■Business environment

According to the “2023 Japan Advertising Expenses” announced by the Dentsu Group ＜4324＞, Japan's total advertising expenses in 2023 were 7.316.7 billion yen, up 3.0% from the previous year, surpassing 2019 before the COVID-19 pandemic, and reached a record high since estimates began in 1947. In the first half of 2023 (fiscal year ending January to June), recovery was seen against the backdrop of an increase in the number of real events held due to the transition of the novel coronavirus infection to type 5 and the revitalization of domestic and international tourism and travel. In the second half of the same fiscal year (fiscal year ending July to December), advertising demand increased mainly for “transportation/leisure,” “dining/various services,” and “drinks/luxury goods,” as social and economic activities became active from the first half, despite being affected by intense heat from summer to fall and the Middle East issue. The increase in internet advertising costs due to the progress of the information society and the increase in promotional media advertising costs such as “events, exhibitions, and videos” due to the active flow of people contributed to the overall growth of the market. BS Broadcasting, to which Nippon BS Broadcasting ＜9414＞ belongs, accounts for over 70% of the satellite media-related (BS, CS, CATV) market, and out of total advertising costs of 7.316.7 billion yen, satellite media-related advertising costs were 125.2 billion yen (125.1 billion yen the previous year), and the situation was almost unchanged.

The BS broadcasting market began in earnest with the start of BS digital broadcasting in December 2000, and has continued to grow steadily with the exception of 2001-2003, when the early days were excluded. Since programs of various genres have increased due to diversification of organization, publication by many companies has increased, which is boosting growth. Since the advertising market as a whole remained sluggish in 2020 due to the effects of the COVID-19 pandemic, the BS broadcasting market also experienced negative growth, but after 2021, in addition to the fact that mail-order market conditions continued to be strong in 2020 due to an increase in nesting demand, sports and other events that had been canceled due to the COVID-19 pandemic will be held, and advertising revenue for BS broadcasts has increased.

Currently, advertising costs for television media are on a downward trend, but this is due to the rise of internet advertisements. The composition ratio of internet advertisements surpassed the composition ratio of television media in 2019. Internet advertising continued to grow from 2020 to 2023, and it increased by more than 1 trillion yen in just 3 years, making it a market on the scale of 3 trillion yen. As a result, the 2023 composition ratio widened further, with TV media being 23.7% (down 1.7 points from the previous year) and internet advertisements being 45.5% (up 2.0 points from the previous year). Regarding promotional media advertisements such as events, etc., “events/exhibitions/videos, etc.” increased compared to 2022 due to the resumption of various events and conventional advertisement sales promotion campaigns due to relaxation of behavioral restrictions, but “folding,” “DM,” “POP,” “free paper,” etc. decreased. Meanwhile, “outdoor advertisements,” “traffic advertisements,” etc. surpassed 2022 due to the return of the flow of people.

However, as replacement with flat screen televisions equipped with BS digital tuners has progressed in many households, the ratio of the number of households that can watch BS broadcasts in fiscal 2019 was 77.1% (“BS household penetration rate survey” (video research survey)), which has grown to close to 80%. It is thought that viewers' awareness has also changed due to the COVID-19 pandemic, and since there are aspects of anxiety about the accuracy of information on the internet, I see that the intention to gather information from television information programs where accuracy of content is regarded as more important than speed is still high. Under these circumstances, the company has the advantage of being able to provide high-quality information, and we believe that the appeal of BS, which can be broadcast all over the country, is being reviewed compared to terrestrial waves, which have differences in spread depending on the region. Furthermore, we believe that revenue opportunities in the video advertising market, which continues to grow, will expand due to the expansion of distribution platforms.

(Author: FISCO Analyst Tomokazu Murase)