Digital video is beginning to gain traction in Japan, achieving 31% growth in 2014 to reach ¥81 billion ($670 million), according to the latest round of research from Futuresource Consulting.
According to Futuresource, mobile operators in Japan have played a significant role in the online video market, with many launching their own subscription video services and subsequently prompting the SVOD-via-mobile market to skyrocket from one million users in 2011 to nearly nine million in 2014.
"Japan has always had a strong mobile culture, which has seen phenomenal growth in recent years,” said Joanna Wright, Senior Market Analyst, Futuresource Consulting.
Wright observed that smartphones overtook the legacy base of high end internet-enabled feature phones and powered through to an installed base of 82 million at the end of 2014, equating to 65% penetration.
"Pay-TV will continue to play an important role, accounting for 50% of spend last year and rising to 54% of overall video spend in 2018," says Wright. "This will be lower than other developed countries such as the UK and US, as traditional Japanese broadcasters have maintained significant control over the market with free-to-air still accounting for 61% of households in 2014 and sliding down to 56% of households by 2018.”
Packaged video continues to dominate overall home video spend, accounting for 83% of home video in 2014, with both rental and sell-through holding up comparatively well.
While DVD is declining, Blu-ray is growing at nearly the same level. Japan has the second largest Blu-ray market in the world after the US and is on track to account for 45% of sell-through spend in 2014.
Additionally, the strong video rental culture in Japan plays a key role in maintaining the packaged video market, which accounted for 50% of digital video spend in 2014.