Content Industry Current Status and Direction of Future Development

April, 2016 Media and Content Industry Division Commerce and Information Policy Bureau Ministry of Economy, Trade and Industry JAPAN

1

I. Current status of Japanese Content Current status of Japan’s content industry 2

 The content industry deals with production and distribution of videos (movies, animation, TV programs), music, games, books, etc. As Japanese content is highly evaluated overseas as a part of “Cool Japan”, Japan’s content industry has great potential to penetrate foreign markets further.

 The market size of Japan’s content industry is around JPY 12 trillion, which is second only to the USA (2013). Currently, the growth rate is moving sideways due to the decreasing domestic population.

 For sustainable growth of Japan’s content industry, it is important to gain profits from foreign markets by taking advantage of Japanese content value.

Outline of the content market in Japan Content market of major nations

Videos Music/Audio Games Publication/Newspaper （Unit：US$B） JPY 4.5 Trillion JPY 1.3 Trillion JPY 1.6 Trillion JPY 4.6 Trillion 700 Asia Pacific Games 600 Video Packages Audio Packages Books Packages USA JPY 0.5 T JPY 0.4 T JPY 0.8 T JPY 0.2 T 500 Movies Karaoke Online Games Magazines JPY 0.2 T JPY 0.5 T JPY 0.9 T JPY 1.1 T 400

Broadcasting Performance Sales Mobile Games Free Papers 300 JPY 3.5 T JPY 0.2 T JPY 0.1 T JPY 0.2 T Japan

Radio-related 200 Others Arcade Games Newspaper Services （online distribution, JPY 0.4 T JPY 1.5 T China JPY 0.1 T theatrical shows） 100 JPY 0.3 T Korea Mobile Phones Others India & Internet JPY 1.0 T 0 JPY 0.1 T 2007 2008 2009 2010 2011 2012 2013 2014 2015

PWC ”Global Entertainment and Media Outlook:2012-2016” Digital Content Association of Japan “Digital Content White Paper 2015” Potential of Japanese Content 3

Popularity of the content of Japan, Korea, USA and Europe in major Asian cities FY Which countries’ Which countries’ Which countries’ animation and comics are Which countries’ drama is familiar? movies are familiar? familiar? music is familiar?

Taiwan

Hong Kong

Shanghai

Bangkok

Jakarta

Singapore Japan USA & Europe Ho Chi Minh

Mumbai Korea

2015.2 Sales ratio of Japanese content in foreign markets 4

 Total sales ratio of Japanese content in foreign markets is around 2.5%, $13.8billion.  Sales ratio of Japanese content is different in each sector. Manga > Game > Character Merchandise > Animation > Movie, Music, Broadcast

Size of foreign content market and sales ratio of Japanese content

( Unit： US$ Billion) 2.5% ( 13.8) Breakdown 19.3% ( 11.0) 0.1% ( 0.1)

0.0% (0.1 )

Game Movie (57) (57)

0.1% ( 0.0) 1.4% ( 0.2) Total (550) Broadcast (385) Music Animation (17) (17)

24.1% 7.9% ( 0.9) ( 1.5)

： Size of foreign market Character Manga (11) (6) ：Sales of Japanese content Merchandise

Research by A.T.Kearney based on PwC Global Entertainment and Media Outlook: 2014-2018, www.pwc.com/outlook, etc. （Reference）Animation 5

Unit： JPY hundred million

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Total 1,366 1,406 2,084 2,232 2,120 1,872 1,812 1,457 1,488 1,532 1,643 1,834 1,847 Sales Income from 224 253 290 313 312 268 248 153 172 160 144 169 195 Overseas

2,500 2,232 2,084 2,120

2,000 1,872 1,812 1,834 1,847 1,643 1,532 1,457 1,488 1,500 1,366 1,406

1,000

500 290 313 312 224 253 268 248 153 172 160 144 169 195

0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Sales: Estimated total sales of all anime-production companies. 市場規模 海外収入 Income from Overseas : Overseas income from video sales, license Total Sales Income from Overseas fees and so on. Source： “Animation Industry Report 2015”, The Association of Japanese Animation （Reference） Video game software 6

Unit: hundred million yen

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Shipment Value 4,729 5,377 5,669 5,628 5,779 5,174 4,747 4,299 4,685 4,871 6,742 8,486 10,240 7,586 6,706 5,309 4,244 14,306 15,596 （domestic＋foreign） Foreign Shipment 1,227 1,478 2,141 2,343 2,848 2,532 2,255 1,993 2,327 2,528 3,629 5,600 7,230 5,061 4,115 2,930 2,042 12,341 13,747 Value

Unit：hundred million yen

18,000

15,596 16,000 14,306 13,747 14,000 12,341 12,000 10,240 10,000 8,486 7,586 8,000 7,230 6,742 6,706 5,669 5,628 5,779 5,600 6,000 5,377 5,174 5,061 5,309 4,729 4,747 4,685 4,871 4,299 4,115 4,244 3,629 4,000 2,848 2,930 2,343 2,532 2,528 2,141 2,255 1,993 2,327 2,042 1,478 2,000 1,227

0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 出荷額（国内＋海外）Shipment Value 海外出荷額Foreign Shipment Value (domestic＋foreign)

* From 2013, research method was changed. Source： “White Paper of Game Industry”, CESA （Reference）Movies 7

Unit： JPY hundred million

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

Total Sales 1709 2002 1968 2033 2109 1981 2029 1984 1948 2060 2207 1812 1952 1942 2070 Income from 71 97 84 84 73 87 77 79 85 68 79 69 64 78 91 Overseas

2500 2207 2109 2060 2,070 2002 2033 2029 1968 1981 1984 1948 1952 1,942 2000 1812 1709

1500

1000

500

71 97 84 84 73 87 77 79 85 68 79 69 64 78 91 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Income from Overseas : The income that the companies related to the Motion 市場規模Total 輸出額Income Picture Producers Association of Japan can get from the rights related to Sales from Japanese movie such as the rights of distribution, screen, remake, broadcast, Overseas secondary use and merchandising in foreign countries. Income from Overseas: 1USD= 120JPY Source：Motion Picture Producers Association of Japan, Inc. 8

II. Policies for the Content Industry “Cool Japan” Strategy 9  The Cool Japan Strategy aims to capture growing demand from emerging countries and activate Japan’s economic growth (reinforcing business activities and creating jobs), by turning the appeal of Japanese culture and lifestyle, not only animation, manga, drama, music, and other content but also Japanese “food”, “clothing” and “shelter”, into value-added.

 For the above purposes, overseas demand should be captured under the government initiative in the following three stages: (1) creating a Japanese boom in overseas markets by promoting Japanese appeal (2) selling relevant products and services in overseas markets (3) encouraging foreign tourists and business persons to purchase products and services in Japan by cooperating with Japan’s tourism policy.

(1) (2) (3) Creating a Selling in overseas Purchasing Japanese boom markets in Japan

Effectively communicating Building platforms Encouraging foreigners the appeal of Japan for earning locally to come to Japan Policies for Japan’s content industry conducted by METI 10

Support for Distribution

①Localization and Promotion Support（J-LOP） Supporting localization (adding subtitles, dubbing, etc.) and promotion of Japanese content to foreign markets.

②CoFesta Holding “CoFesta”, the combination of various content-related events, to appeal Japanese content.

③Cool Japan Fund Supporting business activities aiming at promoting Japanese unique products, services and creativity in overseas market.

④Asia Content Business Summit (ACBS) Holding the international conference combining public and private sectors of Asian countries/regions to discuss common issues of each content industry and to find solutions together.

⑤Anti-piracy Measures Promoting anti-piracy measures by collaborating with the Content Overseas Distribution Association (CODA). Support for Marketing ⑥Ambassadors by international students Promoting Japanese content to foreign countries through international students who understand and love Japanese culture and content.

Maintaining Business Platform

⑦Development of Human Resources for Producer Subsidizing the study in foreign film schools and conducting training at foreign private companies to produce experts in the content industry. ⑧Strategy for Content Technology Promoting and cultivating digital content technology.

①J-LOP: Content Localization and Promotion Support 11 1. Localization support Television Channel Animation Digital Comic

“Channel JAPAN” “WAKUWAKU JAPAN” “Chibi Maruko chan” “Doraemon” Distribution: Asia region Distribution: Indonesia Distribution: China Distribution: English-speaking countries Nikkei-TBS Smart Media SKY Perfect JSAT Corporation Nippon Animation International Fujiko F. Fujio Production

2. Promotion support Sales Promotion Trade Fairs Events

Festival De Cannes Tokyo Girls Collection

Content Trade Fairs（BtoB, BtoC) Doraemon x Home Electronics JAPAN EXPO ・MIPTV, MIPCOM (France) ・AFM : American Film Market (USA) ・AFA : Animation Festival Asia (Singapore, Indonesia) ②CoFesta (Japan International Content Festival) 12

CoFesta is the largest comprehensive content festival in Japan. Events connected with the content industry, including games, animation, comics (manga), characters, broadcast, music and films, and content-related industrial events like fashion and design, are held in cooperation with each other. Various segments of the content industry work together to promote their content overseas with powerful public relations.

Past CoFesta Events CoFesta 2015 Official Events

［All events］ ［TIFFCOM] CoFesta2008 Participants: Contract amount: Official event (15), Partner event (10), 820,000 USD19 million Original event (11) CoFesta2009 Official event (18), Partner event (16), Participants: Contract amount: Original event (6) 1 million USD45 million CoFesta2010 Official event (17), Partner event (9), Participants: Contract amount: Original event (2) 1.3 million USD38 million

CoFesta2011 Participants: Official event (18), Partner event (14), Contract amount: 2.3 million Original event (2) USD45 million CoFesta2012 Participants: Contract amount: Official event (18), Partner event (12) 1.80 million USD52 million

CoFesta2013 Participants: Contract amount: Official event (17), Partner event (11) 2.0 million USD65 million

CoFesta2014 Participants: Contract amount: Official event (18), Partner event (15) 1.34 million USD51 million ②International Content Fair “Japan Content Showcase (JCS)” 13

 Japan Content Showcase (JCS) is a comprehensive international content fair integrating films, broadcasts (TV and other programs), music and animation. This exhibition is held every October at Odaiba, Tokyo.  JCS is held to communicate the appeal of Japanese content to the world, consolidate cooperation with other industries, strengthen its ability to deliver messages to the world, and further develop overseas market for Japan’s content industry.  In 2015, 347 groups exhibited their works and 1,433 buyers visited the JCS (In 2014, 332 exhibitors and 1,160 registered buyers).

【Number of exhibitors and buyers】 【Number of business negotiations】

Tokyo International Content Market at Tokyo 7,000 Tokyo International Anime Exhibitors 5% Music Market International Film Festival 1400 Festival Autumn Buyers 24% up Providing business matching 638 A trade fair set up at the Tokyo Providing business matching 6,663 opportunities at business 1200 6,000 conventions and seminars for International Film Festival for opportunities to distribute domestic and overseas visual animation business information the purpose of overseas 584 development of Japanese music. content, including TV programs. with the aim of rejuvenating th 1000 5,699 12th year from 2004. 12 year from 2004. Japan’s animation industry. 525 TIAF’s 6th year from 2010. 5,000 800 4,844 795 4,000 600

549 576 400 3,000 17% up

217 200 156 186 2,000 160 Period：October 20-22, 2015 (3 days) 0 146 130

1,000

Venue：Hotel Grand Pacific

Japanese国内 出展者 出展者 出展者 Buyer Buyer LE DAIBA Buyer

バイヤー バイヤー バイヤー Exhibitor Exhibitor Zepp DiverCity TOKYO Exhibitor Overseas海外 0 2013 2014 2015 2013 2014 2015

③Cool Japan Fund 14

 Launched in November 2013  Target: Business activities cultivating overseas demand for Japan’s creative and unique products or services  Investment Criteria: Policy objective, profitability, possibility of ripple effect to other business activities (independently judged by a committee consisting of external directors from the private sector) * Duration of the Fund: Expected to be around 20 years

10.6b yen www.cj-fund.co.jp ④Asia Content Business Summit (ACBS) 15

 ACBS was established in 2008, gathering both private and government organizations in the Asian content industry, to discuss common issues and to find solutions by collaborating with each other. ※Member countries/regions： China ・Hong Kong・Indonesia ・Japan・Korea・Malaysia・Philippines・ Singapore・Thailand  The 4th ACBS was held in Tokyo in October, 2014 at the same time as CoFesta. ※2009/10 The 1st ACBS Meeting @ Tokyo, 2011/02 The 2nd ACBS Meeting @Thailand, 2011/12 The 3rd ACBS Meeting @ Singapore

【Asia Content Business Summit（ACBS）】

At the 4th ACBS, ACBS members declared a Joint statement which indicated the activities ACBS members should work on together from now on. （Participants： Hong Kong・ Japan・Korea・Malaysia・Philippines・Singapore・Thailand）

Outline of the Joint Statement of 4th ACBS • To examine ways of continuously collecting statistics and data which enable cross comparison of each market and industrial structure in the region • To recognize the importance of cross-border content distribution and aim to alleviate regulations that can prevent promotion of content distribution. • To work together to fight against pervasive piracy. • To continue discussion on technology implementation, which can facilitate new businesses and give enhanced opportunities for young creators. • To examine ways of promoting international cooperation such as international co-productions. • To examine ways of mutual cooperation regarding human development. • To invite non-member ASEAN states to join the ACBS (expansion of ACBS). ⑤Anti-piracy measures 16

 The presence of pirated copies poses one of the most serious obstacles when we seek to develop content business in global markets.  METI and Content Overseas Distribution Association (CODA) are developing countermeasures against pirated copies through cooperation with copyright holders, copyright protection groups and governments overseas.

Countermeasures against online copyright infringement • A demonstration experiment conducted on video • Subject to cross-sectional sharing of pirated reproduction contribution sites mostly in China and Korea for the information within the content industry concerning comics and purpose of requesting them to delete illegal video animation, three strategic initiatives has been implemented:. content on the Internet. 1. 2. 3. →Almost 100% of CODA’s deletion requests were met. • A memorandum was executed between CODA and Large-scale Inducing users PR, promotion, major video contribution sites in China for copyright deletion to shift and protection on the Internet. to regular sites communication • CODA and Motion Picture Association (MPA) signed an agreement in March 2014 to develop countermeasures • Implementing such measures as deleting pirated content from against online copyright infringement and reinforce data retrieved by a search engine and regulating advertising copyright protection activities. on piracy sites.

Support in joint enforcement (exercise of rights)

For pirated DVDs/BDs, CODA helps copyright holders to exercise their rights through cooperation with local enforcement authorities in China and other countries. →About 6.85 million pirated DVDs were confiscated between January 2005 and March 2015. ⑤Anti-piracy initiatives for manga and animation 17

What is Manga-Anime Guardians (MAG) Project?  A project aimed strategically and consistently to implement three initiatives: (1) “deleting” pirated copies effectively, (2) building a scheme for “inducing“ fans to shift from piracy sites to legitimate sites, and (3) “disseminating and raising awareness” concerning piracy issues to audiences at home and abroad.  The Manga-Anime Anti-Piracy Committee, composed of 15 major manga publishers and animation companies, and the Ministry of Economy, Trade and Industry (METI bureau CODA) work together in one unified body.

＜MAGP initiatives for globally maximizing the value of content＞ Development Dissemination and [Issue] Piracy overseas awareness raising Maximizing the value of content of value the Maximizing

1. 3. Large-scale deletion 2. PR, dissemination and awareness

[Measure] Legitimate-link collection site raising “Thanks, friends” distributed

“Manga-Anime here” opened

audiences

Content holder Overseas

manga-anime-here.com Piracy site

⑥Ambassadors by international students 18

 METI has organized the group named “CoFesta Ambassador", which consists of international students who love Japanese content.  Thanks to “CoFesta Ambassador”, CoFesta can be more productive because the international students take on the role of marketing and promotion. By supporting the expansion of Japan’s content industry to foreign markets, METI aims to promote Japanese content more effectively. ① Marketing: to investigate and provide consumer needs which will be useful for planning promotion strategies. ② Promotion: to set a network with influential business persons in foreign content industries through local events for buyers, media and influencers.

Content Report Style

• Investigation of • To make a report which Report features a trend in foreign • Seminar consumer trends countries through hearing from • Presentation the locals. Marketing • To investigate the reaction of Investigation of foreign consumers to content consumer reaction Japanese companies wish to ・ Report sell.

• To conduct promotion events at foreign exhibitions by PR events in foreign collaborating with ambassadors. • Report countries • To contribute to the attraction of consumers Promotion

Invitation of • To invite influential • Conducting a tour international ambassadors to CoFesta for the ambassadors • students to Japan To expand information on at JCS (Japan Japanese content through Content Showcase) Around 200 ambassadors have been appointed. SNS • Report (as of October 2015)

⑦Development of Human Resources for producers 19

 To promote the expansion to foreign markets and co-production in the content industry, METI aims to produce “international content business producers” who can deal with special tasks such as financing, contract and marketing.  METI subsidizes study overseas and conducts training at foreign private companies.

Subsidy for overseas study（2010～） Training at foreign private companies （2015～）

・METI subsidizes the study at US film schools • METI subsidizes internships relating to where the participants can learn international producers’ tasks (market research, practices cultivated in Hollywood studios. marketing, promotion, script development, ・METI has subsidized nine participants so far. film production, etc.) in overseas content ・METI conducts comprehensive support for the industry, such as Hollywood studios. participants such as preparing references • METI conducts comprehensive support such for application and subsidizing a maximum of as assistance for internship and subsidizing USD 30,000 per year per person. research costs.

(Reference) Schools：AFI（American Film Institute） USC（University of Southern California） • METI has subsidized one participant so far.

Domestic development of human resources invitation Methods to Information develop ・ In order to construct a human network Foreign producer on foreign content to promote international co-production, market METI provides young people with opportunities to interact with business Local producer collaboration Domestic producer persons in the content industry through training and group work. Realization of international co-production ⑧Strategy for Content Technology 20

 Content Technologies, such as CG (Computer Graphics) and 3D imaging, are the basis for various content creation.  With the aim of developing and spreading state of the art content technologies, METI sets a “Technology Map”, conducts activities to find, give awards to, and promote state of the art content technologies, and researches the platform for content producing.

Setting “Technology Map (Content Field)” Finding and promoting content technologies

The “Technology Map” indicating the direction ■DCEXPO content technologies should follow was DCEXPO, which is held by METI and Digital Content revised in 2014. Association of Japan (DCAJ), is an exhibition of content Its purpose is to cultivate Japan’s content technologies. Its purpose is to contribute to further industry and create new industry through the development of the content industry by exhibiting the latest development of content technologies. content technologies and encouraging researchers, students and creators to interact with each other. Investigating content production platform

■ Platform for Manga production ■Innovative Technologies （2014） Its purpose is to find, give awards to, and promote To promote simultaneous online distribution of innovative technologies which will greatly contribute to the Manga content in both Japan and foreign development of the content industry. countries to combat piracy, METI investigated 20 awarded technologies are exhibited at DCEXPO. in 2014 a new manga production process applying digital technologies which can make editing, translating and distributing easier. In 2015, METI conducted a seminar for ■Features publishers, online distribution companies, Its purpose is to conduct a demonstration, seminar and manga creators and students to introduce the workshop to introduce remarkable technology of the year. result of this investigation. The theme of 2015 is “Content Technology which can change sport”.