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Roland Corporation relisted shares at 1st section of Tokyo Stock Exchange on December 16. Jyunichi Miki, president of Roland talked about the story of relisting and the goals of Roland in the coming years and future.

Back in 2008 Roland had struggled with slowdown of business after the financial crisis. As part of efforts to enhance organizational effectiveness, the company chose to operate as a private entity in MBO partnered with Taiyo Pacific Partners in 2014.

Since then, under the leadership of the new management team, Roland has pursued organizational restructuring and investment plans for growth, and escaped from the difficulties. In 2019, the company achieved a record 63.2 billion yen annual sales. The ground for relisting was set.

Launching Roland Cloud subscription business of sound generators and software streaming in 2020, Roland has accelerated the business as total solution provider offering customer from entry level musician to professional pleasure of music making. Here Miki talks about Roland’s next growth plan.

Will you please start telling the story in 2014 when Roland delisted shares?, How did it happen?

Miki: We had a very difficult time after the financial crisis in 2008. Strong yen and stagnant sales of high-ticket items much affected our business which resulted in 4 consecutive terms of loss in 2009. After I assumed the CEO position in 2013, we took a bold step to streamline operation under the new management team. We had to restructure our business, and at the same time desperately needed effective growth plans for the future. MBO plan in 2014 came as a natural course. I happened to have an opportunity to talk with a young owner of a venture company during the 2014 NAMM Show. His company rapidly grew. He led a very young vibrant management team, and it reminded me of the early times of Roland. He took completely different approach in product distribution and philosophy on product design from Roland. He moved quickly. I got inspired from him.

We had a good relationship with the U.S. investment fund, Taiyo Pacific Partners for over 10 years. Fortunately, we shared the goals to establish a strong base in Japanese stock market and enhance corporate value.

Along with streamlining operations, faster cooperative decision making and intensified investment for future growth, we announced a corporate plan that we would return to the normal track of success in 2 years.

Based on the new operational plans, we integrated 8 distribution units in Europe to one single holding company. Also, we settled distribution problems in U.S., China and Japan.

The restructuring plan included closure of the manufacturing base in Italy, sell-out of U.S. factory, and consolidation of 3 factories in Japan which was already in progress before the delisting. In 2015 we successfully opened a factory in Malaysia as a key manufacturing base. In addition, we sold inefficient Rodgers Organ and Cakewalk businesses, and realigned domestic music teaching operations. The delisting solved parent company and subsidiary relationship of Roland and Roland D.G.

During the period we concentrated on strengthening value of our product lines, and acquired V-MODA, a headphone brand. All these efforts paid and the business quickly rebounded by 2016 with 10% operating profit, one year earlier than the initial plan. 2019 was a great year for us having achieved historical 63.2 billion yen sales.

The relisting came right in the pandemic period. Is there specific reason that you selected this difficult time for the relisting?

Miki: Well, we experienced a host of unprecedented incidents during the lockdown. The distribution network collapsed, Malaysia factory closed for 2 months, and the sales declined. It was a great relief that demands grew for easy-to-play musical instruments, and shift to Ecommerce accelerated especially for manufacturers of electronic musical instruments. The factory in Malaysia resumed full-scale operation in June, and piled up back orders were properly resolved. The sales regained the previous level in the 3rd quarter. As our efforts for restructuring and investment concluded and governance system revised, we decided to get back to the public entity now.

What do you plan in the coming months?
Miki: With a financial support from a broad type of investors, I expect we can further strengthen value of capital efficiency, investment effectiveness and seek investment for future growth. Relisting will bring us increased confidence, opportunities of establishing new business alliance for Roland Cloud Service, development of platform and software as well as plans for strategic M&A. We were lucky to have rebuilt our business teaming and sharing mutual objectives with Taiyo Fund. Hereafter, I expect Roland management team takes full responsibility for the second stage. Also, coming back to TSE will help us connect with qualified human resources including engineers for future product and software development.

Which business segment do you explore next?
Miki: Cloud business is critical for growth of Roland. We have put a series of products including ZEN-core Synthesis System into the market since 2019. They are designed with BMC sound generators as a core to be explored to a universal platform. We have consolidated every content and sound generator Roland developed in the past to work on one single platform. The synth, dance, DJ sound generators, elements of digital pianos, drums, Aerophone and analog synths will be reflected in future product development and save manufacturing cost.

Zen-Core sound generators allow user to deliver sound produced on JUPITER-X with RD-88 stage piano or Aerophone. You can also enjoy music produced by your friend on your synthesizer, or play along music produced by favorite professional. The core sound generator platform provides us with unrestricted approach to various genre of hardware. Our goal is to offer music makers a multi-facet musical environment supported by rich contents, applications and services.

Roland has explored the market with excellent digital musical instruments and hardware to this day. While keeping the course, we are now contemplating to integrate music activities from music video production, share of performance data to online music lesson and user community on smartphone.

You mean a shift from “things” to “experiences”?
Miki: People have got almost everything they want today. Synth player has a workstation, controler and peripherals. They are not much impressed by minor upgrade of tonal quality or playability. They need a definite reason to purchase new instrument, i.e., extremely compact design, dream features and the like that give them satisfaction and greater progress in performance. We at Roland call it “User Benefit.” Unless we can offer solution, they will never buy new gears. We believe only solution provider can meet needs of customer and win their satisfaction.

Roland Cloud is the answer?
Miki: Roland Cloud started providing high-quality plug-in sound generators and software. Today we have a growing number of members with professionals and high-end amateurs as the core base. We expect paid members will reach 100,000 by the end of 2021. We think such fun-oriented services for entry-level players as ZENOLOGY and Zenbeats help boost our business.

Since the onset of COVID-19, all of us have been deeply affected, and social activities were completely shuttered. But just think, even before the pandemic, we already had more time for leisure activities and online shared larger part of our life. The pandemic accelerated the trend. Spend longer time at home, we seek things that are creative, enjoyable and relaxing more than ever. Roland is well prepared to serve the needs.

On the other hand, we are much suffered from long-lasting isolated life. It’s natural that we appreciate live events and concerts of their magical power evoking excitement, passion and pleasure in our mind. Real experience inspires our spirit. We devote ourselves to better serve music makers and bring joy to music enthusiasts with digital musical instruments.