Product Market Study – Multimedia & Digital Contents Market in Japan (2012)
Product Market Study 1/2012Multimedia & Digital Contents Market in Japan
IntroductionSince the collapse of the economic bubble at the start of the 1990s, theeconomic situation of Japan, despite the occasional glimpse of a recovery, hasbecome progressively worse. In addition, Japan’s aging population and lowbirthrate are concerns of a future slide in its economic and social dynamism.Amid these economic and social uncertainties, Japan is about to see tremendoustransformations to take place in the information and communication sector.There are several reasons for this, the first of which is infrastructureestablishment. The build-out of communications infrastructure, for example, hasmade it possible today, with the proliferation of smartphones to send and receiveinformation via the Internet anytime from anywhere. With the rollout of ultra-high-speed broadband through fiber-to-home networks accessible from some 90percent of Japanese households, it is now possible to deliver large content workssuch as high-definition video and on demand to individual homes.Broadcasting infrastructure has also evolved dramatically with the move to digitalby both satellite broadcasting and terrestrial broadcasting. Terrestrial televisionhas completely switched to digital broadcasting in July 2011.The establishment of this communications and broadcasting infrastructure andthe continued digitalization of content has made it easier than ever to pushcontent over various media channels. At the same time, digital signage andother content markets are emerging, which are picked for substantial futuregrowth.Users, primarily younger generations of “digital natives” who have grown up withdigital devices, are now increasingly involved in the creation and distribution ofinformation outside of mass media, something that previously was almostunthinkable.At the same time, traditional mass media, who have watched their advertisementrevenues being steadily eroded by the prolonged recession, are now seeing theiradvertisement markets shrink as advertisers flock to the consumer internetadvertisement market. The mass media has failed so far to come up withrevenue models that work in the new market reality.Market OverviewAccording to Digital Content Association of Japan (DCAJ), the Japanese mediacontent industry currently has a market size of more than JPY 12 trillion (USD150 billion), the second largest in the world behind the U.S.
Digital Contents MarketDigital Music Market 2010 Units Value year-over-year year-over-year (JPY basis basis (thousand) Mil) Single Track 44,617 105% 6,295 96% Album 2,850 112% 3,261 104% Total audio downloads 47,467 105% 9,556 99%InternetDownloads Music Video 2,024 116% 567 104% Other downloads 0 - 0 - Total 49,491 106% 10,123 99% Ringtunes 131,247 84% 13,299 81%Mobile Ringback tunes 113,302 101% 10,082 103%DigitalContent Single Track 137,836 96% 47,590 96% Music Video 7,414 93% 2,843 98%
Other Mobile 2,008 146% 931 136% Total Mobile Sales 391,807 93% 74,745 94% Subscriptions 380 54% (Internet) SubscriptionsOther 354 93% (Mobile) Other Digital Music 159 267% 387 88% ContentGrand total 441,457 94% 85,990 95%Source: The Recording Industry Association of Japan (RIAJ)Japan is the world’s largest music market in terms of digital song sales andtogether with the United States represents about half of the world’s sales ofrecorded music. According to the Recording Industry Association of Japan(RIAJ), the digital music market in 2010 amounted JPY 86 billion (USD 1.1billion) in value and posted a decline for the first time since statistical data wasfirst complied in 2005.Mobile digital contents, a distinctive characteristic of the Japanese market,remained dominant, while at the same time, the percentage of internetdownloads to total downloads is increasing every year. Internet downloadsshowed a 1 percent decrease on a value basis while unit production increased 6percent. Specifically, albums and music videos were up 4 percent in value, itsshare edged up from 54.3 percent in the previous year in proportion to the overalldigital music market.RIAJ estimated that the amount of tracks obtained on mobile phones via illegalsharing is approximately equal to that of legal purchase and is growing. Asluggish economy and a rising popularity of gaming has also had a part in thedecline of digital music sales.Online Game MarketOnline games offer a different type of attraction from conventional games sincemultiple players can play together, which has pulled in casual users as well ashardcore gamers. In particular, social games, which are distinguished by thecommunities they form, provide the same sort of enjoyment found with blogs andSMSs and have seen their sign-up numbers soar. The downside to social gamesis that although the sign-up is free, they require players to buy virtual currencyused within the game with real money in order to progress to higher stages.
There have been instances of social game players unwittingly racking up hugebills.According to the Japan Online Game Association, the revenue from onlinegaming in Japan grew 3 percent during 2010 to JPY 132.9 billion (USD 1.66billion). Package software contributed JPY29.4 billion (USD 367 million) to thefigure and JPY 103.5 billion (USD 1.29 billion) came from online game operation.Social game took in JPY 235.5 billion (USD 2.94 billion) in revenue.The main content in game category is still arcade games and game decksoftware. However, growth in online game-related domains is remarkable andnew related domains such as mobile games and social games are the market ofthe future.e-book MarketThe Japanese e-book market was estimated at JPY 65 billion (USD 813 million)in 2010 compared with about JPY 2 trillion for printed books and magazines or3.3 percent of the overall market.According to Impress Holdings, which owns several publishers and softwarecompanies in Japan, Japanese e-book market is dominated by mobile mangacomics and continue to dominate over other types of e-book content includingfiction and nonfiction titles. However, the company predicted that the Japanesee-book market would grow rapidly to JPY 200 billion by 2015.Recently, Apple’s iPad, which can be used as an e-book reader, was launched inJapan. This has prompted the release of a flurry of e-books, including comicsthat are distributed via the iPad. This tendency is certain to pick up speed andnetwork distribution of comics and books is expected to widen even further.Japanese publishers are still very much focused on print books and areconservative when it comes to digital content and digital rights. In fact, non-publishing companies are the ones who are more eager to embrace digitalcontent than book publishers.Online Video MarketWith the development of high-speed broadband infrastructure and web-connected mobile devices, uncontrolled online video distribution has become analmost irreversible trend among the young generation and professionals in Japan.According to Ministry of Internal Affairs and Communications, broadbandsubscribers in 2011 surpassed the 35 million mark, making it the third largestbroadband country in the world.In Japan’s mature advertising market, mobile TV advertising has emerged in2010 or thus as a newly dominant channel for revenue growth. Japan’s mobile
centric culture has also been driving strong usage of video sharing sites onmobile phones. 1.1. IMPORT MARKET TRENDSince there is no import statistics on multi-media and digital contents, we appendbelow some activities undertaken by foreign players in the Japanese market.US Online Service, Hulu, Launched in JapanUS online service, Hulu, has launched a new subscription service in Japan onSeptember 2011. Hulu’s service offered entertainment fans in Japan unlimitedinstant access to hundreds of premium feature films and thousands of episodesfrom previous seasons of TV shows in United States. Japanese subscribers areable to access these shows and movies on demand on a wide variety of internet-connected devices including web-connected TVs, video game consoles, PCs,tablets, Blu-ray players and smartphones, without advertising, for JPY 1,480(USD 19) per month.For the launch of the subscription service in Japan, Hulu has secured licensingdeals with major film studios and TV networks including CBS, NBC UniversalInternational Television Distribution, Sony Pictures Entertainment, TwentiethDisney/ABC Television Group and The Walt Disney Studios and Warner Bros.Additional content will be rapidly and continually added to the service, includingJapanese-produced content and content from across the Asian region.K-pop market in JapanWith the increase in sales overall, the K-pop (Korean pop music) market in Japanis increasingly expanding. KARA is a popular Korean music group, and their DVDsales in Japan ranked 4th by recording over 270,000 copies in DVD yearly salesin 2011.Even though the number of music CDs, DVDs or blue ray are decreasing inJapan, over 60,000,000 video products were produced in 2011 and K-Pop surelycontributed to the overall video software sales to increase.Since Korea started airing high-definition or HD broadcast in 2011, Japanesepeople have begun wanting clear videos of their favorite singers, not justwatching them through video sites. In addition, since many Japanese are usingtheir smart phones to watch videos, record companies are now concentrating onproducing video products instead of CD.The Japanese music market is changing from listening music to watching music.Therefore, K-pop singers will continue to create further business opportunities asa result of making more clear music videos or improve the quality of their videos.
Low priced e-readerRakuten Inc., Japanese major e-commerce company, completed the purchase ofKobo Inc., a Canadian firm that operates an e-book business in about 100countries on January 2012. The main reason behind the acquisition is tointroduce the Kobo e-reader into the Japanese market. The Kobo e-readerallows Japanese text layouts such as vertical writing. Rakuten plans to sell thedevice for less than JPY 10,000 (USD 125).While Rakuten does not pay attention to Japanese e-book tablet makers, it iswary of Amazon.com, its largest competitor. As Amazon attaches greatimportance to Japan’s e-book market, the tug of war between the Japanese andUS companies has become fierce. The least expensive model of Amazon’sKindle e-reader is priced at USD 79 or about 6,300 yen.Amazon has also been negotiating with Japanese publishers to digitise books asit prepares to launch a full-fledged sales campaign for its e-reader in theJapanese market. However, Amazon’s contract states that the U.S. onlineretailer to retain the right to decide the sales price of e-books which provoked astrong reaction from publishers in Japan.Amazon also asked the publishers for copyright controls to accelerate thedigitising process. But in Japan, authors hold copyrights while publishers onlyhave the right to publish books. Amazon is concerned that Japanese publisherswill not provide books for its e-reader, while Rakuten aims for a harmoniousrelation with publishing companies.RegulationsCopyright LawCopyright Law including “Copyright as Author’s Rights and “Neighbouring Rights”is for protecting the rights of authors and creators and fair exploitation of theirworks. Copyrights as Author’s Rights consist of “Moral Rights” and Copyrights asEconomic Rights”. As “Moral Rights of Authors” are rights that are entirelypersonal, they cannot be transferred, but “Copyrights as Economic Rights” canbe transferred because of its nature as economic property.Copyright Registration SystemCopyright Law adopts a non-formality system for establishing copyrights.Therefore, registration is not a requisite for acquiring a copyright. Nevertheless,the Copyright Law applies a registration for various reasons.
Registration is a requirement for preparing against third parties. A “third party”means a party who has a legitimate interest in claiming the lack of registration.Procedures for registration are governed by the Agency for Cultural Affairs. Alsodetails of registrations concerning programme works are provided under the “Lawon Exceptional l Provisions for the Registration of Program Works in which theFoundation of Software Information Center is specified as the designatedregistration organization. All other registration are handled by the CopyrightSection of the Agency for Cultural Affairs.Neighbouring RightsNeighbouring rights are granted to performers, producers of phonograms,broadcasting and wire diffusion organisations and others who are not the authorsof the works, but play important role in communicating works to the public. Theydo not create new works but their activities are equivalent to the creation ofworks. Therefore, their rights are protected in a manner similar to copyright.Neighbouring rights and copyrights exist independently and the neighbouringrights do not affect copyrights. On the other hand, when copyright is subject tolimitation of the free exploitation, the neighbouring rights also become subject tothe same limitation.Major Organisations Involved in Copyright Related MattersCopyright Research and Information Center (CRIC)Address: Tokyo Opera Tower 1F, 3-20-2, Nishishinjuku, Shinjuku-ku, ToyoTel: +81-3-5353-6921Fax: +81-3-5353-6920URL:http://www.cric.or.jp/cric_e/CRIC is a voluntary non-profit-making organization established in 1959. It is theonly organization in Japan that carries out research and information services inall areas of copyright issues, and its membership covers almost all majorcopyright organizations / societies in Japan.Japan Reprographic Right Center (JRRC)Address: Daiichi Aoyama Building 3F., 3-3-7, Kita Aoyama, Minato-ku, Tokyo,Tel: +81-3-3401-2382Fax: +81-3-3401-2386URL: http://www.jrrc.or.jp/eng/index.htmlThe JRRC is a voluntary no-profit-making organization established in 1991 inorder to conduct collective management of the right of reprographic reproduction.
The Japan Writer’s AssociationAddress: Shinkan 7F., Bungei-Shinju Building, 3-23, Kioi-cho, chiyoda-ku, Tokyo,Tel: +81-3-3265-9658Fax: +81-3-5213-5672URL: . http://www.bungeika.or.jp/The Japan Writer’s Association is a voluntary non-profit-organization establishedin 1939 by authors of literary works in order to protect copyright of their worksand to facilitate their fair exploitation. The Federation was registered with theAgency for Cultural Affairs to conduct collective management for novels andstarted it in 1968.The Japan Art, Photograph and Graphic Design Copyright Organization (APG-Japan)Address: 3-10-19, Ginza, Chuo-ku, Tokyo,Tel: +81-3-3564-6555Fax: +81-3-3564-6555URL: http://www.apg.gr.jp/The APG-Japan is a voluntary non-profit-making organization established in1996 in order to conduct collective management of copyright in the near futurewith respect to art, photograph and graphic design collectively in cooperation withthe member organizations as well as to provide copyright information concerned.Japan Society of Rights of Authors, Composers and Publishers (JASRAC)Address: 3-6-12, Uehara, Shibuya-ku, Tokyo,Tel: +81-3-3481-2121Fax: +81-3-3481-2150URL: http://www.jasrac.or.jp/ejhp/index.htmJASRAC is a voluntary non-profit-organization established in 1939 in order toprotect copyright of musical works and to facilitate fair exploitation of such works.It is a musical copyright clearance organization in Japan and is registered withthe Agency for Cultural Affairs to conduct collective management.JASRC administers copyrights of foreign musical works under contracts with 104organizations which are entrusted with performing rights in 91 countries andregions and with 80 organizations which are entrusted with mechanical rights in69 countries and regions.Association of Copyright for Computer Software (ACCS)Address: Tomonari Foresight Building 5F., 5-40-18, Otsuka, Bunkyo-ku, TokyoTel: +81-3-5976-5175Fax: +81-3-5976-5177URL: http://www2.accsjp.or.jp/en/
ACCS is a voluntary non-profit-making organization established in 1991. ACCSis to protect the rights of copyright owners of computer programs and toundertake educational activities for public awareness of copyright.Recording Industry Association of Japan (RIAJ)Address: Kyodo Tsushin Kaikan 9F., 2-2-5, Toranomon, Minato-ku, TokyoTel: +81-3-5575-1304Fax: +81-3-5575-1313URL: http://www.riaj.or.jp/e/index.htmlThe RIAJ is a voluntary non-profit-organization established in 1942 in order topromote the cooperation of phonogram producing industries in Japan and tofacilitate the diffusion of good phonograms and fair utilization of phonograms.In conformity with the Copyright Law, this association, having been designatedas the sole collecting society by the Commissioner of the ACA, collects thesecondary use fees from broadcasting and wire diffusers as well as theremuneration from record rental business who offer commercial phonograms tothe public by the rental.National Association of Commercial Broadcasters in Japan (NAB)Address: Bungei-Shunju Building, 3-23, Kioi-cho, Chiyoda-ku, TokyoTel: +81-3-5213-7717Fax: +81-3-5213-7714URL: http://www.nab.or.jp/Digital Contents Distribution ChannelsSince the 1990s, digital content distribution has stretched to encompass manynew media channels and devices such as packaged media, terrestrial digitalbroadcasts, satellite broadcast, cable television, mobile phones and smartphones,and e-book reader. The move to digital content formats and advances in theInternet and mobile phone networks have utterly transformed distribution in themedia content market.Of these, smartphones are drawing the greatest interest as a new mobile device.Until recently, Japan had led the world in developing new functions for mobilephones. But the entry of the iPhone and other smartphones has been game-changer in Japan. Smartphones feature an easy interface built into the operatingsystem that integrates many different functions such as downloading movies andmusic and browsing the Internet. Smartphones allow the users access video andaudio services from computer Internet sites in addition to mobile-specific contentby connecting wireless carriers’ content provision services with external Internetsites. This has had a profound impact on Japan’s mobile Internet business,which had grew through the vertical integration of networks, platforms, anddevice services all centered on the wireless carrier.
ConclusionThere are no large players that dominate the digital content and applicationprovider space in Japan and most of the players are seeking to cooperate withothers. For digital contents segment in Japan, it is anticipated that consumptionof original mobile content is expected to grow in Japan.Under such situation, Japanese wireless operator NTT DoCoMo, KDDI andSoftbank are actively looking for partners to enhance the quality of their mobilecontent services. KDDI has signed an agreement with a US provider of wirelessservices, providing KDDI subscribers with a variety of western contents.Malaysian companies with attractive digital contents may find the mobile contentsector to be easier to approach than any other digital content sectors in Japan.Traditionally, the mobile sector in Japan has been more open to foreign contents.Japanese mobile phone users are now seeking original content that is new tothem and that cannot be seen on TV. They are seeking a high level of originalityand this makes it easier for Malaysian companies to find their niche market inJapan. Therefore, a Malaysian service provider needs to take a longer-termstrategic view of the Japanese digital content market.Prepared by:MATRADE Tokyo & Osaka8 March 2012
RELATED ASSOCIATIONS AND EXHIBITIONSRelated Trade Fairs in JapanDigital Signage Japan (DSJ) 2012Date : 13 -15 June 2012Venue: Makuhari Messe (Chiba)Organizer: Digital Signage Japan 2011 Steering CommitteeURL: http://www.f2ff.jp/dsj/en/index.htmlDIGITAL CONTENT EXPO 2012Date : October 2012Venue: Nihon Kagaku Miraikan (Tokyo)Organizer: Ministry of Economy, Trade and Industry / Digital Content Association of JapanThe Digital Content Expo serves as one of the official event held concurrentlywith the Japan International Contents Festival (CoFesta). The event attractsattention as it highlights the technical aspect of digital content.Tel: +81-3-3861-3858Fax: +81-3-52961018E-mail: firstname.lastname@example.orgFilmTech 2012Date : 11 -13 April 2012Venue: Tokyo International Exhibition Center ( Tokyo Big Sight )Organizer: FilmTech Japan Show ManagementURL://www.filmtech.jp/Tel: +81-3-3349-8568Fax: +81-3-3349-0598E-mail: email@example.comRelated OrganizationsAgency for Cultural AffairsAddress: 3-2-2, Kasumigaseki, Chiyoda-ku, TokyoTel: +81-3-5253-4111URL: http://www.bunka.go.jp/english/index.htmlDigital Content Association of JapanAddress: Nihonseimei Ichibancho Bldg. LB., 1-23, Chiyoda-ku, Tokyo, 102-0082Tel: +81-3-3512-3900Fax: +81-3-3512-3903URL: http://www.dcaj.org/
Digital Radio Promotion AssociationAddress: Tokyo Tower Studio Bldg. 7F., 4-4-7, Shibakoen, Minato-ku, Tokyo, 105-0001Tel: +81-3-5776-2272URL: http://www.d-radio.or.jp/Foundation for MultiMedia CommunicationsAddress: 3-22-1, Toranomon, Minato-ku, Tokyo, 105-0001Tel: +81-3-5403-7100Fax: +81-3-5403-7101URL: http://www.fmmc.or.jp/The Association for Promotion of Digital BroadcastingAddress: Aoyama Bldg. 13F., 1-2-3, Kita Aoyama, Minato-ku, Tokyo, 107-0061URL: http://www.catv.or.jp/jctea/english/index.htmlDigital Manga AssociationAddress: Ikebukuro Central Bldg., 2-41-12-7-1, Minamiikebukuro, Toshima-ku, Tokyo, 171-0022Tel: +81-3-3971-7771Fax: +81-3-3971-7666URL: http://www.dma-j.net/Japan Online Game Association (JOGA)Address: Umehara Bldg. 9F., Dogenzaka, Shibuya, Tokyo,E-mail: firstname.lastname@example.orgURL: http://www.japanonlinegame.org/