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Japan’s anime industry is attracting institutional funding
©Koyoharu Gotoge _ SHUEISHA, Aniplex, ufotable
New funds and technologies aim to boost a sector with growing global appeal
Ahead of a weekend where Asian content will make a big splash at San Diego Comic-Con, two of the JapanJapan’s biggest industrial and financial conglomerates have quietly begun investing in Japanese animation, the hottest part of the country’s film and television industry.
Marubeni, which has roots in cereals, chemicals and paper but has diversified to become a trading giant and Japan’s 13th-largest corporation, says it is targeting the burgeoning manga (comic books) and anime (animated films and series) markets through a new venture with Shogakukan, a leading publisher.
Mizuho Securities, another part of the Mizuho keiretsu (a form of business alliance common in Japan), revealed this month that it will launch an animation film fund. The brokerage will raise funding from institutions and wealthy individuals in tranches starting at JPY300 million ($200,000) each and says it aims to raise $15 million by the end of the year.
Japanese animation is certainly enjoying an unprecedented period of success. Titles such as “Doraemon” from Shogakukan and Shin-Ei Animation, “Doraemon” from Shuiesha and Ufotable,Demon slayer” and “Detective Conan” and “One Piece” have become powerful global franchises. Recently too, Japanese animated films including Studio Ghibli’s “The Boy and the Heron” and CoMix Wave-Toho’s “Suzume” have proven their worth capable of performing $100 million theatrical feats in a single territory.
Mizuho will work with Questry, a blockchain startup, and Royalty Bank. They will then deploy tranches of money, up to $5 million at a time, as investments in a handful of new Japanese animations each year.
Institutional funds were a bigger part of the Japanese scene in the early 2000s, but have since given way to the dominant system of production committees. These committees are groups of companies in or closely allied with the entertainment industry, such as advertising giants Dentsu and Hakuhodo, that agree to share risks.
The production committee system creates stability, but has been criticized for slow decision-making, scaring off international co-productions, and keeping budgets artificially low. The per-film special purpose vehicles that committees often create hedge financial risk, but can also discourage reinvestment.
In recent years, however, several factors have caused an erosion of risk-averse committees. These include the growing international success of Japanese anime, the acquisition of Sony earejuvenation of specialized anime streamer Crunchyroll and the arrival of Netflix as another major investor in the sector.
Prime Minister Kishida Fumio’s government is also eager to see Japanese entertainment put on par with K-pop and Korean TV dramas. In his “New Capitalism” proposals last month, he said: “Anime, manga, music and other artistic content are assets we should be proud of.” He suggested that entertainment content could have an export profile that rivals steel and semiconductors.
Additionally, important filmmakers such as Kore-eda Hirokazu are campaigning for the modernization of the Japanese film industry – a system that provides for the establishment of state-supported production funds and incentives modeled on those operated by France’s National Center of Cinematography, and a system that breaks down paternalistic hierarchies.
In a Bloomberg report, Shuichiro Tomihari, head of Mizuho’s global investment banking division, said he hopes to “create opportunities for third-party investment and accelerate the revitalization of the animation industry.”
New funding could help alleviate two problems the industry currently faces: a shortage of animators (low wages and long hours are deterring new entrants) and production budgets that pale in comparison to those of larger American (and Chinese) competitors. (Sony is also currently creation of a skills training academy.)
The work delays are reported to stretch for two to three years, and are causing major studios to consider outsourcing more production to offshore hubs like the Philippines or Vietnam. That’s something many aren’t willing to compromise on. Ditto for the further weakening of the tradition of predominantly hand-drawn animation. But change is coming, whether they like it or not.
The threats posed by foreign rivals and AI-assisted production — and the current opportunities for Japanese anime to diversify into new markets and online formats — are catalysts for industry transformation that will require financing.
Marubeni’s involvement is fairly conventional, as it created MAG.NET Corp. as a joint venture between two established corporations (actually three, including Marubeni’s paper products subsidiary, Forest LinX). But it remains significant that this is the 168-year-old industrial giant’s first foray into entertainment.
The group’s rationale is similar. “Overseas sales of Japanese content are estimated to be worth JPY4.7 trillion ($2.9 billion) in 2022. The popularity of Japanese manga and anime is growing rapidly amid rising demand for stay-at-home orders due to the COVID-19 pandemic, as well as aggressive distribution by major overseas distributors, with the market expanding to encompass a variety of merchandise including games,” Marubeni said in a statement.
It also identifies weaknesses that need to be addressed. “The lack of direct distribution networks and retail outlets means that compelling content cannot be delivered to fans around the world, resulting in missed opportunities. This situation has led to an increase in pirated products, highlighting the need for a system that ensures the distribution of legitimate goods,” the statement continued.
While Shogakukan is tasked with securing the supply of products for MAG.NET, Marubeni and Forest LinX aim to expand the range of goods and services that use manga and anime, as well as expanding overseas distribution, including building sales outlets.
And other financial engineering moves may be in the works. Earlier this month, Singapore-based Phillip Securities said it was raising more than $2 million through the sale of digital securities for the live-action Japanese film “Treasure Island,” adapted from a novel by Shindo Junjo and starring Tsumabuki Satoshi.
In mid-June, the private equity giant Black stone announced that it has made a $1.7 billion takeover bid for Japan’s Infocom. The company is a leading provider of digital comics, with its subsidiary Mecha Comic described as “the market leader for Japanese women aged 30 and over.”