Traditional TV Still Rules Video in Japan - eMarketer
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Traditional TV Still Rules Video in Japan

But free and paid VOD services are making gains

Subscription video-on-demand (SVOD) platforms are making some gains in Japan, but traditional and free video services still dominate the market.

A survey of internet users in Japan published by telecom NTT DoCoMo in August 2017 found that 73% of respondents watched free broadcast TV occasionally or daily. By comparison, 67% watched some kind of free VOD service, such as YouTube or Niconico Video, but only 14% utilized a VOD service that charged its users.

Data from a July 2017 survey of internet users in Japan by Hakuhodo DY Media Partners showed a similar gap between the use of free and paid VOD services. According to the firm, penetration of free VOD services was at 75% in July, compared with just 14% for paid VOD.

Free* vs. Paid** Video-on-Demand (VOD) Service User Penetration in Japan, Aug 2015-July 2017 (% of internet users)

However, data from Fieldworks and Visual Media Research Institute indicates that internet users in Japan are becoming more receptive to paying for at least some types of VOD services. For example, 10.6% of respondents paid for a SVOD service this year, up from 7.9% in 2016. More respondents also purchased video content via electronic sell-through (EST)—where consumers pay a one-time fee to download and own content—in 2017 than in the previous year.

Types of Paid Video-on-Demand (VOD) Services Used by Internet Users in Japan, 2016 & 2017 (% of respondents)

So far, one local SVOD service has managed to stave off challenges from big international players. In September 2017, Ampere Analysis reported that dTV, a service affiliated with NTT DoCoMo, controlled the largest share of the SVOD market at 40.8%. Amazon Prime Video ranked second with 23.2%, followed by Netflix (17.0%); Hulu’s Japanese unit, which is owned and independently operated by local TV network Nippon TV (15.9%); and homegrown BeeTV (3.1%).

However, Ampere Analysis also noted that the combined share of Amazon Prime Video, Hulu and Netflix in Japan more than doubled to 56% over the past two years, a sign the newcomers might present a threat to dTV’s hegemony.

The growth of SVOD has also set off a race for competing platforms to expand their content libraries. According to Ampere Analysis, Netflix boosted its title count in Japan by 16.2% in Q2 2017, compared with 9.5% for Amazon and 4% for Hulu.

Man-Chung Cheung

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