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March 04, 2011
IHS Screen Digest has revised its Japanese video rental figures in the light of extensive feedback from industry sources.
The revisions were initiated by feedback early in 2011 querying the exact definition of the raw data we receive each month from local distributors' association the JVA on distributor revenues from the rental sector. The issue raised was whether the JVA data included revenues returned to distributors under revenue sharing (RS) systems of stock management, which have become more prevalent in Japan in recent years, or simply covered the up-front cost of the rental units (which are much lower under RS).
As is often the case when collating data on the video industry, the answer was not clear cut, resulting in an extensive process of revisions affecting every aspect of the rental sector, from distributor revenues to consumer pricing and number of transactions. The revised numbers, which we believe represent the most robust picture of the Japanese rental sector available, confirm our previous view that consumer spending on rental in Japan is declining, but they have also resulted in a historic downward revision of the total size of the rental market. As a result we now believe that Japan represents 50% of the total International rental sector, slightly lower than previously estimated.
The key changes are:
- Increase in rental transactions: We now believe that nearly 1.4bn rental transactions were made in Japan in 2010, up from our previous estimate of 1.0bn
- Reduction in consumer rental prices. ¥100 discount price promotions on catalogue product, by Geo Corporation have forced leading rentailer Tsutaya and many independent stores to reduce their prices to compete. This discounting drove down the average consumer rental price which we now believe fell 6.5% in 2010 to ¥215 ($2.45). Previously we had estimated the average at ¥359 ($4.10) which was calculated based on data published in the JVA's annual store survey.
- Reduction in total rental spending: The increase in transactions failed to offset the decline in rental prices. As a result, we now believe consumers spent ¥297bn ($3.4bn) in 2010, down from our previous figure of ¥365bn ($4.1bn)
- Historic figures now indicate a higher number of rental transactions in recent years but at a lower cost per transaction. As a result we have reduced our historic estimates of the total size of the Japanese rental sector at consumer level. The Japanese market is still, however, the single largest outside the USA and accounts for half of the entire International (outside North America) video rental market.
Subscribers should also note that we have simultaneously made minor downward adjustments to our trade and consumer level data for the Japanese retail sector based on the feedback received and the JVA results for year-end 2010.
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