Netflix and Amazon making gains in Japanese SVOD market
The Japanese streaming video on demand (SVOD) space is heating up. Last year, total SVOD sales hit $1.7 billion – a 12.2% increase from the previous year – and big players Amazon and Netflix are increasing their share of the market. While local player NTT DoCoMo, a Japanese telecommunications company, remains the market leader with 20.3% of the market, this has dropped by 3.8% from the previous year. In contrast, Amazon doubled its share (to 11.5%) and Netflix grew from 4.3% to 7.1%.
Netflix and Amazon have been two of the world’s best performing stocks over the past 12 months
SOURCE: Yahoo Finance
A differentiation point for both Amazon and Netflix, in regards to the Japanese market, is the depth of their pockets. Both companies have committed to ambitious spending regimes to ensure a steady flow of exclusive, premium, content.
Beyond the draw of original content, Amazon is waging a price war of sorts on its competitors. In Japan, Amazon Prime Instant Video is just $36.75 per year – about a third of its U.S. price. This unlimited viewing option is also cheaper than many of Amazon’s competitors in the region, including dTV, Hulu, and U-NEXT. Taken together with Amazon’s greater spend on content, it’s clear that the company is offering more bang for your buck than its rivals.
Netflix, meanwhile, is capitalizing on its strength in animation to capture Japanese viewers. Anime – a Japanese style of animation that is massively popular internationally and more so domestically – has found a home on Netflix. The company is working with some of the art form’s leading lights, throwing money at them to create new hits like “DEVILMAN crybaby”. These animated features are a sure win for Netflix – they play out well in Japan and also cater to a huge, and underserved, international fan base.
With the competition heating up in the country, how far can Amazon and Netflix capitalize on their strengths in japan? The answer remains to be seen, but as the space grows into a $2.4 billion market by 2022, there’s plenty to fight for.
Dominion holds both Netflix and Amazon in its Global Trends Ecommerce Fund.
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