Exclusive Interview: Fuji’s Hisashi Hieda

September 12, 2012 World Screen Top Stories

PREMIUM: Hisashi Hieda, the president and CEO of Fuji Media Holdings, shares with World Screen his strategy for Japan’s leading commercial broadcaster in the digital age.

 

WS: In the aftermath of the earthquake and the economic downturn, how has Japan’s advertising market performed over the last year?
HIEDA: Total expenditure in Japan’s advertising market for 2011 fell 2.3 percent compared to the previous year due to the significant effects of the earthquake. However, TV advertising fees within the market recovered three months after the earthquake and only resulted in an annual 0.5 percent drop. Economically, the manufacturing industry weakened temporarily but recovered quickly, exceeding our predictions. Domestic demand remained stable, and a decline in consumer spending went unseen. People reexamined the value of television through watching news reports of the disaster, resulting in a reevaluation by advertisers about TV’s media value.
 

WS: What is Fuji’s share of the advertising pie, and how do you envision increasing your position?
HIEDA: Our advertising income dropped temporarily after the financial crisis in 2008 but made a quick recovery in 2010, followed by another year of increased revenue in 2011.
 

Fuji TV’s share of the Tokyo metropolitan area’s spot-ad market is approximately 29 percent, at the top out of the five networks in the area. Our programs are overwhelmingly favored by the young female demographic that advertisers place great importance on, due to their high purchasing power. Fuji TV will continue to [present] programming to suit the needs of young viewers who are our main target.  

WS: Is the ad market still dominated by free-to-air channels? How are your BS (broadcast satellite) channels doing in the ad market?

HIEDA: Our BS channel audience is increasing substantially every year, as is its value to advertisers, although, free-to-air channels do continue to dominate Japan’s television advertising market. Advertising revenue from BS channels in 2011 reached less than 3 percent of the total income for TV advertising. This means that there is still room for BS channels to gain a larger piece of the pie. We can expect further growth in this area.

 

WS: Is the traditional 30-second commercial still the preferred option for Japanese brands, or are you seeing more interest in product placement or online advertising?
HIEDA: In Japan, TV commercials are considered the most effective and influential [medium for] reaching out to individuals about a product or brand. TV advertising in Japan has more than a 30-percent share of the entire ad market and has been on the rise for two consecutive years. Web advertising is also rising, but a marketing strategy in which it [works together with] TV ads has become the basis for obtaining more effective ad results. Advertisers in Japan have little interest in product placement. 

 

WS: How are you diversifying Fuji’s revenues beyond advertising?

HIEDA: Fuji TV was ahead of the game compared to other networks when it came to expanding its business outside of advertising. Events, motion pictures, DVDs and related merchandise have grown into a large-scale business, incomparable to other networks. On-demand online program distribution and the gaming business have begun generating revenue and are anticipated to be an area of further growth in the future.

 

WS: On-demand and DVRs have radically transformed the free-TV broadcasting business in the U.S. Are these factors impacting Fuji? How have you seen viewing trends change in Japan?
HIEDA: There is a high percentage of Japanese households that own DVRs and the on-demand market is gradually [progressing]. While this may be an indication of a gradual transformation in TV viewing trends, the foundation of the free-TV business remains stable and unshaken. In fact, last year’s prime-time ratings in Japan rose compared to the year before, proving TV’s dominant standpoint. On the other hand, we are working on on-demand content, to prepare for when changes do occur in viewing trends.

 

WS: What is the next step for Japan’s media industry, now that the digital transition has been completed?
HIEDA: Various steps come to mind, but one topic is how we tackle digital devices and services such as Smart TVs that are popping up in the market one after another. Another major topic is how we enter the international market as a media content company. We are in the process of investigating ways to develop the business multilaterally, instead of just the usual program sales.

WS: How has Fuji’s expansion into new fields such as mobile phones, the Internet and IPTV progressed over the last few years?  
HIEDA: Progression is steady. In the field of the Internet, we partnered with Google this spring and began program distribution on YouTube. We are currently planning various business collaborations for the near future. For smartphones and mobile devices, we are offering [pay-per-view] programs and games. NOTTV is a broadcasting station created exclusively for smartphones that we launched with NTT docomo. Its services began this April and we have high expectations for its growth.
   

WS: How are you positioning Fuji’s international-distribution business? Do you see Japanese content becoming more popular on the global stage?

HIEDA: We have actively developed our international-distribution business. It used to be that program sales of [Japanese] dramas in the Asian market was mainstream. But that very market has been affected by the conquest of Korean-made drama in the past ten years. Now we are not just selling programs, but selling formats, producing local versions, and developing related merchandise. By evolving the business, we aim to diversify profits.

 

WS: You have interests in the pay-TV sector. How important is this business for Fuji?

HIEDA: In comparison to commercial broadcasting, pay-TV broadcasting is less susceptible to fluctuations in the economy. For this reason, it holds an important position in our business portfolio and its role will grow bigger in the future. Fuji TV was early to [invest in] SKYperfecTV!, a satellite platform business. We are also the largest shareholder of WOWOW, Japan’s biggest movie channel and one of the first to embark in the pay-TV business. Fuji TV currently operates three pay-TV channels directly, and its earnings are on the increase.

 

WS: What are the greatest challenges facing Fuji currently? And what are your greatest opportunities?
HIEDA: One of our most important challenges is how we can respond to changes in [the market] such as the diversification of technology and media. Fuji TV is Japan’s strongest [entertainment] content manufacturer and we believe that by maximizing this production power to its fullest and allowing it to conform to new technology and media, [opportunities] for new business are born. Now is the time for our manifestos to come alive—they are: develop a media complex and enrich a digital-content factory. 

 

This April, a real-estate business focusing on urban development became a member of the Fuji Media Holdings group as a wholly owned subsidiary company. This will allow for Fuji TV, whose forte is entertainment, to synchronize with the urban-development business. This expands our chances to occupy new unclaimed territory.
 

WS: What are your goals for the company in the next year?

HIEDA: Recently we have made drastic changes to our organization in order to strengthen programming and content-production power, as well as [reinforcing our] motion picture, pay TV, and digital businesses. Under this new structure, we will strive to achieve solid results and simultaneously take steady steps in building a foundation for the future.