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Japan firms set sites on Internet

Local YouTube facing copywright problems

TOKYO — More and more Japanese viewers are tuning out TV for YouTube, the fourth-most popular website in Japan little more than a year after its official launch in June 2007, in cooperation with six local partners, including satellite platform Sky PerfecTV.

The site, however, has been wrangling with copyright holders, including such orgs as Eiren (Motion Picture Producers Assn. of Japan) and Jasrac (Japanese Society for the Rights of Authors, Composers & Publishers), which demand YouTube crack down on pirated clips. “Legally, they are in the right, but it’s extremely difficult to find and take down all the (pirated content),” says Yasushi Nozawa, deputy director of the Commerce and Information Policy Bureau in the Ministry of Economy, Trade & Industry.

Rather than fight YouTube, some local media companies are embracing the Internet themselves.

Kadokawa Holdings, a media conglom active in pic and toon production, linked with YouTube in May to run ads on pages with uploaded Kadokawa contents, such as its TV toons “Haruhi Suzumiya” and “Lucky Star.”

Staffers search for Kadokawa toon clips on the site. The pirated ones are taken down, while posters of those that display a more creative take on the material, such as anime/music mash-ups called MAD in Japanese, receive a request from Kadokawa to allow its logo and ad to appear on the page. Kadokawa also operates a YouTube channel, Kadokawa Anime, where approved clips appear.

“The business model is totally different from television,” says Fumiyuki Kakizawa, a Kadokawa rep. “We can’t expect to earn the same revenue. But YouTube has a worldwide reach that we can use to present our contents to a large number of people, so in that way it serves as a publicity tool.”

Following in Kadokawa’s footsteps is major pic producer and distrib Shochiku, which in July started its own YouTube channel, with promotional clips from its new pics. The channel also displays clips from Shochiku DVDs and made-for-Internet video content.

Another media conglom, the Usen Group, launched its own video contents platform, GyaO, in April 2005.

Unlike YouTube, GyaO contents, including promotional clips from upcoming pics, music shows, TV dramas, toons and sporting events, are provided by GyaO and its partners. In the beginning, GyaO offered all its contents for free, planning to raise revenue from ads and sponsor fees.

“To be frank, we are still trying to make the (GyaO) business model pay, but we’re confident we can do it,” says Usen rep Akari Mano.

One problem is that, though GyaO has a large registered user base — 20 million by the latest count — relatively few log onto the site with any frequency. To lure them in, GyaO has been beefing up its lineup, including a new free Asian contents sub-site that streams entertainment from South Korea, Taiwan, China, Thailand and elsewhere in Asia.

For TV viewers with broadband, GyaO has opened GyaO Next, a premium service with 30,000 titles, including such recent Hollywood pics as “Babel,” “Perfume” and “National Treasure 2.”

Usen projects the Japanese market for all forms of Web-based video, including GyaO’s three main service areas — free PC webcasts, pay PC webcasts and IP television — will grow from $655 million in 2008 to $1.56 billion in 2011.

Meanwhile revenues from terrestrial TV, currently at $18.5 billion, will decline slightly in the same period, while satellite TV will grow 2% from $3.42 billion and cable TV 9% from $3.18 billion.

“We expect GyaO to really take off from 2010,” Mano says.

It had better — Usen has shifted the focus of its visual media strategy from struggling subsid Gaga Communications, which announced its withdrawal from the pic production and distribution biz in April, to GyaO.

Whether GyaO succeeds in drawing enough eyeballs from YouTube — and moving into the black — is still anyone’s guess, but for Usen and other media companies in a rapidly digitizing market, the old ways are no longer an option.

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