Market Insight

Toshiba restructures its Global TV business to a brand licensing model

January 30, 2015

Jusy Hong Jusy Hong Research and Analysis Director, Smartphone

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Toshiba has taken measures to restructure its TV business. TV development and sales operations by Toshiba will be ceased in North America and instead the firm will license its products to be sold by Compal Electronics, headquartered in Taiwan, by March 2015.  For all other regions outside of Japan, Toshiba has further announced its intention to transform its consumer TV business also toward a brand licensing structure.

Our Analysis:

Toshiba has become the latest in a line of previously established TV manufacturers to downscale its operations in terms of manufacturing and sales toward a brand licensing structure.

Brand licensing is not a brand new business model in TV industry. Philip was the pioneer for this in TV industry. Philips TV brand is now operated by two different companies divided by region. In North America, Japan based Funai is Philips TV while Taiwan based TPV operates Philip TV brand in Europe and Asia Pacific.

Meanwhile the TV industry over the past few years became extremely competitive, both in terms of price and features offered, especially after Flat Panel Display (FPD) TVs became the main TV device over conventional Cathode Ray Tube (CRT) TVs. Two Korean TV manufacturing, LG Electronics and Samsung, started dominating the TV market, leveraging competitive advantage through their in-house panel businesses. They are now the number 1 and 2 brands in the global TV market with a combined market share greater than 37% in 2013. On the other hand, previously entrenched TV brands from Japan have been losing the ground, and started restricting their TV businesses. As a result, many overseas TV production lines were either closed or sold to other companies, including OEM/ODM manufacturers and direct competitors. This weakened their competiveness in terms of cost, brand power, negotiation power with retailer and flexibilities in operating business. Therefore, some well-known Japanese electronics companies, such as Pioneer, Mitsubishi, Hitachi, had withdrawn completely or focused on a limited market a long time ago. Even the remaining top 4 Japanese brands (Panasonic, Sharp, Sony & Toshiba) have been restructuring their TV businesses, causing the market share of Japanese origin companies in the FPD TV market from 2009 to 2013 dropping severely from 34% to 22%.

Compal is a long-time partner of Toshiba for TV, Laptop and other products OEM/ODM business. More than 65% of Toshiba’s TV shipment is already manufactured by contract manufacturers and Compal has the largest share among the Toshiba’s OEM/ODM partners. Toshiba even sold its oversea TV production factories in Poland and Mexico to Compal. The Mexico TV factory’s production is for the North American region, so Compal doing branding licensing in North America looks reasonable.

Meanwhile, Toshiba continues to operate TV factories in Indonesia, which is the last TV factory fully owned by Toshiba. Toshiba closed another fully owned China TV factory in 2014. Toshiba is still operating two oversea TV factories, one in Brazil and the other one in Egypt through joint ventures with local companies. Even the Egypt factory was recently built. As Toshiba has announced that it will be looking for brand licensing partners in all other regions except Japan, some of these factories are likely to sold or closed. It will not be easy finding new brand licensing partners as other Japanese brands will be trying the same thing.

We may see more of brands licensing announcements from other TV brands in the near future. These developments will not be good for the industry and consumers as it will lead to less variety among products and markets more dominated by fewer companies.  


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