Market Insight

Japanese retail video shows healthier signs in Q1 2015

June 03, 2015  | Subscribers Only

David Scott David Scott Associate Director – Research and Analysis, Service Providers & Platforms
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  • Total retail video revenue up 2.0%; shipments down 9.8% in January to March 2015
  • Retail BD revenues and units shipped up 13% and 11% respectively
  • Retail DVD revenues down 7.5%; DVD shipments down 19%
  • Results in line with IHS full-year 2015 forecasts of 52.7 million retail video shipments, generating ¥176 billion ($1.7 billion) in distributors’ revenues.

Japan’s retail video business showed healthier signs in the first quarter of 2015 after declining in 2014, according to IHS analysis of January to March 2015 results from the Japan Video Software Association (JVA). JVA members’ revenues from the combined Blu-ray Disc (BD) and DVD retail sectors increased 2.0% in Q1 2015 compared with the corresponding period a year earlier to just over ¥41.9 billion ($396 million) helped by increases in the average trade price for both BDs and DVDs. The result is a modest gain on the decline experienced for full-year 2014, when value fell 8.8%.

The 1.9% and 14.6% respective increases in the average trade price for a BD and DVD was largely due to distributors choosing to buy fewer but more expensive units over the period (e.g. box sets). JVA members shipped nearly 10.1 million units to the retail market in the first three months of 2015, down 9.8% compared with the previous year.

Japan’s retail BD sector offset a decline in DVD sales to lead the retail video business to growth in Q1 2015 compared with a year earlier. JVA members shipped just over 3.9 million BD units to the retail market in the first three months of 2015, up 11.0% compared with the previous year. Revenues rose 13.1% to ¥21.5 billion ($203 million) over the same period. The results are in line with IHS full-year forecasts of 21.9 million retail BD shipments for the total market in 2015, generating ¥96.3 billion ($909 million) in revenue.

Retail DVD unit sales and value declined 19.3% and 7.5% respectively in Q1 2015, generating revenues of almost ¥20.5 billion ($193 million) for distributors from the shipment of nearly 6.2 million units. This decline is in line with expectations and as such, forecasts remain unchanged.

Altogether, retail video shipments from the combined BD and DVD formats in Japan declined 9.8% in the period from January to March 2015 compared with a year earlier. The decline was steeper than that experienced for full-year 2014, when units fell 3.4% to 48.6 million. IHS forecasts anticipate total retail video shipments of 52.7 million in 2015, generating ¥176 billion ($1.7 billion) in distributors’ revenues.

At consumer level, our research confirms that, in line with IHS forecasts, spending on retail video software was down by around 7% in 2014 compared with the previous year. This year IHS forecasts indicate total consumer spending on the purchase of BD and DVD formats of nearly ¥196bn ($1.9 billion), down from ¥216 billion ($2.0 billion) in 2014.

Our analysis:

Improving economic conditions helped bolster consumer spending on retail video software in Japan during Q1 2015. A combination of low energy prices, a weak yen, monetary stimulus, rising net worth (thanks to stock market gains) and rising wages (the strongest in a decade for large companies) is benefitting the Japanese economy. This has improved consumer confidence and household income levels, which have had a positive influence on consumer spending. However, consumer spending growth is likely to remain moderate unless wage increases spill over from large companies to small and medium-sized enterprises and rural areas. After a 0.1% drop in 2014, IHS forecast Japan’s real GDP to increase 0.9% in 2015 and 1.4% in 2016.  

Local content continues to dominant packaged media sales in Japan, particularly Anime and Music content, accounting for over 60% of the market. The exception to this rule is the strong performance of Disney’s Frozen released in July 2014, which became Japan’s fastest-selling physical video title of all time, beating the previous record set by the 2001 release of the Japanese animated fantasy-adventure film Spirited Away. This performance will likely have a huge impact on year-on-year figures this year.

A key factor propping up sales of packaged media in Japan, particularly of local products, is the use of value-added items such as event tickets. So far, the Hollywood studios who continue for the most part to retail vanilla BD and DVD discs with some extras such as digital copies, music tracks, or additional scenes have not generally adopted such approaches. Local packaged media sales also continue to benefit from limited digital availability of certain genres. Although most studio and local movie titles are readily available in digital, a lack of popular television drama titles continues to drive consumers to purchase this genre in the physical format. 

Geography
Asia Pacific Japan
Research by Market
Media & Advertising
Category
Video
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