Netflix share price down, announces partnership with SoftBank in Japan

Netflix Inc, the world’s largest video streaming provider, announced on Monday a tie-up with SoftBank Group Corp ahead of the US companys launch in Japan next week.

Under the partnership, SoftBank will be selling Netflix subscriptions in the Asian country through its retail network, helping expand Netflixs subscriber base which as of the second quarter amounted to 65.6 million viewers in over 50 countries. And although the US company will also accept subscriptions online, advertising its streaming service via a partnership with SoftBank is expected to help the newcomer better position itself in the Japanese market amid competition from local services.

SoftBank, which operates one of Japans largest mobile carriers, said the tie-up will allow viewers to subscribe to Netflix at its stores and pay subscriptions fees from their monthly phone bills without having to fill out any additional payment information.

Netflixs launch in Japan is part of a global expansion, which it plans to complete by the end of next year. With nearly 36 million broadband homes, Japan is one of the largest markets outside of the US that the company has entered. Starting September 2nd, Japanese Internet users will be able to subscribe to Netflix and watch popular movies and TV shows in high-definition under a basic, standard or premium subscription plan, priced at ¥650 (about $5.40), ¥950 and ¥1 450 per month, respectively.

Netflix will compete, among others, with Hulu’s Japan business, which it sold to Nippon Television Holdings Inc in February 2014. Hulu is creating original content and has about 1 million subscribers as of March, each paying a monthly fee of about 933 yen, while SoftBank rival NTT Docomo Inc offers a video streaming service called dTV that provides access to content for 500 yen a month.

SoftBank already operates its own streaming service called Uula, with a subscriber base of 1.57 million users paying 467 yen a month, which it says will continue to run, but with more focus now falling on Netflix.

SoftBank Group President Ken Miyauchi said that SoftBank might jointly create content with Netflix, but details were still unclear. Well-known for creating original content, Netflix announced in June it has teamed up with Fuji Media Holdings Inc to produce a teenage drama called “Terrace House” for its debut in Japan, the first time the US firm enters a new market with local content.

Asked about SoftBanks benefits from the partnership with the US company, Mr. Miyauchi did not provide any specific details and only said that the two sides have come up with a “win-win” scenario.

Shares of both SoftBank Group Corp and Netflix Inc tumbled on Friday and Monday amid a broad stock market decline. SoftBank settled 3.07% lower at 7 136 yen on Monday in Tokyo, marking a year-on-year drop of 3.02%. Netflix plunged 7.58% on Friday on the NASDAQ to $103.96 and fell 3.92% to $99.88 by 09:41 GMT in pre-market trading on Monday. Shares of the US company were up 54.16% on an annual basis as of Fridays close.