TOKYO — Japan was once Asia’s friendliest market by far to foreign pics, from Hollywood blockbusters to microbudget festival faves from every continent. But from 2007 to 2010, the yearly number of foreign releases plunged from 403 to 308, a drop of nearly 40%. In the same period, domestic pics held steady at nearly 400 annually.

Small-to-midsized indie distribs were especially hard hit by the slide. Some, such as Movie-Eye Entertainment and Cine Quanon, were forced out of business, while the survivors scaled back on everything from staff to acquisitions. Meanwhile, arthouses (called mini-theaters in Japan), have been either closing their doors or changing their programming.

By contrast, total admissions rose from 163.2 million in 2007 to 174.4 million in 2010, with multiplexes, which grew from 2,453 to 2,774 screens in this period, attracting an ever larger share of the audience, especially teens and young adults.

In other words, fans were still going to theaters — and increasingly to the local multiplex — but to see Toho’s slate of domestic blockbusters, along with the occasional “Harry Potter”or “Pirates of the Caribbean.”

“There’s not as much interest in foreign culture as there used to be,” says Yuka Hoshino, who is now marketing director at Paramount, but who worked nearly 15 years at indie powerhouse Gaga. “I’m now over 40, but when I was a university student, many people … listened to foreign music and only went to see foreign films, since Japanese films and music were considered uncool. Now, though, seeing foreign films, or films in general, is not as cool as it used to be. People will only turn out for films they consider events.”

Another factor in the foreign indies fall-off, Hoshino notes, is the decline or disappearance of the companies that once made the bigger indie pics, such as New Line, Miramax, Paramount Vantage and Celluloid Dreams. “Nothing has come along to take their place,” she adds.

Not all is gloom and doom on the indie front, however.

More foreign production shingles, such as Constantin and StudioCanal, are increasing budgets and greenlighting English-language actioners and genre pics (“The Three Musketeers,” “Colombiana”).

In August, Toei, a leading producer and distrib of domestic pics, announced new label Toei Tryangle for foreign product. Toei’s first venture into foreign film distribution since 1987 launches Sept. 17 with the release of Jeong-beom Lee’s Korean actioner “The Man From Nowhere,” followed Nov. 5 by Jackie Chan’s Chinese period drama “1911.” Toei plans to bow at least one foreign pic monthly, as well as develop co-prods with foreign partners.

Toei is not being blindly optimistic: Foreign indies can still hit the local aud’s sweet spot, as evidenced by such smashes as “The King’s Speech” ($24 million at the B.O.), “Slumdog Millionaire” ($17 million) and “Oceans” ($32.6 million) — all distributed by Gaga.

“It’s a matter of picking films with a decent minimum guarantee and planning the best release strategy, such how many prints to make and how much to spend on P&A,” Hoshin says. “In other words, execute the basics.”

She also noted that this year the B.O. take for big commercial pics, especially those by the once invincible Toho, has fallen off, with none of its live-action offerings topping the $25 million mark from June to August. (By comparison, five Toho summer pics passed that bar in 2010.) “People are no longer fooled and deceived by our promotions so easily,” she explains. “They are getting real information about films through the Internet, especially young audiences.”

To survive in this climate, indie distribs have to “think outside the box for ways of distributing their films,” says Yukie Kito, producer of such festival favorites as Kiyoshi Kurosawa’s “Tokyo Sonata” and Jim Jarmusch’s “The Limits of Control.” She cites the example of Banksy’s “Exit Through the Gift Shop,” which she notes has done quite well, if not on the scale of what used to be a big indie hit here, since its July 16 bow.

Distribs Uplink and Parco have sent a Banksy car — a huge white van with the pic’s logo on its side — around the country. Fans who upload their snapshots of the van on Twitter receive a gift set of a poster and stickers. “I sincerely hope films like this will survive,” Kito says. “The quality of (foreign indie) films coming to Japan is quite high, and we can learn so much from them.”

Adds Hoshino: “The main thing is, we have to make films cool again.” n