Japan's Wowow Pay-TV Network Plans Major Expansion, Diversification
Facing increased competition in a fast-changing television industry landscape, Wowow is expanding into new areas at home, and strengthening its overseas presence.
TOKYO – Japan's biggest pay-TV network Wowow, with around 2.6 million subscribers, is attempting to reinvent itself as an "all-around entertainment media" company and further expand its overseas presence, as it seeks to the challenges of a rapidly shifting television landscape.
At the beginning of this month, Wowow announced a restructuring of its management and divisions, designed to accelerate and streamline that process, Hajime Hashimoto, executive managing director for corporate strategy, told The Hollywood Reporter.
"The television business is going through major changes, especially the shift toward the "TV plus Internet" model, as is the pay TV sector," said Hashimoto.
"Our aim now is to change from being just a pay TV company to an all-around entertainment media company," says Hashimoto. "One example is that we broadcast all four tennis Grand Slam tournaments, so naturally we have a lot of tennis fans as subscribers. If those people want to be able to play tennis, or get information about good rackets, we can meet those needs."
To that end, Wowow launched The Tennis Daily web portal, featuring a range of related content, and which is surprisingly light on Wowow branding. A similar venture focusing on overseas dramas covers imported TV series, including those not broadcast on Wowow, with the aim of selling related goods and merchandise.
"Another major shift is from family viewing to people consuming content by themselves," says Hashimoto. "Related to that, is more targeted marketing of programs to our subscribers; for example, if a viewer likes a certain type of movie, we can show them we have a documentary which is related to that, or if they watch a documentary, we should introduce a film with a similar historical theme."
Digitalization in the summer of 2011 brought with it a rapid expansion in the number of pay channels in Japan, with dozens of offerings now available. This is in stark contrast to the situation when Wowow launched in 1991 as the only channel of its kind in Japan.
Hashimoto compares this to the situation of HBO -- to which Wowow is sometimes compared -- in the U.S. when channels such as Showtime emerged as rivals. Wowow itself added two new channels in 2011, and now consists of Prime, its general entertainment channel; Live, featuring sports and music, and the self-explanatory Cinema.
Wowow managed to achieve the expansion from one to three channels without a significant cost increase, according to Hashimoto. Wowow had been broadcasting in both analog and digital until the switchover, with the end of analog compensating for the infrastructure costs of the new channels. As for contents, Wowow has managed to keep the proportion of revenue spent on it, just over a third, unchanged.
"For example, we are now able to show more games from La Liga [Spanish soccer league], which we have broadcast for years and have an "all rights" deal for," explains Hashimoto.
Another element of Wowow's strategy shift has been an increase in original content, including co- productions and investing in international documentary projects. Having more original content -- as well as providing opportunities for spin-off business -- also strengthens the network's bargaining position in negotiations for acquisitions, says Hashimoto.
Police drama Mozu, co-produced with TBS (Tokyo Broadcasting System Television), is an example of the kind of content that Wowow plans to create more of. The first season was shown on TBS' terrestrial channel in spring, while season two has just begun on Wowow.
"I can't give you the numbers, but it's been a big success for us and TBS," says Hashimoto. "We'll be looking at doing similar projects in the future."