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OTT Landscape in JapanDr. Kazu ShimuraInfoCom Research

January 2014

@ Kazu Shimura

More than 50% households has broadband connection and more than 60% mobile phones sold in 2013 are smartphones.

Japanese digital market is highly advanced and there should be a big opportunity for OTT players.

It, however, seems that the OTT business have not achieved huge success yet.

One of the reason for that is the main contents providers are the TV networks and they don’t want to open their contents on line.

The year of 2013, the trend is changing. The TV networks have started to provide their contents to OTT players.

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Summary

Broadband penetration is more than 50%.

3G and LTE has 131 million subscribers, including LTE has 14 millions subscribers

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Japan.. Advanced Infrastructure for OTT Business

Mobile

Source: MIC(Ministry of Internal Affairs and Communications)

60% of mobile phone sold in 2013 are the smartphone.

iPhone? …. FREE with two years mobile plan contracts.

Subway, Starbucks, lots of WiFi café in town.

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Digital Devices with WiFi Connections Anywhere

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No OTT players has taken advantage of it yet…

Why ?

Fifty eight original dramas in December 2013 are now on air on the free TV.

Five large TV networks provides high quality original contents for free (ad supported) with 24/7 broadcasting.

The annual cumulative program production budget of the five TV networks is over five billion US dollars.

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High Quality Original Contents on TV for FREE

TV

TV Dramas now on air

People spend more than three hours a day to watch television.

99.8% of households has TV at home.

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TV is still Dominant for Media Consumption

TV

Source: Hakuhodo

Internet

Multichannel TV services has been matured for ten years.

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Satellite and Cable Operators are Struggling…

The Name of Multichannel TV Operator

The Number of Subscribers

ARPU(US$)

Sky PerfecTV!(Satellite)

3,742,178(October,

2013)32

J:COM(Cable)

3,121,500(May, 2013)

N/A

Cable + Satellite Around

20%

Source: MIC and IR Data

NHK is a public broadcasting service. The annual fee costs US$136. Half of households pay the fee… Two terrestrial TV broadcasting channels and Two satellite

channels 24/7 broadcasting. News, original dramas, major sports,

documentary, educations.. More than US$50 billion for the annual production budget.

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NHK as the largest paid TV Operator

Revenue US$64.8 million

The Number of workers 13,092

Annual fee costs

US$136 only for terrestrial

subscriptionUS$240 for

both terrestrial and satellite

subscriptions

Fewer people pay the

fee..

Source: MIC, NHK

We enjoy 16 free TV channels already.

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Contents Market from the Consumers Viewpoint

TV3 hours a day16 channels US$136 For NHK

(2 terrestrial channels)

US$320 For Satellite

US$300 For Cable

FREE for TV Networks(6 terrestrial channels and 8 satellite channels)

US dramas, cinemas, sports..

News, Original dramas, Major sports

MoneyTime

No more time to spend for watching contents…

Options

Basic？ ？Wanna upgrade?

The largest contents providers are TV networks in Japan. They think that the OTT cannibalizes their advertising business. Thus, they don’t distribute their contents on line.

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Contents Market from the Business Side

OTT Platforms

Major Contents Providers

(TV Networks)

US movies, dramas, animations..

Japanese old movies.

TVDigital DeviceSmart TV

Subscription VOD service is not popular in Japan. Problems: Contents on each OTT platform are

almost the same, such as CSI, HEROES, LOST and old Japanese movies.

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OTT in Japan is not huge..

The Name of OTT Players

TSUTAYA TV U-NEXT T’s TV

The Number of titles 40,000 81,000 N/A

Monthly Fee

20 titles for US$10

US$19Pay Per View Only

The Fee of the Pay Per View for Brand-new Cinema

US$4 US$4 US$5

(Caution, unofficial information) hulu Japan has 0.5 million subscribers.

Launched September 2011. Monthly fee costs US$10. They expand their titles to provide such as local Japanese

dramas and movies.

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US OTT Players have come..

“niconico(ni-ko-ni-ko)” is the Japanese YouTube. 10 billion UGC videos are uploaded. Young and men, so-called OTAKU, skewed community. More than US$10 million monthly revenue.

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niconico – Japanese YouTube

The number of registered members

36.26 million, including 2.11 million paid service

The monthly fee of Premium Service

$5

User Demographic

Age 0-19:16%, 20-29 40.9%, 30-39:23.1%Gender: Men 67%.

NTT Docomo, KDDI and Softbank have their own contents distribution platform.

In March 2013, three of them launched smart TV service which enabled users to watch their contents on TV screen with the USB stick.

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Telecom Careers started VOD platforms.

dMarket(NTT

Docomo)

Smart Pass

(KDDI)

UULA(Softban

k)

The Number of Subscribers

7.01 million (video subscriber 4.46 million)

7.99 million (including music, video and books)

N/A

Monthly Fee US$4 US$6 for

SVOD US$4

Titles N/A N/A 60,000

NHK and TV Networks launched their own OTT platform.

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The TV Networks VOD Platform

The name of TV networks OTT platform

NHK OnDemand

NTV Ondemand

TBS Ondemand

FujiTV Ondemand

fee

• US$10 for catch-up service.

• US$10 for archives

• US$1-3 for pay per view

• US$3 for pay per view.

• US$10 for Season Pack(13 episodes)

• US$3 for pay per view

• US$15 for Season Pack(13 episodes)

• US$10 for monthly

• US$15 for season pack(13 episodes)

others

Annual revenue is US$10 million

N/A N/A N/A

One year ago, the TV Networks delivered their contents directly to the consumers.

October 2013, YouTube Japan launched to deliver the popular TV dramas.

November 2013, amazon Japan launched the TV drama streaming service.

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Now the time for online.

The TV Networks on demand Service, i.e., TBS on demand, FujiTV on

demand…

NHK On demand

OTT Platform: hulu, YouTube, amazon, TSUTAYA TV, T’s TV….

Consumers

No middle

man

It’s complicated.. partners or competitors?

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Current Landscape in the Japanese OTT Market

TV Networks VOD platform

Telecom Careers VOD

platform

OTT platform for premium contents

Foreign OTT platform

OTT platform for both UGC

and premiums

OTT platform for

UGC

Consumers

FREE UGC CONTENTS

PREMIUM PAID CONTENTS

DIRECT DELIVERY TO CONSUMERS

OTT Platform for Premium ContentsOTT Platform for UGC

Japanese OTT market would grow because the TV networks provide their contents with OTT platform.

YouTube and amazon streaming services will give huge impact not only on the OTT market but also on the whole media market in Japan.

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Key Takeaways

Kazu Shimura, senior analyst, InfoCom Research

Shimurakazu (at) gmail.com Twitter : zutaka Facebook: Kazu Shimura

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Thank you !