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Netflix bets on anime to battle Disney, Apple in streaming wars

Masatsugu Horie, Bloomberg News on

Published in Business News

As Netflix Inc. prepares for a bruising battle against the Walt Disney Co. and Apple Inc. for streaming subscribers, it's playing a card that may deliver enough of an edge to fend them off in Asia: Japanese anime.

Although Netflix has featured animation for years, the leading streaming provider of 158 million users is stepping up its anime efforts as new rivals such as Apple, Disney and WarnerMedia's HBO Max roll out their services. All of them have identified animation as a way to lure viewers -- from Disney's historic archive to a recent victory by HBO Max in clinching the coveted U.S. distribution rights for most of Hayao Miyazaki's Studio Ghibli films.

Facing such competition, Netflix is extending its strategy of paying for original content to new animated shows such as "Ultraman" and "Eden." It's also holding out for a chance to feature Ghibli's content, including the Oscar-winning "Spirited Away" and "My Neighbor Totoro," in Japan and other countries outside the U.S. Netflix has also approached the renowned animation studio to secure the up-for-grabs streaming rights for its home country, according to John Derderian, Netflix's director of Japan & Anime.

"Japan is certainly among the top two creators of stories in the world with Hollywood," said Derderian, who confirmed that there have been talks with Studio Ghibli, without offering any specifics.

The studio that produced Oscar-winning "Spirited Away" and "My Neighbor Totoro" had long resisted offering its films for streaming, favoring theatrical releases and physical media. That's changing as more viewers choose to access libraries of shows and movies on smartphones, tablets and computers for a fixed monthly price. Netflix -- which has made inroads in Japan, adding millions of subscribers -- is betting on Japanimation to both defend its turf in the country, and push deeper into Asia.

In fact, most of Netflix's anime viewers are outside Japan, according to Derderian. Shows such as "Dragon Ball" or "Attack on Titan" continue to attract a global audience. Overseas sales of Japanese animation content has quadrupled to almost $10 billion since 2012, according to Humanmedia Inc., a Tokyo-based research firm.

 

Even so, Asia remains a mostly untapped market for the major streaming services. It will probably take a few years until HBO Max, Disney Plus and others to get serious about gathering streaming services in the region. Crunchyroll Inc., a San Francisco-based on-demand streaming service for anime fans outside Japan, has about 2 million subscribers.

Demand for Japanese animation is especially high in Southeast Asia, Europe and Latin Americas, according to Derderian. A spokeswoman for Studio Ghibli declined to comment on business relationships with Netflix, Amazon or other streaming platforms.

"Netflix will have to sustain investment into high-budget, Hollywood-like works and multinational content in order to set itself apart as other players join the market," said Masahiro Hasegawa, an analyst at HumanMedia.

Netflix's average spending top shows has jumped about 30% in the past year, content chief Ted Sarandos said in a post-earnings conference call Oct. 17. Netflix is raising funds with a $2 billion bond issue, it said last week.

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