It was not long ago that the shelves at major electronics stores were lined with stereo systems, speakers and other products bearing the logo for Onkyo, one of Japan’s top audio equipment makers.

But over the years, the electronics giant gradually fell into hard times. Then in May, Onkyo Home Entertainment Corp. filed for voluntary bankruptcy.

Onkyo’s fall from grace reflects not only changes in how people listen to music but also signifies a common problem shared among Japan’s manufacturing companies: failure to change with the times. And that kind of hubris can be fatal.

“The age has ended when simply producing quality items without making other efforts leads to good sales,” said Atsushi Osanai, an economics professor at Waseda University’s Graduate School of Business and Finance.

Onkyo is a case in point.

The predecessor to Onkyo was founded in Osaka Prefecture in 1946, a year after World War II ended. Its flagship products were speakers.

After consumers began enjoying vinyl records in the 1960s, Onkyo concentrated on producing machines that spin vinyl. It pitched a succession of quality products, wowing audio gear fans.

Onkyo’s players could play sounds from low- to high-range frequencies in a balanced manner. Consumers appreciated that their records would sound natural and authentic.

Most of its products, considered luxury but not high-end lines, were affordable and proved hits, allowing a wider variety of music lovers to spin records.

Onkyo quickly responded to changing trends.

“It (Onkyo) took action earlier than others after CDs spread and smaller stereo systems made waves in the 1990s,” said Kenzo Konoike, a critic on audio equipment. “It was just as fast at putting out audio items based on hard discs and online services at the onset of the internet era. It promptly started on the music distribution business as well.”

Seeing the iPod hit the market in the early 2000s, Onkyo released speakers for the renowned portable player very early on.

But it failed to keep pace with all the changing trends, and Konoike argues that Onkyo made a “huge mistake.”

“Subscription offerings have been broadly accepted amid the spread of smartphones,” Konoike said.

The advent of smartphones significantly changed how people listen to music. Young and other people now enjoy music on YouTube, Spotify, Apple Music and other subscription offerings instead of CDs.

And Onkyo missed the boat.

The Recording Industry Association of Japan conducted a survey in December to determine how consumers aged 12 to 69 in Japan listen to their music.

Respondents were asked how they played their music over the last six months. Multiple answers were allowed.

About a quarter said they still rely on CDs, while 30 percent used subscription apps and 45 percent accessed music through YouTube.

Though demand for CDs and CD-compatible stereo systems has shrunk over the years, smartphone-connectable players and speakers did not see a rise in sales.

Onkyo was not the only loser.

According to data from the Japan Electronics and Information Technology Industries Association, the market scale for audio and vocal products dropped by half--from 152.1 billion yen ($1.11 billion) in 2011 to 72.3 billion yen in 2021.

During that period, Sansui Electric Co., one of the three most prominent acoustic gear makers in Japan, went under in 2014. Another, Pioneer Corp., had no choice but to sell its audio and video business to Onkyo in 2015.

Konoike said the manufacturers have struggled because of the growing number of high-performance music players now available in the market.

“Some products in the past got (rated) 50 or 70 out of 100,” he said. “There are now cheaper machines rated at 99, making it increasingly difficult for amateurs to tell expensive ones from their low-priced counterparts.”

But Konoike emphasized that stable demand still exists for high-end lines.

“Products targeting a tiny fraction of audio gear aficionados who are conscious of differences between the 99-point items and 100-point machines are enjoying strong sales,” said Konoike.

On May 13, the day Onkyo announced its bankruptcy, Teac Corp., an established acoustic equipment maker famed for its pricey Esoteric brand, reported consolidated sales of 16 billion yen, up 9.7 percent from the previous year, for the business year ending in March 2022.

Brisk exports were cited as the reason for the positive financial results.

Teac has more than one ultra-expensive music player priced upwards of 1 million yen, such as a 2.8-million-yen CD player released in 2019.

“From the standpoint of the traditional ‘sho,’ ‘chiku’ and ‘bai’ divisions, products in the 'super-sho’ top-most category, along with those from the bai lowest category catering to children who do not have smartphones, have survived,” Osanai said. “Products in the chiku middle category have been killed off in the audio gear industry.”

Osanai pointed to Onkyo’s strong tendency to pride itself on its exceptional manufacturing technology as a source of its failure though he acknowledged that the company had attempted to forge ahead with reform to some extent in response to the changing market conditions.

He said such an extreme focus on manufacturing quality constitutes an issue typical of Japanese makers.

“Successes in the past are said to contribute to the rigidities of the next era,” Osanai said. “Japan’s corporations, unfortunately, have refined skills, so it takes time in many cases for them to forget their past successes in the manufacturing industry.”