U-NEXT HOLDINGS, a dominant force in Japan’s digital content distribution, has reported a remarkable performance for the second quarter of the fiscal year ending in August 2024. The company’s consolidated sales witnessed a 13.8% increase to 152,249 million yen, while operating income surged by 65.7% to 15,813 million yen, showcasing a substantial growth in both revenue and profit margins.
The spike in the company’s fortunes is largely attributed to its content distribution business, particularly the U-NEXT platform, which includes video streaming among its services. This segment alone recorded sales of 52,567 million yen, a 36% increase, and an operating income of 4,373 million yen, up by 32% from the previous year.
A significant contributor to U-NEXT’s success is its merger with Paravi in June 2023, which expanded its user base from approximately 2.9 million to 3.86 million. This growth trajectory continued, with the platform reaching 4.27 million paying users by the second half of 2024, marking an increase of 1.35 million users year-over-year. The platform’s annual revenue per user (APR) is now anticipated to hit the 100 billion yen mark.
U-NEXT’s market positioning has strengthened considerably within the industry, with a record 15% market share in 2023, as reported by GEM Partners. This places U-NEXT ahead of Amazon Prime Video and Disney+ in Japan and just behind Netflix. Notably, while Netflix’s market share has seen a decline, U-NEXT’s share has been on an upward trajectory.
The platform’s success is credited to its extensive library of 360,000 video titles, a hybrid model combining subscription-based unlimited viewing with a pay-per-view option, and a monthly points system valued at 1,200 yen. U-NEXT plans to further distinguish itself by expanding its exclusive content offerings, including movies, anime, dramas, sports, and music.
Given its robust performance, U-NEXT has upwardly revised its full-year earnings forecast, expecting sales in the content distribution business to reach 108.02 billion yen, with operating income projected at 84.0 billion yen. This ambitious growth signals U-NEXT’s proactive approach in capturing a larger share of the streaming market through content diversity and strategic mergers.
