Nomura Research Institute, Ltd. (NRI: Tokyo; Akihisa Fujinuma, Chairman and President, CEO & COO) has completed market analyses and market scale forecasts for the period through fiscal 2014 for five major markets of information technology in Japan. In this first phase, NRI announces forecasts for the four fields of the broadband service market and the four fields of the broadcasting media market. NRI plans to publish forecasts for the Internet-based business, mobile and hardware markets on December 21, 2009.

Market Scale Forecasts
(See the definitions for each market provided at the end of this news release.)

(Unit: Billion yen)

Market/Field		FY 2009	FY 2010	FY 2014	CAGR (%)*1
Broadband service market	Broadband lines	1,341.3	1,395.9	1,559.7	3.1
	Of the above, only optical fiber lines	699.0	780.0	1,016.3	7.8
	Corporate networks	909.4	848.6	807.7	-2.3
	Data centers	1,249.0	1,309.0	1,534.0	4.2
	SaaS	24.0	30.0	47.7	14.7
Broadcasting media market	Terrestrial digital broadcasting (1,000 households)	30,959	34,057	47,124	8.8
	BS digital broadcasting (1,000 households)	24,736	26,997	32,817	5.8
	Multichannel broadcasting	597.8	621.9	693.9	3.0
	VOD (video on demand)	47.8	55.7	73.4	9.0

*1: CAGR (Compounded Annual Growth Rate) refers to the average annual growth rate of each field during the five years between fiscal 2009 and fiscal 2014.

While optical fiber lines will continue to drive the broadband line market, the market will gradually reach saturation

Broadband lines

Backed by a steady increase in the number of optical fiber line subscribers, the broadband line market will continue to grow. By the end of fiscal 2014, the number of subscribers to all types of broadband lines will reach about 35.50 million with the scale amounting to about 1,560 billion yen (of which about 24 million subscribers and about 1,020 billion yen will be for optical fiber lines). While the growth rate of the entire market is in a gradually declining trend, the optical fiber line subscriber base is expected to increase about 1.4 times over that in fiscal 2009 (Figures 1 and 2).

Corporate networks

A shift from conventional leased lines to new, lower-priced WANs (IP-VPN, wide area Ethernet, Internet VPN, etc.) is expected to accelerate. The factors behind such acceleration include that companies will further reduce their investments in the development of information systems because of the economic recession caused by the global financial crisis. As a result, the market size is projected to shrink from about 910 billion yen in fiscal 2009 to 810 billion yen in fiscal 2014.

Data centers

This market has entered a new, high demand phase because of a significant increase in data traffic in recent years and companies' greater interest in business continuity and compliance. Because the supply of server housing space is generally inadequate in cities in Japan, it is a pressing need for many companies to acquire such space. In light of such a high demand for data centers, a rush has been continuing among data center service providers to construct and build data centers, which will expand the market size from about 1,250 billion yen in fiscal 2009 to 1,530 billion yen in fiscal 2014.

SaaS (software as a service)

With the diffusion of services first developed by American vendors and the spread of services among specific industries, the market size in fiscal 2009 is projected to reach about 24 billion yen. As users increasingly recognize the cost effectiveness brought about by the use of SaaS and the number of software products meeting the requirements of user companies increases, the market will steadily grow and amount to 47.7 billion yen in fiscal 2014, which is about double its current size.

Figure 1: Forecasts for the Subscriber Base by Type of Broadband Line



Figure 2: Forecasts for the Market Scale by Type of Broadband Line



Terrestrial digital broadcasting will be viewed by about 47.10 million households in five years

Number of households viewing terrestrial television broadcasting

With the cessation of all analog transmissions in July 2011, the number of households viewing terrestrial television broadcasting will temporarily decrease from about 49 million as of December 2009 by about 4 million. As the number of households equipped with digital television receivers increases after the cessation of analog broadcasting, the number of households viewing terrestrial digital broadcasting is expected to reach about 47.10 million by the end of fiscal 2014. If the market is looked at by reception format, reception through cable TV is projected to expand and about 33.10 million households will view television broadcasting through cable TV by the end of fiscal 2014.

BS digital broadcasting

By the end of fiscal 2014, the number of households that are capable of viewing BS digital broadcasting will reach about 32.80 million (slightly more than 1.3 times that of fiscal 2009). Such expansion of the number of households capable of viewing BS digital broadcasting will be brought about through the diffusion of a common receiver for all three wave formats (a receiver capable of receiving terrestrial digital television broadcasting, BS digital broadcasting and 110° east longitude CS digital broadcasting). In addition to the development of the reception environment such as the availability of a common receiver, major factors contributing to the expansion of the number of viewing households include the expanded use of BS digital broadcasting, mostly among seniors.

Multichannel broadcasting (cable TV, satellite digital broadcasting, etc.)

The size of the multichannel broadcasting market is projected to expand from about 600 billion yen in fiscal 2009 to about 700 billion yen in fiscal 2014. Specifically, cable TV will amount to about 470 billion yen, with about 160 billion yen for satellite digital broadcasting and about 60 billion yen for IP broadcasting. Major factors for such market expansion include the expected expansion of users of 110° east longitude CS digital broadcasting as accelerated by the spread of a common receiver for all three wave formats and an increase in the number of cable TV and IP broadcasting users through a complete shift to terrestrial digital broadcasting.

VOD (video on demand)

The VOD market is projected to expand approximately 1.5 times from about 48 billion yen in fiscal 2009 to about 73 billion yen in fiscal 2014. The major reasons behind such forecasted expansion include enhanced VOD services for TVs and the diffusion of TVs with VOD functions and cable TVs.

This is the ninth edition of NRI’s IT market forecasts since 2000. NRI plans to publish the details of market analyses and forecasts in a book entitled Korekara joho tsushin shijo de nani ga okorunoka – IT shijo nabigeta 2010 (What will occur in the information and communications market in the future – IT market navigator 2010) on December 22, 2009, by Toyo Keizai Inc.

[For inquiries, please contact:]
Ryoko Baba/ Suirei Ban
Corporate Communication Department
Nomura Research Institute, Ltd.
Tel:+81-3-6270-8100
E-mail:

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Market/Field Definitions

Broadband Service Market

Broadband lines	The size of this field represents the total sales of optical fiber lines, DSL (digital subscriber line) and cable TV Internet. The optical fiber line segment is that of access services used by PCs at home through optical fiber lines. It includes services where optical fiber is directly installed as a lead-in cable in households, and services where optical fiber is used in conjunction with VDSL (very high speed digital subscriber line) and the like to provide services to housing complexes. The DSL segment is that of access services that are used by PCs at home through ADSL (asymmetric digital subscriber line). The cable TV Internet segment is that of Internet access services provided by cable TV providers that are used by PCs at home through cable TV.
Corporate networks	The forecasts in this field cover conventional leased lines, frame relay (FR) and cell relay (CR), Ethernet leased lines, IP-VPN, entry VPN, wide area Ethernet and Internet VPN.
Data centers	The forecasts in this field cover hosting, co-location, outsourcing and managed services.
SaaS	The size of this field represents the total sales of system provision services and customized SI (service integration). The system provision service segment consists of fees paid by customers for use of information services delivered by means of SaaS. The customized SI segment is that of system development that is required for each customer to introduce this service.

Broadcasting Media Market

Terrestrial digital broadcasting	The forecasts indicate the number of households that are capable of viewing terrestrial digital broadcasting. These households include: those using an individual antenna installed on a roof, etc. of one’s home; those using a common receiver installed on a roof, etc. of a housing complex; those using wire transmissions such as cable TV and the Internet; and those using a common receiver installed by a municipality. Households that are capable of viewing any one station of terrestrial digital broadcasting, regardless of whether NHK (Japan Broadcasting Corporation) or any commercial broadcaster station, are counted as those capable of viewing terrestrial digital broadcasting. However, terminals that can only receive one-segment broadcasting, such as mobile phones, are not included.
BS digital broadcasting	In the same way as terrestrial digital broadcasting, the forecasts indicate the number of households that are capable of viewing BS digital broadcasting without distinction of any reception method. Households that are capable of viewing any one station of BS digital broadcasting, regardless of whether NHK (Japan Broadcasting Corporation) or any commercial broadcaster station, are included. Special satellite broadcasting (BS broadcasting and 110° east longitude CS broadcasting to be institutionally integrated), which is to be launched in 2011, is not included because it falls under the multichannel broadcasting field.
Multichannel broadcasting	The size of this field represents the total sales of cable TV, satellite digital broadcasting and IP broadcasting. The cable TV segment covers revenues from charges paid by viewers (initial subscription fees, monthly paid-program viewing charges, pay-per-view (PPV) charges and set-top box (STB) rental charges) and revenues from advertising fees. The satellite digital broadcasting segment covers revenues from charges paid by viewers of digital broadcasting using satellites (110° east longitude CS digital broadcasting and 124°/128° east longitude CS digital broadcasting; initial subscription fees, monthly paid-program viewing charges, pay-per-view (PPV) charges) and revenues from advertising fees. The IP broadcasting segment covers revenues from charges paid by viewers of IP broadcasting services such as the retransmission of multichannel broadcasting and terrestrial digital broadcasting programs through receivers such as STB via IP virtual private networks including optical fiber networks (initial subscription fees, monthly paid-program viewing charges and STB rental charges).
VOD	The size of this field represents the total amount paid by consumers to VOD service providers to view video content such as movies through networks such as the Internet and cable TV. The forecasts cover both VOD services in which the rights to view video content are held for a certain period (about one week) and those that enable consumers to download video content to a hard disk, etc. and retain such content without any term limitation (download sales). While membership fees, etc. paid to use VOD services are included, advertising and sales promotion expenses paid by sponsors to video distribution companies for free VOD services are not included.

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