Focus: Japan's Netflix contender bets on youth-driven viral hits
15/03/2019 24:00
(Repeats story from March 14; no changes to text)
By Sam Nussey
TOKYO, March 14 (Reuters) - On a Friday night at a downtown
Tokyo television studio, 12 teen models with cutesy nicknames
like Ayamin and Kyokyo are waiting nervously to find out who has
won coveted spots on the cover of Popteen magazine, a Japanese
fashion bible.
The girls, sporting a range of trendy styles, are the stars
of "Popteen Cover Girl War," a hit show from internet upstart
AbemaTV that may signal a new direction for Japanese television.
Eschewing the pricy serials and star-studded films that have
helped companies like Netflix NFLX.O upend the traditional TV
business in the U.S., AbemaTV is betting on low-budget,
reality-based fare with colourful graphics, relatable young
faces and a relentless focus on generating social media buzz.
The approach has pulled in millions of young viewers,
convincing some advertisers and industry analysts that AbemaTV
has found a lucrative new model.
"It's a generation used to rapidly processing information,"
Tatsuhiko Taniguchi, head of AbemaTV, said of his young viewers.
Dramas are put together "as if we are stuffing in twice the
amount of screenplay," he added.
Japan's traditional broadcasters, boxed in by government
regulations and concerned about upsetting their regional
stations, have mostly left the internet field clear for upstarts
like AbemaTV and foreign players like Netflix and Amazon.com
AMZN.O .
Yet AbemaTV remains an unproven bet for its biggest backer,
online ad agency CyberAgent 4751.T , which launched the network
three years ago with TV Asahi 9409.T . CyberAgent spent 20
billion yen ($179.73 million) on the venture in the fiscal year
that ended in September, much of that on programming, against
revenues of just 6 billion yen.
CyberAgent's stock price is down 40 percent from last July's
all time high at a time when its advertising and gaming units
are also under pressure.
And the overseas players continue to make inroads: In
addition to subtitling their large back catalogues, they are
offering a growing library of local-language content such as
Netflix's "Terrace House."
But CyberAgent founder and CEO Susumu Fujita, who at age 26
became the youngest CEO ever to take a company public in Japan,
remains confident.
"We are not rushing to reach profitability," said Fujita,
45, who estimates that revenue will double this year on the same
amount of spending.
AbemaTV has around 8 million viewers each week. Goldman
Sachs analyst Masaru Sugiyama sees the venture turning
profitable next year and hitting 164 billion yen in revenue in
2024.
With big consumer brands looking for online advertising
opportunities, "there's a huge need for professional content on
the internet, but there is a scarcity of that, especially in
Japan," Sugiyama said.
HIT MACHINE
AbemaTV viewers can watch about 25 ad-supported channels
showing everything from 24-hour news to anime to Korean dramas
to fishing via an app or in a browser.
Along with an ad-supported catch-up service for recently
aired shows, for more hardcore fans there is also a
960-yen-per-month service providing access to every show AbemaTV
has aired.
Japanese TV shows use lots of explanatory on-screen text,
designed to capture viewers zapping between channels, along with
wide shots of terraced rows of entertainers.
By contrast, AbemaTV's smartphone-focused approach features
a cleaner look with frequent close-ups.
AbemaTV hits include a variety show featuring former members
of Japan's once-biggest boy band, SMAP, and a dating show in
which the female contestants and viewers try to identify which
of the male contestants is a "wolf" lying to gain their
affections.
During the run of "Popteen," its stars inspired fierce
loyalties among fans on social media as they completed tasks
like been photographed while being splattered with goo, with
their final ranking partly determined by viewer votes.
"In the end those who revealed their weak side got cheered
on more than the girls who were perfectly cute," said Airi
Tsukioka, a producer on the show. Social media reaction informed
the direction the show took, she said.
DIGITAL INTERFERENCE
AbemaTV traces its roots to Fujita's participation from 2013
in discussions on the future of TV Asahi's programming. One
central question was how to meet the threat from foreign players
like Netflix and Amazon Prime.
Fujita's answer was AbemaTV.
TV Asahi holds a 37 percent stake, helping reduce the burden
on CyberAgent. AbemaTV gained another vote of confidence in
October when it won the backing of two of Cyberagent's rivals,
Dentsu 4324.T and Hakuhodo DY Holdings 2433.T , which have
taken 5 percent and 3 percent stakes respectively.
The investment brings on board two players who between them
control a big chunk of Japan's ad market and could help drive
big brands to the platform.
Dentsu figures released last month showed that in 2018
internet spending grew 17 percent compared to a year earlier. TV
spending shrank by almost 2 percent.
"We want to support the growth of new media," said Arinobu
Soga, Dentsu's chief financial officer.
($1 = 111.2800 yen)
(Reporting by Sam Nussey
Editing by Jonathan Weber and Gerry Doyle)
((sam.nussey@tr.com; https://twitter.com/SamNusseyRTRS;
+81364411596; Reuters Messaging:
sam.nussey.thomsonreuters.com@reuters.net))