The Decline of Sony TVs: How the Once-Dominant Brand Lost Its Edge

The State Of Sony

Once upon a time, Sony was by far the most dominant TV maker in the world. They sold as many as ten million TVs every single year, and TV enthusiasts would often not even consider any other brand as they strongly felt that Sony was the elite TV brand, similar to how many feel about OLED LG TVs today. But this fierce brand loyalty didn’t last forever. In 2006, Sony lost the title of most dominant TV brand to Samsung, a title that Samsung has held ever since.

This didn’t mean too much though. While Samsung had taken the lead in terms of market share, Sony arguably still made the best TVs. It was like comparing Toyota and Mercedes. Toyota leads the market, but Mercedes makes higher-end cars. But Sony’s downfall didn’t stop there. Soon after, Sony would fall behind LG as well, and this was a much more pivotal shift.

This time, Sony didn’t just lose market share, but they also lost status. For the first time in history, LG and Samsung started to outshine Sony. They were constantly pushing the boundaries both in terms of TV size and picture quality. What used to be a 40-50 inch TV turned into a 70-80 inch TV. We also saw the rise of curved TVs, 3D TVs, OLED, QLED, neo QLED, 4K, and now 8K. In fact, Samsung and LG would grow to control nearly 50% of the global TV market.

This was definitely a step down for Sony, but it only got worse from there. You see, it wasn’t just LG and Samsung that were outshining Sony, but soon TCL as well. And TCL didn’t even enter the North American market till 2013. To rub salt in the wound, we’ve also seen the rise of another Chinese brand called Hisense which has also overtaken Sony.

Today, Sony has dropped all the way to 5th place in terms of market share, only controlling 5.7% of the market. That’s only half of what TCL and Hisense each control and only a sixth of what Samsung controls.

Today, Sony doesn’t even produce their own OLED panels. It’s actually LG that makes Sony OLED panels, and Sony is often in the red when it comes to their TV business. During the worst of it, Sony was losing as much as $6.4 billion per year. So, what happened to Sony TVs?

Losing The Edge

But anyway, getting back to the TV market, one of the best ways to identify Sony’s shortfalls is by dissecting a similar company that’s even further on in their decline and that’s none other than Panasonic. Before Samsung and LG took over, it was the Japanese brands, specifically Sony, Panasonic, and Sharp that dominated the TV market, but since then, Panasonic and Sharp have completely exited the US TV market.

So, what happened? Well, given that these brands are much further in their decline, it’s much easier to point out exactly where they fell behind and that was the transition away from plasma TVs. Plasma TVs were Panasonic’s flagship product. Year after year, they were the world’s biggest plasma display maker and they were constantly pushing the boundaries with how big plasma TVs could get. In fact, way back in 2010, they introduced a 152-inch plasma TV.

Now, plasma TVs never really got outdated. In fact, a lot of TV purists will still tell you that there is nothing more natural than a plasma display. But, while plasma technology didn’t get outdated, it did get outpriced. The simple truth was that LCD TVs could get a lot bigger for a lot cheaper. And the average person simply cares a lot more about TV size than picture quality.

Despite this, Panasonic continued pushing forward with plasma TVs and they continued dominating that market. There was just one problem. The entire plasma market eventually disappeared which made Panasonic TVs completely obsolete. With that downfall in mind, I think we can draw some parallels with Sony. Unlike Panasonic, Sony didn’t completely drop the ball when it came to LCD or LED. In fact, they actually made a swift exit from the plasma market in early 2005, but that isn’t to say that Sony wasn’t out-innovated.

You see, TVs weren’t the first electronics industry that Samsung conquered, it was actually semiconductors and more specifically memory chips which they’ve dominated since 2003. And, if you’re familiar with the chip industry, you know that it moves fast. In fact, it’s quite common for chip makers to bet it all every 2 years to stay ahead of Moore’s law as much as possible.

For example, Samsung is investing $44 billion into a new chip-making hub in Texas as we speak. That’s simply how the chip industry works, and Samsung would bring this same mindset and competitiveness to the TV industry, and I think the numbers really put this in perspective.

In 2008, Sony invested 22 billion yen or approximately $140 million into OLED panel production. Now, do you wanna guess how much Samsung invested in OLED that same year? $529 million. That’s already a pretty big disparity, but Samsung has only doubled down on R&D since then.

Pretty soon, we started seeing multi-billion dollar investments, and now, we’re seeing deca billion-dollar investments. For perspective, this one $11 billion OLED investment from Samsung, is over double Sony’s entire annual R&D budget. Yeah, no wonder, Samsung took the lead, but TV innovation was just half the story.

Marketing Powerhouse

Not only did Samsung and LG take the lead when it came to OLED, QLED, miniLED, 4K, and all of that jazz, but more importantly, they also brought their A-game when it came to marketing. Now, marketing was never an aspect in which Sony or Japanese brands in general excelled.

This isn’t to say that Japanese brands didn’t understand the importance of marketing. Konosuke Matsushita, Panasonic’s visionary founder, famously said, “Good products don’t sell themselves.” Even a good product requires an even better marketing campaign.

With that being said, though, Japanese brands tended to lean much more towards organic marketing efforts. Much of their popularity came from word of mouth, strong customer loyalty, and an excellent reputation. In the latter half of the 1900s, this was exactly what Western consumers were looking for—a reliable brand that they could trust and recommend to their friends and family.

But, moving into the 2000s, and especially with the rise of the internet, the role of marketing would completely shift. In a lot of industries, marketing went from something that enhanced sales to something that drove sales. This was especially true in perfectly competitive industries.

Take soda, for example. You can argue that one brand of soda is better than the other, but really, they’re all the same. In fact, blind studies often show that people actually prefer Pepsi over Coke, yet Coke dominates the soda industry because of its superior marketing and branding.

It’s the same thing with the TV market as well. Sure, if you look at the flagship space, you could argue that LG makes the best OLED TVs or that TCL makes the biggest TVs, but the average person isn’t buying flagship TVs. In fact, it would be pretty stupid to buy a flagship TV unless you have money to burn because TV prices are constantly falling off a cliff.

So, as far as the average person is concerned, all the TVs in the mid-range are pretty much the same. And what really drives their purchasing decision is branding, marketing, and price.

Samsung and LG not only priced their TVs extremely aggressively, but they also marketed them extremely aggressively, and I think the numbers really show this once again. Sony’s global marketing budget is $2.67 billion. Not a bad amount by any means. But, Samsung spends $2.57 billion on just US marketing alone.

In fact, Samsung is the 4th largest marketer in the entire world with nearly a $10 billion annual budget. And having a higher marketing budget is just part of the marketing story. Samsung regularly works on out-there products to garner more organic consumer attention. For example, they led the whole 3D TV and curved TVs boom. I’m sure you’re all familiar with their wall TV and their more recent transparent TV as well.

We should also mention that Samsung’s success in the smartphone space has only further cemented them as an electronics leader, further driving TV sales. So, in terms of organic marketing and paid marketing, Samsung and LG very much gave Sony a run for their money. But more recently, Samsung and LG themselves have been starting to fall behind.

The Rise Of China

While everything we’ve discussed so far has played a role in Sony’s downfall within the TV industry, the nail in the coffin was surely the rise of Chinese brands, more specifically, TCL and Hisense. One of the primary reasons that Sony was able to become so dominant in the first place was because of their ability to undercut Western brands like RCA and Philips without sacrificing on quality.

In fact, this is what Japan as a whole was known for in general. Whether it was automotives, gaming consoles, or TVs, Japan made a name for themselves by delivering higher quality and reliability for lower prices. One of the main reasons that they were able to achieve this was due to a cheap labor force and full control of the manufacturing process. But, since then, another country has taken this spot: China.

Now, historically, Chinese brands have been known for atrocious quality control and terrible customer support. So, the only way to consume Chinese electronics was through Western brands that took care of the quality control and customer experience side of things.

But, having worked hand in hand with brands like Apple, Nike, Ray-Bans, Chanel, and dozens of other popular Western brands, Chinese manufacturers have gotten a much better understanding of what the Western audience is looking for. And there’s no better example of this than TCL. Do you wanna guess what TCL used to do before entering the North American TV market?

Well, they used to be one of Samsung’s TV suppliers and witnessed firsthand what it took to dominate a market. This includes investing heavily in research and development, putting out eye-catching products that raise brand awareness, and forming key marketing partnerships, basically everything that we’ve been talking about so far.

After helping Samsung do this for years, TCL simply decided to do it themselves and undercut Samsung in the process.

Ever since then, TCL has been pushing the boundaries when it comes to price, TV size, and picture quality. In fact, TCL is currently in the process of making 100-inch TVs affordable for the average person. Also, if you didn’t know, TCL is now the official TV partner of the NFL.

So, basically, TCL and Hisense are doing to Samsung and LG what they previously did to Sony, Panasonic, and Sharp, which they previously did to RCA and Philips. In other words, the TV industry has been a race to the bottom for decades now, and new brands have risen to the top as they innovate new tiers of pricing efficiency.

Over time, this has essentially led us to buy straight from the cheapest manufacturer. Originally, it was Western brands, then it was Japanese brands, then it was Korean brands, and now it’s Chinese brands.

With each of these evolutions, the previous dominant players were able to survive one cycle of innovation, but not two. For example, Philips was able to stay somewhat relevant as Japanese brands took over, but by the time Korean brands took over, they were out. We’re seeing a similar story play out with Japanese brands today.

While they were able to stay relevant as Korean brands took over, they’re getting absolutely crushed as Chinese brands take over. Sharp and Panasonic, for example, have already exited Western TV markets. Sony has done a much better job at keeping up than those two, and that’s why they still control 5.7% of the market.

But, as TCL and Hisense continue to become more and more dominant, it’s not clear what sort of place Sony will have in the modern TV market, and that’s what happened to Sony TVs.