24 March 2006

Lagging Japan to see pay-TV viewing spike
By Mike Savage
Media
Copyright 2006. Haymarket Media Limited. All rights reserved.

TOKYO: Aggressive competition and consolidation is set to deliver a shot in the arm to Japan's historically fragmented pay-TV market, where viewing and advertising is well below other markets, according to a new report.

Media Partners Asia (MPA), which has just published a report looking at the development of pay-TV and broadband in Asia-Pacific, expects the number of Japanese households with pay-TV to nearly double over the next 10 years as the dominant operators ramp up investment in new technologies with a strong appeal for consumers, such as digital video and broadband internet.

This change is being driven by a number of successful investors and pay-TV brands that have emerged in Japan, including Jupiter TV, Tohokushinsha Film Corp, News Corp, Time Warner, Viacom and Disney.

"Our forecasts of higher pay-TV penetration will further boost the emergence of pay-TV programming brands and increase viewership," said Vivek Couto, executive director at MPA. Because of this, pay-TV advertising should more than double over the next decade, Couto added, rising from US$274 million in 2005 to an expected $678 million in 2015. This rise is unlikely to make a significant dent in TV advertising overall however, with the majority of pay-TV revenues expected to come from subs.

Terrestrial's high production values, together with its hold on areas such as sport that have driven take-up of pay-TV in other markets, should help sustain its dominance, while the absence of ratings is limiting pay-TV's appeal.

"The lack of viewership data for new TV platforms is the key barrier to advertisers investing in the medium," said MindShare Japan MD, Tsuyoshi Endo, pointing to growing interest in more measurable areas such as internet advertising. Online already commands ad revenue more than three times that of pay- TV, which represents less than one per cent of overall adspend in Japan and just two per cent of TV spend.

Japan's pay-TV household penetration of 20 per cent, forecast by MPA to rise to 38 per cent by 2015, is also well below current levels in other markets. This stands at 85 per cent in Taiwan, 89 per cent in Korea and 54 per cent in Hong Kong. However, the amount of money companies make from each subscriber, the second highest in the region after Australia, makes it an attractive market for pay-TV operators.