by Karen Raugust
In Japan, licensed merchandise inspired by animation is, as a rule, available for a short time only--usually from three months to two years--before it disappears from store shelves. During this brief period, however, licensers can profit significantly. In fact, licensing hits can generate sales levels nearly equal to those associated with merchandising blockbusters in the United States, a country with twice Japan's population.
This postage stamp from Japan
features the popular Doraemon
animated character.
According
to EPM Communications, publisher of The Licensing Letter, retail
sales of all types of licensed merchandise in Japan totaled U.S.$10.6 billion
in 1996, translating to annual purchases of U.S.$86 per capita. Approximately
45% of the total, or U.S.$4.8 billion, is attributable to entertainment
and character licensing, largely driven by animation. Industry observers
estimate that about 50% of all merchandising activity in Japan is based
on local properties, with the remainder primarily due to those from the
United States and Europe.
Children's Properties
Licensed animation properties in Japan
can be grouped into three main categories. The first includes television
programming aimed at youngsters aged 3-12. This sector is where the most
lucrative short-term properties arise. For example, Sailor Moon, a
series produced by Toei Animation and one of the top licensed properties
of the 1990s, generated approximately U.S.$800 million in retail sales
of licensed merchandise in Japan in two years. Children's properties are
extensively licensed for nearly every type of product, ranging from snowboards
and apparel to chopsticks and instant noodles. Federico Colpi, senior manager
of the international department at Dynamic Planning, the Japanese licenser
of properties including Devilman and Mazinger Z, says that
Dynamic's property Cutey Honey F has been licensed for more than
200 products in less than six months, a typical situation. Toys and video
games are among the most important categories; some toy manufacturers are
even affiliated with animation companies. Toymaker Bandai, for example,
owns Sunrise, an animation house known for such toy-driven properties as
Gundam, which debuted in 1979. Merchandise is sold in nearly every
distribution channel, from toy, book and candy shops to department and
convenience stores.
| The Hello Kitty character
is featured |
Hello Kitty, the animated series produced by DIC Entertainment. © Sanrio, Inc. |
The Teen and Young Adult Market
Whereas licensed properties for children
are primarily supported by exposure on broadcast television, awareness
for the second category of animation properties, those targeted at teens
and young adults, is created mainly by direct-to-home video productions
(known in Japan as original animated video, or OAV) and comic books. Much
of the merchandise, which includes t-shirts, vinyl figure/model kits, collectible
action figures, posters, and cigarette lighters, is sold through anime
and manga shops. Properties for teens and young adults do not drive as
extensive product sales as those for younger children, but they can be
very lucrative. Retail sales of merchandise based on the 1996 hit Evangelion,
for example, exceeded U.S.$255 million.
Both of these sectors of the animation licensing
business are primarily centered around short-term properties, as noted.
"Only current television shows' characters are licensed for merchandising,
and when a television show goes off the air, manufacturing and distribution
of merchandise stops too," says Dynamic Planning's Colpi. This situation
is beginning to change, however, as producers create serial OAVs and/or
multiple television sequels. For example, Akira Toriyama's Dragon Ball
Z has inspired 24 movies and more than 500 television episodes over
10 years, plus extensive licensing, and NTV's Anpanman and Shogakken
Productions' Doraemon have also driven significant long-term merchandising
activity directed at younger kids. In addition, several popular OAVs are
based on television programs from the 1970s, including Tokyo Movie Shinsha's
Lupin III and Dynamic's Mazinger, and merchandise is now
marketed to consumers in their 30s.
The Lucrative Classics
The third type of animation licensing involves truly classic properties,
a very different business from the two categories discussed above. These
properties may have been based on animation originally, but they currently
stand on their own. In fact, exposure created by the licensed merchandise
itself often drives their popularity. The primary example of this sector,
and the top licenser overall in Japan, is the Walt Disney Company, with
its classic characters like Mickey Mouse, Donald Duck and Winnie the Pooh.
Popular classic properties come from both Japan and abroad. Creations such
as Tetsuan Atom (Astro Boy) and Jungle Taitei (Kimba,
the White Lion) by Osamu Tezuka, considered the father of Japanese
animation, have achieved classic status. Another classic licenser is Sanrio,
owner of properties including Hello Kitty and Kerokerokeroppi. Non-Japanese
classics, in addition to the Disney family, include Charles Schultz's Peanuts,
licensed by United Media; Hanna-Barbera's sniggering dog Muttley, known
in Japan as Ken Ken, from the 1970s TV series Wacky Races, licensed
by Warner Bros.; and Warner's Looney Tunes characters.
One characteristic that most classics have in common is that they are cute.
"Cute is incredibly important in Japan," says David Buckley,
president of Copyrights Japan Ltd., agent for properties including Paddington
Bear, Spot, Musti and Brambly Hedge. "If it's cute, it's
bound to sell." Cute classic characters, as well as some newer ones,
appeal not only to kids, but also to adults, particularly women in their
20s and 30s.
Dragon Ball Z has inspired 24 movies and more than 500
television episodes over 10 years, plus extensive licensing.
© 1996 B.S./S.T.A. Licensed by FUNimation. All Rights Reserved.
Classic
Promotions
While many classic properties have some
support from animation, their licensers primarily create awareness through
other means. Theme parks such as Disneyland Tokyo and Sanrio's two parks
-- Puroland, an indoor facility near Tokyo, and Harmonyland, an outdoor
attraction in Beppu City -- are especially beneficial in generating exposure.
Merchandise based on classic properties is increasingly boutiqued at retail
outlets, both in free-standing stores and shop-in-shops. A free-standing
store is a store that only features a certain company's or character's
merchandise, whereas a shop-in-shop is a kiosk or area within a store that
only features a company's or character's merchandise. This boutique technique
not only drives purchases, but also helps to create awareness. Disney Stores,
Sanrio Gift Gates and Warner Studio Stores are examples, as are shops dedicated
to Snoopy, Babar, Beatrix Potter and Paddington Bear in Tokyo, Yokohama
and Osaka. Some fad characters, those featured in television series or
targeted toward children, are also merchandised in dedicated shops, such
as those overseen by television station NTV.
Classic properties are licensed for virtually every category, with stationery,
novelties and gift items (known collectively in Japan as "fancy goods"),
accessories and foods being especially important. Products are high quality,
and are positioned as brands (labeled products that consumers can trust)
rather than as novelty merchandise. Promotions are also very significant
for classic characters in Japan (and increasingly for any licensed animation
property), with tie-in partners ranging from food companies to airlines
to banks. Annie Morita, director of publicity at Warner Bros. Consumer
Products, says that Warner characters including Looney Tunes, Wacky
Races and Tom & Jerry recently have been involved in bank tie-ins,
which are currently popular as financial institutions employ animated characters
to promote junior savings programs and to appeal to women, traditionally
Japanese households' financial decision makers.
The Cutey Honey property
has been licensed for more than
200 products in less than six months.
© 1997 Y. Iisaka/Dynamic Planning/TV Asahi/Toei Animation.
The Limited Role of Animated Features
Unlike in most countries, animated films
do not play a large role in Japan's licensing market, although movies based
on video games, OAVs or television series can help extend a property's
life. Even the top licenser in the country, Disney, does not generate significant
licensing revenues from its film properties in Japan. One notable exception
to this rule is Studio Ghibli, the producer of movies directed by Hayao
Miyazaki and Isao Takahata. Their annual releases are among the top-grossing
films in the country. Miyazaki's 1997 Princess Mononoke quickly
became the top Japanese film of all time. Some of their properties that
have generated licensed merchandise include Miyazaki's My Neighbor Totoro
(1988) and Porco Rosso (1992) and Takahata's Pom Poko (1994).
A few films by other studios, such as Katsuhiro Otomo's Akira (1988)
and Mamoru Oshii's Ghost in the Shell (1995), have driven licensing
activity for older audiences.
With the exception of classic properties, foreign animation is rare, although
some international programs, such as Teenage Mutant Ninja Turtles
and X-Men, can break through. A popular morning show, Ponkikies,
ends with rotating vignettes of foreign programs Thomas the Tank Engine,
Postman Pat and The Busy World of Richard Scarry, all of which
are licensed in Japan. Fuji TV has even introduced a Ponkikies merchandising
effort as well.
Operations - Japan Style
From an operational standpoint, some differences exist between licensing
in Japan and in other countries. For example, in most regions royalties
are based on the number of items sold, whereas in Japan they are pegged
to the number of pieces manufactured. "Of course, there are no sales
reports either," says Dynamic's Colpi. "All the amount is paid
beforehand, and the licenser does not take any risk in the case that a
product or a book does not sell as expected." Another difference is
the use of royalty seals. "We use certificate stamps to control the
quantity of the licensed products to be released to the market," says
Mr. Kurozumi, licensing manager at Cosmo Merchandising, agent for non-Japanese
properties including Harvey Comics. These seals or stamps, which
are attached to all officially licensed items, are color coded by price,
assisting licensers in their efforts to spot counterfeiting. Kurozumi also
notes that royalties in Japan are often based on the retail rather than
the wholesale price, unlike most other countries.
Dastardly and Muttley dolls from the Wacky
Races animated series.
© Hanna-Barbera Productions. All Rights Reserved.
All told, more than 200 animation studios do business
in Japan, and many of them, including Toei, Nippon Animation, Tokyo Movie
Shinsha and Tatsunoko, have licensing arms, as do several of the seven
terrestrial broadcasters. This situation is indicative of the competitive
nature of the marketplace. While emphasizing that licensed merchandise
inspired by animation can be lucrative, experts point out that breaking
into the Japanese market can be difficult for domestic and international
licensers alike.
Karen Raugust is the author of several books and reports on licensing and entertainment, including The Licensing Business Handbook, International Licensing: A Status Report (both available from EPM Communications, New York) and Merchandise Licensing for the Television Industry (available from Focal Press, Newton, Mass.). She also writes about licensing, animation and other topics for publications including The Hollywood Reporter, Publishers Weekly and Animation Magazine, and acts as a consultant to the licensing and entertainment industries. She is the former Executive Editor of The Licensing Letter.
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