1. Product Market Study 1/2012
Multimedia & Digital Contents Market in Japan

2. Introduction
Since the collapse of the economic bubble at the start of the 1990s, the
economic situation of Japan, despite the occasional glimpse of a recovery, has
become progressively worse. In addition, Japan’s aging population and low
birthrate are concerns of a future slide in its economic and social dynamism.
Amid these economic and social uncertainties, Japan is about to see tremendous
transformations to take place in the information and communication sector.
There are several reasons for this, the first of which is infrastructure
establishment. The build-out of communications infrastructure, for example, has
made it possible today, with the proliferation of smartphones to send and receive
information via the Internet anytime from anywhere. With the rollout of ultra-high-
speed broadband through fiber-to-home networks accessible from some 90
percent of Japanese households, it is now possible to deliver large content works
such as high-definition video and on demand to individual homes.
Broadcasting infrastructure has also evolved dramatically with the move to digital
by both satellite broadcasting and terrestrial broadcasting. Terrestrial television
has completely switched to digital broadcasting in July 2011.
The establishment of this communications and broadcasting infrastructure and
the continued digitalization of content has made it easier than ever to push
content over various media channels. At the same time, digital signage and
other content markets are emerging, which are picked for substantial future
growth.
Users, primarily younger generations of “digital natives” who have grown up with
digital devices, are now increasingly involved in the creation and distribution of
information outside of mass media, something that previously was almost
unthinkable.
At the same time, traditional mass media, who have watched their advertisement
revenues being steadily eroded by the prolonged recession, are now seeing their
advertisement markets shrink as advertisers flock to the consumer internet
advertisement market. The mass media has failed so far to come up with
revenue models that work in the new market reality.
Market Overview
According to Digital Content Association of Japan (DCAJ), the Japanese media
content industry currently has a market size of more than JPY 12 trillion (USD
150 billion), the second largest in the world behind the U.S.

3. Digital Contents Market
Digital Music Market
2010
Units Value
year-over-year year-over-year
(JPY
basis basis
(thousand) Mil)
Single Track 44,617 105% 6,295 96%
Album 2,850 112% 3,261 104%
Total audio downloads 47,467 105% 9,556 99%
Internet
Downloads
Music Video 2,024 116% 567 104%
Other downloads 0 - 0 -
Total 49,491 106% 10,123 99%
Ringtunes 131,247 84% 13,299 81%
Mobile Ringback tunes 113,302 101% 10,082 103%
Digital
Content Single Track 137,836 96% 47,590 96%
Music Video 7,414 93% 2,843 98%

4. Other Mobile 2,008 146% 931 136%
Total Mobile Sales 391,807 93% 74,745 94%
Subscriptions
380 54%
(Internet)
Subscriptions
Other 354 93%
(Mobile)
Other Digital Music
159 267% 387 88%
Content
Grand total 441,457 94% 85,990 95%
Source: The Recording Industry Association of Japan (RIAJ)
Japan is the world’s largest music market in terms of digital song sales and
together with the United States represents about half of the world’s sales of
recorded music. According to the Recording Industry Association of Japan
(RIAJ), the digital music market in 2010 amounted JPY 86 billion (USD 1.1
billion) in value and posted a decline for the first time since statistical data was
first complied in 2005.
Mobile digital contents, a distinctive characteristic of the Japanese market,
remained dominant, while at the same time, the percentage of internet
downloads to total downloads is increasing every year. Internet downloads
showed a 1 percent decrease on a value basis while unit production increased 6
percent. Specifically, albums and music videos were up 4 percent in value, its
share edged up from 54.3 percent in the previous year in proportion to the overall
digital music market.
RIAJ estimated that the amount of tracks obtained on mobile phones via illegal
sharing is approximately equal to that of legal purchase and is growing. A
sluggish economy and a rising popularity of gaming has also had a part in the
decline of digital music sales.
Online Game Market
Online games offer a different type of attraction from conventional games since
multiple players can play together, which has pulled in casual users as well as
hardcore gamers. In particular, social games, which are distinguished by the
communities they form, provide the same sort of enjoyment found with blogs and
SMSs and have seen their sign-up numbers soar. The downside to social games
is that although the sign-up is free, they require players to buy virtual currency
used within the game with real money in order to progress to higher stages.

5. There have been instances of social game players unwittingly racking up huge
bills.
According to the Japan Online Game Association, the revenue from online
gaming in Japan grew 3 percent during 2010 to JPY 132.9 billion (USD 1.66
billion). Package software contributed JPY29.4 billion (USD 367 million) to the
figure and JPY 103.5 billion (USD 1.29 billion) came from online game operation.
Social game took in JPY 235.5 billion (USD 2.94 billion) in revenue.
The main content in game category is still arcade games and game deck
software. However, growth in online game-related domains is remarkable and
new related domains such as mobile games and social games are the market of
the future.
e-book Market
The Japanese e-book market was estimated at JPY 65 billion (USD 813 million)
in 2010 compared with about JPY 2 trillion for printed books and magazines or
3.3 percent of the overall market.
According to Impress Holdings, which owns several publishers and software
companies in Japan, Japanese e-book market is dominated by mobile manga
comics and continue to dominate over other types of e-book content including
fiction and nonfiction titles. However, the company predicted that the Japanese
e-book market would grow rapidly to JPY 200 billion by 2015.
Recently, Apple’s iPad, which can be used as an e-book reader, was launched in
Japan. This has prompted the release of a flurry of e-books, including comics
that are distributed via the iPad. This tendency is certain to pick up speed and
network distribution of comics and books is expected to widen even further.
Japanese publishers are still very much focused on print books and are
conservative when it comes to digital content and digital rights. In fact, non-
publishing companies are the ones who are more eager to embrace digital
content than book publishers.
Online Video Market
With the development of high-speed broadband infrastructure and web-
connected mobile devices, uncontrolled online video distribution has become an
almost irreversible trend among the young generation and professionals in Japan.
According to Ministry of Internal Affairs and Communications, broadband
subscribers in 2011 surpassed the 35 million mark, making it the third largest
broadband country in the world.
In Japan’s mature advertising market, mobile TV advertising has emerged in
2010 or thus as a newly dominant channel for revenue growth. Japan’s mobile

6. centric culture has also been driving strong usage of video sharing sites on
mobile phones.
1.1. IMPORT MARKET TREND
Since there is no import statistics on multi-media and digital contents, we append
below some activities undertaken by foreign players in the Japanese market.
US Online Service, Hulu, Launched in Japan
US online service, Hulu, has launched a new subscription service in Japan on
September 2011. Hulu’s service offered entertainment fans in Japan unlimited
instant access to hundreds of premium feature films and thousands of episodes
from previous seasons of TV shows in United States. Japanese subscribers are
able to access these shows and movies on demand on a wide variety of internet-
connected devices including web-connected TVs, video game consoles, PCs,
tablets, Blu-ray players and smartphones, without advertising, for JPY 1,480
(USD 19) per month.
For the launch of the subscription service in Japan, Hulu has secured licensing
deals with major film studios and TV networks including CBS, NBC Universal
International Television Distribution, Sony Pictures Entertainment, Twentieth
Disney/ABC Television Group and The Walt Disney Studios and Warner Bros.
Additional content will be rapidly and continually added to the service, including
Japanese-produced content and content from across the Asian region.
K-pop market in Japan
With the increase in sales overall, the K-pop (Korean pop music) market in Japan
is increasingly expanding. KARA is a popular Korean music group, and their DVD
sales in Japan ranked 4th by recording over 270,000 copies in DVD yearly sales
in 2011.
Even though the number of music CDs, DVDs or blue ray are decreasing in
Japan, over 60,000,000 video products were produced in 2011 and K-Pop surely
contributed to the overall video software sales to increase.
Since Korea started airing high-definition or HD broadcast in 2011, Japanese
people have begun wanting clear videos of their favorite singers, not just
watching them through video sites. In addition, since many Japanese are using
their smart phones to watch videos, record companies are now concentrating on
producing video products instead of CD.
The Japanese music market is changing from listening music to watching music.
Therefore, K-pop singers will continue to create further business opportunities as
a result of making more clear music videos or improve the quality of their videos.

7. Low priced e-reader
Rakuten Inc., Japanese major e-commerce company, completed the purchase of
Kobo Inc., a Canadian firm that operates an e-book business in about 100
countries on January 2012. The main reason behind the acquisition is to
introduce the Kobo e-reader into the Japanese market. The Kobo e-reader
allows Japanese text layouts such as vertical writing. Rakuten plans to sell the
device for less than JPY 10,000 (USD 125).
While Rakuten does not pay attention to Japanese e-book tablet makers, it is
wary of Amazon.com, its largest competitor. As Amazon attaches great
importance to Japan’s e-book market, the tug of war between the Japanese and
US companies has become fierce. The least expensive model of Amazon’s
Kindle e-reader is priced at USD 79 or about 6,300 yen.
Amazon has also been negotiating with Japanese publishers to digitise books as
it prepares to launch a full-fledged sales campaign for its e-reader in the
Japanese market. However, Amazon’s contract states that the U.S. online
retailer to retain the right to decide the sales price of e-books which provoked a
strong reaction from publishers in Japan.
Amazon also asked the publishers for copyright controls to accelerate the
digitising process. But in Japan, authors hold copyrights while publishers only
have the right to publish books. Amazon is concerned that Japanese publishers
will not provide books for its e-reader, while Rakuten aims for a harmonious
relation with publishing companies.
Regulations
Copyright Law
Copyright Law including “Copyright as Author’s Rights and “Neighbouring Rights”
is for protecting the rights of authors and creators and fair exploitation of their
works. Copyrights as Author’s Rights consist of “Moral Rights” and Copyrights as
Economic Rights”. As “Moral Rights of Authors” are rights that are entirely
personal, they cannot be transferred, but “Copyrights as Economic Rights” can
be transferred because of its nature as economic property.
Copyright Registration System
Copyright Law adopts a non-formality system for establishing copyrights.
Therefore, registration is not a requisite for acquiring a copyright. Nevertheless,
the Copyright Law applies a registration for various reasons.

8. Registration is a requirement for preparing against third parties. A “third party”
means a party who has a legitimate interest in claiming the lack of registration.
Procedures for registration are governed by the Agency for Cultural Affairs. Also
details of registrations concerning programme works are provided under the “Law
on Exceptional l Provisions for the Registration of Program Works in which the
Foundation of Software Information Center is specified as the designated
registration organization. All other registration are handled by the Copyright
Section of the Agency for Cultural Affairs.
Neighbouring Rights
Neighbouring rights are granted to performers, producers of phonograms,
broadcasting and wire diffusion organisations and others who are not the authors
of the works, but play important role in communicating works to the public. They
do not create new works but their activities are equivalent to the creation of
works. Therefore, their rights are protected in a manner similar to copyright.
Neighbouring rights and copyrights exist independently and the neighbouring
rights do not affect copyrights. On the other hand, when copyright is subject to
limitation of the free exploitation, the neighbouring rights also become subject to
the same limitation.
Major Organisations Involved in Copyright Related Matters
Copyright Research and Information Center (CRIC)
Address: Tokyo Opera Tower 1F, 3-20-2, Nishishinjuku, Shinjuku-ku, Toyo
Tel: +81-3-5353-6921
Fax: +81-3-5353-6920
URL:http://www.cric.or.jp/cric_e/
CRIC is a voluntary non-profit-making organization established in 1959. It is the
only organization in Japan that carries out research and information services in
all areas of copyright issues, and its membership covers almost all major
copyright organizations / societies in Japan.
Japan Reprographic Right Center (JRRC)
Address: Daiichi Aoyama Building 3F., 3-3-7, Kita Aoyama, Minato-ku, Tokyo,
Tel: +81-3-3401-2382
Fax: +81-3-3401-2386
URL: http://www.jrrc.or.jp/eng/index.html
The JRRC is a voluntary no-profit-making organization established in 1991 in
order to conduct collective management of the right of reprographic reproduction.

9. The Japan Writer’s Association
Address: Shinkan 7F., Bungei-Shinju Building, 3-23, Kioi-cho, chiyoda-ku, Tokyo,
Tel: +81-3-3265-9658
Fax: +81-3-5213-5672
URL: . http://www.bungeika.or.jp/
The Japan Writer’s Association is a voluntary non-profit-organization established
in 1939 by authors of literary works in order to protect copyright of their works
and to facilitate their fair exploitation. The Federation was registered with the
Agency for Cultural Affairs to conduct collective management for novels and
started it in 1968.
The Japan Art, Photograph and Graphic Design Copyright Organization (APG-
Japan)
Address: 3-10-19, Ginza, Chuo-ku, Tokyo,
Tel: +81-3-3564-6555
Fax: +81-3-3564-6555
URL: http://www.apg.gr.jp/
The APG-Japan is a voluntary non-profit-making organization established in
1996 in order to conduct collective management of copyright in the near future
with respect to art, photograph and graphic design collectively in cooperation with
the member organizations as well as to provide copyright information concerned.
Japan Society of Rights of Authors, Composers and Publishers (JASRAC)
Address: 3-6-12, Uehara, Shibuya-ku, Tokyo,
Tel: +81-3-3481-2121
Fax: +81-3-3481-2150
URL: http://www.jasrac.or.jp/ejhp/index.htm
JASRAC is a voluntary non-profit-organization established in 1939 in order to
protect copyright of musical works and to facilitate fair exploitation of such works.
It is a musical copyright clearance organization in Japan and is registered with
the Agency for Cultural Affairs to conduct collective management.
JASRC administers copyrights of foreign musical works under contracts with 104
organizations which are entrusted with performing rights in 91 countries and
regions and with 80 organizations which are entrusted with mechanical rights in
69 countries and regions.
Association of Copyright for Computer Software (ACCS)
Address: Tomonari Foresight Building 5F., 5-40-18, Otsuka, Bunkyo-ku, Tokyo
Tel: +81-3-5976-5175
Fax: +81-3-5976-5177
URL: http://www2.accsjp.or.jp/en/

10. ACCS is a voluntary non-profit-making organization established in 1991. ACCS
is to protect the rights of copyright owners of computer programs and to
undertake educational activities for public awareness of copyright.
Recording Industry Association of Japan (RIAJ)
Address: Kyodo Tsushin Kaikan 9F., 2-2-5, Toranomon, Minato-ku, Tokyo
Tel: +81-3-5575-1304
Fax: +81-3-5575-1313
URL: http://www.riaj.or.jp/e/index.html
The RIAJ is a voluntary non-profit-organization established in 1942 in order to
promote the cooperation of phonogram producing industries in Japan and to
facilitate the diffusion of good phonograms and fair utilization of phonograms.
In conformity with the Copyright Law, this association, having been designated
as the sole collecting society by the Commissioner of the ACA, collects the
secondary use fees from broadcasting and wire diffusers as well as the
remuneration from record rental business who offer commercial phonograms to
the public by the rental.
National Association of Commercial Broadcasters in Japan (NAB)
Address: Bungei-Shunju Building, 3-23, Kioi-cho, Chiyoda-ku, Tokyo
Tel: +81-3-5213-7717
Fax: +81-3-5213-7714
URL: http://www.nab.or.jp/
Digital Contents Distribution Channels
Since the 1990s, digital content distribution has stretched to encompass many
new media channels and devices such as packaged media, terrestrial digital
broadcasts, satellite broadcast, cable television, mobile phones and smartphones,
and e-book reader. The move to digital content formats and advances in the
Internet and mobile phone networks have utterly transformed distribution in the
media content market.
Of these, smartphones are drawing the greatest interest as a new mobile device.
Until recently, Japan had led the world in developing new functions for mobile
phones. But the entry of the iPhone and other smartphones has been game-
changer in Japan. Smartphones feature an easy interface built into the operating
system that integrates many different functions such as downloading movies and
music and browsing the Internet. Smartphones allow the users access video and
audio services from computer Internet sites in addition to mobile-specific content
by connecting wireless carriers’ content provision services with external Internet
sites. This has had a profound impact on Japan’s mobile Internet business,
which had grew through the vertical integration of networks, platforms, and
device services all centered on the wireless carrier.

11. Conclusion
There are no large players that dominate the digital content and application
provider space in Japan and most of the players are seeking to cooperate with
others. For digital contents segment in Japan, it is anticipated that consumption
of original mobile content is expected to grow in Japan.
Under such situation, Japanese wireless operator NTT DoCoMo, KDDI and
Softbank are actively looking for partners to enhance the quality of their mobile
content services. KDDI has signed an agreement with a US provider of wireless
services, providing KDDI subscribers with a variety of western contents.
Malaysian companies with attractive digital contents may find the mobile content
sector to be easier to approach than any other digital content sectors in Japan.
Traditionally, the mobile sector in Japan has been more open to foreign contents.
Japanese mobile phone users are now seeking original content that is new to
them and that cannot be seen on TV. They are seeking a high level of originality
and this makes it easier for Malaysian companies to find their niche market in
Japan. Therefore, a Malaysian service provider needs to take a longer-term
strategic view of the Japanese digital content market.
Prepared by:
MATRADE Tokyo & Osaka
8 March 2012

12. RELATED ASSOCIATIONS AND EXHIBITIONS
Related Trade Fairs in Japan
Digital Signage Japan (DSJ) 2012
Date : 13 -15 June 2012
Venue: Makuhari Messe (Chiba)
Organizer: Digital Signage Japan 2011 Steering Committee
URL: http://www.f2ff.jp/dsj/en/index.html
DIGITAL CONTENT EXPO 2012
Date : October 2012
Venue: Nihon Kagaku Miraikan (Tokyo)
Organizer: Ministry of Economy, Trade and Industry /
Digital Content Association of Japan
The Digital Content Expo serves as one of the official event held concurrently
with the Japan International Contents Festival (CoFesta). The event attracts
attention as it highlights the technical aspect of digital content.
Tel: +81-3-3861-3858
Fax: +81-3-52961018
E-mail: info@cphijapan.com
FilmTech 2012
Date : 11 -13 April 2012
Venue: Tokyo International Exhibition Center ( Tokyo Big Sight )
Organizer: FilmTech Japan Show Management
URL://www.filmtech.jp/
Tel: +81-3-3349-8568
Fax: +81-3-3349-0598
E-mail: film@reedexpo.co.jp
Related Organizations
Agency for Cultural Affairs
Address: 3-2-2, Kasumigaseki, Chiyoda-ku, Tokyo
Tel: +81-3-5253-4111
URL: http://www.bunka.go.jp/english/index.html
Digital Content Association of Japan
Address: Nihonseimei Ichibancho Bldg. LB., 1-23, Chiyoda-ku, Tokyo, 102-0082
Tel: +81-3-3512-3900
Fax: +81-3-3512-3903
URL: http://www.dcaj.org/

13. Digital Radio Promotion Association
Address: Tokyo Tower Studio Bldg. 7F., 4-4-7, Shibakoen, Minato-ku, Tokyo,
105-0001
Tel: +81-3-5776-2272
URL: http://www.d-radio.or.jp/
Foundation for MultiMedia Communications
Address: 3-22-1, Toranomon, Minato-ku, Tokyo, 105-0001
Tel: +81-3-5403-7100
Fax: +81-3-5403-7101
URL: http://www.fmmc.or.jp/
The Association for Promotion of Digital Broadcasting
Address: Aoyama Bldg. 13F., 1-2-3, Kita Aoyama, Minato-ku, Tokyo, 107-0061
URL: http://www.catv.or.jp/jctea/english/index.html
Digital Manga Association
Address: Ikebukuro Central Bldg., 2-41-12-7-1, Minamiikebukuro, Toshima-ku,
Tokyo, 171-0022
Tel: +81-3-3971-7771
Fax: +81-3-3971-7666
URL: http://www.dma-j.net/
Japan Online Game Association (JOGA)
Address: Umehara Bldg. 9F., Dogenzaka, Shibuya, Tokyo,
E-mail: info@japanonlinegame.org
URL: http://www.japanonlinegame.org/