Development of the Japanese Broadband Market 6

Some of you have asked me before, about why in Japan we don’t have so many VOD (Video on Demand) service users via optical fibre services. I have found some of the reasons in a book published on December 2008 about the Japanese information communication market, issued by Nomura Research Institute, Ltd, the largest think tank in Japan.

I think the book proposes two intriguing analyses.

First, VOD services don’t have so many line ups. VOD services are comprised of both contents such as movies and animations, and contents by broadcast stations (TV). However, in fact VOD service providers offer very little TV contents which are very popular in Japan. Why? One of the reasons is that broadcast stations are reluctant to offer their contents to VOD service providers because they are afraid that consumers are not going to watch TV. (It means that they may lose advertising revenue.) The second reason is copyright application. The Japanese copyright law requires them to get approval from all copyright holders including performers, if they want to offer their contents to VOD services. They think this is quite a troublesome chore.

Secondly, the service level of VOD is still inferior to that of competitors. For example, TSUTAYA, the biggest video rental chain in Japan, provides a DVD home delivery service called TSUTAYA DISCAS. That is, when consumers can order DVDs including the latest ones online, TSUTAYA sends these DVDs to them by mail. After watching them, consumers only drop them into mail boxes. TSUTAYA offers this service for a fixed monthly charge including postage charges, e.g., about £10 for 4 DVDs per month, about £15 for 8 DVDs per month and so on. The book says that many people usually watch DVDs on the weekend, they don't need VOD servises where they can watch movies anytime. Rather, TSUTAYA DISCAS is useful for them because it has more titles including the latest ones than VOD service providers.

As I mentioned above, it is the fact that VOD service providers still have many problems to solve which means their appeal is still quite limited for customers.