Amazon Online Video Service Arrives in Japan

Amazon Japan has launched its Instant Video online platform, with more than 26,000 imported and local films and TV shows for streaming or download. Amazon's decision to enter the online video market in Japan is interesting for two reasons. For starters, it is entering an already crowded marketplace with several major local competitors. It's also another sign that the competition between Amazon and its Japanese counterpart Rakuten is heating up.

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The launch of Amazon Japan's Instant Video service comes just before the debut of the Kindle HDX, which goes on sale in Japan tomorrow. The device will come with a 2,000 yen ($20) coupon for Instant Video as a promotion. Instant Video's pricing tier begins at 100 yen (about $1) for a 24-hour rental. Amazon Japan also started selling e-books at the end of last year and now has more than 25 million songs on its music service.

The debut of Amazon Japan Instant Video pits it against local competitors like GyaO Corp, Tsutaya TV and NotTV, as well as Hulu and Apple's localized Japanese services. Amazon Japan's new focus on streaming video comes after competitor Rakuten took several big steps to position its $16 billion Internet services ecosystem as a significant worldwide competitor to Amazon and Netflix. Over the past two years, Rakuten has acquired e-reader services provider Kobo, European streaming video platform Wuaki.tv and Viki, a global video streaming platform that crowdsources translated subtitles.

Rakuten is probably best known in the U.S. as the lead investor in last year's $100 million Pinterest round, but it is also one of the world's largest e-commerce companies with a current market cap of about 1.9 trillion yen ($18 billion USD). That amount, however, still puts it far behind Amazon's market cap of $177 billion. With e-commerce's extremely thin margins, Rakuten's decision to focus on aggressively expanding its digital content business makes sense. Amazon Japan's move into the online video market is another sign that, despite its much larger size, the e-commerce behemoth will not take its business in Japan for granted.

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