Answerman

How Is Online Streaming Doing in Japan?

Wayland asks:

So apparently everyone in US and Aust is loving streaming services, (despite issues with people trying to get on the US site). I've also heard that it hasn't really taken off in Japan, yet. Hulu wasn't really able to make a dent into the market, I've understand that Netflix has now entered the Japanese market, but I haven't heard anything on whether they consider themselves doing well there. From your perspective, how is streaming doing in Japan, do the people you work with in Japan see streaming as something that's now catching on or still have a way to go?

It's not doing all that well yet, but it's getting better.

In terms of YouTube and Nico Nico, both services are quite entrenched. Nico Nico's growth has slowed substantially, clocking in at about 2.5 million premium members (they had 2 million in 2013), and 50 million registered users. YouTube, meanwhile, is blowing up, with 70% of internet users reporting having used the service -- ranking it #1 social media website in the country, above Facebook, Twitter, and Japan's local (and more popular) social media service, LINE.

But that's all user-generated video. In terms of premium services streaming professionally made content, Japan is behind English speaking countries in terms of market reach. Hulu famously launched in Japan back in 2011, but didn't manage to secure much Japanese language content -- most of what they were offering was American TV shows. It also cost a fortune (¥2,000 per month, with no free option). After three years, Hulu sold off the service to Nippon TV, who added some more Japanese content, and reduced the price to a far more reasonable ¥930 per month. In March they announced they had over a million subscribers.

Netflix only launched their Japanese service in September, but has been doing groundwork for their launch for some time. Learning from Hulu's mistakes, the company is putting a stronger emphasis on local entertainment, aiming to make it about 40% of what's available (it's usually 20% in most countries). They brokered a deal with both Fuji Media Holdings (parent company of Fuji TV, Pony Canyon, Nippon Broadcasting System, and many others) to provide Japanese content, as well as with comedy talent agency Yoshimoto Kōgyō to produce Netflix's original Japanese content. Pricing the service at ¥650-1450 per month, the company has been spending heavily on marketing, and local versions of televisions from major manufacturers like Sony, Toshiba and Panasonic got those ubiquitous Netflix buttons added to their controls back in the 2nd quarter. The company even partnered with cell phone company SoftBank to easily add the service to users' monthly bills. It's too early to know how well the service is doing, though.

Amazon also opened their Prime Instant Video in Japan in September, making it only the fourth country the service is available in (US, Germany and UK being the others). The company launched its Fire TV product there at the same time. A prime membership only costs ¥3,900 per year in Japan. Like in the US, their catalog is not as extensive as Netflix's, but they're also talking about making Japanese language original content. Again, it's too early to say how well it's doing, and to be honest, it's hard to say if the service is really even doing all that well in America. Amazon is not known for being forthcoming with sales figures for its own products.

All of this is in addition to services being offered by Japanese companies. In October the major TV networks announced they were all throwing their weight behind a Hulu-esque service called TVer, and a consortium of 29 different content producers have started a service called Bonobo, which is more of an iTunes-like pay-on-demand service. An ad supported service run by Yahoo! Japan since 2009, called Gyao! has 60,000 titles including movies, TV dramas, sports and variety shows. dTV, a service run by Avex Corporation, charges ¥500 per month to access its libary of 120,000 titles (including music videos and karaoke). dTV has been spending big on local blockbusters, being the official home of the live action Attack on Titan movies.

It's suddenly a very crowded marketplace for streaming services in Japan. What's more, it remains to be seen whether the aging Japanese public at large even wants subscription streaming services. The country is famously old fashioned in how it consumes media (they still buy enough CDs to keep Tower Records in business over there). A survey conducted in September by JustSystems showed that, among users of Amazon.co.jp, only 6.3% currently subscribe to a streaming service, while 38.8% knew what they were but weren't interested in them. Another 27.7% didn't know what they were.

“Japanese people are not so good at making selections, especially in terms of video,” said Hulu's Masashi Funakoshi told Variety at Tokyo's Japan Content Showcase 2015 in October. “Also, people hate to have content pushed onto them.” The company is trying to compensate for this by putting more effort into recommendations and custom-tailored offerings.

Will all of this effort work? Only time will tell.

Justin Sevakis is the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap.