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Anime Drives Streaming in Japan

The war for market share in Japan’s streaming market is being waged on the anime battlefield. In March, telco giant NTT Docomo announced the fixed-rate Disney Deluxe package that will include titles from Disney, Pixar and Marvel. The move closely followed an announcement by Netflix, which launched in Japan in 2015, about partnerships with anime studios Anima, Sublimation and David Production.

“Particularly for anime, our aim has been to become the most compelling and attractive home for creators, production studios and fans,” says John Derderian, director, Japan and anime, Netflix. “The company is committed to increasing our investment in anime as the audience for the content grows on the service — and we believe there is a lot of room to grow.”

The net result is that Netflix and other key players could be turning the future of Japan’s famously inflexible film industry into a matter of getting on board the streaming train or risk being left in the digital dust.

For anime, it is the perfect genre to target due to its increasing international appeal. In 2017, the Japanese animation market — including ancillary revenue streams such as merchandising, music and live events — was worth 2.15 trillion yen ($19.2 billion), an increase of 8% over the year before, according to the Assn. of Japanese Animations. Of that total, nearly half was derived from overseas, a significant uptick over the 30% share the year before.

“The Japanese animation industry as a whole has been producing content primarily aimed at the local market. But this quickly evolving distribution model is urging everybody to be more competitive in front of a wider and diversified audience,” says Hiroshi Makino, producer at studio Production I.G., whose “Ghost in the Shell: SAC_2045” anime series is set to stream on Netflix next year.

Market share in Japan’s streaming sector is up for the taking. According to marketing firm GEM Partners, NTT Docomo’s dTV was the leader in 2018 with a share of 13.7%, but the figure is nearly half that of 2016. For Netflix, it held sixth place at 8.9%, up from 7.1% the year before.

The nation’s film industry — whose box office totaled 223 billion yen ($2 billion) last year — ought to be peering over its shoulder. Sales in the streaming market are closing in, estimated at 185 billion yen ($1.66 billion) in 2017, up by around 10% over the year before, according to the Digital Content Assn. of Japan.

Japan’s largest talent agency, Yoshimoto Kogyo, is paying attention. In April, the company announced that it is partnering with streaming platform iflix to distribute its dramas, films and variety programs to other parts of Asia. “This deal is our first investment in the Asian media market,” says Kazutaka Shimura, director of Yoshimoto Creative Agency at Yoshimoto Kogyo. “We have a lot of experience in organizing live music events or stage shows in Asia. However, we don’t have a medium that amplifies our activities.”

Exhibitors are handling the presence of streamers in their own way, in part through investment. In June, chain Toho Cinemas will be raising standard ticket prices by 100 yen (90¢), the first hike in 26 years. The company attributed the reason to the increase to costs for labor, digital projectors, automated ticket machines and the opening of new outlets in the center of Tokyo.

The days of Japan being a viable market for the DVD might (finally) be waning, a fact that has not eluded studio and distributor Toho, whose “Godzilla: The Planet Eater” started streaming on Netflix in January. The company is also working with other top players Amazon Prime and Hulu. “As the video market shrinks, we have high expectations for expansion in the streaming market, and we hope to be able to deliver our work to more customers through such distribution services,” according to a Toho representative, who wished to be unnamed.

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