Netflix Japan sets official launch date

06 Aug 2015

It's official: Netflix Japan will start streaming on September 2.

Netflix Japan has set up an official landing page, as well as accounts on Twitter, Facebook and YouTube announcing the official launch date.

Netflix announced plans to enter Japan earlier this year, but hadn’t specified when it would kick off services. The OTT player already offers services in around 50 countries (including Australia and New Zealand, where Netflix began services in March), and also plans to expand into Italy, Portugal, Spain, and Iceland later this year.

How well Netflix Japan will do is, of course, anyone’s guess. Its main OTT competition is Hulu Japan (although it isn't actually owned by Hulu – the service was sold last year to Nippon TV, which continues to license the Hulu brand).

A number of reports have pointed out that Netflix’s latest quarterly results (Q2 2015) reported strong subscriber growth both in the US and internationally. That includes a boost of paying members by over three million to nearly 63 million at the end of Q2 (64.5% of them domestic, the rest international).

But while Netflix’s domestic ARPUs grew 2% quarter on quarter, its international ARPU dropped 2% in the same period. In fact, in the past four quarters Netflix’s international ARPU has reportedly shrunk 3.4% (CAGR).

That could spell trouble for Netflix’s international strategy, says Sarah Goodman of Strategy Analytics in this blog post:

Declining international ARPU is significant because in the long run Netflix’s international markets are going to be a bigger contributor to the growth of the company than the U.S. market is going to be. With nearly 4 out of 10 U.S households subscribing to Netflix they are close to saturation, suggesting that in the long run internationally there is much more room for growth. Although Netflix is still gaining subscribers internationally, their revenue per paying subscriber is decreasing each quarter calling into question long-term revenue growth.

Still, it would be a mistake to get too hung up on ARPUs. Netflix can still grow revenues if it signs up enough paying subscribers. Also, ARPU declines may well be inevitable as the OTT TV/SVOD space gets more competitive. If Netflix hasn't factored that into its international strategy, it arguably deserves to fail.

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