The overview of the Japanese OTT (Over the Top) market. In February 2014, Nippon Television announced that it will buy the Hulu Japan. Lots of things will occur in Japanese media landscape in 2014.

1. OTT Landscape in Japan
Dr. Kazu Shimura
InfoCom Research
January 2014
@ Kazu Shimura 1

2. 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.
@ Kazu Shimura 2
Summary

3. Broadband
penetration is more
than 50%.
3G and LTE has 131
million
subscribers, includin
g LTE has 14 millions
subscribers
@ Kazu Shimura 3
Japan.. Advanced Infrastructure for
OTT Business
0
500
1000
1500
2000
2500
0
20,000
40,000
60,000
80,000
100,000
120,000
140,000
20032004200520062007200820092010201120122013
The Number of Mobile Subscribers and The
Volume of Data Traffico n the Internet in Japan
Data Traffic（Gbps）
Internet Subscribers(Million)
Mobile Subscribers(Million)
Mobile
Source: MIC(Ministry of Internal Affairs and Communications)

4. 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.
@ Kazu Shimura 4
Digital Devices with WiFi Connections
Anywhere

5. @ Kazu Shimura 5
No OTT players has taken advantage
of it yet…
Why ?

6. 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.
@ Kazu Shimura 6
High Quality Original Contents on TV
for FREE
TV
TV Dramas now on air

7. People spend more
than three hours a
day to watch
television.
99.8% of
households has TV
at home.
@ Kazu Shimura 7
TV is still Dominant for Media
Consumption
TV
Source: Hakuhodo
Interne
t

8. Multichannel TV services has been matured for ten years.
@ Kazu Shimura 8
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

9. 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.
@ Kazu Shimura 9
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 subscription
US$240 for both
terrestrial and satellite
subscriptions
Fewer
people
pay the
fee..
Source: MIC, NHK

10. We enjoy 16 free TV channels already.
@ Kazu Shimura 10
Contents Market from the
Consumers Viewpoint
TV
3 hours a day
16 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, ci
nemas, sp
orts..
News, Origin
al
dramas, Maj
or sports
MoneyTime
No more time to spend
for watching contents…

11. 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.
@ Kazu Shimura 11
Contents Market from the Business
Side
OTT Platforms
Major Contents
Providers
(TV Networks)
US
movies, dramas, animati
ons..
Japanese old movies.
TV
Digital DeviceSmart TV

12. 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.
@ Kazu Shimura 12
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$19
Pay Per
View Only
The Fee of the
Pay Per View
for Brand-new
Cinema
US$4 US$4 US$5

13. (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.
@ Kazu Shimura 13
US OTT Players have come..

14. “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.
@ Kazu Shimura 14
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%.

15. 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.
@ Kazu Shimura 15
Telecom Careers started VOD platforms.
dMarket
(NTT
Docomo)
Smart Pass
(KDDI)
UULA
(Softbank)
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

16. NHK and TV Networks launched their own OTT platform.
@ Kazu Shimura 16
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

17. 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.
@ Kazu Shimura 17
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

18. It’s complicated.. partners or competitors?
@ Kazu Shimura 18
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 CONTENTSPREMIUM PAID CONTENTS
DIRECT DELIVERY TO CONSUMERS
OTT Platform for Premium Contents
OTT Platform for UGC

19. 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.
@ Kazu Shimura 19
Key Takeaways

20. Kazu Shimura, senior analyst, InfoCom Research
Shimurakazu (at) gmail.com
Twitter : zutaka
Facebook: Kazu Shimura
@ Kazu Shimura 20
Thank you !