The Japanese biz escaped the recession that ravaged the larger economy in 2009, if overall numbers told the whole story. The local B.O. hit its second-highest annual total ever — $2.29 billion — while distribs released 448 local pics, the biggest number since 1991.
A closer look at the current scene, however, reveals an industry in turmoil.
While leading distrib Toho has prospered, accounting for eight of the top-earning domestic pics last year — including B.O. No. 1 “Rookies” ($92 million) — many small- and medium-sized companies are struggling. Several have folded their tents in the past year, while others have scaled back budgets and slates.
The domestic production bubble has already popped,” says Hiro Otaka, B.O. analyst for the Bunka Tsushin entertainment news service. “There may be as many 50 to 100 fewer films made here this year.”
A central reason is the decline in the DVD market. Last year, shipments of all video software declined 5% to an estimated $2.7 billion. This is nearly $1 billion less than the all-time peak in 2004. Smaller producers have been particularly hard hit.
They can’t turn a profit on theatrical, so they need DVD sales to survive,” explains Otaka. “But now they can’t make money on DVD either.”
Distribs of U.S., European and other foreign pics, especially arthouse titles, are also hurting. “Nobody was buying anything at Berlin, and Cannes will probably be the same,” Otaka observes. Companies that are both foreign pic distribs and domestic pic producers, such as the late, lamented Cine Qua Non and Movie-Eye, can be hit by a double whammy.
Meanwhile, industry powerhouse Toho continues to dominate, with the roughly 30 titles it distribs annually accounting for nearly 30% of the domestic pic B.O. On Toho’s lineup this year are three blockbusters that could determine whether total box office for the year is up or down: “Bayside Shakedown 3,” “Umizaru 3” and “The Borrower Arrietty.”
The first two are new entries in popular action series produced by the Fuji TV network. “Bayside Shakedown 2,” whose rebel cop hero works in Tokyo’s trendy bay area, earned $186.5 million in 2003 — an all-time record for a live-action Japanese pic, while “Umizaru 2,” about the rescue of ferry boat passengers by a Japanese Coast Guard diver, raked in $76 million in 2006. The new pics are expected to equal or better these numbers.
The third is a toon by Studio Ghibli, the anime colossus responsible for the monster hits of Hayao Miyazaki, though the new pic is directed by one-time Miyazaki underling Hiromasa Yonebayashi and is based on the Mary Norton children’s classic “The Borrowers.” The last such Ghibli pic, the 2006 “Tales from Earthsea,” earned $82 million. (It was helmed by Miyazaki’s son Goro.)
Overall B.O., however, has hovered around the $2 billion mark for the better part of a decade, despite the growth in screens from 2,524 in 2000 to 3,396 in 2009. “The pie isn’t growing, so if one company like Toho gets rich, the others grow poorer,” Otaka comments.
That goes for not only Toho’s domestic rivals, but also for Hollywood and other foreign-pic distribs, who score with the occasional blockbuster but have otherwise watched their market share slip from 68.2% in 2000 to 43.1% in 2009. Led by Warner, Hollywood has fought back by distribbing and producing local pics, but the results have been mixed at best.
One ray of hope is 3D, where the Hollywood product far outdistances the local competition, in terms of budgets and sheer numbers. By 2012, nearly one-third of all Japanese screens are expected to be 3D — and the Hollywood successors to “Avatar,” which has earned more $160 million in Japan, will probably be filling most of them, including Legendary Pictures’ 3D entry in Toho’s iconic “Godzilla” franchise.
Toho plans to end the year big, with “Space Battleship Yamato.” Based on a much-beloved 1970s Leiji Matsumoto toon, this sci-fi space opera is being compared to “Avatar” in its potential B.O. impact. Meanwhile, makers of the 300-plus local films that aren’t on the Toho lineup will be battling for space of another kind, from theater marquees to DVD shelves.
It’s not fair, but then neither were all those stompings Godzilla administered to the frantically fleeing citizens of Tokyo. In the Japanese biz, you can run from Toho, but you just can’t hide.