COVER STORY • 1 Current Conditions and Prospects for the Japanese Content Industry By Hamano Yasuki

The Young Report was after this report that the copyright Based on the slogan, “Trade follows industry became the sector of the US film,” the US House of Representatives The US copyright industry accounted economy with the most remarkable established the Motion Picture Section for 5.24% of the nation’s GDP in 2001. growth. Subsequent administrations in the Bureau of Foreign and Domestic When business related to the copyright placed importance on the copyright Commerce in 1926 and the then industry such as distribution and sales business after Reagan and the Young Secretary of Commerce, Herbert are included, this industry’s GDP share Report, but there is also a long history Hoover, later to become President, was rises to 7.75%, creating 8 million jobs in behind this. put in charge of films. The government the United States. It grew by an annual In 1917, when the United States became a sponsor of film exports, and average of 7.01% during the period entered World War I, President films came to be considered as a medi- from 1977 to 2001. The amount of Woodrow Wilson immediately assem- um for promoting American products in export sales is actually greater than bled the “Creel Committee” or the general. domestic sales, and according to esti- Committee on Public Information to In order to promote film exports, the mates by the US Department of rally public support for joining the war. next year, the government began to issue Commerce, it has become the largest The committee was named after its frequent reports relating to films in American industry, exceeding the chem- Chairman George Creel, who fervently other countries through the Motion ical, automobile and aviation industries. advocated the “Gospel of Americanism,” Picture Section. This data became the The role of the “Young Report” is and the committee justified and pro- reference source enabling Hollywood to great. As a prescription for regaining moted the export of American informa- obtain a monopoly on the world’s cine- international competitiveness at the end tion. Creel used new media to carry out ma screens. In an era when no other of the 20th century, the Industrial what France, Britain and other country had accurate data on film mar- Competitiveness Council of the Reagan European countries had done as part of kets and image culture, only Hollywood Administration produced the Young their colonial policies. was able to devise overseas marketing Report in 1985, which recommended By the beginning of the 1920s, it plans based on this data with govern- reinforcing protections for intellectual became clear that the export of mental support. The reports continued property rights. Although the Reagan American films had caused a surge in to be prepared until the Democratic Administration did not promote new sales of US products such as clothing, Party came to power under Roosevelt. policies based on the report’s advice, it automobiles, furniture and machinery. As a result of these efforts, the share of American films in the international mar- Figure 1 Total Content Market in Japan 2003 ket went from 75% in 1930, to 90%. Even today, Hollywood monopolizes screens around the world, helping US pop culture to conquer the universe.

Europe, Asia and Japan

In my book, Hyogen no Bijinesu (The Expression Business; published by the University of Tokyo Press), using total domestic content sales around the world, I calculated that United States accounts for almost half of the world content market. However, since there is also US-made content like Hollywood movies that have an overwhelming share in every country, there is no doubt that US-made content accounts for a majori- ty of the world market. Unaffected by global problems such as Source: The Content Industry in Japan 2004, Digital Content Association of Japan environmental issue, or a worldwide

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Figure 2 World Share of Content Market (2002)

economic slump, the content industry continues to grow in every country, and has gained recognition as a key industry for the 21st century. With the rise of China as the world’s factory, other countries are facing the same problems that the United States had at the end of the 20th century, and now need to restructure their industries. There is also a continuing shift in cultural values from a focus on labor toward self-real- ization and enjoyment. Not only can the content industry help provide these to consumers, but the process of content creation itself is also a form of self-real- ization and self-expression. The indus- try is therefore seen as a source to create attractive employment opportunities. Sources: Adjusted from PRICE WATERHOUSE COOPERS and In Asia, the term “content industry” is Global Entertainment & Media Outlook 2002-2006 generally used, although it is usually called the “copyright industry” in the the Promotion of Creation, Protection achieved such international competitive- United States, or the “creative industry” and Exploitation of Content, was also ness today. in Europe. The copyright industry also put into effect in June 2004. As part of However, industries in Japan consist includes computer software and infor- the joint government and industry mainly of making manufactured prod- mation processing services, while the efforts, the Joint Industry-University ucts, and sectors like animation have not creative industry encompasses such fields Education Program for Content been treated as an industry, nor recog- as design and art. Creation Science was set up at the nized as a cultural product. Since cul- In Japan, the Fundamental Law for University of Tokyo in October 2004, tural administration and its activities in the Promotion of Culture and Arts was and many other universities have fol- Japan have been strongly influenced by proposed by the Agency for Cultural lowed suit. Clearly, content industry European refinement, only forms of Affairs, and established in 2002. The promotion has been gaining momentum “high culture” are recognized as cultural Ministry of Economy, Trade and in Japan. assets. Animation and video games, Industry set up the Study Group for which are accepted overseas, are exclud- International Strategy of Media Content Animation ed from the realm of cultural assets. Industry, while the Ministry of Internal France and other European nations Affairs and Communications established For a long time in Japan, content has have used the approach of introducing a Forum on Information been ignored as an economic resource their high culture to the wealthy or priv- Communication Software in 2003. and export industry. The only cultural ileged classes in other countries and then After the release of the “Strategic industry established with the goal of allowing time for it to trickle down to Program for the Creation, Protection exports has been the animation industry. the lower classes. The United States and Exploitation of Intellectual In 1948, Toei Animation was estab- however, as I stated earlier, acting in Property,” the Japanese version of the lished as the first real animation produc- concert with the increase of income and Young Report, by the Cabinet’s tion company in Japan. Okawa leisure time of the average citizen, has Strategic Council on Intellectual Hiroshi, then president of the company, been able to disseminate its culture Property in July 2003, a task force on noted in 1956, “Unlike the Japanese quickly and massively with its pop cul- content was established. movie industry, which lacks internation- ture. The former example represents the In the private sector, the al appeal due to the linguistic barriers, 19th century model of the industrializa- Entertainment Content Industry sub- we expect to break into the overseas tion of culture, while the latter is the committee was set up by Nippon markets by captivating audiences with 20th century model. Keidanren (Japan Business Federation). illustration and action of animation.” The cultural administration in Japan Following this, the Liberal Democratic The Japanese commercial animation follows the 19th century model. It focus- Party of Japan Content Diet Member industry intended to be an export indus- es on high culture in the form of tradi- League was formed. The Content try from its outset. Therefore, it is no tional Japanese arts such as Noh, Promotion Law or the Law Concerning accident that Japanese animation has Bunraku (puppetry), Kabuki, Gagaku

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(ancient court music), classical dance, Domestic and International aters, which can make a hit into a huge Ikebana and tea ceremony. Animation Markets one, the film single-handedly earned the has been excluded since it is not one of majority of the proceeds for all Japanese these traditional arts. Ironically, many A survey of the Japan Foundation movies combined that year. When of these arts were never considered to be Japanese-Language Institute shows over- Spirited Away was broadcasted TV in high culture when they were created. seas institutions providing Japanese lan- January 2003, it grabbed an audience In the 21st century, Japanese society guage education have tripled over 10 share of 46.9% even though it had has finally recognized animation as an years to 19,130 in 1998. These institu- already achieved record sales in video art form, now that it is a source of inter- tions have indicated that in the 1980s and DVD formats. This broke all records national economic competitiveness and students wanted to learn Japanese due to for a Japanese production, including the a cultural resource highly popular over- an interest in the strong Japanese econo- previous record-holder, The Fox in the seas. We often hear the expression, “the my, but after the collapse of the bubble Quest of the Northern Sun, which aired lost decade,” to describe the recent pro- economy more of them were interested in August 1979 with an audience share longed economic slump, but for the in Japanese music and animation. of 44.7%. Japanese animation industry, the last Also according to a JETRO survey, the The Japanese animated film, Ghost in decade has been more than fabulous. market for Japanese animation in the the Shell (1995), was number-one on the The term “anime” is now recognized United States was estimated about ¥4.36 list of video sales in The Billboard maga- worldwide as the common word to billion in 2002. This accounts for 3.5% zine on Aug. 24, 1997 in the United describe Japanese animation, and distin- of the total exports from Japan to the States. In 2002, animation accounted guishes it from similar products from United States, and is 3.2 times greater for eight of the top10 films in Japan by other countries. than the export value of Japanese steel box office proceeds, including Tottoko According to statistics, the Japanese products to the United States. Hamutaro. It is no exaggeration to say market for culture, in the broader sense, The box office sales from Spirited that animation has become the flagship exceeds ¥40 trillion, and is a huge Away, released in 2001, reached ¥30.4 of Japanese film. industry rivaling food products or billion. Although it was assisted by the In addition to its commercial success, healthcare. increase in the number of cineplex the- Spirited Away became the first animated film to receive the top Golden Bear Figure 3 Market Size of Japanese Anime in the US (2002-2003) prize, at the 52nd Berlin International Film Festival. It was also the first time that an animated film took the top prize at three major international film festi- vals. Finally, it received the Oscar for Best Animated Feature Film at the 75th Academy Awards. Total proceeds from animation at the box office, on TV, and through software sales and rentals in Japan are just under ¥200 billion. Although this also includes proceeds from foreign anima- tions, it is almost the same as the box office revenues earned by the Japanese film industry. According to the Association of Japanese Animations, there are about 450 companies involved in animation production in Japan. Other research indicates that a majority of the compa- nies are concentrated in the Tokyo area, and a full 80% are inside the city of Tokyo, with 77 companies in Nerima- Sources: The Actual Conditions and Prospects of US-Anime Market 2003 (JETRO) ward and 71 in Suginami-ward. Movie…BOXOFFICEMOJO According to materials released by the Home Video….Nielsen Video Scan, Video Business Licensing…adjusted by JETRO, based on annual reports and accounts statements of each compa- South Korean government in 1996, nies Japanese-produced animation accounts

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Movie $180million DVD $ 320million Movie $8.11million VHS $ 72million DVD $ 243million VHS $ 172million

License-products License-products $ 4,450million $3,937million COVER STORY • 1

Photo : The Mainichi Newspapers for 65% of the world animation market. In statistics on cultural industry market size put out by the Ministry of Culture and Tourism in 1998, the animation market was worth $73.6 billion com- pared to the live-action film market $63 billion.

Public Diplomacy

Japanese cultural diplomacy has con- sisted merely of sending examples of tra- ditional Japanese arts abroad – often “arts” that are difficult even for people in Japan to understand – and has made no effort to win the understanding of the country. It is obvious that cultural prod- ucts that are not interesting to most Japanese will not be able to attract a lot of people in other countries. Walter F. Parkes, the producer of The Ring, the remake of Japanese film, stated that the current generation is the first generation Japanese anime attracts many people in the United States of American children to be familiar with Japanese pop culture. Once they reach Museum, Mitaka, opened in October Japanese animation may soon be sur- the age when they can pick their own 2001, featuring the works of Miyazaki passed. Japanese industries often delays movies, he said, they will naturally be Hayao, has seen a sharp increase in the to create methodical systems due to interested in Japanese culture, in the number of overseas visitors. While depending on individual skills. Japan same way that their parents’ generation 14,255 tickets were booked by visitors may not be able to maintain its superior- loves Disney. from overseas from April to September ity in the rapidly digitalized field of ani- Peter van Ham, a Dutch national 2003, only 4,048 were sold to foreign mation, unless it creates a system for branding researcher, has advocated the visitors during the same period of the content production and creator training use of animation for the brand of the previous year. This represented an similar to that of Hollywood. Japanese nation. As he points out, ani- increase of 3.5 times despite the negative mation is the first contact with Japanese impacts of SARS and international terror- culture for many overseas children. ism. Visits by foreigners are also increas- Japan Foundation Japanese-Language Institute, Recently, public diplomacy has becom- ing at Mandarake, a shop that sells ani- Present Condition of Overseas Japanese-Language ing increasingly important, including mation related products in Nakano, Education, Finance Ministry Printing Office, 1998 efforts to directly obtain the understand- Tokyo (Nihon Keizai Shimbun: Nov. “Jisho Naze Ureru? (Why do Dictionaries ing of people using open communication 24, 2003.) Sell?)” Nihon Keizai Shimbun, March 2, 2003 channels and forming partnerships, However, as described in the report Hirasawa Seiji,“Tokyo ni okeru Animeshon rather than formal diplomatic methods. issued in April 2003 by the Koizumi Sangyo Shuseki no Kozo to Henyo” (Makeup and Japanese animation would be an Cabinet’s Japan Tourism Advisory Changes in the Concentration of the Animation extremely important resource for this Council, there are no good plans to Industry in Tokyo), Keizai Chirigaku Nempo kind of public diplomacy. Viewed from attract foreign tourists, even though (Annals of the Japan Association of Economic the perspective of soft power and “gross there are animation production loca- Geography), Vol. 47, No. 4, 2001, p. 60 national cool,” it is no exaggeration to tions that attract young people from Oh Yong Woon,“Cartoon and Animation say that animation can contribute greatly around the world. Industry as a Strategic Culture One,” Seoul to the influence of our national strength. The international success of Japanese International Cartoon & Animation Festival 1996, Animation also holds the potential to animation has shown it is possible to 1996, p. 267. become a tourism resource. According compete against the US content indus- to the 2003 first half activity report of try. Since each country is carefully sup- Hamano Yasuki is a professor at the the Tokuma Memorial Cultural porting its own animation industry, University of Tokyo. Foundation for Animation, the Ghibli many experts are predicting that

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