Recently, the Japanese government hosted a study group to determine future policies to support its entertainment industry, including the local gaming industry.
Specifically, the Commerce and Services Group of the Cultural and Creative Industries Division of the Japanese Ministry of Economy, Trade and Industry, hosted the 8th Entertainment and Creative Industry Policy Study Group.
The presentation slides have been revealed, providing us with a look at the policies proposed by the group.
The document recognizes that the entertainment and content industry, including video games, anime, manga, music, and live-action, has become a core industry for Japan. It’s also a major source of foreign currency.
With the aim of creating attractive content in Japan and delivering it worldwide, the ministry intends to implement an action plan to expand the cumulative market size abroad for the industries mentioned above to 20 trillion yen (approximately $134 billion) by 2030.
According to the plan, this will be achieved by deepening the partnership between the public and private sectors and the cooperation between the relevant industries, resulting in the growth of overseas demand and the revitalization of the local economy.
A general policy has been decided, and then specialist committees will dive deeper into the policies for each specific industry.
We hear that since the implementation of the “Cool Japan” campaign in 2013, overseas sales of the Japanese entertainment industry have quadrupled, from 1.4 trillion yen to 5.8 trillion yen.
Of these, the video game industry takes the lion’s share, about 3.5 trillion yen, having grown from about 1 trillion yen.
The Japanese government believes that its initiative stimulated private investment and contributed to the significant increase in overseas sales across the entertainment industry as a whole. Budgets have expanded, although not as steadily as they could have, and they’re still low compared to other countries like South Korea.
Now the government wants to continue supporting the industry and has established five principles based on a review of the policies implemented between 2013 and 2024, and feedback from public opinion.
These principles are defined as “the Five Principles of the Entertainment Policy” and are as follows.
- Provide large-scale, long-term, and strategic support.
- Support initiatives that are created in Japan and delivered to the world.
- Do not interfere with the content of the creations.
- Act directly and with transparency.
- Prioritize challengers and innovators.
Basically, the Ministry aims to engage in dialogue with stakeholders to identify key support areas and provide large-scale and long-term support that can enhance business viability and predictability, stimulating private investment as a result.
This stems from the recognition that, while government-funded projects have expanded in the past year, and while analysis suggests that this has been effective, the level of support remains low compared to other countries.
The government also wants to encourage domestic investment in IP, talent, and digital infrastructure, as well as investment overseas in international distribution networks and fandom development.
While providing this support, the government must not influence the content of the creative works and must guarantee the creators’ freedom of expression.
Policies should be kept as simple as possible so that even stakeholders unfamiliar with content creation or distribution can easily understand them.
Lastly, priority should be given to projects that are high-risk and high-reward.
Returning to the goal of achieving 20 trillion yen in sales overseas for the combined entertainment industry by 2030, this would effectively result in Japanese content dominating the global market.
To achieve this, it’s crucial to develop a “global stage” with the creation of international distribution networks and the encouragement of the growth of fandoms, while also nurturing creative resources (IP, talent, and digital infrastructure) capable of producing world-class products.
This is a mutually reinforcing relationship, as major distribution networks make major hits more likely, while achieving major hits helps expand the distribution network.
The document recognizes that Japan faces global competitiveness challenges in sectors like music and live action, while it excels in games, manga, and anime.
Mechanisms have been created to maximise revenue by expanding IP across multiple media, including merchandise, and this has an effect that isn’t just additive, but multiplicative on their impact and overall influence.
Japan also excels in the creation of incubation systems capable of presenting products on high-visibility platforms while selecting excellent products from a large pool and refining them based on user feedback.
That being said, individual industries have been working on expanding overseas individually, which means that Japan’s strengths have not been fully leveraged in the global market.
This is why Japan intends to implement a strategy to expand its “Japanese-style content ecosystem” worldwide, using its strength in games, anime, and manga as the foundation.
In a world where the biggest investor wins, Japan must compete against other countries by offering hundreds of billions of yen in financial support.
In order to achieve the goal in eight years, the next three to five years are to be seen as a critical window, requiring large-scale, long-term, and strategic investment.
In order to achieve success, the Ministry of Economy, Trade and Industry will not limit itself to providing subsidies, but will also collect and monitor data on distribution networks and products, select projects with high potential, and apply the feedback it receives to improve results.
In the long term, the doubling of domestic investment in IP, human resources, and digital infrastructure would transform the entertainment industry from a labor-intensive industry that generates earnings mostly in Japan to a knowledge-based industry that generates earnings mostly in the global market.
This could result in the entertainment industry generating over half of the trading surplus for goods and services by 2040.
Interestingly, the document showcases the areas in which the Ministry sees an advantage for Japan and other areas in which improvement is required.
For the gaming industry, Japan has an advantage in console games, whole PC and mobile are currently the “main battlefield” in which it needs to fight harder.
It also has an advantage represented by its creators, but it needs to work harder in the creation of large-scale content for overseas markets.
Further “contested” areas for PC and mobile are the optimization of transactions with platform providers, the strengthening of overseas distribution, the establishment of a support base overseas, and the promotion of action against piracy.
Interestingly, looking at 2024’s figures, the document recognizes that while the public grants provided to games, anime, and live-action are large in absolute terms, they’re still small for games and anime in relative terms. As such, it’s necessary to strengthen support for the industries that are seen as the “main battlegrounds” in the near term.
On top of that, if we look at grants specifically offered to efforts to deliver Japanese content to overseas users, support for participation in international exhibitions accounts for half of all the support.
On the other hand, there is currently no direct support for initiatives that strengthen fandom. To enhance support for localization and fandom development, the Japanese government must reconsider the requirements while also taking into account that the required budgets differ across sectors like games, anime, manga, music, and live-action.
It’ll certainly be interesting to see whether the policies discussed here will be implemented successfully and will have the desired effect, especially considering that the new Japanese Prime Minister, Sanae Takaichi, is planning to increase the collaboration between the public and private sectors in investing to strengthen the Japanese economy and achieve growth.
If you’re interested in the most recent financial results of Japanese gaming indystry companies, you can find our articles about Nintendo, Koei Tecmo, Capcom, Konami, and Marvelous.