Philips Consumer Lifestyles will license its Philips and Magnavox brands to Funai for Blu-ray Disc players, DVD players, DVD recorders and home-cinema products in the U.S., effective Jan. 1, 2009.
This follows its decision to license the Philips and Magnavox brands for TV products to Funai Electric, representatives of Philips Consumer Lifestyles said in November.
Funai will assume responsibility for the manufacturing, distribution, marketing and sales activities of all Philips DVD and Blu-ray Disc players, DVD recorder and home cinema (home theater) categories in the United States market. The agreement includes Magnavox products of the same categories, a Philips spokesperson told TWICE.
Philips will receive royalty payments in exchange for Funai's right to exclusively use the Philips and Magnavox brand names for these product categories in the United States during this time frame.
The agreement will run three years, with the ability to extend it further from there.
Philips said it will continue to fulfill orders and service for the products under both brands for the balance of 2008. It also has already planned the product line for 2009, which will be taken over by Funai.
After the transition, Philips Consumer Lifestyles' electronics product offerings will be limited to primarily "On The Go" portable products, including MP3 players, headphones and portable DVD players.
Unlike the TV agreement, which covered products marketed in the United States and Canada, the new video agreement covers only those video and home-cinema products sold in the United States, according to a Philips spokesperson.
The newly formed Philips & Funai company, which is based in Atlanta, has been handling Philips-branded TVs since Aug. 1. Under the new deal, Caesar Martinez has left Philips Consumer Lifestyles and is now handling video products marketing for Philips & Funai.
Funai handles marketing of its Magnavox-branded products out of offices in New Jersey.
The spokesperson said that the transition should be easy as Funai was already manufacturing Blu-ray Disc players for Philips distribution. Philips DVD players and other companies were sourced from other manufacturers.
"We actually have nice market share in Blu-ray and have always been one of the industry leaders in DVD," the Philips Consumer Lifestyles spokesperson told TWICE. "It's not a situation where we are getting out of a tough business. We view this as the next, natural progression with Funai because they have the TV in the living room and they will be in position to leverage and work with retailers on all the components that go with the TV from DVD to home cinema."
"This intended agreement presents a good solution for Philips to maintain its strong brand presence in the U.S. video multimedia market," Philips Consumer Lifestyles said in a statement announcing the deal. "Philips will continue to develop, source and market its own products in these categories in other markets around the world."
Funai will show the new products at it booth in the Renaissance Hotel at the 2009 International CES.