Amazon Plans to Enter the Japanese Market



Amazon’s Japanese entry

According to a report in The Verge dated August 27, 2015, Amazon (AMZN) will be launching its Prime Instant Video service in Japan later this year. Amazon’s entry follows the launch of Netflix (NFLX) streaming service in Japan on September 2.

The OTT (over-the-top) market in Japan is heating up. According to a Variety report dated July 19, five Japanese TV networks are also expected to jointly launch their streaming service, Tver, later this year. Each of the five networks will supply content for this service. Another OTT service, Bonobo, backed by 29 content owners, is also expected to launch later this year.

Viewing streamed videos on electronic devices like mobiles and tablets is picking up in Japan. According to a report by eMarketer, citing a survey for Yahoo! conducted by Macromill, there has been a spurt in viewing streamed videos on smartphones in Japan.

However, there’s a difference. While viewers in the 30+ age group prefer watching videos of short duration, or around 1–3 minutes, younger viewers prefer watching videos of longer duration, or 30 minutes to an hour.

Amazon’s Prime Instant Video service could cater to this younger audience through a mix of Japanese and English content. However, the eMarketer report also mentions that 93% of this younger audience watched only free content.

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Why price could be a sticky point

Amazon’s Prime Instant Video will be priced at ¥3900 (or ~$32) per year. That is around $2.66 per month, which is far less than Netflix’s most inexpensive plan in Japan priced at $5.40 per month.

The reason price could become a deciding factor in the popularity of OTT players is because the Japanese are reluctant to pay for SVOD (subscription-video-on-demand) services. That’s because the OTT market in Japan consists of many free ad-supported streaming services like TVer. Broadcast television in Japan also mainly consists of free-to-air TV channels. It remains to be seen whether Amazon’s Prime Instant Video service will succeed.

You can get a diversified exposure to Amazon by investing in the Consumer Discretionary Select Sector SPDR ETF (XLY), which holds 8.88% of the stock. XLY also holds 6.24% of Comcast (CMCSA) and 2.55% of Time Warner (TWX).


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