The Japanese subscription video-on-demand (SVoD) market has long been dominated by the two international giants Amazon Prime Video and Netflix. However, in 2023, domestic services U-Next and Paravi joined together to compete more directly with the two global players.

U-Next, owned by entertainment company Usen-Next, has long boasted the largest catalogue size among all SVoD platforms in Japan. However, its higher monthly cost (JPY2,189 versus JPY1,490 for Netflix’s Standard plan and JPY600 for Amazon Prime) has also hindered its subscription growth. In comparison, Paravi, a smaller SVoD service established by major Japanese broadcasters TBS and TV Tokyo, carries their popular titles but is offered at a much cheaper subscription fee - JPY1,017 per month. The merger in Q2 2023 enabled U-Next to boost its content offering while absorbing 0.8m subscriptions from Paravi, boosting its total subscriber base to 3.9m. The surviving service, U-Next, successfully retained most of the users from Paravi by giving them a legacy price until the end of 2023 (thereafter JPY1,430), while existing U-Next users enjoyed the enriched catalogue with the same fee as before.

The merger has not only helped U-Next to surpass dTV (now named Lemino) and Hulu Japan (owned by another major broadcaster, Nippon TV) to become Japan’s largest domestic SVoD service, but crucially, helps it compete more directly with Amazon Prime Video and Netflix. Its enlarged catalogue (with Paravi’s content from TBS and TV Tokyo) is complemented by diverse partnerships with content providers such as Warner Bros. Discovery (including HBO content), NBCUniversal and Paramount. Moreover, imitating Amazon’s successful strategy, U-Next has also included various perks within its subscription plan, such as free Manga and e-books, free movie tickets, and add-on subscriptions of sports streaming platform SPOTV NOW, and public service broadcasting (PSB)-owned NHK On Demand. With this fuller offer, U-Next is now on track to achieve a forecast of 5m subscriptions in Japan by 2028.

Although U-Next currently has around 60% of Netflix and 40% of Amazon Prime Video’s subscriber base, its higher ARPU enabled U-Next to generate JPY90bn (~$636m) in 2023, 76% of what Netflix generated, and twice as much as Amazon Prime Video. Overall, with its larger catalogue, subscriber base and revenue, U-Next is now better positioned than any other domestic SVoD service to challenge the dominance of Amazon Prime Video and Netflix and increase competition in the wider Japanese streaming market.