Japan's Netflix contender bets on youth-driven viral hits

Teen models on the Popteen Cover Girl War, a hit show from Internet upstart AbemaTV. It is betting on low-budget, reality-based fare with colourful graphics, young faces and a relentless focus on generating social media buzz.
Teen models on the Popteen Cover Girl War, a hit show from Internet upstart AbemaTV. It is betting on low-budget, reality-based fare with colourful graphics, young faces and a relentless focus on generating social media buzz.PHOTO: REUTERS

TOKYO • 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 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 pricey serials and star-studded films that have helped companies like Netflix upend the traditional TV business in the United States, AbemaTV is betting on low-budget, reality-based fare with colourful graphics, relatable young faces and a relentless focus on generating social media buzz.

This 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," Mr Tatsuhiko Taniguchi, head of AbemaTV, said of the young viewers. Dramas are put together "as if we are stuffing in twice the amount of screenplay", he added.

Japan's broadcasters, boxed in by government regulations and concerned about upsetting regional stations, have mostly left the Internet field clear for upstarts like AbemaTV and foreign players like Netflix and Amazon.com.

Yet, AbemaTV remains an unproven bet for its biggest backer, online ad agency CyberAgent, which launched the network three years ago with TV Asahi.

CyberAgent spent 20 billion yen (S$242 million) on the venture in the fiscal year ending in September, much of that on programming, against revenues of just 6 billion yen. CyberAgent's stock price is down 40 per cent 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 chief executive officer (CEO) Susumu Fujita, who, at age 26, became the youngest CEO to take a company public in Japan, remains confident.

"We are not rushing to reach profitability," said Mr 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", said Mr Sugiyama.

AbemaTV viewers can watch about 25 ad-supported channels showing everything from 24-hour news and anime to Korean dramas and fishing via an app or in a browser.

Along with an ad-supported catch-up service for recently aired shows, there is also a 960-yen-per-month service for more hardcore fans, 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 entertainers. In 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 boyband, 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 being photographed as they are 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 Ms Airi Tsukioka, a producer on the show. Social media reaction informed the direction the show took, she added.

AbemaTV traces its roots to Mr 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.

Mr Fujita's answer was AbemaTV.

TV Asahi holds a 37 per cent stake, helping reduce the burden on CyberAgent. In October, AbemaTV won the backing of two of CyberAgent's rivals, Dentsu and Hakuhodo DY Holdings, which have taken 5 per cent and 3 per cent stakes respectively. The investment brings on board two players which 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 last year, Internet spending grew 17 per cent, compared with a year earlier. TV spending shrank by almost 2 per cent.

"We want to support the growth of new media," said Dentsu's chief financial officer Arinobu Soga.

REUTERS

A version of this article appeared in the print edition of The Straits Times on March 18, 2019, with the headline 'Japan's Netflix contender bets on youth-driven viral hits'. Print Edition | Subscribe