Chapter 629 – VCD brands
The companies that bought the authorization could manufacture VCD players long ago. But the patent protection was not over, and they could not produce the VCD players.
Although the companies were paying high fees for the authorization, it was still acceptable as there were still profits. Most importantly, companies did not want to miss this opportunity. They could also manufacture VCD players and at the same time, research on new technology. If they could develop newer technologies, they might get more profits in the future!
Toshiba also bought the patent authorization. Almost all the big Electronics MNC got the authorization. Some of them purchased the authorization by themselves, and some were cooperating with others. Sony was the odd one out. They were kicked out from the start.
Norio Ohga scolded Sony’s representatives when they got back to Japan. Sony had wanted to enter the Chinese market with their VCD players. They had prepared the production lines in their factories, and it was wasted!
Sony was not eyeing the profits from VCD players. They wanted to train their staffs to prepare for the upcoming DVD players. The DVD primary technology belongs to Feng Yu, but if Sony were able to set the industry standards successfully, Wind and Rain Electronics would still have to give in to them. DVD disc had higher storage and better picture quality. It can even be used in computers. These were what Sony was after.
That’s it. Sony cannot manufacture VCD players, and the war for the DVD industry standards was still ongoing. They had invested a lot and got no returns. This was a massive loss for the company!
But Sony had partnered with Toshiba to set the DVD industry standards. So, Norio Ohga went to look for the president of Toshiba personally to discuss if they could work together to produce VCD players.
Sony had prepared the production lines, and they could use it to manufacture VCD players. They only want a share of the profits. If they were able to develop the DVD players together, then their earnings might even be higher than Wind and Rain electronics.
Toshiba considered for a while and agree to cooperate with Sony. Toshiba had many dealings with Sony and did not want to offend them.
But both companies argued over the name of the brand for this VCD player. Toshiba did not agree to name it as Toshiba-Sony. Even a shorten name like Toshi-sony was rejected. Toshiba insists on using its brand. Sony had no choice but to give in. In the end, both parties came to an agreement. Sony will own 40% of Toshiba VCD players, and they also had to provide the production facilities, workers, and funds.
Toshiba VCD players entered the market. But in Japan, they faced fierce competitions from Sharp, Fujitsu, Panasonic, NEC, etc. All these top electronics companies also introduced their VCD players into the market.
The production for Toshiba VCD players was low due to their production capabilities and higher efficiency. But the rest of the companies were strong too. The production cost for companies was about the same. All of them could afford to lower their retail rates to attract consumers.
All this while, AIWA company which had monopolized the Japan VCD market was quiet. They did not even lower their retail prices.
Not only in Japan, but many VCD brands also appeared in Europe, America, and other regions. Even in China, new VCD brands were appearing.
Feng Yu does not care about other countries. But he made it clear to the 4 Chinese factories. You all can manufacture VCD players, but if you all want to lower the retail prices to have a price war, then Wind and Rain VCD and Aiwa VCD will also enter the price war. When it happens, you all will be finished!
Of course, Feng Yu did not ask them to set retail prices high. Feng Yu told them that Wind and Rain Electronics and Aiwa Electronics main target were overseas. But if anyone of them wants to create problems for them in their backyard, then don’t blame him.
Feng Yu will let their VCD players remain on the shelves and loses all their deposits!
Those companies that bought the VCD authorization had to place deposits. The companies had to sell at least 10,000 units annually. Wind and Rain Electronics set this as the benchmark and collected deposits from every company. If any company could not fulfill the target, the deposit will be forfeited. The authorization for the second year will end.
The deposit for each company was 500,000 USD. There were 46 companies. Just the deposit alone, Wind and Rain Electronics collected 23 million USD. It was used to expand their production lines to manufacture the more advanced Super VCD!
Not only Wind and Rain Electronics, Aiwa Electronics, and AIWA company’s factories were upgrading their facilities and expanding their production lines.
Now, everyone agreed with Feng Yu that the era of VCD had arrived. Feng Yu’s Super VCD player will be accepted easier by the consumers. The Super VCD player had more storage, better picture quality, and had more functions. Wind and Rain will continue to lead the direction of where the industry is heading and get the most significant market share.
Although the VCD market share was taken up by many other brands, the market was opened up. Wind and Rain Electronics’ profits increased further.
Many companies who were manufacturing VCD players were curious why Philips, who was cooperating with Wind and Rain Electronics, did not introduce their VCD players. They should have patent authorization.
Also, other than China, the VCD player prices in different markets started to drop. Wind and Rain VCD player and AIWA VCD player sales were declining. Were they giving up on those markets?
This should not be the case. The companies felt that it was Wind and Rain Electronics misjudged the market and gave out too many authorizations. This caused their poor performance of their brand of VCD players.
Wind and Rain Electronics had made a mistake. They lost the profits from VCD players for some patent authorization fees.
The happiest company was Sony. Serve you, right! You think you could snatch the market shares from us? You all were only able to seize the music player market from us because we were focusing on the movie and gaming industry.
Now, we have taken over your VCD market share. Where is the Super VCD you are boasting about? Not yet developed?
The more prosperous the VCD market, the happier Sony was. Although Sony did not make money from the VCD players, Sony’s Columbia Pictures movie rights increased in value.
Sony might cooperate with Toshiba for the VCD players. But Sony produced the VCD discs themselves. Sony got high profits from the sales of their movie VCD discs. They also owned many movie companies and record labels. Sony was the real winner of this VCD war!
Feng Yu had asked Fu Guangzheng to buy as many movie rights as possible. But some rights could not be purchased. Those companies that were close to Sony refused to sell their rights to Fu Guangzheng.
But Feng Yu was not worried. His partner was Philips. Philips also has its own record labels and lots of connections. Feng Yu was able to make use of this.
The world’s largest VCD disc producer was still Wind and Rain Electronics. The factories not only need to manufacture VCD discs, but they also had to produce Super VCD discs which will meet the DVD player format.
When the Super VCD player was launched, these companies will be crying their hearts out!