Is History Repeating Itself in Japan?

One of the starkest trends in the consumer electronics industry over the past 15 years has been the collapse of Japan’s once mighty TV industry. Formerly iconic brands with immense global reach have shriveled in the face of intense pressure from South Korea’s one-two punch of LG and Samsung and a glut of low-cost competition, mostly from China.

To be sure, most of the brand names linger on, passing between opportunistic firms seeking to make retail inroads on the strength of a once powerful name. But the manufacturing base that powered Japan to TV dominance has been off-shored (mostly to China and East Asia), while companies like Sony try new business entities to keep a sagging business afloat.

This history is instructive because it appears to be playing out again, this time in Japan’s camera industry.

It’s been no secret that most of Japan’s camera firms have been reeling under the onslaught of mobile phones. The Camera & Imaging Products Association, which tracks Japanese camera shipments, pegged total shipments at nearly 120 million in 2010. By 2016, the number had plummeted to 24 million.

This vertiginous drop has been taking its toll on companies like Nikon, Canon and Panasonic. It’s also raised an inevitable question: will these firms follow the playbook of their TV counterparts and spin off their camera businesses or license out their brands? Most camera companies have moved production to lower-cost regions like Thailand and Malaysia, but outside of Ricoh’s purchase of Pentax, there has been very little consolidation or brand licensing. Some firms, like Panasonic, are diversified enough that they could sustain the loss of their imaging arms and survive (even if, to date, they have shown no inclination to do so). Others, like Nikon, are more dependent on imaging and thus more likely to tough it out.

The challenges facing Japan’s camera industry are, of course, different than the ones faced by its TV industry. In the latter, while market share shifted, total worldwide sales remained within a range of 200-220 million. Unit sales trends clearly fluctuated around that range, but never experienced the kind of sustained and seemingly irreversible plunge that has pushed the camera market to the brink. Smartphones and tablets may have pulled some people away from the big screen, but they haven’t cannibalized TV sales in nearly the same way as they have digital camera purchases. That suggests that Japan’s camera brands may not be able to avail themselves to the same strategies used by their TV counterparts—what firm would want to license a camera brand if so few people are interested in buying cameras?

Thus far, however, most of Japan’s camera companies appear uninterested in following the example of the TV makers. They have slowed the pace of product introductions and shifted focus to higher-end consumers and professionals (who remain committed to higher-quality products), but haven’t aggressively targeted new imaging markets like drones or virtual reality. Panasonic announced that it will dismantle its imaging division. The dismantling, however, will actually be a move to other operation units within the company. The camera industry has an even longer and more iconic history in Japan than its TV business. It won’t go down without a fight.