Will contraction of the membership base continue to weigh on membership revenue in FY2027-H1?

WOWOW has long identified its reliance on viewing-fee revenue from subscribers, which accounts for approximately 90% of revenue, as a risk, explaining that changes in subscriber numbers have a significant effect on revenue and profit. This risk is not merely theoretical: membership revenue in FY2026 was ¥54.947 billion, down 6.1% year on year, making it evident in the results. In FY2027-Q1, revenue was ¥17.644 billion, down 5.6% year on year, and the company attributed this mainly to the decline in membership revenue.

The long-term trend in the subscriber base is challenging. Cumulative net additions declined from 2.3597 million at the end of FY2025 to 2.1667 million at the end of FY2026, a decrease of 193,000, or 8.2%, in one year. At the end of FY2027-Q1, the figure was 2.088 million, or 91.5% of the year-earlier level. Q1 net additions alone were negative 79,000, indicating that net subscriber losses continued from the year-earlier level. In the first half, it will be necessary to determine from both new additions and cancellations whether the Q1 decline was a temporary seasonal factor or a structural excess of cancellations.

The composition of subscribers also requires attention. Multiple-contract subscribers stood at 277,000 in FY2027-Q1, or 90.3% of the year-earlier level, continuing the contraction of a contract group believed to have higher added value than single contracts. Accommodation-facility contracts, by contrast, increased to 91,000, or 102.0% of the year-earlier level, so the subscriber base is not deteriorating uniformly. However, the Q1 materials did not disclose whether the increase in accommodation-facility contracts can offset the decline in individual subscribers, or the revenue contribution and profitability by contract type.

In the first-half results, we want to assess membership revenue not only through the simple change in revenue, but also through subscriber numbers, contract mix, any price revisions, churn and the breakdown of new additions by acquisition channel. Q1 explained the decline in membership revenue but did not show the amount of membership revenue itself, or the revenue contribution from new additions generated by sports and music content and increased cancellations following the end of special programs. A return of membership revenue to year-on-year flat growth, or a narrowing of the decline in cumulative net additions from approximately 8.5% year on year in Q1, would provide evidence that the revenue structure is bottoming out.