In the not-too-distant past, watching TV meant sitting in front of a screen at home, waiting for a program to come on at a scheduled time. The picture is slightly different today, as more consumers are shifting their media time away from traditional television, opting for online video-on-demand (VOD) services that are creating entertainment opportunities for users who have increasingly more control over what, when and how they watch video content.
Viewers are in the midst of a migration toward original digital video channels such as YouTube Originals, live streaming on social platforms and subscription VOD (SVOD) services. Indeed, according to a global poll released by global information and measurement company Nielsen in March this year, nearly two-thirds of respondents in 61 countries said that they watch some form of VOD content. This is not to mention that in recent years, it has become the norm to view such content on smartphones and tablets, as opposed to home computers.
“Today’s media landscape is complex, but the growth of video-on-demand programming services can create opportunities for all players in the media ecosystem,” says Megan Clarken, president of Nielsen Product Leadership. “For audiences, advertisers and content providers alike, advantage will be gained with an in-depth and keen understanding of not just how consumer viewing dynamics are changing, but why they are changing.”
As one of the largest SVOD markets in the Asia-Pacific region, Japan is going through its own change. According to another Nielson survey, which compiled figures from Nielson NetView and Mobile NetView studies, more than 10 million households nationwide watched SVOD content in 2015, a number that is expected to almost double by 2020. These stats peg Japan as the largest market in Asia, ahead of South Korea and China. However, China is expected to overtake Japan this year, with the internet penetration rate reaching record highs — and rising every year — in a country with a population of more than 1.3 billion. Considering 91 percent of Japan’s population has access to the internet compared to 52 percent in China, the potential of the Chinese SVOD market becomes clear.
The biggest players in the domestic SVOD market are Avex, Hulu, Amazon Prime Video and Netflix. Avex is the only domestic company in the big leagues, and runs dTV, one of the nation’s biggest video streaming services, with 120,000 titles and more than 5.5 million subscribers. Hulu Japan kicked off its content streaming in 2011, but somewhat lackluster results led to a sell-off to Nippon TV, one of the nation’s main terrestrial TV broadcasters. Amazon Japan started Prime Video in September 2015 — the same month as Netflix Japan — and both are leading the way in locally made original content.
Netflix says local creations account for up at least 40 percent of its domestic catalog — and out of the 40 original global content productions that Amazon has planned this year, half of them will be Japanese, according to Amazon Studios chief Roy Price.
“This is an amazing era where an alternate universe of awesome TV is being created around the world,” he says at a recent news conference in Tokyo. And with hits such as “Mozart in the Jungle” and “The Man in the High Castle” in his portfolio, Price knows what he’s doing.
“It’s all about bringing the same global mission and creative principles for original content to Japan,” Price says. “Our mission is to create unique TV series and movies that will stand out in a crowded global landscape — fresh, new programming that sets high standards at a time when TV is at its best globally.”
Amazon Prime Video Japan’s initial lineup of original domestic content is in line with this ambition. “Invisible Tokyo” is a self-proclaimed “neo-documentary” that explores Tokyo through the eyes of its most powerful cultural icons, whereas “Baby Steps” is a manga-to-live-action series that follows the life of a high school student and aspiring tennis player. And then there’s the amusing “Businessmen vs. Aliens,” which I’ll leave to your imagination.
According to Amazon Japan President Jasper Cheung, however, the benefits of Amazon Prime lie not just in its Prime Video content. Until recently, most internet users would have had the impression that Amazon is a premier online destination to buy physical books, clothes and pet groceries. However, with other services such as Kindle and Prime Music up their digital sleeves, the merits for users extend beyond simply having access to their SVOD archives. Or, as Cheung stated at the news conference, “At Amazon, we aim to provide content that you can watch, listen to or read.”
Netflix Japan, on the other hand, appears to be the pack leader when it comes to original content. With worldwide hits in the form of “House of Cards,” “Orange is the New Black” and the more recent “Stranger Things,” confidence is also high within the local ranks.
Netflix Japan President Greg Peters affirms the company’s commitment to the domestic market.
“We really think about the service from a global perspective,” Peters says. “Our job is to create the world’s first global TV network using the power of the internet and Japan is a critical component of that, from a consumption side and a creation side.”
When it comes to the creation side, Netflix has had a flying start with original content made in Japan. While Amazon was gearing up to release their initial lineup of original content, Netflix had already released three series for international streaming: the humorous drama of “Underwear” (international title “Atelier”),” reality show “Terrace House: Boys & Girls in the City” and award-winning novel-turned-drama “Hibana” (“Spark”). A fourth series — late-night drama “Midnight Diner: Tokyo Stories” — is scheduled to be released in October.
Just as Amazon has a potential edge in the variety of products that it has readily available, Netflix has its own weapon of choice in an increasingly competitive SVOD arena: an unparalleled video recommendation system.
“Because of the nature of our service, global availability and, more importantly, our recommendation system (at Netflix), we can have people who love French movies or art movies and have never seen a Japanese drama in their life,” Peters says. “But we know the kinds of stories and treatments that they like, so we can recommend titles such as ‘Hibana’ and find a much bigger audience.”
The advantages of SVOD content over regular terrestrial broadcasts are clear. The appeal is simple: Watch as many videos as you like, when you want, where you want. And it’s cheaper than its cable or satellite competitors. This is not to mention the fact that there are no sponsors or other stakeholders to influence creative choices made in production.
“It’s important that the (production) team has artistic freedom, and they’re not restrained by ‘what the sponsor’s going to think’ or other ‘administrative’ people around them,” Peters says. “So they can realize the potential in their work, which I think makes something globally attractive. Our job is to be ‘creator-enabling’; the team’s job is to have a vision and then execute it. Ours is to enable them and then get out of the way. And I think the creators are excited by it and enjoying the freedom.”
Katsuaki Yamaji, director of content business and production at Yoshimoto Creative Agency, a “Hibana” co-production company, says the creative freedom at Netflix allowed for a solid live-action production of the best-selling novel.
“We like the ‘creativity first’ attitude that Netflix has,” Yamaji says. “We were able to express the story while staying true to the original work.”
Kentaro Shibuya, media promotion director at Fuji TV — the production company behind “Underwear” — reveals what it was like to work with the SVOD pioneer.
“To be honest, it wasn’t that different from making a regular TV show (at Fuji TV),” Shibuya says. “Even though it was an internet-only series, we didn’t do anything particularly different than usual, including creative expression and the script.”
This could be the reason why the series did not make much of a ripple in both the domestic and international fronts. Part of the international excitement of on-demand, internet-based content is being able to experiment with the creative process, free of the very much established demands that the corporate world makes on movie makers.
A firmly established commercial tie-up system in addition to predictable casting from the same pool of big-name actors and, in many cases, showbiz personalities and teen pop stars, are often seen as major detriments to the industry’s reputation.
In such an environment, one wonders how Shibuya and the production team approached the casting process. Unfortunately, Shibuya refused to comment on the selection procedure — a sign of the current state of the rigid nature of the old-school model of entertainment and advertising.
Peters, however, did.
“We don’t know yet if it’s because it’s inherent to Japan, as in it’s viewer preference, or if it’s an artifact of the ‘structures’ in the industry,” he says. “But I think what we’ll be able to do is experiment and see how a great story told by unknown actors does, and discover exactly what it is that people get attracted to when they want to watch a piece of content.”
Although Netflix’s heart might be in the right place, it appears the statistics aren’t as optimistic as Peters is regarding taking top spot in the domestic SVOD scramble.
In February, RBC Capital Markets surveyed more than 1,500 people in Japan about their streaming video usage and found that only 1 percent of respondents use Netflix to watch films and TV shows. This compares with 7 percent for Amazon Prime Video and 5 percent for Hulu. The rest of the pie went to VOD content providers, namely 39 percent for YouTube, and 13 percent for domestic streaming sites Nico Nico and GYAO!, respectively.
The race to create the country’s first-ever global internet TV hit is an ongoing one, and as far as the transition from regular terrestrial TV to online SVOD content is concerned, it appears that the Japanese TV industry itself needs to undergo its own paradigm shift just as much as the Japanese population. Issues such as sponsorship and the lack of creative freedom to experiment with new production methods, as well as predictable casting and story-telling techniques will all need to be faced head on in the coming months.
Although there has been a lot of talk regarding the “death of TV,” television is not dying so much as it is evolving — extending beyond the traditional screen to include programming from altogether new sources accessed in new ways. In the borderless world of media in the present day, the only constant is change. On-demand video content may be one of the more recent entrants into the foray, but it represents a part of the continuous journey that the industry has been on for more than a decade. Winning over increasingly empowered viewers is now at its most challenging in history, so content providers will need to stay flexible and ahead of the next technological hurdle.
Ultimately, however, successfully navigating this new media landscape will require going back to creative basics.
“Content will always be king, and consumers will continue to demand greater control and customization of the viewing experience,” Nielsen’s Clarken says. “Providers who exceed standards on both fronts will have an advantage.”