JVC 2003 Annual Report Download - page 28

Victor Company of Japan, Limited
26 Annual Report 2003
Software & Media
D-VHS Tapes
The digital version of the de facto VHS standard
invented by JVC
Mini-DV Tapes
Highly functional digital cassette tape using
technology unique to JVC
Mini-DV Digital Hi-Vision Tapes
Realizing high-definition recordings on
Mini-DV tape
Hiroshi Fujisawa
President, Media Company
camcorder market share and we make
further technological advances in the
DVC format. We also started develop-
ing new media for technologies such
as Blu-ray Discs and advanced optical
discs. Sales in the next year or two will
depend on the market acceptance rate
for related hardware devices.
In recorded media, we make the
most of our powerful value chain in the
content business, applying our exclu-
sive Digital K2 audio technology from
the mastering stage onward to deliver
sound quality incredibly close to the
orginal. We also quickly adapt technol-
ogy and distribution techniques to
changes in customer needs.
Structural Reform and Cost
Reduction Benefits
Falling sales prices for recordable
media and recorded media exert in-
creasing pressure on profit margins.
Survival requires a constant search for
further cost savings. During the past
fiscal year, we took a number of steps,
including closing a U.S. disc factory
to consolidate all disc production at a
single location, and initiating employ-
ment structure reform. At media
MEDIA BUSINESS
Renewed Focus on Core Strengths
and Growth Strategies
Our main media business activity is
manufacturing and selling blank record-
able media and recorded media on CD,
DVD and tape formats. Recorded media
contgent includes material owned by
JVC as well as material acquired through
deals with content partners.
Our DVD-RW discs have earned a
reputation for reliability in Japan and
overseas, thanks to their extremely low
error rate during playback and record-
ing. In Japan, we have a market share
of about 60% on a shipment basis. To
cement our DVD products as the de
facto standard in the domestic market,
we are now investing in additional
capacity that will raise monthly DVD
output from the past fiscal year’s
450,000 units to one million units
this year. Mini-DV tape is another im-
portant product in this business. This
tape, a global product, is currently the
only cost-efficient media capable of
high-definition recording and play-
back. We expect growth in demand for
this tape as our digital video cameras
capture a growing share of the
factories, we reduced the level of de-
fects and established a highly flexible
manufacturing system. For example, we
now produce small volumes of recorded
media at a profit, which is certain to
lead to higher earnings. In audiotape,
a market with a dwindling number of
players, we cut costs to the point where
we benefit as one of the few remaining
manufacturers.
The emergence of new forms of
media offering even higher recording
speeds and densities presents numer-
ous opportunities for JVC’s media
business. Having completed the
groundwork to capitalize on these
trends, we now look forward to using
these new technologies to generate
higher sales and earnings.
With expertise in areas from artist development to the manufacture and sale of recorded media, this segment boasts a
complete and integrated value chain. The media business mainly manufactures and sells recordable media and prerecorded
software such as CDs and DVDs. The software business primarily identifies and develops promising artists, and also pro-
duces, distributes and sells content. The Software & Media segment accounted for 17% of total fiscal 2003 sales. Weak-
ness in Japan’s market for music CDs caused segment sales to decline 5% and dragged operating income down by 59%
during the year under review.
In the software business, JVC withdrew from the movie business and divested its game business to improve profitability.
We are now concentrating this business on music content to boost earnings.