Amazon to Start Streaming in Japan: A Concern for Netflix?
Amazon Inc. AMZN plans to launch Prime Instant Video in Japan next month for Prime members. This could be an attempt to counter the competition that Netflix NFLX is likely to pose with the launch of its streaming services on Sep 2 in the country.
Amazon Instant Video is a digital video streaming and download service that lets users rent, buy or subscribe to a range of video content. The services will initially include popular Japanese and U.S. dramas, shows, cartoons, movies and many more. Amazon Studios’ original comedy shows like Transparent and Mozart in the Jungle and children TV series such as Tumble Leaf will also be shown.
The services will be available to all Amazon Prime members in Japan who pay an annual membership fee of 3,900 yen ($32.50).
Amazon has been expanding its geographical footprint beyond the U.S. for quite some time now. Currently, the company’s unlimited streaming-video services are available to Prime members in the U.S., the U.K. and Germany.
The robust adoption of Internet and mobile services in Japan is likely to make it an important growth driver for Amazon. The company stands to benefit from the huge untapped potential of the nascent pay TV market in the country, with only 38% of the population adopting the service, per latest data.
Moreover, the country has the third largest broadband market in the world, lagging the U.S. and China. Another major positive for the market is the availability of high-speed Internet (84% of households have Internet speed of more than 4 mbps).
While the market is no doubt attractive for the company, competition is intense. Japanese player, Hulu (acquired by Nippon Television Network Corp. in 2014), is already popular and Japan Contents Group is set to launch its streaming service this year. Japan Contents Group even formed a consortium of 29 Japanese content providers, including major TV networks and film studios.
International expansion is one of the key growth drivers for Amazon. We believe that these initiatives, though weighing on its financials in the near term, will eventually provide a competitive edge over players like Time Warner Inc.’s TWX HBO, Netflix and Yahoo! Inc. YHOO.
Amazon currently sports a Zacks Rank #1 (Strong Buy).
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