Major audio brands may not survive another year as parent companies struggle to stay afloat.
Some of the biggest names in the audio industry are in trouble as Masimo and Voxx International, parent companies of legacy audio brands, struggle with mounting losses. Denon, Marantz, Klipsch, and Pioneer could disappear from stores by 2025, marking the end of decades-long leadership in high-end sound.
The Numbers Behind the Crisis
The financial reality behind these audio giants is hitting harder than a blown speaker.
First off, remember Masimo, who bought Sound United’s collection of brands (including our beloved Denon and Marantz) back in 2022? They dropped a whopping $1.532 billion on that deal, and now they’re probably wishing they hadn’t.
Their consumer audio revenue has taken a nosedive.
By Q3 2024, they were only pulling in $161.4 million, down from $171.5 million the year before. And, if that doesn’t sound bad enough, they also watched their revenue tumble from $562.1 million to $465.6 million over nine months.
The end result? They’re now $31.3 million in the red, with $12.9 million of that loss happening in just Q3.
Sure, it’s technically better than their $17.8 million loss in Q3 2023. But, that’s like saying your boat is sinking slightly slower than before.
As for Voxx International, their consumer electronics division saw sales drop 35% to $16.1 million. Their Premium Audio Products didn’t fare much better, sliding 6.2% down to $49.9 million.
Put it all together and their consumer electronics revenue dropped 15.4% to $66.1 million last quarter.
Voxx has been trying to stop the bleeding by selling off pieces of the company.
They managed to get $3.4 million for the Jamo and Energy brands (making about $2.2 million in profit) and scored $24.5 million for Voxx Accessories Corp.
But, they’re still burning through money like crazy, with operating costs hitting $31.8 million in Q2 2024.
So even though they’ve trimmed their debt to under $20 million, they’re not out of the woods yet. They’re still dealing with a $40 million court judgment, falling profits, and they’ve had to completely stop making Pioneer, Elite, and Esoteric products worldwide due to licensing issues.
There are many numbers involved here. But the bottom line is these once-mighty audio giants are in serious trouble.
Why Is This Happening?
The fall of these audio legends isn’t just about numbers but a perfect storm that’s been brewing for years.
Here’s what’s really going on behind the scenes:
The post-COVID slump
The pandemic created a surge in home audio sales as people built home offices and upgraded their living spaces. But those golden days are over.
Since 2022, sales have crashed by up to 30% in some cases.
For example, Voxx International’s consumer electronics dropped by 35% partly because people aren’t spending like they used to.
Even turntables, which were flying off the shelves during lockdown, are now collecting dust in warehouses.
With inflation hitting hard, high-end audio gear has become a luxury many can’t justify.
The corporate structure problem
The problems run deeper than just sales.
Masimo, a medical tech company, lacks the expertise to run an audio business. They’re experts at hospital equipment, but high-end speakers are a different game entirely.
Voxx faces similar challenges. They can’t even make Pioneer products anymore because of licensing issues!
Perhaps because of these misalignments, both companies are trying to squeeze unrealistic profits out of these brands (around 300% to 500% margins).
Voxx did manage to cut costs by $5.3 million in Q2, but their operating losses continue to mount.
Basically, managing multiple classic brands under one corporate umbrella has only added to their struggles, spreading resources thin and diluting brand identities.
The changing consumer market
Consumer preferences have also changed dramatically:
- Young music fans prioritize convenience over traditional hi-fi setups. They’re not looking for massive speaker setups anymore. Instead, they look for portable, budget-friendly solutions that fit their lifestyle better.
- Serious audiophiles are turning to vintage equipment, which often matches or exceeds new products in quality and value.
- Some Chinese manufacturers have come in to offer the same things luxury audio brands do but at less cost. So, customers have been leaning towards them more in recent years.
What Happens Next?
The future of these legacy audio brands remains uncertain.
Masimo has marked January 2025 as their decision deadline for their audio division’s fate.
Their board hasn’t finalized any plans yet. But, the options on the table range from completely shutting down operations to spinning off the brands into separate companies.
Voxx International is taking a different approach to survival.
They’ve started selling off pieces of their audio empire to cut down their debt, which now sits under $20 million. For instance, the Jamo and Energy brands have already gone to a Chinese buyer.
Pioneer’s situation is particularly tough, though. They’ve had to stop making their Elite and Esoteric products worldwide after losing key licensing deals. Because of this, offers to buy the brand have been too low for Voxx to accept.
However, the real concern isn’t just whether these brands will survive, but what they’ll become.
They could end up split apart, absorbed by bigger companies, or turned into budget brands that share nothing but a name with their former glory.
The most frustrating part for loyal customers? Many of these brands still make great products. But corporate struggles, not product quality, might determine whether your next receiver will have that familiar Denon, Marantz, or Klipsch logo on the front panel.
denon and marantz hasnt been beloved since the 70s (marantz) and the 80s (denon). they just words, just brands. they meanmnothing today.
Maybe lower their prices to be affordable for the average American. Since the inception of the current administration I’ve seen high end audio prices go through the roof where it makes it difficult to justify high end equipment. Many are turning to the more aff powered speaker setups that sound pretty darn good. Who can afford a $15,000 amp or integrated amp? Power is power. No one really requires more than 100 watts and could even do well with 50 watts. Only the wealthy can afford true high end audio equipment. Bigger is not always better.
Think Nakamichi:(
Teac is the parent of Esoteric, not Pioneer, and Esoteric seems to be widely available with a large and continually expanding product portfolio.
Interesting article. Lots of moving pieces and great brands here at the hands of being turned over or shuttered.
It is like Sears and Kmart both running to the edge of the cliff, then getting together to jump together thinking a parachute would open automatically to save them.
The doom and gloom of the numbers makes for an interesting contrasts against those brands that in the same time frame, and even after COVID, are killing it still with record profits and sales. Of course, they are taking marketshare away from these groups but that is like taking giving the market a fresh KIA to replace their Buick.
Grow old with your customer, and grow out of business.
Saddens me to read this as many are strong brands.
What are the licensing issues that Pioneer is facing?