF Johnson Technologies in 2014 for about ¥6.6 billion — the descendant of the gramophone company trading the living room for police and fire dispatch in North America.