Japan's Growing Multimedia Market

by Noriko Takezaki

According to the Multimedia White Paper 1997, produced by the Multimedia Content Association of Japan (an affiliate of the Ministry of International Trade and Industry), Japan's multimedia market topped \4.9 trillion in 1996. This represented a 26% year-on-year increase. The growth was due, in part, to strong PC sales early in the year (following the November 1995 Japanese release of Windows 95) and the continuing growth of the Internet market.

The Japanese hardware market reached \3.9 trillion in 1996, a growth of 31% over 1995. The domestic software market, however, reached only \830 billion, a modest 5% growth from 1995. The multimedia (network) services market, meanwhile, was the smallest of the three but showed the strongest year-on-year growth, climbing by 37% to \181 billion.

Sales trends
PCs accounted for nearly 45% of hardware purchases, clearly leading the growth of the market with \1.75 trillion in 1996 sales. This represented a healthy 26% growth over 1995 PC sales. Led by the growing popularity of corporate intranets, Unix servers and LAN peripherals also enjoyed brisk sales in 1996, accounting for some 16% (\623 billion) and 11% (\413 billion) of the market, respectively. Both of these figures represented a 22% year-on-year increase.

Other notable points in the 1996 multimedia hardware market were an over-500% year-on-year growth of digital still camera sales (to \58 billion), and an 80% rise (to \140 billion) in car navigation equipment sales, fueled mainly by expensive VICS (vehicle information and communication system) products.

In 1996, the PC-oriented CD-ROM market grew by almost 50%, from \97 billion to \143 billion. TV game-related CD-ROM sales, too, showed strong growth, doubling the previous year's sales (from \88 billion in 1995 to \176 billion in 1996) in part because of the introduction of numerous new titles. The TV game cartridge market, however, slumped from \273 billion to \139 billion.

Overall, the CD-ROM market reached \348 billion in 1996. In terms of genre, games accounted for a majority of CD-ROM sales (\195 billion), followed by OS (operating system) and business software (\54 billion), and educational/cultural software (\30 billion). Farther down the list, but at a significant \12 billion market share, was "adult" title CD-ROMs.

The network services market saw a more-than-fivefold growth in the number of Internet service providers, and significant growth in demand for ISDN (integrated services digital network) Internet connections.

Future projections
Regarding the 1997 multimedia market, the Multimedia White Paper estimates that the market will continue to grow, reaching \6.3 trillion in total (up by 29% from 1996). The hardware market is projected to reach \4.9 trillion (a 26% increase), while the software market will for the first time top the \1 trillion level (reaching \1.1 trillion, up by 36%). Greatest growth, once again, is expected in the service market, which will grow by 61% to \296 billion.

In the hardware arena, PCs are expected to once again lead market growth, while DVD (digital versatile disk) units and digital satelliteÊbroadcast receivers should enjoy strong sales. Growth is also expected to be strong in digital video cameras, and in the mobile navigation market, thanks to the introduction of compatible PDAs (personal digital assistants)ÊandÊPHS (personal handyphone system) terminals.

In the software arena, the CD-ROM market for PCs and TV games is projected to show strong growth, in part due to the emergence of a new distribution channnel (convenience stores). The ability of vendors to maintain more than a slim profit margin, however, is doubtful. Network-based karaoke should also prove popular.

The Multimedia White Paper 1997 is available at major bookstores in Japan for \9,800. It comes with a CD-ROM that contains information on Japan's multimedia market, multimedia usage samples, winners of the Multimedia Grand Prix '96, a sample of the multimedia software creator licensing test, Internet hyperlink points, and an introduction of multimedia-related publications, terms, and history. Only the multimedia market section is in English.

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