Rakuten TV, the Japanese e-commerce giant's effort to take Netflix and Amazon into the world of video streaming, has been a minor player in terms of online entertainment market share, with only 7 million users his service. But today, it unveils two new keys that hopefully will help turn the tide. The company adds 30 new European countries where the service will be operational, bringing the total number to 42 throughout the region and Japan. It has also signed an agreement with big names in connected TV entertainment systems, including Samsung, LG, Philips and Hisense. to incorporate a dedicated button "Rakuten TV" on their remotes.
Both actions highlight the fact that Rakuten may not have been among the biggest advocates of the popularity of video streaming (compare its 7 million users to the 139 million users reported by Netflix in its most recent results), but that does not seem ready. in the towel on it.
"We are here to continue running the marathon," said Jacinto Roca, CEO of Rakuten TV, this week. "This is a new step towards becoming a global player in this sector."
It's high time that Netflix and Amazon compete in the high-end video market – that is, video entertainment delivered to consumers via their existing broadband connections to compete with expensive cable plans. or by satellite – but they are perhaps among the best performers. most obvious competition, they are not the only ones. Apple, Google, a number of content owners themselves and device makers all believe that they have the opportunity to become a favorite place for consumer video entertainment needs.
In a way, Rakuten TV looks directly at the response of the Japanese ecommerce company to Amazon's video service: the two companies have established themselves in the region as a natural extension of their e-commerce activities , which sell consumer electronics products and already have many content-related activities – namely books and e-books, and both would have already built much of the infrastructure needed to perform these services as sub- product of these e-commerce transactions. And, alongside other assets owned by Rakuten, such as Viber and Ebates, it is an additional initiative of the company to diversify not only its revenues and services, but also the The ecosystem in which customers interact with its brand.
But Rakuten TV has taken a different approach in at least three important ways. The first of them is the way the price of the service is calculated. There is no monthly subscription, and people watch and pay movies. Roca said that it is unlikely that this will change in the future.
"We believe that the simplicity of our offer is one of the key value propositions for us, so we do not plan to introduce monthly packages," he said. He added that in the case of Rakuten TV, the company found that customers were watching more than one movie per month and that, if you look at the average price of its movies, promotions might happen (in the UK ) at 99 pence for one. movie, but a high release like Grindlewald's crimes costs £ 13.99 to see – "it's really a good ARPU for us," he said. "The goal today is to make sure that people enjoy at least one movie a month on our platform."
It notes that the economic aspects are paradoxically more complex with regard to bundles for popular suppliers, where several points of view come under the same price, which may affect margins across the board. service. (Something that has been discussed with streaming music, too.)
The second area in which Rakuten TV tries to differentiate itself from others in the video streaming space is its decision not to create original content, or at least on any scale. Last year, the company produced a film that she produced, Hurricane, which Roca described as an "experiment".
"We're going to do three or four more films this year to start learning more about production, but we have no major strategy behind that for now," he said, noting that content providers have regulatory requirements in Europe also allowing them to contribute to market growth. content production industry locally facing the excessive dominance of the United States "It's more an experiment, with but no strategic initiative."
Content efforts can be hundreds or even billions of investments, as they all have done for Rakuten TV's competitors, and while it is certain that the fame and credibility that ensues may not be tenable. option, given the challenges of distribution. This also places Rakuten in a better negotiating position with other content rights holders, who will not consider him as a rival for the eyes who could also use their own power as trading currency during trading. A license.
This brings us to the third area where Rakuten is trying to be a little different, and an excuse from Roca to explain why society has taken so long to expand into more countries: localization. He says that Rakuten TV will stand out from the market by offering a wider and more tailored content selection for each local market, using data to see not only what locals love to watch on TV, but also what are the outputs cinematographic films that Rakuten should absolutely try. get for these markets. It takes time, he says.
I have to admit that there is something to this: if you have ever traveled to various places far away and tried to watch Netflix or Amazon Prime Video, you may notice that the choice of titles is much more limited, but are almost the same from one country to another and place a strong emphasis on the original content of services – probably another reason why they created it first, to populate their services without having to make many delicate licenses .
Whatever the case may be, Rakuten is investing in another, more fundamental area before it can further double its original content. The company does not disclose how much it had to pay smart TV manufacturers to create a button on their remotes, but said the investment was based on solid results from existing handsets from Roku and Hisense.
"We have buttons on these buttons for a few years and we can see that we bring in new users from these buttons," said Roca. "After two years with that, we decided that it was a good time to invest in brands with large market shares in Europe." He added that this would potentially give Rakuten TV potential access to the buttons on TVs from suppliers. % of the market in the region. Of course, for users to have handsets with these Rakuten buttons, consumers have to buy new TVs. It is therefore a bet that must still bear fruit.
The investment in investing in smart TV is also remarkable, because at the same time, Rakuten does not expand its presence significantly on the mobile. It also depends on the data, said Roca: today, about 60% of its content is consumed on smart TVs. The company also claims that it has the largest 4K HDR film catalog in Europe and is about to start testing 8K.
As for the future, Roca said that Rakuten TV's project was to penetrate completely different markets, now that it covers Europe extensively. This will most likely include Latin America, which has a cultural and linguistic synergy with Spain, the local Rakuten TV market (the Japanese giant led its television strategy around its 2012 acquisition of Wuaki.tv, founded by Roca , who renamed). And it also examines the markets it could target in Asia. Another acquisition of Viki by Rakuten, which provides crowdsourcing subtitles for online videos, could play a key role in its strategy in Asia, where Viki has a broad base of use.