Japan

May 2017

Key Takeaways

Netflix does not align well with audience expectations and viewing habits in Japan.
Viewing of broadcast and terrestrial television remains high. Japan’s media marketplace continues to be dominated by “old” TV institutions.
There is a broad opinion in Japan that Netflix is “foreign”, despite Netflix Japan’s commitment to producing original Japanese content

Market

Netflix’s overall impact in Japan appears minimal so far. It has not revolutionised TV-broadcasting to the same extent as it has in North America, nor has Netflix entered the cultural zeitgeist in Japan.

When Netflix Japan launched on 2 September 2015, it entered a marketplace that was already awash with video streaming businesses operating under diverse business models. Some of these businesses, such as DMM.com and NicoNico, were mainstays of the Japanese media landscape which had been providing limited streaming services since the late 2000s, primarily focusing on Japan’s important mobile phone-based internet market. Others, such as Rakuten Showtime and Tsutaya TV, represented instances of video/DVD rental businesses diversifying their portfolios into the “innovative” new video streaming business marketplace. Still others, such as Hikari TV and J.Com on Demand, were Japanese start-ups connected to pre-existing cable TV services which had pre-emptively launched in a bid to beat Netflix to the punch.

Netflix Japan’s major rival in the Japanese marketplace is Hulu Japan, a Japanese subsidiary of the American Hulu.com, which is now owned by Japanese television broadcaster Nippon Television (NTV). Originally launched in 2011, NTV bought Hulu Japan in April 2014 and subsequently became the most popular VOD service in Japan. With extremely positive user reviews, Hulu Japan appears to be Netflix Japan’s major competitor. This competitive edge has been recognised in the US, with HBO signing an exclusivity deal with Hulu Japan which makes all HBO content (including shows as Game of Thrones, The Sopranos, Silicon Valley and True Detective) exclusively available for on-demand viewing through Hulu Japan. Hulu Japan also has an extensive range of anime and other Japanese content, as well as Korean and Taiwanese Dramas and global films. Hulu Japan is priced at 933 yen a month, compared to 650 yen a month for Netflix’s basic package.

The centrality of mobile phones and smartphones is important to note when considering the Japanese media market. Internet-capable mobile telephony has been a key part of Japan’s mediascape since the late 1990s and early 2000s, and the smartphone boom had firmly taken hold with penetration rates reaching 77% by 2015. Streaming videos on internet-capable mobile phones is thus an important part of Japan’s video streaming culture, particularly given the long commutes workers face in large urban metropoles such as the Greater Tokyo Metropolitan Region.

Another distinctive feature of the Japanese streaming market is the importance of anime content. Almost all streaming services offer anime and promote it heavily on their websites and platforms. As the typical fannish consumers of anime are understood to be highly tech-literate consumers who engage in heavy patterns of focused consumption, it is unsurprising that they are attracted to “innovative” new media platforms. Nowhere is this clearer than in the example of NicoNico, which is firmly tied to the otaku sub-culture.

Regulation

The Ministry of Internal Affairs and Communications (MIC), regulates broadcast media in Japan with limited restrictions on foreign control. The Radio Law of 1950, amended in 2005 regulates radio and private television licensing. At present, there is no regulatory legislation specific to streaming services. They are treated as cable television and subscription television under law, meeting the same obligations as broadcast television and radio. Importantly, Japanese media law and policy does not include any “local content” restrictions as found in many other nations, although the Japanese media landscape is heavily dominated by local content due to the predominantly monolingual nature of Japanese society.

Viewing Habits

While there are no conclusive data, use of over-the-top services via smartTVs appears less common than mobile-based streaming or conventional linear TV viewing. While some expats watch Netflix on their home televisions, Japanese youth prefer laptop/smartphone broadcasting (most use Hulu.jp) while other Japanese often stick to their old cable television subscriptions.

Internet Pricing and Availability

Internet penetration in Japan is amongst the highest in the world, with some of the fastest access and download speeds available globally. The saturation of smartphones and internet-capable mobile telephony is almost universal, and access to the internet is relatively affordable. At the present time, Japanese telcos appear to be lagging behind in providing “bundle opportunities” that include streaming services into their overall home and mobile internet packaging, and this may reflect the dominance of cable television in the market.

Content

According to reports, Netflix is aiming for 40% of the available content in its catalog to be Japanese. The company has licensed many local titles, signing deals with suppliers including the broadcaster Fuji TV. However, the Netflix Japan catalog is relatively light on when it comes to anime content, especially when compared with other streaming services.

In July 2016 press release, Netflix stated its intention to further increase Japanese content, especially Netflix originals, as part of an Asian regional push. This is despite the fact that early viewing data seemed to suggest that Japanese audiences did not show a preference for Netflix originals and instead preferred Japanese content from Japanese production companies.

One of Netflix’s most well-known original productions so far is Hibana (2016), a TV serial based on an award-winning novel. Netflix executive Greg Peters points to Hibana as evidence of the company’s desire to “share Japanese culture” around the world. However, numerous “cultural critics” (hyōronka, similar in nuance to “public intellectuals”) in Japan have questioned whether or not foreign audiences will be able to understand/appreciate Hibana’s ostensibly “Japanese” appeal.

Consumers and Press Reaction

Public debate about Netflix in Japan has tended to emphasise three key themes.

First, Netflix has become associated with longstanding critiques of American cultural imperialism in Japan. Critics have likened Netflix to the iconic kurofune (black boats) of Commodore Matthew Perry’s “American gun-boat diplomacy,” which forcibly opened Japan to foreign trade in the mid-19th Century after 200 years of relative isolation. Much as Commodore Perry’s kurofune ushered in the Meiji Revolution of 1868, the importation of Western learning and technology and massive social changes that led to a conscious rejection of traditional Japanese culture under the banner of “Civilisation and Enlightenment” (bunmei kaika), Netflix was similarly presented as revolutionising Japan’s stale broadcast media through explicitly American forms of innovation. The term kurofune no nettofurikkusu (Netflix of the black boats) became a commonly utilised epithet in much early reporting, although this use quickly subsided.

A second theme in the public reception of Netflix, especially in the business press, is innovation. The specific term utilised is ishin (維新), meaning “innovation, restoration, revitalisation,” and this was explicitly contrasted with the term teitai (停滞), meaning “stagnation.” In particular, there was a focus upon the fact that Japanese households rarely have internet capable televisions, and that the introduction of Netflix may spur people to purchase such devices in order to gain access to desired content. In contrast to the discourse of kurofune, this discourse is remarkably optimistic and does not foresee any negative impacts from the introduction of Netflix.

There has also been some discussion in Japanese media outlets about Netflix’s potential to “internationalise” Japan’s mostly domestically-focused broadcast media. Discussed mostly in the context of Netflix’s “gurōbaru-ka senryaku” (globalising strategies), such articles examined how Netflix Japan would potentially allow more economically-viable access to popular Western drama series which had long been relegated to specialised cable services too expensive for the average Japanese consumer to access. This discourse consciously reflected broader trends from the 1990s and early 2000s where “internationalisation” (kokusaika) was drawn upon as a strategy to combat the increasing stagnation of the Japanese economy in the so-called “Lost Decade” after the collapse of the Japanese economic miracle and the Bubble Economy of the 1980s. In promoting Netflix as an example of internationalisation (or, perhaps, Americanisation), this perspective (which was especially prominent in Japan’s English-language press) explicitly criticised those who viewed Netflix as cultural imperialism and also implicitly criticised the inward looking nature of Japan’s broadcasters, which typically prioritise the domestic market through the production of cheap “wide show” variety programs.

Local Netflix Offices

Netflix K.K.
Shin-Aoyama Tokyu Building 10F
3-11-13 Minami-Aoyama
Minato-ku
Tokyo 107-0062 Japan

Works Cited
Galbraith, Patrick W, & Karlin, Jason G (Eds.). (2016). Media convergence in Japan: Kinema Club.
Gottlieb, Nanette, & McLelland, Mark. (2003). The Internet in Japan. In Nanette Gottlieb & Mark McLelland (Eds.), Japanese cybercultures (pp. 1-16). London: Routledge.