May 2016 | www.selectasset.com
What's Japan watching and how?

Gone are the days when families would gather around the flatscreen to watch sumo on Sunday afternoon or evening quiz shows overflowing with laughing celebrities. Today, you’re more likely to see Japan’s young people watching TV on their smartphones or tablets while riding public transportation. But what are they watching?
Until the early 1990’s, Japanese television was mostly viewed on home analogue sets featuring terrestrial broadcasts from five commercial channels and the nation’s public broadcaster NHK. Typical programming could be summed up as news, variety talk and quiz shows, live sumo and baseball, anything and everything about food, pop idol vehicles, period dramas, samurai movies and the odd imported TV drama or sitcom from the West.
By the mid 1990s, cable and satellite TV programming had infiltrated the scene, but never became the game-changer it is in the USA, where cable channels essentially turned the networks into also-rans, outpacing them by producing high-quality original content for adults. Think “The Wire,” “The Sopranos,” “Breaking Bad,” “Sherlock,” “Game of Thrones, “Mad Men” and “The Walking Dead.”

It’s not your father’s programming

Today, thanks the maturation of satellite and cable TV service and an explosion of video on demand (VOD) providers, the there’s more action than Japanese viewers know what to do with, and new players are joining the fray every quarter,  offering a diverse selection of content ranging from classic movies to shopping networks to all-anime channels.
Of Japan’s 55.95 million households, various research indicates that 99.5% have TVs. However, while more than 37 million have broadband subscriptions and nearly 10 million subscribe to satellite TV, the cable is penetration rate is only about 46% of TV households. That’s according to 2015 research by the Organization for Economic Co-operation and Development (OCED).
Those figures could suggest either that most people are happy with terrestrial TV programming and don’t wish to pay for more content, or the country is ripe for an influx of VOD providers. Stay tuned, because the latter is already underway.
Japan’s largest cable TV company J:Com claims to have 4 million subscribers to its cable service, 2.91 million Internet subscribers and offers 50,000 titles through its VOD platform in ultra-high quality 4K. J:Com also has a “Smart TV” service that allows subscribers to share content through various devices including tablets over a home WiFi network. 
However, J:Com is a content provider, rather than a producer. It offers 77 channels, including some that bring Japanese viewers those famous cable shows, such as “Sherlock” and “Homeland” along with others that show samurai movies or golf 24/7.
Data from the independent survey research company, Ipsos, shows that when it comes to TV viewing platforms, 82% of Japanese people watch mainly “live” broadcasts, which is second the lowest rate in the world topping only the USA.
Among Japanese who prefer other platforms 14% like to watch on a computer, 6% choose mobile devices, 3% stream from the Internet, and 45% watch programs saved on a digital video recorder, which is the highest global DVR usage rate.

Order up some Japanese digital content, to go

Today most any device with a screen can play any kind of digital content, and a new wave of VOD providers are eager to entertain those looking for freedom from the boob tube or seeking to cut the cable cord and those high monthly fees. VOD providers offer content that can be viewed anytime, anywhere there’s an Internet connection or WiFi access, while average subscription fees run about ¥1,000 per month.
“We expect slow and steady growth in the Japanese market,” stated Netflix CEO Reed Hastings in announcing the company’s arrival in 2015. Netflix, from the USA, is the world’s leading VOD provider, but it also produces original content. And because Japanese tastes are said to be insular, Netflix has revealed plans to produce 40% of its content for this market in Japan, as opposed to 10-20% in most other non-U.S. markets.
In February, Netflix, announced, what it called a “ground breaking deal” with Japan’s Production I.G (known for the famous “Attack on Titan” and “Ghost in the Shell” anime titles) to produce an original anime series called “Perfect Bones”, a 12-episode series directed by Kazuto Nakazawa, that would premiere only on Netflix. This marks the first original anime title to debut all episodes simultaneously in 190 countries around the world.
Hulu another U.S. VOD provider, originally launched its Japan operations in 2011, but struggled mightily to attract subscribers. In April 2015, it was acquired by the parent company of the terrestrial channel Nippon Television Network. Since then, Hulu Japan has focused on local content. New Japanese-language originals include “The Last Cop” and “Fujiko.” It also features a deep library of Japanese movies, anime and Korean dramas, which are very popular in Japan these days.

And the award for best VOD goes to…

Tsutaya, Japan’s biggest CD and DVD rental chain is another local heavyweight in the VOD arena with their acTVila video content platform. Launched in July 2006 with backing from Matsushita, Sony, Hitachi and other Japanese electronics giants, acTVila started broadcasting is service in 2007, which allows viewers to access content on their home TVs, instead of a PC, using a special monitor, broadband router and LAN cable.
Another new face, Bonobo, still wet behind the ears but nothing to monkey around with, launched VOD operations in September 2015 with 260 titles available for rental and purchase from leading movie distributors Shochiku, Toei, Kadokawa, Disney, Toho and Tokyo Broadcasting System. Movie rights holders are free to set their own prices, with many charging ¥500 for rentals and ¥2,500 for purchases. Bonobo officials have said they plan to expand their catalogue to 7,000 titles and 50 distributors by early spring 2016.
Aside from Netflix, perhaps the biggest global brand to begin offering VOD in Japan is Amazon Prime. Amazon Prime Instant Video started rolling in September 2016 with more than 10,000 titles for an annual fee of ¥3,900. Some 70% of the content at launch was Japanese, including more than 200 concert videos of the chart-topping idol group AKB48. Amazon claims that upcoming original content includes 20 Japanese-language titles scheduled to premiere before the end of the year
Never to be left of out business related to content delivery, Softbank chief Masayoshi Son launched UULA, an on-demand music and video portal. UULA is a joint venture between SoftBank and the Avex Entertainment Group run by famed J-pop mogul Max Matsuura’s. Uula offers unlimited viewing to customers for ¥480 a month for some 60,000 titles of content accessible by smartphones, iOS devices, and TV via an HDMI connector.
CBS Studios International and Japan’s Avex Entertainment have agreed to an extension of their multi-year content licensing agreement to offer CBS original programming for UULA video-on-demand service..
“We’re excited to expand this content licensing agreement and provide UULA subscribers the flexibility to watch CBS programming on their mobile devices,” “The international digital space continues to provide more choice for viewers and additive revenue opportunities for content providers,” said Barry Chamberlain, Executive Vice President, CBS Studios International.

How are all these players cutting up the pie?

Hulu claims to have one million users. Uula claims 1.57 million subscribers. dTV claims to have 4.8 million subscribers. A recent survey by RBC Capital Markets of 1,500 Internet users in Japan found that just 1% of respondents use Netflix to watch movies and TV shows. That compares with 39% for YouTube, 7% for Amazon, 5% for Hulu and 13% for other players
Those figures leave a lot of room for adjustment. Keep your ears open and your antenna up. There is sure to be a whole lot more shakin’ going on in the battle royale for Japan viewing public.