Piracy, Netflix, and the slow crawl of "Cool Japan"

The Washington Times this week reported on the entertainment industry's wringing of hands over recent data showing that Netflix's "Orange is the New Black" is the second most daily pirated TV show in the world right now after "Game of Thrones":

[...] [T]he fact that Netflix shows are also being voraciously downloaded illegally renews industry worries that there are no clear solutions to piracy. Entertainment industry executives had hoped Internet-based services such as Netflix, Hulu Plus and Amazon Prime would persuade those watching pirated videos online to begin paying or subscribing legally — much the way music lovers embraced iTunes, even if they had grown up illegally downloading files on Napster. But even Netflix, which at $8 to $9 per month for a streaming-only plan costs a fraction of a typical cable bill, may not be able to curb online theft.

Netflix has a different take, however. CEO Reed Hastings pointed out that piracy in Canada has declined since Netflix was introduced 4 years ago. The Post continues:

“I think people do want a great experience and they want access. People are mostly honest,” Netflix chief content officer Ted Sarandos said in an interview with Stuff.tv in May 2013. “The best way to combat piracy isn’t legislatively or criminally, but by giving good options.”

This reminded me of a recent Tofugu video, which reported on Tokyo's move this summer to crack down on manga and anime pirates. Essentially they're saying "Thanks for supporting our entertainment industry, but please stop!"

This is an issue I've discussed with friends before, and as Tofugu's Koichi asserts, it's somewhat gray. Now I'm not advocating for piracy here, but I do very much understand the impulse to seek out and illegally download that which is cannot be obtained by other means. Japan is sitting on a largely untapped goldmine.

For over a decade now, Tokyo has promoted a "Cool Japan" campaign to grow Japanese soft power and exploit the popularity of Japanese culture. Anime, manga, and video games are integral parts of "Cool Japan," yet the respective industries have been slow to adapt.

Outrage, indeed!

Why are there hardly any Japanese films and TV shows available on Netflix? Why are so many popular anime and manga titles unavailable in the US and other countries? Probably the same reason media are so expensive in Japan - the J-entertainment industry is very cautious about how it licenses its content and wants big profits. The fact that shows like Doraemon are now making their way over to the US is encouraging, but then again the blue robo-cat has been around for almost 50 years now. It's about time...

Japanese mobile app blog App Woman voices similar concerns pertaining to Japan's video game industry. "Where is Cool Japan Headed?" asks a recent article.

「COOL JAPAN」の象徴のひとつ、ゲーム。

日本では、今やゲーム機よりもスマホで遊ぶことの方が主流の様。ところが、世界49ヶ国と比べてみると、日本の「モバイル、タブレット」ゲームの利用率はそれほど高くないのです。

According to a recent study by market research firm Kantar Japan, more Japanese people play games on mobile platforms than consoles now, 48.7% vs. 41.4%. The report shows that Japan has the lowest rate of mobile game play among the Asian countries studied. In other words, the mobile game market is booming! The article goes on to point out that Japan has no shortage of big name titles and series, including "Dragon Quest," "Mario," and "Pokemon."

And yet Bloomberg ran a piece just this past May in which Nintendo president Iwata basically said that they'll have to fire him before Nintendo starts selling games on mobile platforms.

To be fair, not all Japanese companies are clinging to the well-worn path. Softbank just last year dove head-first into the US mobile carrier market with its acquisition of Sprint, and also bought a majority share in Finnish company Supercell, the maker of the popular mobile game Clash of Clans. Square-Enix has also been steadily porting Final Fantasy and other titles to mobile. And let's not forget about my favorite Japanese mobile developer, Kairosoft, which has been localizing its sim titles for a while now.

There is no clear way to measure the success of  "Cool Japan," but I would argue that the sustained level of international anime and manga piracy is a good indicator that there is a big opportunity for Japanese entertainment companies, if only they would take advantage.

The "Cool Japan" Delusion

There's a recent "Views from the Street" at the Japan Times online asking the question "Can selling 'cool Japan' save the ailing economy and help avert a demographic disaster?"

First of all, the "Cool Japan" campaign, if it can be called a campaign, is a move to promote Japanese culture abroad as hip, or "cool" as the kids say these days. While I might argue that it the branding of Japan as "cool" has been relatively unsuccessful, as I believe many more people would associate Japan with words like "technological," "exotic," or "strange," there is no denying that the spread of some elements of "cool" Japanese culture around the world has enjoyed more than modest success. Anime, manga, video games, and Japanese pop music have spread to many countries, although they thrive particularly among those members of "geek culture," as noted quite some time ago by Emily Leach of Asian Week. Still, I don't mean to assert here that Japan isn't "cool." What I do mean to assert is that the whole notion of "cool Japan" relating to Japan's economic woes is flawed.

Cool Japan is a red herring. Japan's stagnant economy can be traced back to the 1990's and its accrual of debt and fiscal deficits (Sound familiar? If America makes it out of the current recession, it will succeed where Japan has failed). Japan's economic problems cannot be saved by some giant advertising campaign. And they will be severely worsened, possibly to the point of collapsing the national economy, within the next 50 years. It has nothing to do with image. It has to do with individual behavior and national policy.

As Tornadoes at As I see Japan...from LA has been pointing out in recent posts, Japan is suffering from population decline. Not only that, but Japan's population is aging. This means that as the years pass, there will be less people working and more people retiring. Eventually there won't be enough taxes coming in to pay for all the "free" health care and welfare that is required.

There are two possible solutions:

(1) Japanese people need to have more children. This is the easiest way to increase the population and inject some new blood into the ailing economy.

(2) Ease immigration policies. This is obviously not happening.

As it is, the "cool Japan" movement, even if it were effective, can only boost tourism and sales of Japanese goods. What it needs to do is encourage immigration to Japan. And the Japanese government needs to allow for this. 

And so will Japan somehow weather the storm, or will it fade away into oblivion (in a cool way, of course)?