Funai Gets Boost From Blu-ray, Converter Boxes

[Stryydr]

Seems like Funai is happy with blu-ray. Interesting numbers here in my view.

DVD player sales fell from the previous year's $189 million to $128 million, and video recorder sales dropped from $25.6 million to $11.3 million.

Blu-ray Disc players and step-top converter boxes for the United States accounted for $78.4 million and $146.6 million, respectively.

The entire article is here:

ttp://www.twice.com/article/CA6614847.html

Funai Gets Boost From Blu-ray, Converter Boxes
By Greg Tarr -- TWICE, 11/14/2008 1:50:00 PM

Tokyo– Sales of new products such as U.S. TV converter boxes and Blu-ray Disc players boosted Funai Electric’s operating income 108.8 percent to compensate for a 7.5 percent year-on-year decline in sales of mainstay products, the company reported in its consolidated financial results for the first half (April to September) of fiscal 2008.

According to a report from the Nikkei news service, Funai said mainstay product sales declined to about $1.49 billion while operating income surged 108.8 percent year on year to $44.6 million with the help of revenue from set-top boxes and Blu-ray Disc players in the United States.

The new device categories made up for decreased sales of Funai staples including CRT TVs and DVD players, according to Nikkei.

The report said Funai directors acknowledged that sales of TV converter boxes in the U.S. will have only a limited lifespan, following the completion of the U.S. analog TV shut-off in February, but the company expects that to be compensated for next year with increased sales of Blu-ray players and Philips branded LCD TVs in the U.S.

Funai took over sales and marketing of Philips TV products in North America in August following its licensing agreement with Royal Philips Electronics NV of the Netherlands.

In the fiscal first half, Funai said its TV-related sales dropped from $682 million to $586 million from the previous year, while LCD TV sales increased from $464 million to $513 million, and CRT TV sales shrank from $145 million to $59 million. Sales of the other TV-related products declined from $73 million to $14.4 million due to the company's withdrawal from the projector market, Nikkei reported.

DVD player sales fell from the previous year's $189 million to $128 million, and video recorder sales dropped from $25.6 million to $11.3 million. DVD recorder sales nudged up from $113.5 million a year ago to $118.5 million.
The company said sales of new products including Blu-ray Disc players and step-top converter boxes for the United States accounted for $78.4 million and $146.6 million, respectively.

Information equipment sales significantly decreased year on year from $466.7 million to $286 million. Funai said OEM orders for printers decreased while OEM orders for digital cameras recovered.

[comixguru]

Good, but not great news for Blu-ray, I think. Funai players entering the market and selling what is probably 500K players so far in 2008 should be balanced against Sony dropping 300K players off their estimates after the three month of sales JUL-SEP.

On the other hand, fantastic news for Sony-haters. Funai stole just stole $75M right out of Sony's wallet.

-comix

[tolitzpogi]

I think this is awesome news... it shows the competition that some of the naysayers say doesn't exist anymore in the industry

- T

[ack_bak]

This is good news. It shows that even budget BD players can generate revenue and profit for a company.

[hatt]

So Funai BD player revenue was over half of DVD player revenue. I wonder what the profit margins are on each. Can't be too much margin in $30 players.

[theflux]

Kind of puts a damper on all the people who say Toshiba isn't entering the market because there is no profit to be made.

[hellokitty]

Originally Posted by comixguru

Good, but not great news for Blu-ray, I think. Funai players entering the market and selling what is probably 500K players so far in 2008 should be balanced against Sony dropping 300K players off their estimates after the three month of sales JUL-SEP.

On the other hand, fantastic news for Sony-haters. Funai stole just stole $75M right out of Sony's wallet.

-comix

It's not a zero sum game. Both of them are increasing Blu-ray market. Sony earns from royalties and the success of Blu-ray ultimately.

[comixguru]

Originally Posted by hellokitty

It's not a zero sum game. Both of them are increasing Blu-ray market. Sony earns from royalties and the success of Blu-ray ultimately.

Sure thing, your absolutely right. Sony banks all that license money... wait, aren't they "just a part" of the BDA, though?

Regardless, when's the last time you lost $75M in profits and didn't hurt over that. And in a sluggish economy where you're turning down projections across the board -- man, it's a blood bath of red on those Sony projections. Good for BR, yes, bad-bad-bad for Sony, definitely.

-comix

[AV_Integrated]

Originally Posted by comixguru

On the other hand, fantastic news for Sony-haters. Funai stole just stole $75M right out of Sony's wallet.

Not really. Sony makes some money on the players they sell, but Panasonic gets the highest royalties from players sold as they hold the majority of patents in the technology.

Instead, Sony will do cartwheels because Sony makes their real cash cow on this through disc sales, not through player sales. So, whenever a single player is sold, it is added money for Sony.

Frankly, the comparison between the DVD players and BD players only being about 40% apart from each other is downright shocking. Funai is really stepping up into the BD arena and appears to be on track to surpass their DVD sales totals in the next 12 months with the growth curve we have seen for Blu-ray over the last 12 months.

While Blu-ray may not be out of 'niche' category yet in the minds of many, it sure doesn't seem to be doing to bad for Funai!

[Stryydr]

The fact that DVD player sales are down almost 33 percent for a budget manufacturer like Funai, is pretty telling. Will be interesting to see how their blu-ray players do over the holiday season which is really just getting underway in earnest. 38 percent of their player sales are now blu-ray players.

[Coren]

Originally Posted by AV_Integrated

Instead, Sony will do cartwheels because Sony makes their real cash cow on this through disc sales, not through player sales. So, whenever a single player is sold, it is added money for Sony.

This. It's kinda silly to say that Sony "Lost $75 million" due to Funai...it's simply not the case. This is $75 million in BD players that likely would not have been bought at all this year if not for Funai having such a priced player, and that's a large chunk of added disc sales.

I'm quite certain Sony is very happy Funai is adding to the BD install base.

[JAGUAR1977]

Originally Posted by Stryydr

The fact that DVD player sales are down almost 33 percent for a budget manufacturer like Funai, is pretty telling. Will be interesting to see how their blu-ray players do over the holiday season which is really just getting underway in earnest. 38 percent of their player sales are now blu-ray players.

Totally agree, the knock on effect will start to hit DVD disc sales, it's not looking so far fetched that DVD is reaching a tipping point were the decline in sales could start to accelerate, and we could see 15%, 20%, 25% drops in revenue.

[DaveS1138]

Wow! Thats actually alot more impressive than I was expecting. Almost half the revenue from Blu-ray that they get from DVD players........That shows right there just why the studios and CE's are pushing for a new format........People buying DVD players now can pick up an upconverting one for $40 and there is just no profit in DVD anymore.

So come on Toshiba.........when are you going to stop licking your wounds and give us a Blu-ray player. I am very interested to see what they can do with the experience gained from HD-DVD.

[Pro-bassoonist]

Originally Posted by DaveS1138

So come on Toshiba.........when are you going to stop licking your wounds and give us a Blu-ray player.

Patience...

Pro-B

[Kosty]

Funai Electric’s operating income 108.8 percent to compensate for a 7.5 percent year-on-year decline in sales of mainstay products, the company reported in its consolidated financial results for the first half (April to September) of fiscal 2008

DVD player sales fell from the previous year's $189 million to $128 million,
...
Blu-ray Disc players ...for the United States accounted for $78.4 million

During April to Dec Funai's $300 MSRP Blu-ray players did $78.4 / $128 M = 61.25% of the revenue of its $50-$100 MSRP DVD players. Probably a heftier profit margin as well.

DVD sales for that prominent maker of budget DVD players declined 32% in a single YTY comparison period. Ouch.

Blu-ray did not have a year to year comparison , (as Funai didn't sell them in Apr-Sep 2007) but went from $ 0 M to $78.4 million. It will probably double that in the Oct -Dec 2008 period alone. So Funai will probably sell alone $250 M in Blu-ray hardware sales.

We've focused a lot on software sales around here, but if Funai is going to sell $250 M in Blu-ray hardware units in the calendar year of 2008, Sony Panasonic LG Samsung Sharp etc are going to sell a lot more. Since those companies make little profit on DVD players, that over a billion of dollars of Blu-ray hardware sales revenue this year will be a nice change. Billions of dollars more in the future as well.