Market Insight

Fuji TV partners with Alibaba’s Youku Tudou to capture online demand in China

August 08, 2018

Kia Ling Teoh Kia Ling Teoh Senior Research Analyst – Advertising & Television Media, IHS Markit

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Japan’s leading commercial broadcaster Fuji TV has partnered with Chinese online video service Youku Tudou to stream Japanese dramas on its platform. Majority of the content will be behind a paywall.

Fuji TV is part of Fuji Media. In 2017*, its broadcasting revenues were 232.7 billion yen ($2.1 billion), mainly made up of advertising, programming sales, satellite broadcasting and other businesses. Its streaming platform Fuji TV On-demand reported 800,000 paying subscribers as of the end of April 2017. 

Youku Tudou was born out of merger of two video streaming websites, Youku and Tudou. The company was acquired by e-commerce giant Alibaba in 2016. Youku Tudou uses both advertising and subscription business models, and as of July 2018 the company reported to have over 30 million paying subscribers.  

Our analysis

According to IHS Markit Channels & Programming Intelligence Service, Japan’s TV advertising revenues dropped 2% in 2017. However, we forecast TV advertising revenues to grow at CAGR of 2% in 2018-2022, bolstered by the ripple effects of the 2020 Olympics Games in Tokyo. Fuji TV controlled 21% of Japan’s TV advertising revenues in 2017. In January to December 2017, Fuji TV’s TV advertising revenues declined 7% on the same period the year before, from 205 billion yen to 191 billion yen, below market level. 

 

Programming sales had become more important to Fuji TV’s total revenues; however, the company is yet to realise its full potential. Programming sales, including domestic and international, contributed to 7% of Fuji TV’s total revenues in 2017, an increase from 6% in 2015, with flat growth in 2017.

Being one of the oldest broadcasters in Japan, Fuji TV houses nine production subsidiaries and is home to many renowned Japanese drama titles including Long Vacation悠长假期 (1996), One Litre of Tears 一公升的眼泪 (2005) and Last Friends 最后的朋友 (2008). However, Japanese programming had been sidelined following the disruption of Korean pop culture and the rise of popularity of Chinese content.

Considering the softening TV advertising revenues and modest programming sales, Fuji TV is actively expanding its global presence. Tapping the Chinese market is has a lot of potential due to the sheer size of the market. China is home to 427 million TV households, compared to 51 million in Japan. In addition, Chinese paid-for online video market is booming, with total number of OTT subscriptions grew 60% in 2017.

In 2014, the Japanese TV network teamed up with China’s online video platform iQiyi to produce Mysterious Summer不可思议的夏天 for premiere on the video platform. Since 2016, Fuji TV had successfully partnered with Chinese TV companies to remake some of its drama titles and in 2018, it partnered with Chinese production company WaveStar Films to remake Great Teacher Onizuka (GTO) 麻辣教师 and Tales of the Unusual世界奇妙物语.

On top of that, co-production with other international players such as Netflix and ZDF will boost Fuji TV’s global branding. Co-productions with Netflix such as Atelier and Terrace House: Opening New Doors were made for worldwide premieres. In June 2018, it announced a co-production of soccer drama series with ZDF Enterprises.

We expect continuous efforts to capture international market by co-production and reviving classic titles will bolster Fuji TV’s future revenue growth.

*Fuji TV’s financial year runs from 1 April to 31 March. Please note that IHS Markit analysis is done according to calendar year which runs from 1 January to 31 December.  

Geography
Asia Asia Pacific Japan
Organization
Alibaba Fuji TV Netflix ZDF
Research by Market
Media & Advertising
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