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Netflix dives deeper into anime as Disney readies streaming rival

Video giant partners with trio of Japanese producers on original content

Netflix aims to lure more users outside the U.S. with anime as competitors like Disney line up new streaming services.   © Reuters

TOKYO -- Netflix has forged multiyear agreements with three Japanese animation companies to produce and globally distribute original content, Nikkei has learned, bolstering its anime lineup as rivals including Walt Disney burst onto the streaming market.

The video platform has tied up with Tokyo-based Anima, Sublimation and David Production to make anime versions of properties popular in Japan, for worldwide release in two to three years. These include Netflix's science fiction series "Altered Carbon," launched in 2018, as well as the "Dragon's Dogma" role-playing game and the "Spriggan" action manga.

Netflix hopes to capitalize on anime's international following by fleshing out its lineup of original shows as competition heats up. Disney is expected to pull its content from Netflix's digital shelves to launch its Disney+ service later this year, while AT&T, which purchased media company Time Warner in 2018 and counts the "Harry Potter" films in its arsenal, will introduce its own platform in late 2019.

The new partnerships join two others Netflix formed with Japanese production companies last year and build on the U.S. company's past forays into anime and other Japanese television series, which have been handled through individual contracts.

Netflix has spent heavily to lock down exclusive offerings in a range of countries and stand up to rivals' selection of famous titles. It shelled out $6.3 billion on content in 2017 and appears to have invested at least $8 billion in 2018.

Netflix CEO Reed Hastings is focused on investing in new content to help the platform grow. (Photo by Joshua Ogawa) Netflix CEO Reed Hastings is focused on investing in new content to help the platform grow. (Photo by Joshua Ogawa)

CEO Reed Hastings has said the company will not skimp on investing, in order to grow. Netflix reported free cash flow of negative $3 billion for 2018 and expects a similar result this year. But the company is prioritizing attracting customers over improving earnings in the short term, pointing out that content can be used for a long time.

The company's original programming has gained traction of late, with the Netflix-produced film "Roma" scooping up honors at last month's Academy Awards and its series starring Japanese decluttering author Marie Kondo becoming a cultural phenomenon.

Netflix's worldwide paid subscribers numbered 139 million at the end of last year, with about 80 million outside the U.S. The company is shifting toward seeking growth in European and Asian markets, where increased anime offerings will likely help lure more users.

Japan's anime market grew 8% to 2.15 trillion yen ($19.36 billion) in 2017, crossing the 2 trillion yen mark for the first time, according to the Association of Japanese Animations. Sales overseas powered much of the growth, rocketing about 30% from the year before to 994.8 billion yen -- approaching the scale of domestic sales, which shrank for a third straight year to 1.15 trillion yen.

In the U.S., Netflix competitors including Amazon.com are snapping up anime properties to beef up their own streaming offerings. Nine-tenths of people viewing Netflix's anime content are located outside Japan.

Netflix's profile in Japan is not as high as elsewhere. In 2018, mobile provider NTT Docomo's dTV service led the Japanese streaming market, with a 13.7% share, while Netflix came in sixth at 8.9%, according to Tokyo-based research firm GEM Partners. Docomo has teamed up with Disney on a domestic streaming service as well, turning up the heat on Netflix in the Japanese market.

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