Take a look at the top ten charts on Netflix Japan, and it’s filled with anime. The streaming service has gone out of its way to appeal to Japan, including producing Netflix exclusive Japanese dramas, but subscriptions are still lagging behind other regions.
According to Tokyo-based research firm Impress (via website The Information), 25.6 percent of those who responded in Japan are using at least one paid streaming service. While the number has increased in the last year, it’s still well behind the US. In comparison, The Information adds, 61 percent of American homes use two or more paid streaming services. What’s more, Netflix has reportedly only garnered subscriptions from 13 percent of broadband Japanese homes. (The number is more than double for Amazon Prime.)
Netflix has yet to disclose official subscription numbers for the country.
In Japan, network television still dominates—though, anecdotally, it seems the country’s youth is watching more YouTube (at least my kids are!), which appears true in many, many other countries. But because network television is still so powerful in Japan, networks can churn out shows for traditional TV and streaming services like Netflix, covering both bases in the process.
For anime, the major networks are a key part of financing and production. The networks can partner with record labels and toy makers in an effort to help cushion losses. The resulting anime ends up on Japanese TV for free, which makes the idea of a paid streaming service somewhat of a challenge, perhaps. Then, the production model itself differs for Japanese TV networks and Netflix. While insiders tell The Information that the streaming giant shells out up to 50 percent more for shows, the programs typically have more detailed and intricate scenes, which require more time, effort, and money, which means the extra earnings can end up as a wash. What’s more, Netflix sometimes wants to pay for completed shows, while TV networks will pay anime studios while the programs are in production, which helps to offset costs.
“It’s hard to see exactly how lucrative it is for the studio to work with Netflix,” said Hiromichi Masuda, a former anime producer who has done research for the Association of Japanese Animations. “Japan’s anime industry is like a village community built around key players like TV stations. Netflix isn’t part of that community.”
While Netflix is contending with competition in Japan, rival streaming platforms like Crunchyroll and Funimation, both of which have fewer subscribers but a far more fervent anime fan base. “Netflix is getting better at anime, but it’s a large climb for them,” said consultant Vince Imaoka, a former Netflix anime producer. “It’s more of a fault that it is really hard to get anime because there is so much competition for content.”
The number of people in Japan subscribing to paid services will increase. More and more shows will end up on the platform. But in the meantime, traditional TV in Japan isn’t going anywhere anytime soon.