Nippon TV’s Yoshio Okubo

PREMIUM: Yoshio Okubo, the president of Nippon TV, tells TV AsiaPac how building Hulu’s business and expanding the company’s international operations—including pay-TV channels, formats and finished program sales and co-productions—are key growth opportunities in the years ahead.

TV ASIAPAC: What is driving the success of your programming strategy?
OKUBO: One of the key mottos that drive us at Nippon TV is “viewers come first.” We always keep in mind our viewers’ needs whenever we produce content. I believe this approach has allowed every one of our programs to continuously evolve, which in turn has led to the outstanding results that Nippon TV has been achieving.

Let’s take The Quest as an example. This is our extremely successful entertainment program that airs on Sundays at 8 p.m. Last fiscal year, The Quest beat all the other entertainment shows in Japan to capture the highest viewer ratings. With no signs of slowing down, it continues to capture the hearts of a primarily young female fan base and score stellar ratings in the area of 20 percent every week. To put it roughly, one out of five people in Japan watches this program, which features celebrity guests who travel all over the world to take on extreme challenges, such as racing against wild animals in Africa or scaling Mount McKinley. The show brilliantly addresses the needs of today’s viewers by enabling them to feel the drama, excitement and humor that arises from the challenges. It is a high-quality entertainment program that quickly became successful throughout the world.

Our core programming strategy is to produce regular shows that viewers can count on and enjoy every week, instead of airing special programs frequently. I believe this strategy has made it easier for a large audience base to develop a habit of watching Nippon TV and made it an indispensable part of their daily lives.

TV ASIAPAC: Japan is unique in that it is one of the world’s mature TV markets where terrestrial still commands a majority of TV viewing. Why do you think this is?
OKUBO: The main form of terrestrial broadcasting in Japan is free-to-air television with advertisements, which covers the country almost entirely. Nippon TV and all the other terrestrial broadcasters employ a general programming strategy that targets young and old, male and female. Nippon TV hit the airwaves in 1953 as the first commercial broadcaster and others followed suit. The country was in the midst of rebuilding from the war when television entered people’s living rooms. Since then, TV has become a source of wholesome entertainment and a trusted source of news and information. Through broadcasting advertisements, it has also become a major contributor to the Japanese economy. I believe that because we share such a long history together, we continue to be welcome in the homes of the general population.

TV ASIAPAC: What prospects do you see for the growth of non-terrestrial viewing?
OKUBO: If you look at the subscriber trends for the existing pay-TV channels, you get the impression that [the number of] people who see the benefit of paying to watch content is still limited. That said, the younger generations are increasingly watching content on various devices. With the advent of smart TVs and on-demand streaming services, I believe the competition to capture people’s disposable time will get even tougher. To win this battle, it is crucial that we deliver content that meets viewer expectations.

TV ASIAPAC: Why was it important for Nippon TV to acquire Hulu?
OKUBO: We knew that it was only a matter of time before a foreign player with a lot of capital would enter the Japanese video-on-demand business. It was clear to us that we needed to quickly obtain control of the domestic video-streaming market by mobilizing our capital to establish a platform. Just when we were thinking about this strategy, the opportunity to acquire the Japan business of Hulu presented itself last year. Hulu is now a wholly owned subsidiary of Nippon TV. Due to the reinvigorated content lineup and aggressive promotions, we were able to grow the subscriber base from 600,000 at the time of acquisition to over 1 million a year later. Moreover, even our terrestrial TV rivals NHK (the public broadcaster) and the other major commercial broadcasters are sharing their content with Hulu. It has indeed become an all-Japan platform, which we hope to continue growing with the help of all parties involved.

TV ASIAPAC: What benefits does your terrestrial business derive from being associated with Hulu? And what strengths does Hulu gain from being aligned with Nippon TV?
OKUBO: One of the strengths that Hulu acquired was Nippon TV’s strong content production capability. As a subsidiary, Hulu is given top priority in streaming Nippon TV’s popular programs. We are also using Hulu to stream full episodes of upcoming shows before they air on Nippon TV. Hulu also now has access to Nippon TV’s powerful and vast reach as a media company. In Japan, terrestrial TV has a strong influence on society. As the most-watched broadcaster in the country, Nippon TV is capable of creating a significant buzz for Hulu’s popular content through its various programs. The Last Cop, an original drama that was co-produced by Nippon TV and Hulu in June, successfully leveraged these benefits. The first episode was aired nationwide on Nippon TV’s terrestrial platform. The subsequent episodes were made available each week via Hulu. This strategy became quite the talk of the town and had a huge positive impact on viewer ratings and Hulu’s subscriber base.

As for Nippon TV, we gained a fourth major platform to add to our terrestrial, broadcasting satellite and communications satellite businesses and are looking forward to growing our expertise in producing content and programming strategies that are appropriate for each.

This fall, Netflix will be coming to Japan. This is good news because it will stimulate the local VOD market. With over 1 million subscribers on Hulu, we already hold the top position in this business, but this is not a time to rest on our laurels. Our goal is to make Hulu an indispensable part of every Japanese household and have 5 million subscribers in five years. We also plan to aggressively acquire high-quality content from all over the world. To these ends, we at Nippon TV will leverage all the strengths and assets we have across the group.

TV ASIAPAC: The Japanese economy has seen many challenges over the last few years. How has the TV advertising market been?
OKUBO: Although badly affected by the 2008 financial crisis, the Japanese TV ad market stabilized by 2010 and has been sideways since. Amidst this landscape, Nippon TV’s ad sales have been gradually increasing since 2010. This is a remarkable accomplishment that we attribute to the general increase in our viewer ratings and our ability to specifically capture the viewership of the younger generations, which is an important target for our clients. Last fiscal year, Nippon TV beat all the other commercial broadcasters to generate the highest advertising revenues.

TV ASIAPAC: What are some of the other revenue streams you are exploring, outside of advertising?
OKUBO: The entire Nippon TV group is united in our goal to create content that enriches people’s lives, which we aspire to deliver to a vast audience domestically and internationally through various media. We are also aggressive about increasing our non-advertising revenue streams. The video-streaming business, of which Hulu is a part, is a crucial arm that we will strengthen further in the coming years. Our international business also continues to grow, with many exciting developments in the horizon. Last year, we acquired TIPNESS, Japan’s most prominent chain of fitness clubs, which became the core component of our life and health-related business. Going forward, we are looking to strengthen our real estate business, particularly the redevelopment of our vast property holdings in Tokyo’s prime Chiyoda-ku district.

TV ASIAPAC: Outside of the Hulu acquisition, what are some of the other ways you’re working to bring the Nippon TV brand to digital devices and platforms?
OKUBO: We believe it is important to provide services designed for smartphones and other mobile devices, particularly to make Nippon TV even more appealing to the younger age groups. As such, we are actively taking our terrestrial TV content and making it available for internet streaming. Our past terrestrial TV programs were already available through our paid streaming service. Last year, we started a free streaming service that includes advertisements. Weekly programs are streamed shortly after the terrestrial broadcast and are available until the airing of the next episode. This service enables those who missed the terrestrial broadcast to enjoy the program later, even on their smartphone. While our goal is to stay ahead of the changing viewing habits and develop a wide array of platforms on which our content can be watched, we also remain hopeful about terrestrial TV viewership regaining traction.

TV ASIAPAC: How important is the international market to Nippon TV?
OKUBO: Establishing a solid presence abroad has been a crucial component of our medium-term management plan since 2012. For many years now, Nippon TV has been licensing content and formats to overseas clients. The BBC’s Dragons’ Den and ABC’s Shark Tank are originally a Nippon TV format. We welcome its tenth anniversary as an international hit. Since first airing on the BBC in 2005, the format has been remade and aired in over 25 countries and regions. What we discovered, however, is that licensing to overseas partners alone does not lead to the international recognition of the Nippon TV brand. We decided to target the Asian market first and establish our brand there. We formed a joint venture with Sony to launch GEM Asia, a channel focused on our dramas and entertainment shows for audiences in Southeast Asia and Hong Kong. It is scheduled to launch in the fall of 2015 and deliver Nippon TV shows during prime time, in addition to hit programs from other Asian countries. This is a great opportunity to capture the attention of people who previously had no exposure to Japanese programs and create new fans. We plan to take full advantage of the channel’s launch and actively market the Nippon TV brand.

TV ASIAPAC: Are you pursuing co-productions?
OKUBO: We have a successful track record of co-productions with partners around the world, especially in Asia and Europe. For example, in 2013, we partnered with Media Prima in Malaysia to co-produce the drama The Files of Young Kindaichi: Jungle School Murder Mystery. In Thailand, we partnered with Kantalux and MCOT to co-produce the popular entertainment show Pharaoh! In 2014, we partnered with the Media Prima Group company Primeworks to co-produce Welcome to the Railworld Japan, which was broadcast on 8TV in Malaysia. In the U.K., creators from both Sony Pictures Television and Nippon TV developed program proposals from scratch and successfully co-produced three entertainment shows titled Out of Sight, #Love and We Know What You Ate Last Night, all of which Sony is currently selling globally as formats. In Israel, we co-developed AHA! Experience with Dori Media, who went on to sell the format in places such as Vietnam.

We will continue to pursue joint projects with partners from all over the world in an effort to solidify our presence and brand as a global media powerhouse. Our experience proves that co-productions are a wonderful opportunity for Nippon TV to learn the values of other countries, see their unique ways of producing content and understand their interaction with their viewers. It would be an honor for us to have more learning experiences from partners throughout the world. In Japan, Nippon TV’s content production expertise and media influence continue to be unrivaled. We look forward to more opportunities to share our strengths abroad.

TV ASIAPAC: Heading into 2016 and beyond, what are the major challenges facing Nippon TV?
OKUBO: With persistent low birth rates and an aging population, it is difficult to expect economic growth from Japan in the mid to long term. Meanwhile, advertising methods are becoming more diverse. We are faced with the challenge of maintaining the dominant position of TV advertising.

We believe, however, that Nippon TV is in a better position than our competitors to overcome any obstacles. As the oldest commercial broadcaster in Japan with over 60 years of experience, Nippon TV’s reach and content production expertise have proven to be unparalleled. When it comes to new ventures and exploring unchartered territories, we are the boldest and most dynamic. The entire Nippon TV group boasts a culture of “convergence” that enables us to come together for new initiatives and synergize our strengths. I am confident that these qualities will allow us to thrive in the international scene as well. To stay relevant and strong, it is important to feel the pulse of the changing times and evolve accordingly, and we at Nippon TV have the skills and mindset to do just that.