ICT industry 84.1 trillion yen, 8.7% Nominal market size of all industries (2014) trillion yen 100,000 84,124 80,000 63,260 60,000 40,000

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1 Chapter 5 Basic Data on the ICT Field Section 1 ICT Industry Trends 1. Economic size of the ICT industry (1) Market size (domestic production ) ICT industry market accounted for about 8.7 percent of all industries, making it the largest industry The ICT industry s market size in 214 was 84.1 trillion yen (based on nominal domestic production ), accounting for 8.7 percent of all industries and making it the largest industry in the country (Figure ). Looking at the industry s performance over time finds that its production value cooled off for several years after 2 in response to the collapse of the IT bubble. The industry entered positive growth territory again starting in 25, but its production value plummeted between 28 and 29 due to the global economic crisis. ICT s production value continued to slide even after 21 until signs of recovery finally started to appear in the years between 212 and 214 (Figure ). Looking at the transitions in market size (based on real domestic production ) of the main industries in constant 25 values reveals that the ICT industry recovered from the global financial crisis to 98.3 trillion yen in 21 but remained flat thereafter. The ICT industry s market size (based on real domestic production ) in 214 contracted by just.1 percent from the previous year to 98.3 trillion yen. The industry s average annual growth rate from 1995 to 214 was 2.3 percent (Figure ). Figure Market sizes of major industries (based on nominal domestic production ) (breakdown) (214) ICT industry 84.1 trillion yen, 8.7% Electrical equipment (excluding ICT devices) 29.6 trillion yen, 3.1% Transport equipment 51.5 trillion yen, 5.3% Construction (excluding construction of telecom facilities) 6.3 trillion yen, 6.3% Other industries trillion yen, 59.2% Nominal market size of all industries (214) trillion yen Wholesale 57. trillion yen, 5.9% Retail 37. trillion yen, 3.8% Transport 43.7 trillion yen, 4.5% Iron and steel 29.8 trillion yen, 3.1% (Source) Study on Economic Analysis of ICT, MIC (216) Figure Trends in market sizes of major industries (based on nominal domestic production and real domestic production ) Nominal domestic production Real domestic production (in billions of yen) 12, 1, 8, 78,182 6, 4, 2, (in billions of yen, 25 values) 12, 1, 84,124 8, 63,26 6, 4, 2, 98, ICT industry Iron and steel Electrical equipment (excluding ICT devices) Transport equipment Construction (excluding construction of telecom facilities) Wholesale Retail Transport (Source) Study on Economic Analysis of ICT, MIC (216) 5

2 (2) Gross domestic product (GDP) The real GDP of the ICT industry in 214 accounted for 1.8 percent of all industries The nominal GDP of the ICT industry rose slightly in 214 by.4 percent year-on-year to 37.1 trillion yen. Conversely, the real GDP of the ICT industry in constant 25 values slipped.8 percent year-on-year in 214 to 51.1 trillion yen. The nominal GDP has trended downward since the 29 financial crisis, but the real GDP has been on a general upward direction (Figure ). Looking at the size of nominal GDP of the main industries finds that the ICT industry s nominal GDP accounts for 7.9 percent of the combined nominal GDPs of all industries and is the second largest after the wholesale industry. The growth rate of the ICT industry in terms of nominal GDP rebounded to plus.4 percent over 213 and 214. Examining the real GDPs of the main industries finds that the ICT industry s real GDP accounts for 1.8 percent of all industries, making it the largest of all major industries (Figure ). (3) Employment ICT industry employment totaled million in 214 accounting for 7.2 percent of total employment in all industries The ICT industry employed million people in 214 (up 1.1 percent from the previous year), accounting for 7.2 percent of total employment in all industries. Employment declined by 7.4 percent from 213 in the ICTrelated construction sector, by 2.8 percent in the ICTrelated manufacturing sector, and by 1.3 percent in the Internet-related services sector. But employment in the communications sector and the video, audio, and text information production sector increased, by 5.5 percent and 1.7 percent respectively (Figure ). Figure Transitions in the nominal GDP and real GDP of major industries 6 Nominal GDP (in billions of yen) 5, 45, 4, 35, 37,52 37,143 3, 25, 2, 15, 1, 5, (in billions of yen, 25 values) 6, 5, 4, 3, 27,41 2, 1, Real GDP 51, ICT industry Iron and steel Electrical equipment (excluding ICT devices) Transport equipment Construction (excluding construction of telecom facilities) Wholesale Retail Transport Figure Nominal GDP and real GDP of major industries (Source) Study on Economic Analysis of ICT, MIC (216) Nominal GDP ICT industry 37.1 trillion yen, 7.9% Nominal GDP of all industries Other industries trillion yen trillion yen, 63.8% Electrical equipment (excluding ICT devices) 4.8 trillion yen, 1.% Transport equipment 9.5 trillion yen, 2.% Construction (excluding construction of telecom facilities) 27.4 trillion yen, 5.9% Wholesale 38.2 trillion yen, 8.2% Retail 23.4 trillion yen, 5.% Transport 22.9 trillion yen, 4.9% Iron and steel 5.9 trillion yen, 1.3% Real GDP ICT industry 51.1 trillion yen, 1.8% Real GDP of all industries trillion yen Other industries trillion yen, 61.3% Electrical equipment (excluding ICT devices) 1. trillion yen, 2.1% Transport equipment 1.7 trillion yen, 2.2% Construction (excluding construction of telecom facilities) 25.7 trillion yen, 5.4% Wholesale 33.5 trillion yen, 7.% Retail 23.1 trillion yen, 4.9% Transport 24.1 trillion yen, 5.1% Iron and steel 5.6 trillion yen, 1.2% 6 See Data 3 and Data 4 at the end for details about these figures. Figure Transitions in ICT industry employment (Source) Study on Economic Analysis of ICT, MIC (216) [1s of thousands of jobs] 4,5 3,63 3,67 3,92 3,953 3,979 4,42 3,966 3,719 3,632 3,69 3,623 3,719 3,734 3,825 3,884 3,828 3,898 3,964 4,78 4,124 4, 3,5 3, 2,5 2, 1,5 1, (translation Communications Broadcasting Information services Internet-related services not needed) Video, audio and text information production ICT-related manufacturing ICT-related services ICT-related construction Research (Source) Study on Economic Analysis of ICT, MIC (216) 51

3 2. ICT industry contributions to the national economy (1) ICT industry s economic spillover effects The ICT industry contributes the largest economic spillover effects of all industries in terms of added value and employment inducements The ICT industry s real domestic production in 214 was 98.3 trillion yen. The industry s economic spillover effects, 7 estimated to be 88.3 trillion yen in added value and million jobs, were the largest of all Japan s industries. By comparison, in 1995 the ICT industry s real domestic production value was 63.3 trillion yen, which contributed 57. trillion yen in added value and million jobs. Because technological innovation has a large impact on the ICT industry, the industry is believed to be a stronger driver of added value than employment (Figure ). From the mid-199s on, the added value and employment induced from primary industries, such as iron and steel and electrical equipment, have been flat. In contrast, contributions from the ICT industry (particularly in added value) soared until 21 and have been maintained at a high level ever since. Figure Transitions in economic spillover effects (induced added value and jobs) from major industries production activities (in trillions of yen) Induced added value Induced jobs (In 1s of thousands of jobs) 1, ICT industry total Iron and steel Electrical equipment (excluding ICT devices) Transport equipment Construction (excluding construction of telecom facilities) Wholesale Retail Transport (Source) Study on Economic Analysis of ICT, MIC (216) 3. Research and development in the ICT field (1) Research and development spending The ICT industry 8 spent trillion yen on research in FY 214, accounting for 29.8 percent of all corporate research spending According to the 215 Research Investigation Report on Science and Technology, Japan s total scientific and technological research spending (i.e., research spending) in FY 214 stood at trillion yen (the combined research spending by enterprises, nonprofit organizations, public agencies, universities, etc.). Corporate research spending, which accounts for about 7 percent of all research spending, was trillion yen. Of this amount, trillion yen (29.8 percent) was spent on research by the ICT industry. The ICT equipment and appliance manufacturing segment was largest research spender in the ICT industry (Figure ). (2) Technology trading The ICT industry posted a surplus in technology exports 9 in FY 214 The value received from Japan s technology exports in FY 214 totaled trillion yen, to which the ICT industry contributed 48.8 billion yen, or 13.1 percent. On the other side of technology trades, the costs of technology imports was 513. billion yen, of which the ICT industry paid out billion yen, or 5. percent. Both Japan and the ICT industry posted export surpluses in technology. The ICT equipment and appliance manufacturing segment accounted for the largest share of the ICT industry s technology imports and exports (Figure ). 7 There are two methods of calculating economic spillover effects: (1) calculating the economic spillover effects for all Japan s industries brought about by each industry sector s final demand, focusing on the goods and services that constitute the industry sector s final demand and (2) calculating the economic spillover effects for all Japan s industries brought about by each industry sector s production activities (total of final demand and intermediate demand), focusing on the industry sector itself. The latter method was used here. 8 ICT industry here refers to the ICT equipment and appliance manufacturing industry, the electrical equipment and appliance manufacturing industry, the electronic component, device, and circuitry manufacturing industry, and the information and communications industry (including the information services, telecommunications, broadcasting, Internet-related services, and other ICT sectors). 9 The value of technology trade is the equivalent value received from the provision (export) of patents, knowledge, technical direction, and other forms of technology transfers to other countries or the equivalent value paid to receive (import) the same forms of technology transfers from other countries. 52

4 (3) Number of researchers The ICT industry employed 182,73 researchers, or 36.1 percent of all corporate researchers in Japan There were 866,9 researchers in Japan on March 31, 215 (the total of all researchers at enterprises, nonprofit organizations, public agencies, universities, etc.). Enterprises employed 56,134 researchers, or about 6 percent of the total. The ICT industry employed 182,73 researchers, or 36.1 percent of all corporate researchers in Japan. The ICT equipment and appliance manufacturing segment had the most researchers of any ICT industry sector (Figure ). Figure Breakdown of corporate research spending by industry (FY 214) (Corporate research spending: trillion yen) Total for other industries ICT equipment and trillion yen, 8.4% appliance manufacturing trillion yen, 12.% Electrical equipment and appliance manufacturing trillion yen, 8.2% Electronic component, device, and circuitry manufacturing billion yen, 4.5% Total for other manufacturing industries trillion yen, 61.8% Telecommunications billion yen, 2.8% Information services 31.2 billion yen, 2.2% Internet-related and other ICT services 6.8 billion yen,.1% Broadcasting 5 million yen, less than.1% (Source) Prepared from the 215 Research Investigation Report on Science and Technology, MIC Figure Technology trading by industry (FY 214) Total for other industries 77.9 billion yen, 2.1% Value of technology exports (all industries: trillion yen) Total for other manufacturing industries trillion yen, 84.7% ICT equipment and appliance manufacturing 29.4 billion yen, 7.9% Electrical equipment and appliance manufacturing billion yen, 3.8% Electronic component, device, and circuitry manufacturing 25.1 billion yen,.7% Information and communications 25.8 billion yen,.7% Value of technology imports (all industries: 513. billion yen) Total for other industries 76.8 billion yen, 15.% Total for other manufacturing industries billion yen, 35.% ICT equipment and appliance manufacturing billion yen, 28.1% Electrical equipment and appliance manufacturing 39.1 billion yen, 7.6% Electronic component, device, and circuitry manufacturing 9.9 billion yen, 1.9% Information and communications 63.5 billion yen, 12.4% (Source) Prepared from the 215 Research Investigation Report on Science and Technology, MIC Figure Corporate researchers by industry (as of March 31, 215) Corporate researchers in all industries: 56,134 Total for other industries 34, % ICT equipment and appliance manufacturing 87, % Electrical equipment and appliance manufacturing 39, % Total for other manufacturing industries 289, % Electronic component, device, and circuitry manufacturing 26, % Information services 23, % Communications 5,133 1.% Broadcasting 29, less than.1% Internet-related and other ICT services 289, % (Source) Prepared from the 215 Research Investigation Report on Science and Technology, MIC 53

5 4. State of ICT enterprise operations The Basic Survey on the Information and Communications Industry is a general statistical survey (started in 21) that MIC and the Ministry of Economy, Trade and Industry jointly conduct under the Statistics Act (Law No. 53 of 27) to clarify the operations of enterprises belonging to the ICT industry a Large Category G in the Japan Standard Industry Classification and to obtain basic data for ICT industry policies. The following sections provide an overview of the 215 survey that pertains to ICT enterprises. Figure (1) Summary of enterprises engaging in ICT business operations (activity-base results) a. General summary of the survey results 5,639 enterprises were engaged in ICT business operations with sales in excess of 46 trillion yen Sales attributed to ICT business operations in FY 214 totaled trillion yen (total sales by the enterprises were trillion yen). By sector, the telecommunications sector accounted for 36.6 percent of all sales (up.2 percentage points from the previous year), the software sector 32. percent (up.5 points), and the information processing services sector 11.2 percent (up.4 points) (Figure ). The number of enterprises engaging in ICT business operations (irrespective of whether ICT business operations are the enterprise s mainstay operations) stood at 5,519. Operating profits were trillion yen, ordinary income was trillion yen, and the enterprises held 9,51 subsidiaries and associated companies. b. Breakdown of sales Enterprises capitalized at less than 1 million yen accounted for more than 5 percent of all enterprises in eight of the 12 ICT industry sectors A breakdown of ICT industry enterprises by capital size discovers that enterprises capitalized at less than 1 million yen accounted for more than 5 percent of all enterprises in 8 of the 12 ICT industry sectors. Of particular note is the video information production and distribution sector and the audio information production sector, where enterprises capitalized at less than 5 million yen accounted for more than 4 percent of all enterprises in the respective sectors (Figure ). ICT industry sales Advertising agencies (181) 3,128.7% Cable broadcasting service providers (213) 5,78 1.1% Film makers and distributors (466) 8,44 1.8% Publication companies (368) 1, % Newspaper companies (132)14, % Private broadcasters (371) 2, % Internet-related serviceproviders (75) 25,98 5.6% Information processing service providers (1,738) 52, % Audio program producers (127) 1,836.4% FY 214 sales in the ICT industry trillion yen Software service providers (2,889) 148,677 32% Service providers related to video, audio, or text information (167) 1,331.3% Miscellaneous communication service providers 2,598.6% Telecommunication service operators (371) 17, % Figures in parentheses are the number of companies Unit: 1s of millions of yen (Note) Miscellaneous communication service providers refers to enterprises that selected other as the primary business in the breakdown of sales attributable to ICT business operations. (Source) 215 Basic Survey on the Information and Communications Industry, MIC / METI 54

6 Figure Breakdown of ICT industry enterprises by capital size All responses(5,519) Telecommunication service operators(371) Private broadcasters(371) Cable broadcasting service providers(213) Software service providers(2,889) Information processing service providers (1,738) Internet-related service providers(75) Film makers and distributors(466) Audio program producers(127) Newspaper companies(132) Publication companies(368) Advertising agencies(181) Service providers related to video, audio, or text information(167) TV / radio program producers (included in other results)(393) Less than 5 million yen 5 million yen to less than 1 million yen 1 million yen to less than 5 million yen 5. Telecommunication market trends (1) Market size Mobile communications accounted for about 6 percent of sales in the telecommunications sector, while, by service category, the data transmission services share has been rising year by year Sales in the telecommunications sector in FY 214 were trillion yen (an increase of.4 percent from the previous year) (Figure ). Fixed-line communications accounted for 32.9 percent of all sales in FY 213, and mobile communications (mobile phones and PHS 5 million yen to less than one billion yen One billion yen to less than 1 billion yen 1 billion yen or more (Source) 215 Basic Survey on the Information and Communications Industry, MIC / METI Figure Transitions in telecommunications sector sales handsets) for 55.8 percent (Figure ). Looking at sales by service category finds voice transmission services accounted for 3.5 percent and data transmission services for 49.5 percent (Figure ). The average revenue per user (ARPU) among the main mobile communication service providers was 4,17 yen for NTT Docomo, 6,13 yen for KDDI, and 4,7 yen for SoftBank (Figure ). [in 1s of millions of yen] 16, 14, 133, , , , ,94 12, 1, 8, 6, 4, 2, (fiscal year) (Note) Comparisons must be made with caution, as sales represent the simple sum of figures from all responding carriers and the number of responding carriers differs from year to year. Prepared from 215 Basic Survey on the Information and Communications Industry, MIC / METI Figure Telecom carriers sales breakdown by fixed-line communications and mobile communications (fiscal year) Fixed-line communications Mobile communications Other Prepared from 214 Basic Survey on the Information and Communications Industry, MIC / METI 55

7 Figure Transitions in sales by service category (fiscal year) Voice transmission services Data transmission services Leased services Others Prepared from 214 Basic Survey on the Information and Communications Industry, MIC / METI Figure Transitions in mobile ARPU in the past five years for three domestic mobile operators [yen per month] 7, 6, 6, , 4, 4,87 4, ,17 4,5 4,37 4,51 4,43 4,49 4, ,15 4,29 4,45 4,23 4,7 54 3, 2,67 2,69 2,64 2,6 2,96 2,49 2,85 5,69 2,51 2,77 2,93 3,21 3,45 2, 4,15 1, 2,2 1,73 1,37 1,18 1,21 2,2 1, ,65 1,52 1,52 FY 211 FY 212 FY 213 FY 214 FY 215 FY 211 FY 212 FY 213 FY 214 FY 215 FY 211 FY 212 FY 213 FY 214 FY 215 NTT Docomo KDDI (au) SoftBank Voice ARPU Data ARPU Voice ARPU + Data ARPU Other ARPU (Notes) Each company s ARPU is calculated and released based on the respective company s criteria. The figures were not calculated using the same method. Due to rounding, the total of individual ARPU figures may not equal the total ARPU figures. NTT Docomo includes Smart ARPU, KDDI includes value added ARPU, and SoftBank includes service ARPU. The ARPU figures for KDDI after FY 212 were taken from au Communications ARPU under the personal segment. Applied discount amounts were subtracted from the voice ARPU. SoftBank ARPU figures included communication modules until FY 211. SoftBank Mobile took over SoftBank BB, SoftBank Telecom, and Y!Mobile on April 1, 215 (name changed to SoftBank on July 1, 215). The FY 215 ARPU figures for NTT Docomo and KDDI were monthly sales per user. Prepared from financial statements from each company 6. Broadcasting market trends (1) Size of the broadcasting market a. Broadcaster sales Broadcaster sales totaled trillion yen in FY 214; the share of sales by terrestrial-based broadcasters has continued to expanded in recent years Japanese broadcasters are divided into two categories: Japan Broadcasting Corp., a public broadcaster known as NHK, which depends on reception fee revenues, and private broadcasters that depend on advertisements or paid programming. Apart from these categories, the Open University of Japan provides broadcasting services for educational purposes. The entire broadcasting sector s sales, including revenues from broadcasting and non-broadcasting operations, decreased in FY 214 (by 1.4 percent) from the previous year to trillion yen. By category, terrestrial-based private broadcasters sales were trillion yen (up.7 percent from the previous year), satellite-based private broadcasters sales were billion yen (down 18.5 percent), cable TV broadcasters sales were billion yen (down 1.1 percent), and NHK s ordinary operating income was billion yen (up 2.7 percent). In terms of market share, terrestrial-based private broadcasters accounted for 73. percent (up 2.1 percentage points from the previous year) of private broadcasters sales. The market share of terrestrial-based broadcasters continued to grow from the previous year (Figure ). 56

8 Figure Transitions in and breakdown of the broadcasting sector market size (total sales) [1s of millions of yen] 45, 4, 35, 3, 37,458 38,356 39,698 4,152 4,422 41,178 39,689 38,254 39,89 39,115 38,915 39,37 38,759 25, 2, 15, 1, 5, (FY) Terrestrial-based broadcasters Satellite-based broadcasters* 1 Cable TV broadcasters* 2 NHK* 3 Fiscal year Terrestrial-based broadcasters 24,863 25,229 26,153 26,138 26,91 25,847 24,493 22,574 22,655 22,52 22,87 23,216 23,375 Community broadcasters Private included in broadcasters total above *4 Satellite-based broadcasters *1 2,769 2,995 3,158 3,414 3,525 3,737 3,95 3,887 4,185 4,49 4,51 4,491 3,661 Cable TV broadcasters 3,76 3,33 3,533 3,85 4,5 4,746 4,667 5,134 5,437 5,177 4,931 5,3 4,975 NHK *3 6,75 6,83 6,855 6,749 6,756 6,848 6,624 6,659 6,812 6,946 6,64 6,57 6,748 Total 37,458 38,356 39,698 4,152 4,422 41,178 39,689 38,254 39,89 39,115 38,915 39,37 38,759 (Note 1) Figures for satellite-based broadcasters represent operating revenues from satellite-based broadcasting services. (Note 2) Cable TV broadcasters until FY 21 were business enterprises providing independent broadcasting services with facilities licensed under the former licensing scheme (under the former Act on Cable Television Broadcasting. Note that facilities registered under the former Act on Broadcast on Telecommunications Services included those that use the same broadcasting method as facilities licensed under the former licensing scheme). From FY 211 on, cable TV broadcasters were registered business enterprises with wired telecommunication facilities providing independent broadcasting services. (Both exclude business operators using IP multicasts.) (Note 3) Figures for NHK represent ordinary operating income. (Note 4) Community broadcasting operators that also provide cable TV broadcasting services are excluded. Prepared from MIC materials and the NHK Yearbook for each fiscal year 7. Content market trends (1) Size of Japan s content market The Japanese content market was valued at trillion yen, over 5 percent of which was attributable to video content, about 4 percent to text-based content, and less than 1 percent to audio-based content The Japanese content market was valued at trillion yen in 214. By content segment, video content accounted for over 5 percent of the market, text-based content, about 4 percent, and audio-based content, under 1 percent. 1 The primary components of the video content segment, worth trillion yen (54.4 percent of the entire market), were terrestrial TV programs, worth trillion yen, game software, trillion yen, satellite and cable TV broadcast programs, 95.2 billion yen, movies, billion yen, videos, billion yen, and original Internet videos, billion yen. The primary components of the audio-based content segment, worth 75.3 billion yen (6.5 percent of the entire market), were music, worth billion yen, and radio programs, 22.9 billion yen. And the primary components of the text-based content segment, worth trillion yen (39. percent of the entire market), were newspaper articles, worth trillion yen, magazines, trillion yen, books, billion yen, comics, billion 1 The market size was measured and analyzed by assessing the primary nature of the content works and recalculating the value at each distribution level, such as primary distribution or multiuse. The value of content was not calculated by media channel. 11 The magazine category includes free newspapers. 57

9 yen, database information, billion yen, and original Internet text-based content, billion yen (Figure ). The overall size of the content market in 214 has remained essentially unchanged since 29 on. The size of each content segment as well stayed flat between 29 and 212, after which the video content segment expanded while the text-based content segment contracted (Figure ). (2) Trends in the online content market The market for online content, which is downloaded or streamed via the Internet to computers or mobile phones, grew to trillion yen, accounting for 23.9 percent of the entire content market As part of the overall content market, the market for online content, which is downloaded or streamed via the Internet to computers or mobile phones, reached trillion yen. By content segment, the video content segment accounted for 58.8 percent of the online content market, the text-based content segment, 3.1 percent, and the audio-based content segment, 11.1 percent. The video content segment of the 214 online content market was worth trillion yen, which consisted of 921. billion yen for game software, billion yen for original Internet videos, 2.7 billion yen for videos, billion yen for movies, 72.1 billion yen for terrestrial TV programs, and 61.3 billion yen for satellite and cable TV broadcast programs. Music accounted for billion yen of the 33.9 billion yen audio-based online content market. The billion yen text-based online content market consisted of billion yen for original Internet text-based content, billion yen for database information, 154. billion yen for books, and billion yen for newspaper articles (Figure ). The online content market has been growing steadily since 21. Looking at the market by content segment shows that the video content segment (which more than doubled from 21 to 214), and in particular the hot game software portion, has been driving the online content s market expansion (Figure ). Figure Breakdown of Japan s content market (214) Database information billion yen, 2.2% Books billion yen, 6.9% Magazines trillion yen, 9.5% Text-based content segment trillion yen 39.% Comics billion yen, 4.3% Newspaper articles trillion yen, 14.5% Audio-base content segment 75.3 billion yen, 6.5% Original Internet audio-based content 8.8 billion yen,.1% Total content market trillion yen Radio programs 22.9 billion yen, 1.8% Music billion yen, 4.7% Original Internet other content billion yen, 1.7% Movies billion yen, 5.9% Videos billion yen, 3.7% Original Internet videos billion yen, 1.9% Terrestrial TV programs trillion yen, 24.5% Video content segment trillion yen, 54.4% Satellite and cable TV broadcast programs 95.2 billion yen, 7.9% Game software trillion yen, 8.3% (Source) Survey on the Production and Distribution of Media Content, Institute for Information and Communications Policy, MIC Figure Transitions in Japan s content market size (by content segment) [trillions of yen] Video content Audio-based content Text-based content (Source) Survey on the Production and Distribution of Media Content, Institute for Information and Communications Policy, MIC 12 Original Internet text-based content includes blogs, social media, newsletters, and similar text-based content. 58

10 The 215 mobile content industry s market increased 13.3 percent from the previous year to trillion yen The Japanese mobile content industry s market, 13 which is made up of the mobile content market 14 and the mobile commerce market, continued to expand in 215, reaching trillion yen (a 13.3 percent increase year-on-year), due to the growth and proliferation of smartphones and tablets. By individual segments, the mobile content market reached trillion yen (up 7.3 percent) and the mobile commerce market reached trillion yen (up 16.8 percent) (Figure ). (3) Trends in the broadcast content market Export value of Japanese broadcast content was billion yen in FY 214 The export value of Japanese broadcast content in FY 214 was billion yen. Note that from FY 21 onward, Internet distribution rights, video and DVD rights, format and restaging rights, merchandising rights, and similar rights, in addition to program broadcast rights, have been included in the export value of broadcast content (Figure ). The traditional method of exporting broadcast content had been to sell the program broadcast rights. But today, methods have diversified, so that revenue streams other than program broadcast rights account for more than half of all revenue. Cartoons and animations account for over 6 percent of export value by program category, followed by dramatic programs and variety shows, and Asia accounts for about 6 percent of exports, followed by North America and Europe Looking at the broadcast content export value by program category finds cartoons and animations account for 64.3 percent of total, dramatic programs, 17. percent, and variety shows, 11.4 percent, followed by docu- Figure Breakdown of the online content market (214) Books 154 billion yen, 5.6% Text-based contents egment billion yen, 3.1% Database information billion yen, 68% Original Internet other content billion yen, 7.1% Other audio-based content 17.5 billion yen,.6% Audio-base content segment 33.9 billion yen, 11.1% Music billion yen, 15% Satellite and cable TV broadcast programs 61.3 billion yen, 2.2% Newspaper articles billion yen, 5.6% Total digital content market trillion yen Terrestrial TV programs 72.1 billion yen, 2.6% Other text-based content billion yen, 4.8% Game software 921 billion yen, 33.6% Movies billion yen, 5.2% Video content segment trillion yen, 58.8% Original Internet videos billion yen, 7.8% Videos 2.7 billion yen, 7.3% (Source) Survey on the Production and Distribution of Media Content, Institute for Information and Communications Policy, MIC Figure Transitions in the online content market size (by content segment) [in trillions of yen] (Source) Survey on the Production and Distribution of Media Content, Institute for Information and Communications Policy, MIC Video content Audio-based content Text-based content 13 The mobile content market refers to the market for digital content provided over the mobile Internet (including ringtones, music streaming, videos, games, and fortune-telling). The mobile commerce market refers to the sales of physical goods (mail-order sales, etc.), sales of services (ticket sales), and transaction fees (including stock brokerage commissions, auction fees, and other payments) conducted over the mobile Internet. 14 In 21, the scope of the mobile content market was expanded to encompass the open platform market (such as smartphones). 59

11 mentaries and sports programs (Figure ). The largest export market for broadcast content was Asia, at 58.5 percent of the total, followed by North America at 24.2 percent, Europe at 13.3 percent, and South and Central America. Diverse export destinations for Japanese broadcast content are developing, particularly in Asia. Figure Mobile content industry market size [in 1s of million of yen] 5, 44,228 45, 39,46 4, 35, 3,142 3, 28,596 24,48 25, 23,57 19,61 2, 19,359 15,26 16,55 15, 14,997 11,716 9,681 1,85 1, 14,566 15,632 5, 5,525 6,465 7,345 8,51 1, Mobile content market Mobile commerce market (Source) Study Report on Technical Factors and Systems Pertaining to Open Platforms Promoting Mobile Content Business, MIC Figure Export value of Japanese broadcast content [in 1s of million of yen] (FY) (Notes) Export value of broadcast content: total export value of program broadcast rights, Internet distribution rights, video and DVD rights, format and restaging rights, merchandising rights, and similar rights. From FY 21 onward, the export value from other revenue streams has been included along with program broadcast rights in the export value of broadcast content. Figures prior to FY 21 are the export value for program broadcast rights only. (Source) Survey on the State of Overseas Expansion of Broadcast Content (FY 214), Institute for Information and Communications Policy, MIC Figure Export value of Japanese broadcast content by program category Export value of broadcast content (by program category) Export value of program broadcast rights (by program category) Sports.9% Documentaries 1.7% Variety shows 11.4% Dramatic programs 17.% Other 4.7% billion yen Cartoons and animations 64.3% Sports 1.6% Documentaries 3.4% Variety shows 13.6% Dramatic programs 18.2% Other 8.8% 8.62 billion yen Cartoons and animations 54.5% (Source) Survey on the State of Overseas Expansion of Broadcast Content (FY 214), Institute for Information and Communications Policy, MIC 6

12 Section 2 1. Internet usage trends ICT Service Usage Trends (1) State of Internet proliferation a. State of major ICT device proliferation (households) ICT device proliferation has matured overall, but smartphone ownership has increased year by year, now topping 7 percent The household penetration rate at the end of 215 was 95.8 percent for mobile phones and PHS handsets 15 and 76.8 percent for computers. The penetration rate for smartphones, which are included in the mobile phone and PHS handset category, has shot up to 72. percent (up 7.8 percentage points from a year earlier), reducing the ownership gap with computers from 13.7 percentage points to just 4.8 percentage points (Figure ). b. State of Internet usage Both the number of Internet users and the Internet population penetration rate rose The number of Internet users 16 at the end of 215 was 1.46 million, an increase of 28, (.3 percent) from the end of 214. The Internet penetration rate as a percent of the general population was 83. percent (Figure ). Those using computers to access the Internet accounted for 56.8 percent of all Internet users, the largest portion, followed by 54.3 percent for smartphones and 18.3 percent for tablets (Figure ). Figure Transitions in household ownership rates for ICT devices Ownershiprates [%] Fixed-line telephones Fax Mobile phones and PHS handsets Smartphones Computers Wearable devices Tablets Home game consoles with Internet connectivity 26 (n=4,999) (n=3,64) (n=4,515) (n=4.547) (n=22,271) (n=16,53)(n=2,418) (n=15,599)(n=16,529)(n=14,765) Portable music players with Internet connectivity Other appliances (information appliances) with Internet connectivity The figures for mobile phones and PHS handsets have included personal digital assistants, or PDAs, since the end of 29 to the end of 212 and smartphones since the end of (1) The survey covers an age range of 6 and up. (2) The estimated number of Internet users is based on the results to a question on whether the respondents, aged 6 or older, had used the Internet in the year covered by the survey. Internet access devices include computers, mobile phones / PHS handsets, smartphones, tablets, game consoles, and all other devices (irrespective of device ownership). The purposes of using the Internet cover all possible purposes including personal, work, and school. (3) The number of Internet users was calculated by multiplying the estimated population aged 6 or older (estimated from Population Census and death table data) by the Internet usage rate obtained in the survey for people aged 6 or older. (4) The Communications Usage Trend Survey does not include the number of no answer responses in the calculations (except for Figure ). 61

13 Figure Transitions in the number of Internet users and the penetration rate among the general population Tens of thousands 11, 1 1, 9,48 9,61 1,44 1,18 1,46 9 8,754 9,91 9,462 9,652 9, 8,811 8, , 7 7, , 5 5, 4 4, 3 3, 2, 2 1, (Year-End) No. of Internet users Penetration rate among the general population Figure Internet usage by device (at the end of 215) Internet usage rate (all devices) 83. Computers 56.8 Smartphones Tablets Mobile phones and PHS handsets (excluding smartphones) Home game consoles with Internet connectivity Televisions with Internet connectivity Year-End (n=33,525) (Note) Figures indicate the percentage of people who accessed the Internet using the corresponding device during 215. c. Purposes of using the Internet Sending and receiving s was the most common purpose of using the Internet Among all age groups, the most common purpose of using the Internet was sending and receiving s. Viewing the results by age group finds that more than half of users in all age groups use the Internet for sending and receiving s, map or transportation information services, and accessing weather forecasts (Figure ). Figure Applications / purposes of using the Internet by age group Sending and receiving s Browsing and posting to websites and blogs Creating and updating own websites and blogs Using social media Using forums, boards, and chat sites Using free voice call appsorvoice chat sites Using video posting / sharing sites Using on-dem and streaming services for radio, TV programs, movies, etc. Using Web photo albums Using online games Participating in quiz / prize competitions or questionnaires Map or transportation information services (free of charge) Using weather forecasts (free of charge) Using news sites Using dictionaries and encyclopedias Exchanging and downloading electronicfiles (P2P, FTP, etc.) Purchasing or trading goods and services (total) Purchasing or trading goods and services (including digital content purchases and financial transactions Financial transactions (Internet banking, securities trading, insurance transactions, etc.) Purchasing or trading goods and services (including digitalcontent purchases but excluding financial transactions) Purchasing or trading digital content (music, audio, videos, gamesoftware, etc.) Purchasing or trading goods and services (excluding) digital content purchases and financial transactions Internetauctions Using e-government and e-local government services (electronic applications, notifications, and reports) Other 2 to 29 (n=2,773) 3 to 39 (n=4,24) 4 to 49 (n=4,642) 5 to 59 (n=4,59) 6 and older (n=5,697) (2) Challenges for safe, secure Internet usage a. Matters of concern with Internet usage and problems with ICT networks Households are concerned about personal information, and enterprises are concerned about security Among households with concerns about using the Internet, 8.4 percent cited personal information will be disclosed or exposed externally without permission as a concern. This was followed, in order, by computer virus infections (77.9 percent) and trustworthiness of electronic payments (47.3 percent) (Figure ). Among enterprises, 47.8 percent, the highest response rate, mentioned concern about virus infections as a problem when using the Internet, internal LANs, or other networks. This was followed difficult to develop security measures (44.2 percent), indicating heightened security concerns among enterprises (Figure ). 62

14 Figure Matters of concern with Internet usage at households (multiple answers permitted) Personal information will be disclosed or exposed externally without permission 8.4 Computer virus infections Unsolicited Trustworthiness of electronic payments False billing and other types ofinternet fraud Unsure how far security measuresshould be taken One s own understanding of Internet usage Trustworthiness of authentication technology Violations of intellectual property rights Amount of illegal and harmful information Internet addiction Conflict with communication partners Others.9 End of 215 (n=8,34) Figure Problems with Internet and intranet LAN usage at enterprises (multiple answers permitted) Concern about virus infections 39.7 Difficult to develop security measures Operational and management personnel shortages Operational and management cost increases Low security awareness among employees Difficult to recover from failures, outages, etc. Difficult to quantify benefits High communication charges Difficult to obtain benefits Low communication speeds Concern about protection of copyrights and intellectual property Concern about trustworthiness of electronic payments Concern about trustworthiness of authentication technology Others No particular problems End of 214 (n=2,27) End of 215 (n=1,85) b. Information security measures Violations (number of arrests) of the ACT on Prohibition of Unauthorized Computer Access rose slightly, and almost 8 percent of households and more than 9 percent of enterprises have implemented some form of information security measures Looking at the state of information security measures taken by households that use the Internet finds that 73.2 percent of households have taken some form of information security measures. The leading security measures were install or update anti-virus software (53. percent) and sign up for or renew a security service (25.8 percent) (Figure ). Looking at the state of information security measures implemented by enterprises that use ICT networks finds that 98.9 percent of enterprises have implemented some form of information security measures, an increase from the previous year. The leading security measure was install anti-virus programs on computers and other devices (operating systems, software, etc.), which is done by 9.8 percent of enterprises. This was followed, in order, by install anti-virus programs on servers (68.8 percent) and control access with IDs and passwords (62.5 percent). The response rate for every security measure survey increased from the end of 214 (Figure ). 63

15 Figure Implementation of information security measures at households (multiple answers permitted) Taken measures 73.2 Have not taken measures 16.9 Don t know whether measures have been taken Install or update anti-virus software Sign up for or renew a security service Do not connect to untrusted Internet connections Set passwords on devices 16.4 Set and check administrator 2.6 End of 215 (n=1,945) Figure Implementation of information security measures at enterprises (multiple answers permitted) Implemented measures Have not implemented measures 1.1 Install anti-virus programs on computers and other devices (operating systems, software, etc.) Install anti-virus programs on servers Control access with IDs and passwords Set up and deploy firewalls Train employees Establish security policies Apply operating system security patches Retain access logs Construct virus walls for external connections Use proxies (proxy servers) Encrypt data and networks Audit security measures Monitor access lines Authenticate users with authentication technology Set up and deploy intrusion detection systems (IDS) or intrusion protection systems (IPS) Establish anti-virus response manuals Outsource security management Set up and deploy Web application firewalls Other measures End of 214 (n=2,74) End of 215 (n=1,834) c. Personal information protection measures Nearly 9 percent of all enterprises have implemented personal information protection measures The percentage of enterprises that have implemented some form of personal information protection measures was 87.7 percent, up 9.3 percentage points from the end of 214. The most cited protection measure, given by 49.5 percent of enterprises, was appoint a personal information protection and management officer followed, in order, by enhance internal training (46.9 percent) and establish a privacy policy (3.8 percent) (Figure ). (3) Cloud service usage trends a. State of cloud service usage in Japan The percentage of enterprises using cloud services rose from the end of 214 Of enterprise respondents to the survey, 44.6 percent said they had used cloud services either partially or extensively, up 5.9 percentage points from 38.7 percent at the end of 214 (Figure ). b. Breakdown of cloud service usage The most frequently used cloud service is The most frequently used cloud service is , cited by 51.9 percent of respondents, followed, in order, by 51.3 percent for file storage and data sharing and 42.9 percent for server usage (Figure ). 64

16 Figure Implementation of personal information protection measures at enterprises (multiple answers permitted) Implemented some measures Have not implemented any measures Enhance internal training Appoint a personal information protection and management officer Establish a privacy policy Reduce amount of required personal information Rebuild systems and structures Obtain Privacy Mark certification Strengthen requirements when selecting suppliers (require Privacy Mark certification, etc.) Other measures End of 213 (n=2,88) End of 214 (n=2,42) Figure State of cloud service usage in Japan End of 214 (n=2,98) End of 215 (n=1,821) Use company wide Use at some sales locations and divisions Do not use presently, but plan to use in the future Do not use presently and have no plans to use in the future Do not have a firm understanding of cloud services Figure Breakdown of cloud service usage File storage and data sharing Server usage Internal informaition sharing / portals Schedule sharing Data backups Payrolls, financial accounting, HR Marketing assistance e-learning Sharing information with trading partners Project control Production, distribution, and retali-outlet managemen System development and Website construction Purchasing Order-taking and sales Billing and payment systems Authentication systems Research and development Other uses End of 215 (n=838)