In-depth: Onkyo Pioneer deal heralds end of an era

posted on Sunday, 14th September 2014 by Steve May

home cinema  Corporate 

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Pioneer has agreed to sell its Home AV business (along with its headphone and phone divisions) to once rival Onkyo. The deal differs from an earlier proposition mooted in June, in that Hong Kong based private equity firm Baring Private Equity Asia is no longer involved, but the upshot is largely the same. The two companies hope to finalise the sale by the end of October, completing an integration of operations by March 2015.

As part of the arrangement, Pioneer will take a 14.95 percent stake in Onkyo. The two companies say they will will continue to operate as separate brands. In a statement, the pair declared that they: 'will mutually and effectively utilize their advantages in resources such as brand power and the-best-of-its-kind technologies, and thereby improve cost competitiveness and maximize synergies." While it's unclear just what kind of entity Pioneer will become going forward, there's no doubt that this is an end of an era for a brand which has enjoyed close and influential ties to the custom install community.

Hi-fi journalist John Bamford (pictured above), worked with Pioneer during the period of arguably its greatest AV innovation, from Laser-Disc through to the legendary Kuro plasma TVs. Back in 2007, we talked extensively about the early days of Pioneer's home entertainment era, from digital disc precursor Laser Disc to DAT, the ahead of its time high-res audio format, as well as the doomed launch of DVD-Audio. More recently, we caught up at a media briefing with pro-audio sound engineers Britannia Row. Once again, the heady days of Pioneer were fondly discussed...

"Pioneer was a fascinating corporation to work for during the 1990s," Bamford recalls. "Research and development into higher fidelity recording and playback of digital audio proved that CD was far from 'perfect' and, to prove the point, in the early part of the Nineties Pioneer developed 'HS-DAT' recorders (High Speed DAT) running at double speed with 96kHz sampling frequency. Professional models could be interfaced with encoder/decoder 'bit reallocation' hardware dubbed 'ARTS' (Advanced Resolution, Twice Sampling) to provide 24-bit, 96kHz recording. I distinctly remember thinking if only we could have higher fidelity sound just like this in our homes from compact and convenient optical discs..."

The Laser Disc company
At that time laser disc remained the format of choice for discerning videophiles. DVD and its pre-release variants were a science project. "Back in the day, Pioneer was The Laser Disc company, so any talk of digital video being able to match the fidelity of Laser Disc's analogue video picture quality was met with derision among Pioneer personnel," he confides.

Laser Disc Player

"While Philips had been promoting CD Video, Pioneer had developed a proprietary digital video system dubbed Alpha Vision for industrial Karaoke systems in the Far East. While it was far superior to CD Video, with its MPEG1 video running at more than 4 Mbps, Pioneer maintained that Alpha Vision was really only good enough for 'digital Karaoke' and was not the equal of Laser Disc for the enjoyment of films in the home. Later on, when we eventually saw MPEG2 video running at data rates of up to 10 Mbps, we soon had to eat our words about digital video being unable to surpass analogue Laser Discs!"

Despite its influence, the company was a relatively small fish during the development days of DVD, says Bamford. "Although Pioneer was a specialist electronics company in the global scheme of things, it was nevertheless a multi-billion-dollar corporation. I remember quite vividly the time we had Japanese R&D engineers visiting London with prototype DVD-Video hardware to demonstrate to representatives of investment bankers and financial institutions in the city of London. These were hairy demonstrations: we had cooling fans positioned strategically to keep the computer hardware stable and before our important guests entered the room to witness the demonstrations of this 'cutting-edge' technology our engineers were spraying the carpet with water mist to reduce harmful static. How I wish I'd set up a camcorder to record these events! I guess this must have been the spring/summer of 1995. We were saying: "This is the future of home entertainment systems," and history has proven we were not wrong."

The dawn of DVD
The DVD format was eventually launched in 1996. "At that time I spent a disproportionate amount of time trying to educate show-goers, and members of the general press, that DVD did not stand for 'Digital Video Disc'," says Bamford. "The specification book had been published and outline specifications were freely available for anyone curious to study what was what. Even the video disc specification allowed for two channels of 24-bit 96kHz linear PCM audio, consequently Pioneer engineers in Tokyo had been busy transferring 24/96 recordings they'd made earlier on those HS-DAT recorders to the new optical media. I was thrilled to be demonstrating a prototype DVD player delivering high resolution 24/96kHz audio at the annual Heathrow Hi-Fi Show, organised by Hi-Fi News magazine in September '96, a couple of months prior to the world launch of DVD-Video in Japan."

While the significance of this audio landmark was not lost on industry luminaries as Professor Malcolm Hawksford of Essex University's audio engineering department and Meridian Audio's Bob Stuart, the majority of the hi-fi press were more interested in the latest valve amplifiers and high-end turntables being demonstrated at the Show. "DVD, after all, was 'just for people interested in home cinema', wasn't it?"

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App

"It broke my heart that the opportunity DVD technology gave us for higher fidelity sound in our homes at the time was largely lost. One could argue that the DVD-Audio specification was far too slow in coming due to the music industry's concerns regarding copy protection (it arrived more than three years after the introduction of DVD-Video); one could further argue that the software industry would not have been so paranoid about copy protection had DVD-Video's CSS copy protection system not been so speedily 'exposed'." It's curious to think, he adds, that for a while there were more home cinema enthusiasts enjoying the enhanced fidelity of DVD-As than audio hobbyists who considered themselves hi-fi buffs.

The Kuro era
A year later, the brand unveiled the first high definition plasma TV, ushering in a golden era of picture quality excellence under the Kuro banner. During the ensuing decade the brand pioneered the use of control apps (I was shown the first developmental sample under NDA at its now closed Meguro HQ in Tokyo), aggresively developed plasma picture quality to a point that still impresses today (an early demonstration of its never to be released FUGA TV technology behind closed doors is pictured below) and pushed integrated AV receivers to hitherto uncharted heights, with the SC-LX90 Susano model (pictured above in 2007 before its global release). But while technical excellence became a by-word for Pioneer's brilliant engineers, more ominous commercial forces were always at play.

"It's a tragedy that the music industry failed to back the DVD-A format with thousands of titles to play," notes Bamford. "This was caused in no small part by Sony and Philips' determination to maintain a majority share of patent royalties from music software sales, hence the introduction of rival music disc SACD. With two formats vying for consumers' attention they were both doomed to commercial failure..."

As for what comes next from Onkyo-Pioneer, only time will tell. Consumer taste has changed dramatically from the halcyon days discussed above; packaged media now competes with streaming solutions and the biggest growth area for hi-fi is multi-room wireless. Needless to say AV aficionados with long memories will be watching with keen interest...

Kuro Comparison

Also read:
Leaf talks UHD and next generation HDCP2.2

In-depth: What Apple HomeKit will mean to custom install

HD Connectivity Interview: The new cool

Steve May

Steve is a veteran of the UK consumer electronics industry, having covered it for
various media outlets for more than 20 years.

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Posted by Doug Randall on 26th May 2015, 2:18 PM
The writing was on the wall for a long time for companies making mid to high quality hardware. I wrote a memo to my then employers Marantz about the launch of DCC (Digital Compact Cassette for those who don't remember) suggesting that no new hard formats for audio would be successful. That was in the 90s, and although there have been attempts, I still think I was right. Pioneer, for a relatively small niche outfit, had a massive investment in physical factories and machinery to develop more hardware, and it was all doomed to become just massive overhead. But it is hard to see what they could have done to change their fate, and I speak as someone who worked for and loved Pioneer for what the company was.

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