Mitsubishi Chemical Holdings Corp will cease production of Blu-ray Discs and DVDs, according to a report in Japanese newspaper Asahi Shimbun. This comes against “a backdrop of declining profitability globally due to competition with low-priced BDs and DVDs manufactured overseas”. “The time has passed when Japanese companies produce optical discs,” a Mitsubishi Chemical official is reported as saying. Blu-ray sales are not compensating for the declining DVD market.
Mitsubishi will outsource production to Taiwanese and Indian makers, the company is reported as saying. This will lead to Taiyo Yuden as the sole Japanese manufacturer of DVDs, while there are four other Blu-ray manufacturers who may or may not decide that the Mitsubishi move is the right one and follow suit.
According to the Japan Recording-Media Industries Association, says the report, global demand for DVDs, which peaked in fiscal 2007 at about 6 billion units, and has steadily declined since then. Sales of DVDs are forecast to drop to 3.7 billion units in fiscal 2013. In the meantime, the retail price for DVDs virtually halved between 2006 and 2011. Blu-ray sales have not made up for the decline, says Asahi Shimbun. In FY2010, Japan accounted for 95% of the global Blu-ray sales amounting to 100 millions (about 20% of the sales of DVD).