With Netflix's recent announcement that they have hit the 10-million members milestone one year shy of their 10th anniversary since they entered the Japanese market, there were a number of articles which analyzed how they did it and the challenges along the way. As such, I have extracted and added some more information to the key points raised so that you can gain a better understanding of the issues in the Japanese entertainment industry which isn't necessarily friendly towards a foreign company like Netflix.
- While Netflix does not provide a regular update on its membership numbers in Japan, it recently announced that it had surpassed the 10-million membership milestone in the first half of 2024. This was just one year shy of its 10th anniversary since it entered the Japanese market on 2 September 2015. As recent as 4 years ago, Netflix had announced that it reached the 5 million members milestone in Japan so this effectively meant that they had doubled their membership base in just 4 years.
- Paying for cable TV and on-demand streaming portals may have been commonplace outside of Japan but this was seen as something that wouldn't work so well in Japan because there were various free platforms for the domestic viewers to watch programmes made by private TV stations. Since subscription-based platforms like WOWOW and Sky PerfecTV! were reportedly having 3 to 4 million subscribers at their peak, the market consensus was that the Japanese market would not see membership numbers exceeding 5 million for the paid TV streaming segment.
- When Netflix launched the drama series "Zenra Kantoku" in August 2019 after it started operating in Japan 4 years ago, that attracted a lot of attention and was said to be why its subscription number surged to 3 million members in the following month.
Due to the COVID-19 pandemic, it added another 2 million members within a span of 12 months and easily cleared the 5 million subscribers milestone in September 2020.
- However, Netflix did not reveal its membership numbers after 2020 which industry insiders suspected to be due to a slide in its membership base after the pandemic. Adding on to the speculation was that the up-and-rising domestic competitor U-NEXT had seen its membership jump to 4.33 million after its merger with Paravi thus fanning the sentiment that it was giving Netflix a serious run for its money.
With this latest announcement though, it has become apparent that U-NEXT is still far from Netflix in terms of membership numbers and had actually been growing steadily over the years.
- The significance of a 10-million membership base can be put into perspective by comparing this with Japan's population numbers. Based on the current population of 124.5 million people, Netflix's membership number may be just 10% of that but when compared to the number of households i.e. 48.85 million, that works out to more than 20% (considering most households would only need one subscription even if it is to be shared among family members living together).
Most if not all free-to-air dramas these days are seeing low real-time ratings and that anything above 10% is considered a hit. Assuming that just half of Netflix's members in Japan watch one drama, that would be similar to having a reach of 10% of all households nationwide. And not to forget that people outside of Japan can also watch these Japanese titles on the Netflix platform so actual viewership reach (Netflix's worldwide membership base is said to be more than 283 million) would be wider than a domestic drama aired on free-to-air TV only.
- Considering that only paid subscribers can get access to a Netflix title, it was unusual to see that a pet phrase in a Netflix drama was chosen as one of the top 10 buzzwords in 2024. The line "mou ee deshou" by Pierre Taki in the drama "Jimenshitachi" released earlier this year seemingly proved to be popular enough for its inclusion in the buzzword top 10 ranking and even became a parody and game by comedian Chocolate Planet.
- It also seems that Japanese titles are gaining traction in the world with "Jimenshitachi" making it to the top 10 ranking in 30 countries. Another title i.e. "Shinobi no ie" released in February was the No.1 title in 16 countries during its first week of release and also made it to the top 10 in 92 countries.
On the domestic front, "Jimenshitachi" was No.1 in Japan for 6 weeks in a row, "Shinobi no ie" was No.1 for 4 weeks while "City Hunter" and "Gokuaku Joou" both hogged the top spot for 3 weeks in a row following their releases.
- However, Netflix's entry into the Japanese market was not smoothsailing from the start. It has always been nicknamed as a black ship (kurofune) in a reference to the Western ships that came to Japan between the 16th and 19th centuries which essentially means a foreign disruptor in the Japanese market. The Japanese entertainment content industry was indeed exclusive and isolated to domestic players while being resistant to foreign competitors for a long time. With the success of Netflix and the titles it had produced over the years with domestic industry players, it has opened up more possibilities for Japanese titles making it in the world through this platform.
- Looking at Japanese dramas made by Netflix with Japanese directors and/or TV stations, you can see that there had been a steady flow of investment in J-content. Note that this list only mentions the first season's release year for those having multiple seasons and doesn't include the Japanese movies, anime and music content also available on the platform:
2015
Underwear
2016
Hanabi
Shinya Shokudou
2017
Bokudake ga inai machi
Honoo no tenkousei REBORN
Salaryman Kantaro
100 man en no onnatachi
Nobushi no gurume
2018
Uchuu wo kakeruyo daga
Jimmy ~ Aho mitai na honma no hanashi ~
Mobusaiko 100
2019
Zenra Kantoku
2020
Imawa no kuni no Arisu
Juon: Noroi no ie
Ai naki mori de sakebe - DEEP CUT -
FOLLOWERS
2021
Gokukufudou
2022
First Love Hatsukoi
Hiyama Kentarou no ninshin
Kingyozuma
Shinbun Kisha
2023
Sanctuary
Kimi ni todoke
Yu Yu Hakusho
Mitarai-ke, enjou suru
Rikon shiyouyo
THE DAYS
Maiko-sanchi no makanai-san
2024
Shinobi no ie
Renai Battle Royale
Jimeshitachi
Gokuaku Joou
Sayonara no tsuzuki
- In Toyo Keizai's interview with Sakamoto Kazutaka, the vice president of Netflix Japan's Content Department, he revealed that the first three years of Netflix's entry into the Japanese market was not easy. From the start, they concentrated on acquiring as much content as possible and even dabbled in producing their own original content like the drama version of "Hibana" adapted from Matayoshi Naoki's novel but the results were not that satisfactory. Coupled with the fact that Japanese works did not really make an impact in the world back then, the US headquarters didn't think that it was worth spending money on making their own Japanese content. This was contrary to the notion that many people had about Netflix having a lot of money to spare and would be willing to do so just because they were a foreign company.
However, the efforts paid off gradually as more Japanese works made it into Netflix's top 10 global ranking. With reference to the most-viewed ranking released for the first half of 2024 (January to June), Japan accounted for the second-most number of non-English titles in the ranking while South Korea took the top spot.
- The success of Netflix's original titles have also translated into gains for the shooting locations such as Kobe City where "City Hunter" was shot at. It was reported in the media that the city managed to get economic gains of more than JPY 400m thanks to the popularity of the title.
- Unexpectedly, the music used in these original titles have also benefited from the popularity. The ending song for "City Hunter" i.e. TM NETWORK's "Get Wild Continual" soared up the karaoke rankings and saw a doubling of its monthly listener numbers on Spotify.
Another example would be from the reality show "Boyfriend" where its theme song "Dazed & Confused" by South Korean artist Glen Check grabbed the No.2 spot in Spotify Japan's Viral Top 10 ranking despite Check being relatively unknown in Japan.
- Netflix's growing prominence in the entertainment industry is said to have brought about significant benefits in neighbouring South Korea such as improvement in labour conditions. For example, the daily filming hours are restricted to 12 hours and not to exceed more than 52 hours a week. Even though this may mean an increase in costs due to the higher number of filming days, there is an increasing trend of more efforts put in to secure enough budget so as to accommodate such arrangements. However, there are also downsides such as the reportedly sky high salaries for the cast taking up a huge chunk of the budget and a drying up of suitable stories to be made.
- While Netflix intends to replicate the good stuff from their experience in South Korea and apply that to Japan, they are also mindful of potential pitfalls in areas like budget management. Hopefully, this will bring about a positive ripple effect in the industry for the long term.
