Video On Demand Market in Japan

[Mulboyne]

This is too long to go on the Main page so I've stuck it in Gaijin Ghetto. Morgan Stanley has just put out a large report on Video on Demand in Japan which looks like the first from a broker. No public link but you can get the drift from the front page:

Report overview

Networked Nation:
The Proliferation of broadband networks and high-performance computers, coupled with improvements in image distribution and playback technology, has driven an increase in the number of users viewing video content over the Internet. In June 2005, the government (Ministry of Public Management, Home Affairs, Posts and Telecommunications (MPT)) reported that broadband subscribers in Japan surpassed the 20 million mark (Exhibit 1). Simultaneously, according to Information Communication Research (ICR) estimates, the household broadband penetration ratio at has already reached 76.6%. In addition, there has been rapid growth in both the volume and breadth of contents available for streaming. Conditions are now in place for a shift in basic content consumption patterns from synchronous passive consumption (associated with television) to nonsynchronous active consumption (associated with the Internet).

Introduction to VoD in Japan:
Video on Demand (VoD) services allow users to access movies or other video content over a network for viewing on a device of choice (TV, PC, other). Users have the ability to view the content at their convenience as well as the flexibility to rewind, fast forward, and pause during the session. VOD services can be broadly segmented into four basic categories: (1) method of viewing (TV sets or PCs), (2) viewing premises (in the home or at external establishments including hotels, retirement homes, hospitals), (3) underlying technology architecture (open or closed), and (4) billing methodology: (subscription/fee-based or free (relying on ad revenue). Exhibits 11~13 provide a roadmap of key players and service relationships within Japan's emerging VOD industry.

Critical Mass Achieved:
2005 can be viewed as the true "First year of VOD in Japan". Over the past year there has been a significant pick up in the business development and investment activities of both entrepreneurial enterprises as well as established institutions to lay a "critical mass" foundation for the industry. For instance, as detailed in Exhibits 11~13, organizations such as "Internet venture" firms, content production companies, telecom carriers, and pay TV providers have all launched businesses in the VOD distribution services area.

IP Challenge:
The lack of a comprehensive standard to manage and protect intellectual property rights is the biggest "bottleneck" or constraining factor for the industry. Given the potential for significant growth in the sector, it is imperative that regulators and key industry constituencies (content owners, service providers, carriers) prioritize achieving a resolution on this matter. This report comprises three parts: (1) an overview of VOD distribution services, (2) a comparison of the main VOD distribution service providers, and (3) a look at the activities of content holders with regard to VOD.