Earlier this month, Japanese e-commerce company Rakuten rebranded its Video-on-Demand (VoD) service from Wuaki to Rakuten TV. The pay-per-view service is available in 12 countries and has over five million users across Europe, including one million in the UK.
Mike Fletcher speaks exclusively with Rakuten TV’s CEO and founder, Jacinto Roca to discuss the VoD market and how Rakuten TV is looking to grow its presence.
When Rakuten bought Wuaki.tv in 2012, you said that you believed online video would ultimately replace traditional pay-for TV services. Five years later and over ten million households subscribe to at least one of the available VoD services here in the UK. How do you now see the disruption of the traditional TV market?
It is clear that customers are opting more for services that allow them to decide what to watch, where and when to watch. This will continue but traditional pay-for TV service providers are fighting hard to adapt to this evolving customer preference. I no longer think they will disappear. They will continue to adapt to changing behaviours and we will see a greater focus on empowering consumers to watch TV the way they want to watch it.
Where do you see Rakuten TV’s place in the UK VOD market? Amazon’s subscription service continues to grow at 17% quarter on quarter and is available to 3.6million UK subscriber households, while Netflix is available in 6.9 million UK households.
We have a pay-per-view model so we don’t need to compete on subscribers but more than one million active users regularly view our service here in the UK. In the last five years we have grown 40% year on year. While our competitors focus more on TV shows and Hollywood blockbusters, our focus is more on new releases and a broader cinematic offer.
Is the dominance of the SVOD providers such as Netflix (100 million global subscribers) and Amazon Prime (80 million global subscribers) good for your pay-per-view VOD business?
Most definitely. They are driving the consumer behavioural trends. The majority of our customers are also Netflix subscribers. These users prefer their television content on-demand and they come to us for the new movie releases. Netflix is complementary to us and helps increase our traffic.
SVOD providers need original content to build loyalty among subscribers. How does your pay-per-view movie player keep its users coming back for more?
We need to be the recommended movie player of Smart TVs. We achieve this by ensuring we have all the latest releases, both from Hollywood and from regional film makers, and that we show them in the highest quality available.
This year we’re also investing in film production and distribution as customers no longer understand why they should have to wait three months between a theatrical release and a VoD release.
We want to help reduce that timeframe and disrupt the traditional distribution model, in order to help more movie producers show their work to new audiences. We will invest in production and support the digital distribution of more regional films across our network of 12 European countries.
Rakuten TV has five millions users in the 12 European countries it operates in and your revenues are on the rise (up 50% in 2016). How much of this can you attribute to mobile?
Mobile is important but we want to be the alternative to the cinema screen so how we integrate with Smart TVs is more important to us. Smart TVs can provide the picture and audio quality that better complements our offer. Mobile’s relevancy is for discovery and the sharing of our content.
Tell us about the sponsorship agreement you signed with FC Barcelona last year, worth I believe, some £47 million a season?
The sponsorship’s one main objective is to promote the Rakuten brand globally, especially in the 12 European countries we currently have a presence. We are not going to have football distribution rights on our pay-per-view service. We have chosen a football team because we’ve got experience in Japan working with sports teams to promote our brand and it has been very successful for us.
We own a football team and a baseball team in Japan. We believe our sponsorship deal with FC Barcelona is one of the biggest football shirt sponsorships ever seen and will last for four years. It aligns our mission to empower young regional film producers with Barcelona’s heritage of empowering young talented footballers to be the very best they can be.
What are your expansion plans? In 2015 you mentioned you were targeting 15 countries. Is that still the case?
Yes. But we first want to focus on ensuring that our sponsorship of FC Barcelona is helping to build our brand presence in the 12 European countries where we currently have a presence. As long as our business and user base is growing in those 12 countries, we will always look to expand however. Our ambition is to be a global player. We don’t have defined timings but our objective is to keep on growing.
Rakuten Group has now integrated its video operations in Europe, Japan and the US. How will the parent company’s e-commerce and messaging app interests* help evolve VoD?
In the future, e-commerce market places will grow up around VoD services and messaging will play a key part in this digital evolution. We are helping to build this future-facing Rakuten ecosystem, which will then roll-out across Europe. The first step however is to grow our brand presence.
* Rakuten bought messaging app Viber for $900 million in 2014. On 20 July, 2017, Rakuten Viber acquired Chatter Commerce, a San Francisco-based startup that created a keyboard for mobile commerce called ShopChat