The entry of Netflix and Amazon Prime Video in September 2015 ushered in a period of increased competition for the Japanese video-on-demand (VOD) market. Up until that point, the market had largely been dominated by domestic services, such as Fuji Television on Demand, Hikari TV, and U-Next. During the early 2010s, it expanded due to factors such as the increasing dissemination of smartphones and tablets, the improvement of content libraries, the lowering of prices, and the spread of subscription models. In the second half of the 2010s, the market steadily built momentum as more and more major services joined the competition. Next to Netflix and Amazon Prime Video, these included TVer in 2015, Abema and DAZN in 2016, as well as Disney and Apple in 2019. The heightened demand for home entertainment during the COVID-19 pandemic added to the momentum of the market and strongly pushed the
. As a result of these developments, the
Leading paid VOD services
Survey figures show that Amazon Prime Video is by far the
most commonly used paid video streaming service. As a Prime membership benefit, the service profits from its connection to other offerings of the American e-commerce giant. Netflix, on the other hand, holds the
highest market share among SVOD services based on user fees. The company has invested heavily in local content, such as drama series and anime, which it saw as key to winning over Japanese audiences. The strongest domestic contender is U-Next, which is operated by U-Next Holdings and offers a particularly large content library. The service completed a merger with its competitor Paravi in June 2023, which resulted in a transfer of content and users from Paravi to U-Next. Another strong domestic contender is Hulu, whose Japanese version has been operated by Nippon TV since 2014.
Rise of ad-supported video streaming
Although VOD services have become more widely adopted in recent years, there are clear differences between the different types of services. While the SVOD segment showed strong growth, this was not the case for transactional video-on-demand (TVOD) and electronic sell-through (EST). TVOD services allow users to digitally rent specific videos, while EST services make it possible to purchase videos permanently. While the penetration rates of these services have remained relatively stable on a low level, ad-supported video-on-demand (AVOD or ADVOD) services constituted a growing category and
are now used by majority of people. Notable AVOD services include TVer, which offers all of its content for free, and Abema, which also offers a premium plan. The success of AVOD services is underpinned by the
spread of connected TVs among Japanese households, which is expected to continue in the coming years.
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