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Business

Japan's online video market faces wave of natural selection

Streaming services falling victim to overcrowded industry

TOKYO -- Even as the online video on-demand market grows steadily in Japan, the industry looks to be flooded with too many service providers from home and abroad, inevitably leaving less competitive players falling by the wayside.

The latest casualty is the "Bonobo" online video service offered by movie producer Toei and its partners. The service will be terminated as early as this summer -- a little less than two years after it was launched in September 2015. Bonobo charges for each video clip rather than the more common monthly fees for unlimited viewing. It has struggled to set itself apart from the competition, thus failing to propel subscriber growth. The operator considered partnering with another service -- dTV, provided by the likes of NTT Docomo -- but this did not materialize.

Meanwhile, CD and DVD rental company Geo Holdings will shut down its "Geo channel" operations at the end of June. The Nagoya-based company has offered the service since February 2016 in collaboration with record label owner Avex Group Holdings. Geo sought to capitalize on its more than 1,000 rental shops across Japan to gain subscribers. But a staffer admits, "We struggled more than expected." Avex Group's UULA service already ended on March 31.

The Nomura Research Institute projects that the domestic video streaming service market will grow some 30% from fiscal 2016 to around 220 billion yen ($1.97 billion) in fiscal 2022.

Many businesses have entered the market since 2015, including such foreign giants as Netflix and Amazon.com, as well as television stations and internet service providers. Last year, Britain's Perform Group launched online sports broadcasting service DAZN.

Operating successfully in this market requires financial stamina for producing and procuring attractive content. The process of natural selection likely will further thin the herd as time goes on.

(Nikkei)

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