Netflix faces strong competition, consumer apathy toward SVOD as it sets sights on Japan

Netflix says it will launch in Japan this fall, continuing its drive to expand to some 200 countries by the end of 2016. The company, which currently operates in about 50 countries, is in the process of deploying in Australia.

Netflix said the rollout in Japan would include “a strong selection of Japanese TV series and films,” as well as Netflix originals and a boatload of other content from regions where Netflix already is deployed.

The Japanese market has 36 million broadcast households and some of the top broadband connection speeds in the world, but it offers some strong pushback from consumers. Only 4% of respondents to a Deloitte Tohmatsu Consulting survey last year said they subscribed to a paid streaming service, according to published reports. Deloitte suggested that the rate was low because Japanese consumers are used to watching free TV.

Netflix also will face strong competition.

Among SVOD and TVOD players already deployed in Japan are Amazon, Apple, Google, GyaO, Tsutaya, Niconico and Hulu.

But Hulu, which deployed in Japan in 2011, found the market difficult enough that it allowed itself to be sold to Nippon Television Network in 2014.

Netflix also will face off with a trio of cellphone carriers – NTT Docomo, KDDI and Softbank — that not only run their own streaming services but also, in the case of Docomo, are producing original content and, as in the case of Softbank’s acquisition last year of Legendary Studios, are looking for their own sources of unique content.

But Netflix maintains that is will appeal to the market because of its raft of originals and a growing catalog of content from the other markets it already has expanded to.

“With its rich culture and celebrated creative traditions, Japan is a critical component of our plan to connect people around the world to stories they love,” Netflix CEO Reed Hastingssaid.. “As we expand into Asia, we’re excited Netflix members increasingly will have access to some of their favorite movies and TV shows no matter where they are.”

In a nod to the strength of consumer electronics makers in Japan and to work with Japanese film and TV creators, Netflix said it will open a regional office in Tokyo. The company said long-time exec Gregory Peters, who previously was chief streaming and partnerships officer, will move to Tokyo as general manager of Netflix Japan.

Netflix will be available at launch on smart TVs, tablets and smartphones, computers and a range of Internet-capable game consoles and set-top boxes. Additional details on pricing, programming and supported devices will be available at a later date.

Netflix currently counts more than 57 million members who watch more than two billion hours of premium video per month.

In Japan, Netflix will have established a significant beachhead in Asia… what do you think? Is South Korea next?

Stay tuned.

Stay tuned.

Jim O’Neill is Editor of Videomind and Principal Analyst at Brightcove. You can follow him on Twitter @JimONeillMedia and on LinkedIn