SVOD – Big in Japan and growing

March 31, 2022

Young couple watching a televsion together.

Filippo Giachi

SVP – Asia Pacific

Demand for over the top (OTT) streaming services in Japan remains high, with global subscription video on demand (SVOD) platforms like Netflix and Amazon Prime Video competing for viewers with a host of local content providers, many of which have a unique regional focus on anime and manga.

Statistics compiled by GWI in the third quarter of 2021 suggest that over three-quarters of Japanese Internet users aged between 16 and 64 (76%) watch TV content via streaming services at least once a month, spending an average of around 20m a day in the process. That figure represents less than 15% of the total time they spend watching TV delivered from multiple sources – including satellite, terrestrial, and cable TV stations – however, suggesting there is still plenty of headroom for the SVOD market to grow.

Statista estimates consumers in Japan will spend just under US$2.6bn on SVOD subscriptions this year, forecast to expand further at a compound annual growth rate [CAGR] of 5.6% to reach over US$3.2bn in 2026, for example. The average revenue per user (ARPU) is expected to hit US$67.28 in 2022, while user penetration will rise from 30.6% to 32.3% by 2026, at which point the number of SVOD subscribers will be 39.9m.

Established video consumption habits

Watching videos, TV shows, and movies online is a popular activity in Japan, one of the primary reasons cited for using the Internet by almost 56% of those aged 16 to 64 in Japan, according to GWI. Japanese people spend two hours and 15 minutes every day watching TV, which is either broadcast or streamed to their viewing devices. The country’s consumers watch multiple forms of different video content regularly. Over a quarter (27%) access music videos at least once a week, while 21% watch gaming videos.

Another 16% regularly tune into video live streams, and 15% watch sports clips/highlights or access comedy, meme, or viral videos. Similar numbers also like product reviews (14%), influencer videos and video logs (Vlogs – 9%), and educational videos (8%). Those habits helped to boost the total amount of money Japanese consumers spent on video on demand (VOD) content in 2021 – which includes streaming services and one-off downloads – by 15% year on year to US$3.7bn in 2021, according to Statista’s Digital Market Outlook.

Crowded SVOD market

Most of that revenue goes to SVOD providers. Despite its high placing on App Annie’s ranking of 2021 mobile app downloads (see below), Amazon Prime Video is estimated to have just a 12% share of the subscription video on demand (SVOD) market measured by revenue in Japan, according to figures compiled by Statista’s Research Department, around half of that enjoyed by Netflix (23%).

The country is undoubtedly well furnished with SVOD platforms, with rival services from global providers DAZN (10%), Hulu (8%), and Disney+ (6%) also popular. Japan also has a strong line-up of local SVOD companies, many of which are focussed on anime and manga. U-Next, for example, is a subsidiary of Japanese retail, telecommunications, and energy conglomerate Usen-Next Holdings launched in 2009. The company began offering a selection of HBO and HBO Max content in Japan in March 2021[i] and commanded almost 12% of the local SVOD market in that year according to Statista’s calculations.

Another local service dTV (formerly d-VIDEO/BeeTV) from Avex Broadcasting and Communications offers content exclusive to Japan as does NTT DOCOMO’s anime platform D Anime Store. Both command a modest proportion (4-5%) of the overall SVOD market in Japan which is characterised by a large number of similarly small players which also include Telasa, Abema Premium, Fuji TV On Demand (FOD) Premium, Tsutaya TV and Anime Hodai amongst others.

SVOD favourites on the smartphone

SVOD content is viewed on multiple large and small screen devices in Japan, including smartphones. Almost 93% of Japanese Internet users aged between 16 and 64 owned a smartphone in the third quarter of 2021 according to GWI, up over 3% year on year. That is more than those who own a laptop or desktop computer (77%), or a tablet (30%), while a comparatively small proportion (10%) own a dedicated TV streaming device.

Mobile phone penetration in the country is almost at saturation point, with 202m cellular connections shared by a population of just under 126m, according to GSMA Intelligence estimates. The ready availability of affordable phones and data tariffs in the country are signification contributors to that penetration. The lowest cost smartphone available for purchase in Japan typically retails at around US$102, while the average tariff for a single gigabyte of cellular mobile data hovers around US$3.38.

Mobile Internet connection speeds in Japan also lend themselves well to streaming high-definition video content onto people’s phones, averaging around 41Mbit/s in November 2021 and increasing by 11.6Mbit/s (almost 40%) during the previous twelve months.

Those trends have also helped VOD platforms become some of the most downloaded mobile apps in Japan, with more video streaming services making the top-ranked categories than elsewhere in the world, according to App Annie’s State of Mobile 2022 report. The mobile version of Amazon Prime Video was the 9th most downloaded app in Japan in 2021, for example, which also ranked webtoon subscription service Piccoma top in consumer spending. Another cartoon platform, LINE Manga, was second in the same list, ahead of online TV streaming service Abema TV in 6th place and live streaming platforms Livit and Pococha Live in 8th and 9th.

Japan’s SVOD market has significant momentum behind it. DOCOMO Digital expects to see even more fierce competition for subscribers as established players customize and expand their content libraries through investment and partnerships in the future.

[i] HBO Max Content to Stream on Japan’s U-Next Platform, Variety, 31st March 2021

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