Market Insight

Amazon Channels launch in Japan

August 03, 2018

Jun Wen Woo Jun Wen Woo Senior Research Analyst – Online Video, IHS Markit

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Amazon Japan started offering Amazon Channels with 20 channels available for its Prime Video users to subscribe to on 14th June 2018. The genre of channels range from movies, TV programs and sports to music, news, documentaries and hobby/culture. Amazon has continued to increase Amazon Channels partnerships in Japan and it now has 30 channels available on its platform for Prime users to subscribe. Notable additions include a partnership with Viacom International Media Network to launch Nickelodeon Japan and MTV MIX on Amazon Channels Japan in July 2018.

Our analysis:

Amazon Channels was first launched in the United States at the end of 2015 as the Streaming Partners Program. The e-commerce giant then expanded Amazon Channels internationally to the United Kingdom, Germany and Austria in May 2017 before its recent launch in Japan. As Amazon’s biggest market in Asia Pacific with 2.3 million video users in 2017, Japan is the first country to have Amazon Channels introduced in the region. This lead will be contested by India in the coming years although IHS Markit believes it is unlikely that Amazon will launch its Channels service there until it localises its core Prime Video content offering, something Amazon is set to invest heavily in with 18 original Indian productions announced to date. Other countries poised for Amazon Channels introduction include France as Amazon’s relatively new video markets in Western Europe start to gain video traction.

Amazon sees opportunity in Japanese OTT market despite the strong hold of traditional video business

Nearly three-quarters, or around 29 million of all pay TV subscriptions in Japan were via cable TV at the end of 2017. Despite an increase in OTT services, IHS Markit expects cable subscriptions to remain stable over the next five years.

Most of the channels offered by Amazon Prime Video in Japan are available on pay TV services like Hikari TV, Sky Perfect and J:Com. Amazon is aiming to capitalise on the availability and price of its Channels service to create an attractive skinny bundle alternative to these pay TV providers. The monthly fee of the Amazon Channels are lower while for pay TV, there is usually a registration and set top box rental fee apart from channel fee. Furthermore, pay TV subscriptions also come with a contract, whereas Amazon Channels users can choose to subscribe or unsubscribe whenever they want.

Amazon Channels to serve as an OTT aggregator in the crowded Japanese online video market

The Japanese online video market grew 21% YoY to $922 million in 2017, with subscribers increasing by 5 million to 22 million. Japan’s online video market is crowded with both local and international services including dTV, Amazon Prime Video, Netflix, Hulu Japan and U-Next. Apart from online-only video players, pay TV services and broadcasters are also moving into the online video market. As a result of rising competition in the market, a number of online video services including UULA, Bonobo, BBTV Next and TBS on Demand have shut down their online video services in Japan in 2017 and 2018.

Japan is one of the few markets where Amazon Prime Video has more subscribers than Netflix by the end of 2017 and the addition of Amazon Channels will further strengthen Amazon’s position in the market. As an OTT aggregator, Amazon Channels give an opportunity for consumers who are currently consuming or plan to consume OTT content from multiple sources by simplifying the billing and streaming process to a single location. It is likely that Amazon will attract more Prime subscribers as a direct result of deploying Amazon Channels, with additional revenues generated from Prime users who consolidate existing subscriptions or new sign up for Amazon Channels on the Amazon platforms.

Geography
Asia Pacific Japan
Organization
Amazon
Research by Market
Media & Advertising
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