The Coming Week in Asia: Waiting on the Cable Guy

Cable's reach in Japan is limited, but a recent merger may change that.
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TOKYO -- For the average Japanese television fan, keeping up with popular U.S. prime time dramas like

NYPD Blue

,

The X-Files

or even

ER

is a royal pain. Unlike U.S. viewers who can tune into Japan's bizarre hit cooking show

The Iron Chef

by clicking onto the

Food Network

, fans of international shows must fork over 300 yen ($2.84) just to watch a few episodes.

The money goes into the pocket of video rental stores. Because Japan's cable industry is so fragmented, with small local stations only carrying limited programs, if you want to watch international shows, you have to see them on video. If the neighborhood bar doesn't carry satellite, viewers who are aching to watch the next 30-second

Mike Tyson

fight are simply out of luck.

This will all change over the next few years as competition in the domestic cable market heats up after the merger this fall of

Jupiter Telecommunications

and

Titus Communications

, two of Japan's largest cable TV operators. With only 20% of the nation's population hooked up to cable TV, the merged company is looking to gobble up some of the remaining 700 or so smaller, local cable TV stations and to provide much wider content. Company officials, who announced the deal this past week, also said they were thinking of taking the merged company public.

This is great news for all of the die-hard

X-Files

fans, but the underlying reason why Japan is going cable is not Scully, but the Internet. Cable operators like Jupiter basically want to turn the existing cable networks, which usually only transmit regular TV programs, into an interactive-data line that also comes with high-speed Internet access.

And it won't just be the owners of Jupiter, which include general traders

Sumitomo

and

Itochu

(ITOCY)

, electronic goods manufacturer

Toshiba

, the U.S.'s

Liberty Media

(LMG)

and

Microsoft

(MSFT) - Get Report

, that will reap the benefits when the cable industry matures.

"The Jupiter-Titus merger will encourage the industry to consolidate and that should generate a significant market for fiber optic and electronic-part makers" as firms start to upgrade or fix network systems, says Kota Nakako, analyst at

Warburg Dillon Read

.

Electronic-equipment manufacturers like

Sony

(SNE) - Get Report

,

Matsushita Electric Industrial

(MC) - Get Report

,

Hitachi

(HIT)

and

Pioneer

are also competing to sell digital satellite receivers to cable TV stations so viewers can get extra programming if they want. Utility

Kansai Electric Power

, railway operator

Tokyu

, and general trader

Tomen

are also building their own cable TV networks.

And as soon as cable goes national, game-maker

Sega Enterprises

(SEGNY)

is hoping its profits will increase as well. The firm already has signed a deal with 30 cable TV operators to peddle a special cable version of its

Dreamcast

game console to viewers.

And where there are winners, of course, there are losers. Telecom firms like

Nippon Telegraph & Telephone

(NTT)

,

DDI

, and

Japan Telecom

better start slashing Internet access charges -- which NTT has stubbornly refused to do so far -- or suffer losing their share of an expanding market. And in the worst-case scenario, where cable fever does not catch on, broadband content providers like

Softbank

,

Marubeni

and

Oki Electric

, three firms that are setting up new units, could also suffer.

"Japan has about three years to consolidate its cable industry. If it misses this deadline, then there is little future," cautioned Nakako.

And sadly for the screaming female Japanese fans, that also means they won't get see

Rick(y) Schroder

at the flick of a switch.