Japan’s digital entertainment market on the rise

Forecasts predict booming growth in online video

The landscape of Japan’s digital entertainment market is poised for significant expansion. A fresh analysis forecasts that the online video sector will experience a robust 7% compound annual growth rate over the next five years. This promising outlook is part of a broader trend within the screen industry, which includes free TV, pay-TV, and theatrical releases.

Projected revenue growth

By 2029, total screen industry revenue in Japan is expected to surge, growing from $31.8 billion in 2024 to $34.1 billion. The online video segment is predicted to witness a marked increase in its share, climbing from 35% to an impressive 45%. This growth translates to an estimated $15.3 billion for online video alone.

Dominance in content categories

In the realm of user-generated content, YouTube continues to reign supreme. On the other hand, the subscription video-on-demand (SVOD) arena is fiercely contested, with Netflix, Prime Video, and U-Next leading the charge. In the premium advertising-supported video (AVOD) sector, TVer stands out as a major player.

Anime’s enduring appeal

Japanese anime remains a cornerstone of the country’s cultural and economic fabric. By the third quarter of 2024, anime accounted for 36% of premium VOD engagement. The format generated a staggering $2.5 billion in 2023 across TV, streaming, and theatrical releases. Notably, streaming platforms now represent half of all anime revenues, with television following at 27%.

Key players driving SVOD content

The report highlights over 20 studios behind 70% of the top-performing SVOD content. Among the leaders in this space are TMS Entertainment, TBS, and Aniplex, which have propelled Japanese anime to hold 117 out of the top 200 titles. Meanwhile, content from major Hollywood studios like WBD, Paramount, Disney, and Sony continues to dominate the most-watched programming lists.

Future expansion and technological developments

The digital entertainment market in Japan is primed for continuous expansion, particularly due to advances in technology. With fiber broadband reaching 82% of households and connected TV penetration projected to hit 51% by 2029, the infrastructure is in place for sustained growth. Key telecommunications companies, KDDI and NTT, have emerged as pivotal streaming partners, bolstering the industry’s capacity.

Leading the way in SVOD monetization

Looking ahead, Netflix, Prime Video, and U-Next are expected to spearhead SVOD monetization efforts. Disney+ will secure its position as the fourth largest player, while Max is set to gain a significant share through its strategic partnership with U-Next and subsequent direct-to-consumer rollout. TVer will also continue to grow its piece of the premium AVOD market, driven by strong performance in connected TV monetization.

Robust recovery post-pandemic

Encouragingly, the number of theatrical releases has bounced back to pre-COVID levels. Local movies remain dominant with a substantial 70% share of the gross box office receipts. This resurgence underscores the resilience and enduring appeal of Japanese cinema both domestically and internationally.

Wrap-up

The future of Japan’s digital entertainment landscape looks incredibly promising. With substantial growth projected across various segments—particularly online video—Japan’s screen industry is set to see an era of innovation and expansion. As the market continues to evolve, audiences can look forward to a rich and diverse array of content catering to all tastes.

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