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Number 1 Shimbun

A Change in the Air(waves)

No1-2017-1TV2A scene from the Netflix drama, "Hibana."

Demographics and new technologies are having a big effect on viewing habits in Japan.

by Gavin Blair


Tune in to Japanese television on any given evening and you will find nothing that different from two or three decades ago. Programming is still dominated by the usual menu of variety shows packed full of segments on food and travel punctuated by excited cries of “Oishii!” and “Sugoi!” emanating from the familiar roster of celebrity faces, along with some largely formulaic dramas, the ubiquitous quiz shows and the occasional elaborate popular music program.

But take notice, for changes are afoot. A shrinking domestic market is forcing the big networks to look further afield for growth, while competition from new platforms such as Netflix and Amazon is posing challenges, but also creating opportunities.

The programming and business of the commercial broadcasters – and to a lesser extent NHK – revolves around the “Golden Time” hours of 7 to 10 pm, when the highest-rating programs and biggest-earning commercials air. And while you may not notice the difference, the shifting demographics of the domestic audience has led to a shift in content over the last 10 to 15 years to programming designed to appeal to older viewers, according to Taka Hayakawa, director of worldwide production and sales at Fuji TV. “There is no young generation, so it’s all about the ojisan and obachan,” says Hayakawa, whose career has also included writing, directing and producing for television.


A shrinking domestic market is forcing the big networks to look further afield for growth, while competition from new platforms is posing challenges and creating opportunties.


This has manifested itself most visibly in the increasing number of police detective and medical-themed dramas, with relatively simple, formulaic storylines in the primetime slots, says Hayakawa. “If it’s a detective story, you can guess the conclusion is going to be catching the bad guy; with a medical-type drama, if you can understand the first few minutes, then you will be able to work out the story.”

According to Hayakawa, these dramas are “safe and comfortable, without any edginess or feeling of danger.” He says that despite Fuji TV’s efforts to resist the shift, the broadcaster will run two dramas with such themes in its next primetime slots.

Makito Sugiyama, vice president of global business at Tokyo Broadcasting System Television, doesn’t see such a significant change in content on the terrestrial channels, although the Broadcast Satellite channels are “targeting older viewers.”

ONE CHANGE THAT HAS undeniably occurred in television viewing habits, though not one peculiar to Japan, is the growing tendency to watch programs in time-shift: either recorded, on VOD (video on demand), catch-up services or on net-based platforms such as Hulu and Amazon. The way that viewing figures are calculated in Japan was recently changed to reflect this change, bringing some cheer to the networks, which are able to show that their audiences have not dropped as much as had been thought. With the price of commercial slots based on ratings, the networks now have to devise new formulas to reflect the time-shift audience, complicated by the fact that some can watch ad-free or skip ad breaks on recorded programs.  

In addition to expanded offerings from cable and satellite networks, the Japanese TV industry now faces stiffer competition from a growing number of alternative content platforms in a now crowded marketplace. “Amazon, Netflix and other new platforms have been totally disruptive in the U.S. and are now trying the same strategy in Japan,” says Hayakawa. “Competition is getting very tough and we are only at the initial stage of disruption in Japan as they have just launched recently here. But their growth is inevitable. The Japanese TV industry is pondering how to survive in this landscape.”


Original content is becoming a key part of the expansion of the new platforms in Japan, mirroring the strategy of Amazon Video and Netflix’s global ambitions.


Definitive numbers are unavailable, but local platform Abema TV is reported to be the most popular VOD service, followed by Amazon Prime Video, Hulu, dTV and then Netflix. In terms of hours watched weekly, dTV – which was originally a mobile service launched by DoCoMo that has expanded to television – is in the lead, followed by Amazon and Netflix.

Hulu found it difficult to carve out a niche in the local market and sold its Japan operations to Nippon TV in early 2014. Since the takeover by NTV, the service has ramped up its local original programming, including a Japanese version of the German police series “The Last Cop,” which became a big draw for Hulu last year.

Original content is becoming a key part of the expansion of the new platforms in Japan, mirroring the strategy of Amazon Video and Netflix’s global ambitions. Amazon Japan has already announced 12 original series, including dramas, documentaries, variety shows, anime programs and children’s shows, with plans for more. In the summer of 2016, Netflix Japan launched “Hibana (Spark),” a 10-episode drama based on an Akutagawa Prize-winning novel by Matayoshi Naoki. As well as boosting local content, the drama was made available on Netflix in 190 countries and dubbed into around 20 languages.

No1-2017-1TVTaka Hayakawa, director of worldwide productions and sales at Fuji TV.

ALTHOUGH THE NEW PLATFORMS are a clear challenge to the legacy commercial broadcasters, the networks aren’t adopting a siege mentality, but rather working with them. Fuji TV created the drama “Underwear (Atelier)” for Netflix, and the two have formed an alliance to co-create dramas for the Asian market. Even staid public broadcaster NHK partnered with Netflix on “Tokyo Trials.” The four-part mini-series about the trials of war criminals after World War II was broadcast on NHK in December, while Netflix streamed it overseas. NHK will offer it on its own VOD service before Netflix makes it available to its subscribers in Japan.

For decades, movie production has been an important revenue stream for the commercial networks. Many of the annual box office leaders are spin-offs from drama series or other films that TV companies are involved with through a movie production committee system that brings partners from distributors, rights holders and advertising agencies together as investors. NTV has announced a movie spin-off from “The Last Cop,” due for release this spring.  


The emergence of the huge Chinese theatrical market at a time when relations between the two countries have thawed is creating new opportunities.


Few of the 400 or so Japanese films released each year generate more than minimal interest or box office overseas. But the emergence of the huge Chinese theatrical market at a time when relations between the two countries have thawed enough for Japanese films to start getting released again is creating new opportunities. Flying Colors (Billy Girl) was the third-biggest Japanese live-action film of 2015 with ¥28.4 billion ($23.6 million). Based on a true story about a waster of a high school student who suddenly decides to go to an elite university, it featured TBS as a leading company of its production committee. The film was given a wide release in China in April 2016 and took in more than $6 million. Although that is only a fraction of the $80 million that the anime hit Your Name (Kimi no Na wa) had made in China by late December, let alone the hundreds of millions that a Hollywood blockbuster can pull in there, it represents significant overseas box office success for a Japanese film.

ON THE ANIME TV series front, overseas sales have been growing exponentially over the last couple of years, helping to boost revenue for the anime industry to ¥1.83 trillion ($18 billion) in 2015. That was up by 12 percent from a year earlier, according to the Association of Japanese Animations, helped by a growth in sales of streaming rights to China of 78.7 percent.

Clearance of copyright was a major issue for online distribution of all Japanese content because the Broadcast Law and copyright are governed by different ministries. Many of the hurdles have now been overcome, but the issue remains a barrier for international distribution, according to Sugiyama of TBS: “Everyone is working toward trying to resolve this, but it’s not as simple as people think it is; clearance is difficult even for the music used in TV programs, since it may be cleared for domestic distribution, but not overseas.”

The networks don’t own the rights for all the programs they broadcast, but are often involved as co-producers of anime, receiving a share of the revenue from overseas sales. “TV stations used to sell content in stages, with first broadcast and then DVD releases. But now distribution through broadcasting, streaming and DVD sales are becoming almost simultaneous,” says Sugiyama.

Sales of formats – essentially ideas for shows – has been a long-running global success story for the TV networks. The “Dragons’ Den/Shark Tank” show, where venture capitalists decide whether or not to invest in entrepreneurs’ business ideas, has been remade in around 30 countries, but started life as “Money no Tora” on NTV in the early 2000s. Other global hits include “America’s Funniest Home Videos,” “Takeshi’s Castle” and “Sasuke/Ninja Warrior,” all of which originated at TBS, and Fuji TV’s “Iron Chef” and “Hole in the Wall.”


No1-2017-1TV3Jessie Graff in the “American Ninja Warrior” finals

Many observers put this plethora of ideas down in part to the large number of short segments in Japanese variety shows, which are often the birthplace of formats for programs in their own right. The low-budget nature of much of Japanese TV leads to producers being creative and often coming up with ideas for shows that can be made relatively inexpensively – another attraction for international buyers.


Broadcasters will likely need to follow the lead of corporations in other sectors in making investments and acquisitions abroad.


With younger people in particular now consuming video on a variety of devices from multiple platforms, the business model of the traditional linear broadcasters looks unsustainable. Factor in the shrinking population, and the TV networks face a particularly acute environment. In addition to aiming for further growth in overseas markets for content and ideas, the broadcasters will likely need to follow the lead of corporations in other sectors in making investments and acquisitions abroad.

Fuji TV, for example, was an early investor in Niantic, the San Francisco-based developer of worldwide smash hit augmented reality game Pokemon Go, despite not being the broadcaster of the TV anime series. The company also produced a documentary about the Pokemon Go phenomenon, in Japanese and English, that was broadcast in Japan in December and is targeted at a global audience. Such strategies and synergies are the way forward, according to Fuji’s Hayakawa, who both led the investment and acted as a producer for the documentary. “Similar to the divide between Silicon Valley and Hollywood in the U.S., the two industries are separate in Japan, but we have to combine the two in order to survive,” suggests Hayakawa.

Gavin Blair covers Japanese business, society and culture for publications in the U.S., Asia and Europe.



Published in: January 2017

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