Viacom Japan’s Peter Bullard

April 2007

By Mansha Daswani

MTV Networks International has been undergoing a
fair bit of restructuring over the past few months, including redirecting
resources to markets with strong growth potential. Among those is Japan, where
Viacom recently took 100-percent control of MTV Japan from its local partners.
Peter Bullard is charged with overseeing the company’s growth in this
high-priority market as president of Viacom International Japan. He tells TV
Asia Pacific about the rollout of
the MTV and Nickelodeon brands, as well as the importance of the FLUX digital
platform.

TV ASIA
PACIFIC: How is the
distribution for Viacom’s services in Japan?

BULLARD: There is one large DTH multichannel provider, SKY
PerfecTV!, available in about 3.5 million homes. We’re on that platform with
both MTV and Nick. Then the rest is traditional MSO cable operators, and the
800-pound gorilla of that market is J:COM, which has 2.6 million homes. If
you’re a multichannel player in Japan, you certainly need to be on one of those
two platforms. Ideally, you want to be on both. MTV Japan is on both,
Nickelodeon is currently only on SKY PerfecTV! Then, in addition to J:COM,
there are other significant systems. There are about 5 to 6 million cable homes
in Japan. That is out of a total of 45 million TV households.

We’re able to achieve good affiliate revenues. We
have a market that is quite well regulated, so we don’t see the kind of leakage
of our signal that we do in other parts of Asia. And in the case of MTV Japan,
we also do extremely well on advertising and sponsorship revenues. The
demographics in Japan are not like India, where two-thirds of the population
are under 30 or 35. In India, youth marketing is mass marketing. In Japan,
youth marketing is still all about targeting. Because it’s a wealthy and very
developed economy, with high levels of employment, young people here have high
levels of disposable income. So we offer a very attractive demographic and we
harness our digital-, online- and event- marketing capabilities and we produce
appealing packages. When you wrap it all up, despite the relatively small
penetration of the market, it’s kind of the crumbs from a rich man’s table.
There’s actually a very good business here.

Nick is a little ways behind. It’s really only in
the last year to 18 months that we’ve begun to put our shoulders behind that
wheel and give Nick some enhanced local content. Nick has cre­ated a
fast-growing consumer-products
business here, and since we took control of MTV Japan, that’s allowed us to
begin to unlock some of the synergies between the two businesses. Our increased
presence on the ground here has resulted in a much more collaborative and
supportive response from local production companies and marketing partners.

TV ASIA
PACIFIC: What led to the
decision to take back control of MTV Japan?

BULLARD: The channel launched at the beginning of 2001 with
a local joint-venture partner. It had previously been a completely locally
owned and operated music channel called Vibe. We wanted to invest in the
channel to keep it competitive and strong, and we were with a partner who was
reaching the point where they wanted to get out of the business. More
importantly, we felt the timing was absolutely right because of the changes in
the digital technology and the landscape here. We wanted to make sure we were
well positioned to take advantage of all of the things that are going to happen
over the next two years. There’s going to be full digitization of the TV
landscape in 2011. You’ve got high broadband penetration, high mobile 3G
penetration.

There is a very unusual secondary platform which is
known as BS [broadcast satellite], a set of frequencies on satellites allocated
to the terrestrial free-to-air broadcasters, at the moment pretty much
exclusively for their use. That’s going to change. There are about eight or ten
BS frequencies available. Over the next 12 months, that number goes to [more
than 40]. That’s going to create a platform of 12 to 15 million homes, largely
unduplicated with the existing cable and satellite platforms. That’s going to
create a content vacuum. We think we’re well placed to fill that with a lot
more original content. We’re not going to get a 24-hour position on one of
those, but selected distribution of key program blocks, key events, with
supportive local partners.

TV ASIA
PACIFIC: What have you done
in the digital space?

BULLARD: About 18 months ago, we launched [the] FLUX
[platform] on mobile [with] video downloads and a streaming entertainment site,
combined with social networking. About four or five months ago, we launched a
broadband version of that, with much deeper, richer content. The mobile
services are predominantly subscription based at the moment. FLUX Broadband,
which is still in beta, is free.

TV ASIA
PACIFIC: How much original
content are you producing?

BULLARD: MTV Japan is produced, originated and distributed
locally. Nickelodeon is a little different. Producing original animation and
drama is much more expensive and much more difficult to version locally. We’re
beginning to develop partnerships with local producers to create local original
animation. And we’re looking at some acquired local content.

TV ASIA
PACIFIC: Are you bringing
any other Viacom brands to the market?

BULLARD: We quietly launched [the urban music network] BET
on FLUX Broadband. It is undoubtedly a niche product, but there is a big
R&B, hip-hop following in Japan. It’s relatively low cost for us to deliver
BET over FLUX as selective premium content. And we have talked about doing an
international music service.