Kyoto University,
Graduate School of Economics
Research Project Center Discussion Paper Series

Japanese Films Strike Back:
Development of Promotional Alliancesin the Japanese Film Industry in the 2000s
Naoki Wakabayashi
Jin-ichiro Yamada
Masaru Yamashita
Ryuichi Nakamoto
Hiromi Nakazato

Discussion Paper No. E-10-009

Research Project Center
Graduate School of Economics
Kyoto University
Yoshida-Hommachi, Sakyo-ku
Kyoto City, 606-8501, Japan
November, 2010

Japanese Films Strike Back:
Development of Promotional Alliances in the Japanese Film Industry in the 2000s
Naoki Wakabayashi1
Kyoto University, Graduate School of Economics and Management
Jin-ichro Yamada
Kagawa University, Faculty of Economics
Masaru Yamashita
Aoyama Gakuin University, Faculty of Management
Ryuichi Nakamoto
Japan Society for the Promotion Science and Kyoto University
Hiromi Nakazato
Meiji University, Faculty of Information and Communication

Abstract
Supporting the revival of domestic films in the Japanese market in the 2000s, we find the dynamic
emergence of promotional alliances or “production consortia,” led by mainly television broadcasters withseveral media companies. In making local films, they make new conditions that partner organizations may
not only share cost, risk and resources but also collaborate for short-term media mix demonstration, which
attract Japanese audience again. The aim of this paper is to explore the development of alliance networks ofthe production consortium in the Japanese film industry and examine the characteristics that facilitate a highrate of performance through knowledge transfer and resources, from the viewpoint of organizational
network analysis. Analyzing interfirm promotional alliances in the 2000s, we find that cohesive ties within
an animation film consortium contributed to a high rate of performance.

Keywords
Alliance Network, Social Capital, Cohesive Ties, Japanese Film Industry, Production Consortium

1

He is an professor of organizational behavior, Graduate School of Economics and Management, Kyoto University, Japan.
His e-mail address is wakaba@econ.kyoto-u.ac.jp.
1Introduction
As the 2000s unfolded, Japanese films recaptured
their domestic market share, mainly from
Hollywood films. Following the long-term declineof major Japanese film distribution companies,
leadership in key film projects has shifted fromthe big movie studios to television broadcasters,
advertising agencies, and other major players. In
the current filmmaking environment, thesecompanies tend to organize promotional alliances,or a “production consortium (seisaku iinkai),”with companies engaged in film distribution,
publishing, production, and other related media
services. As the film industry is generally
project-based, these many promotional alliances
have resulted in the sequential production of commercially successful films. They provided new conditions
that partner organizations may not only share cost, risk and resources but also collaborate for short-term
media mix demonstration for new films. However, the combination of partner firms often repeats itself.
Behind the return of the market share of Japanese films as indicated in Fig. 1, we find the dynamic
emergence of filmmaking alliances of media companies and an exchange structure for new ideas, knowledge,
talent, human resources, funding, and film production resources.
Alliance networks have attracted growing interest from management researchers as the coordination
mechanism for new alliances (Gulati, 1998; Gulati and Gaugiulo, 1999). Such networks reduce thetransaction costs among the partner firms, provide effective access to marketing or innovation, and facilitate
knowledge transfer within exchange networks (Kogut, 1988). Alliance networks enable the serial formationof new interfirm collaboration projects as an “incubator” because they function as a coordination mechanism
for knowledge, talent and resources (Inkpen and Tsang, 2005). The special content and structure ofinterorganizational networks have garnered considerable attention as organizational network resources or“organizational social capital” (Adler and Kwon, 2002) in terms of knowledge transfer, resource access, newbusiness opportunities and innovation. The aim of this paper is to explore the development of alliancenetworks of production consortia in the Japanese film industry and examine the characteristics that facilitatea high rate of performance and social capital in making commercial films.
In particular, organizational network researchers discuss how cohesive ties and bridging ties may havecontrasting effects on interorganizational knowledge transfer and learning (Ingram, 2002). Partner firms thathave strong and repeated cohesive ties may see a high rate of transfer of homogeneous knowledge andcollaborative activities, while the wider range of partner firms spanned by bridging ties may see theacquisition of new heterogeneous knowledge and the creation of nouveau knowledge. In the current
Japanese film industry, a high rate of commercial success was seen in a case of stable partner firms with astrong exchange relationship, or cohesive ties, and also in several cases of partner firms organized for the
first time with new bridging ties.
We discuss this topic in detail in four parts. First, we discuss how bonding and bridging ties in alliancenetworks affect interorganizational learning. Second, we describe how and why production consortia
developed in the current Japanese film industry. Third, we apply network analysis to explore thedevelopment of alliance networks of production consortia in the 2000s and examine the network featuresthat may affect the box-office performance of commercial films. Finally, we discuss how Japanese
production consortia provide timely resource access for partner firms and advertising opportunities throughvarious media; however, internationalization may become an important issue in today’s rapidly growing
Asian film market and deceleration of the Japanese market.

Interorganizational Networks and Learning and the Development of Alliance Networks
The transformation of filmmaking from the movie studio system to project-based network organizations isseen not only in the United States but in Europe and Japan as well. At the start of a new film project, the2companies involved in production, film distribution, cable TV broadcasting and other media-related services
are likely to organize a consortium or a network of alliances. In Hollywood, repeated collaborative ties
between production and distribution organizations may affect legitimacy acquisition and eventually lead tothe survival of the production organizations (Cattani et al., 2008).
Interorganizational learning is considered an important advantage of forming alliances (Gulati, 1998). As
Inkpen and Tsang (2005) summarized, strategic alliances can facilitate knowledge transfer between thepartner firms and build effective capability in four main ways. First, only those firms in the alliance network
can acquire the know-how for forming alliances. Second, only through an alliance can the partner firms
acquire detailed knowledge about each other’s resources, capability and potential. Third, alliance partners in
a new business area can collaborate to jointly develop new capability and knowledge. Lastly, alliancepartners are able to access new resources and knowledge from the other partners. Thus, interorganizationalties in alliance networks may facilitate interorganizational learning only in the joining organizations. In thecontext of the film industry, production and promotional alliances also facilitate the transfer of knowledge
and new access to talent, resources and funding.
Investigating the network characteristics that facilitate interorganizational learning, researchers point out that
only specific content and structure may facilitate transfer of knowledge and access to resources (Gulati,
1998; Henderson et al., 2001). Thus, specific effective types of content and structure would be consideredorganizational social capital for alliances. Even in recent studies on interorganizational networks, several
specific features were pointed out as social capital of knowledge transfer and creativity: connectivity andcentrality (Cattani, et al., 2008); cohesive ties (Stark and Vedres, 2006); past or bridging ties (Soda et al.,2004); small world (Uzzi and Spiro, 2005); and so on.
However, there are two basic types of interorganizational ties that have a special effect on knowledgetransfer in filmmaking and are thus considered as special social capital: bonding and bridging ties
(Wakabayashi et al., 2009). With cohesive, or strongly bonding ties in an alliance network, a partner firm
has repeated, strong and dense networks with regular partners, and frequently exchanges contacts andinformation. A trusting relationship is quickly established, making it possible to share detailed knowledge of
homogeneous value of a joint business; thus their cohesive ties may facilitate the transfer of tacit knowledge.
In the context of the film industry, cohesive ties enable regular alliance partners to maintain a trusting
relationship, share a homogeneous vision of filmmaking, easily access common resources and talent andjointly appeal to a regular audience (Faulkner and Anderson, 1987). This leads to the successful productionof a series of their unique films.
Hypothesis 1. Firms that have cohesive ties within promotional alliances in the film industry are likely tohave a high rate of performance in producing a series of their unique films.
On the other hand, firms that have bridging ties within a widely extending alliance network may discover a
new combination of heterogeneous ideas, knowledge and values, and subsequently come up with novel
concepts, styles and approaches to filmmaking. In particular, Burt (2004) indicates that bridging ties acrossseparated groups have a significant effect on innovativeness and define these as “structural holes.” When apartner firm is located at the bridging ties to separated groups, it is likely to have an advantage in acquiring
new ideas, talent and resources for inspiring radical innovation compared to firms in relatively isolatedgroups (Zaheer and Bell, 2005). In the context of the television industry, production staff members locatedat these “structural holes” can much more easily identify popular concepts and ideas of current TV shows
than ones without them and frequently provide high-rating programs (Soda et al., 2004).
Hypothesis 2. Firms that are located at the bridging ties to separated groups in alliance networks in the film
industry are likely to have more opportunities to produce state-of-the-art, highly successful films,
recognizing the most popular and innovative concepts and styles of filmmaking.

Evolution of Promotional Alliances in the Japanese Film Industry
Film creators have had to adapt and diversify the content and array of media available to viewers who now
have several options for accessing movie content. The net result of this diversification has been a decline in3interest of theater audiences, leading to a depression in the Japanese film industry. In response, a newly
formed film project group, known as the production consortium, has turned the fortune of the Japanese film
industry, which now has a higher market share than that of Hollywood, with box-office revenues of 210
billion yen, an increase of over 26% since 2000.
The role of the production consortium is to coordinate collaborative and strategic partnerships between thecompanies in charge of film production. The consortium is an unincorporated association and does not haveseparate legal form. It is funded and formed from major TV broadcasters, film distribution companies,
leading publishing companies, advertising agencies, and other supporting companies that provide business
investment, benefits and services. Partnership in the consortium remains unchanged during the entire periodof the film project.
Prior to the establishment of the production consortium, film production companies had invited industrial
companies to invest funding and share the risks involved in film production. However, all this changed
during the 1980s, when publishing companies launched film projects with the aim of marketing and sellingbooks associated with the films. A radical shift from the traditional film industry approach occurred whenmass media events were employed to promote films. The strategy involved major TV broadcasters andadvertising agencies, encouraging them to join the film projects. It was these mutual collaborations thatdeveloped into a promotional alliance between media distribution companies.
The promotional alliance has two merits. Firstly, the diversification and the sharing of risk among thepartner firms to minimize the risk in film production. It also allows mutual access to scarce andindispensable resources such as knowledge, technology, talent, and human resources.
Secondly, media companies participating in the production consortium can effectively launch short-term
intensive promotional activities. It is then this alliance of multiple media companies that can easily create
major promotional events, utilizing various windows such as free TV and book advertisement, affiliatedbookstore and convenience store chains, hopefully resulting in the increase of box-office revenue. It istherefore imperative that participating media companies are able and willing to contribute to thosepromotional activities. Nowadays, the large-scale promotional activities are attracting the younger
generation back to the theaters, resulting in an increase in audience numbers.
A successful film project led by a production consortium is the film “Socrates in Love.” After the publishing
agency obtained the film rights of the novel, they established collaboration with a TV broadcasting company
and then contacted the film production company, allowing the film project to begin. The film’s production
cost was about 5 million dollars but it was successfully launched in 2004, along with large-scale
promotional activities aired on TV commercials. Additionally, promotional activities at affiliated bookstores
turned the film into a big hit. The success of this movie led to the original novel being translated into several
languages and sold worldwide. The movie was remade as a TV drama and was a hit in both Japan and
Korea.
However, the production consortium deals with animation movies differently. An example of this is theanimation film “Spirited Away,” which won the Grand Prix at the Berlin International Film Festival as wellas the Foreign Film Category Award at the U.S. Academy Awards. For this Studio Ghibli masterpiece, theproduction consortium formed by Tokuma Shoten Publishing, Nippon Television Network, Dentsu (Japan’slargest ad agency), Tohokushinsha Film and others came up with approximately 25 million USD for
production costs. The partner firms split the costs and divided the profits in proportion to their respective
investment. Since the anticipated income was three-tiered: box office, video/DVD and TV, it was not
surprising that firms of this type took part in the consortium and that their participation strengthened themarketing of the film. Spirited Away’s production cost was an extraordinary amount, given that a Japanesefilm grossing over 300 million USD at the box office is considered a major hit. Each film production
consortium has their representative company and the consortium is maintained by the large-scale media
companies that capitalize on their expertise and vast resources in promotional activities that can often trigger
mega hits from the films they subsidize. (See Fig. 2)
During the making of this film, the production company had sole responsibility and control of the project.
Funding and promotional support was provided through their long-standing relationship with established TV
broadcasters, advertising agencies, a publishing company that was part of their parent company, and trading
companies that also owned convenience stores.
A characteristic of the production consortium in promoting films is that the TV broadcasters basically take4

the lead and responsibility for promoting their film projects by effectively utilizing their multiple media
outlets. The consortium follows the regulations set by the TV industry. Thus, when a consortium is formed,
their aim in creating a new project must take into account the alliance of partner firms that have the available
resources required to make the film.
On the other hand, animation films are the main responsibility of production companies that have the powerand expertise to produce top-quality film content with collaborative support from many media distribution
companies. They depend strongly on the skills of creators and associated professionals with whom they havelong, well-established relationships in order to pursue artistic depth.
Network Analysis of Development and Effects of Promotional Alliances
Methods and Data
Using the data on Japanese films from 2000 to 2007 and conducting a network analysis on Japanese film
firms, we examined the relationship between alliance network characteristics and the corresponding firm
performance. We used the special issues of the Japanese film magazine, “Kinema Junpo (Bi-Monthly Reporton Japanese Cinema),” which provides information about films of the previous year, such as profiles, staff
and ranking by box-office sales and annual film reviewer voting conducted every February.

Figure 2 Two Patterns of Production Consortia

The final dataset covered a total of 210 films and among these, we selected 123 filmmakers. We only
counted firms that made at least two films in the top 30 ranking more than two times over eight years, sincefirms that make only one film in the top 30 ranking over eight years are not considered to be major
filmmakers. Network structure and variables were calculated through the following procedures: after wemade up an affiliation network of Japanese films and filmmakers, we converted it into an event-overlap
network among Japanese filmmakers, which would be their collaboration network. Using the data, we set up
two datasets: all-times dataset on network and performance over 8 years, and periodic dataset on a 2-year
network. The former includes network features and performance of firms during 8 years. The latter consistsof firm’s network features for 4 two-year periods. This can be used as an overview of the development of
networks over 4 periods.
In the next section, we check the general trends in the Japanese film industry. After that, applying a
regression model, we examine what network characteristics affect the firm’s achievement of top-performing
film projects.

5Growth of Film Industry Network
Promotional Alliance Networks Over 8 Years
Looking at the rough profile of the all-times
dataset from 2000 to 2007, it can be seen thatmost of the 123 firms are embedded in one
network and have direct or indirect ties to otherfirms. The entire network is densely linked andconsists of many ties.

Figure 3 Network Structure of top film firms from2000 to 2007

Development of Periodic Alliance Network
The promotional alliance network in theJapanese film industry in the 2000s developed
from period to period and the firms in the
network moved closer to each other. As seen inFig.
4, an increasing number of firms entered into promotional alliances and created new collaborative
relationships period by period. However, as Fig. 5 shows, the distance between firms decreased (averagefarness). In considering the relative decrease in average structural constraints, firms in the promotional
alliance network do not have bridging ties and become relatively dependent on each other.

Figure4

Figure 5. Characteristics of Network Structurefrom 2000 to 2007

Development of Japanese Top
Films’ Alliance

Network Effects on Performance
To examine what network characteristics strongly affect firm performance, we use the all-times dataset andexamine the effect of network variables, in comparison with the effects of size variables and film experiencevariables.
Dependent Variables
As targeted firm performance variables we set up the average performance of films assigned by a firm. This
figure is calculated by using the sum of the film sales assigned to a firm divided by the number of films
assigned by the firm.
Independent Variables
We examined several independent variables including network and non-network variables (size andfilmmaking experience) in order to check the effects of the former, in comparison with the latter.
As network variables, we calculated the number of ties, clustering coefficients, and structural constraints.
The number of ties means the number of collaborative relationships of a firm and how widespread theircollaboration is. The clustering coefficient is a typical measure of cohesive ties and shows how dense thelinks are for a focal firm in a direct network (ego network). It also indicates how densely the focal andpartner firms have direct exchange in neighborhood networks. The structural constraint is a reverse indicatorof the structural holes and bridging status of a firm. Burt (2004) defines structural holes as a special position
6

with important bridging ties to separated groups. The structural constraint indicates the extent to which afirm lacks these important bridging ties and is not autonomous. In setting the network variables, we createdan actor-event network matrix between films and firms, based on the described film data. The matrix wasthen transposed into a co-membership (or, actor by actor) matrix of individual firms. Then we dichotomized
the matrix. Using the dichotomized co-membership matrix, each network variable was calculated. All
network variables were standardized in order to compare them among different firms. To calculate the
network variables, we used UCINET 6.0, an analysis package for social network data (Borgatti, Everett &Freeman, 1999).
Drawing a comparison with the network effects, we checked the effects of firm size, profitability and film
domain (animation film centered or not). In checking the effects of firm size for 2007, we used the logged
number for the amount of capital, total sales, number of employees. For profitability, we also checked thatof ROE. In considering the domain of filmmaking, we checked the proportion of animation films (PAF), thatis, to what extent firms commit to making animation films. In the context of the Japanese film industry,
animation films often show higher sales than regular films. In order to examine this effect, we also
introduced the PAF, the number of animation films divided by the number of total films that a firm assigned.
After we confirmed the strong correlation between clustering coefficient and PAF, as shown in Table 1, we
calculated the intermediate term of both variables by multiplying the clustering coefficient by the PAF
Results
In checking the correlation among the average film performances of a firm, network variables andnon-network variables, we found that the average film performance was clearly correlated with a highproportion of animation films in making films, with two network variables including clustering coefficientsand structural constraints although it was weakly correlated with the number of employees and ROE, andwas uncorrelated with the amount of capital and total sales (See Table 1). Therefore, we focused on theeffects of clustering coefficient, structural constraint and proportion of animation films (PAF) in films, incomparison with employee number and ROE, and attempted a regression analysis to clearly confirm theeffects.
We ensured a strong mixed effect of cohesive ties for the animation production consortium, a certain
positive effect of the follower’s position and employee size in the regression analysis, as shown in Table 2.
As the base model, we found that a high level of employee size and ROE may affect the high rate ofperformance in Model 1, but the explanatory capacity of this model is very low. We then confirmed that thefirms making a greater than average number of animation films showed a high rate of performance in Model2, and there was a strong correlation between clustering coefficient and PAF in Table 1. We found that theintermediate term has an increasing effect on film performance. This means that the firms that make moreanimation films tend to have stable and continuous ties in the consortium and achieve high commercial
success. Connected to this, the high structural constraint in Model 3b shows a certain significant effect of thefollower’s position because a firm is strongly embedded within a specific group. Thus, hypothesis 1 ispartially supported in the case of animation film production consortia, however, hypothesis 2 is notsupported.

7

Table 1
No
1
2
3
4
5
6
7
8
9
10
11

Pearson Correlation between Network, Size and Performance

Variables
average sales of assigned
films (JPY)
total sales of assigned
films (JPY)
proportion of animation
films (PAF)
logged capital size (2007,
JPY)
logged total sales of firm(2007, JPY)
ROE (2007)
logged number of
employees (2007)ties
structural constraint (SC)clustering coefficient(CC)intermediate of CC and
PAF

n

Means

S.D.

1

2

123

242219.60

237529.16

1232208868.29

3195455.74

0.32

**

123

0.24

0.37

0.38

**

118

4.97

1.22

111

6.50

97

3

4

0.26

**

0.06

0.26

**

0.08

1.08

0.11

0.31

**

0.12

152.771271.66

0.23

115

2.57

1.00

0.17

123

20.07

16.05

-0.08

123

0.14

0.07

0.24

122

0.66

0.22

123

0.49

0.32

*
†

0.04

0.30

0.79
*

5

6

7

8

9

10

**

-0.06

-0.07

0.35

**

0.12

0.82

**

0.89

**

-0.11

0.74

**

-0.12

0.29

*

0.31

**

-0.09

0.36

**

**

-0.34

**

0.20

-0.21

*

-0.24

*

0.13

-0.31

**

-0.71

**

0.26

**

-0.51

**

0.09

-0.20

*

-0.22

*

0.11

-0.23

*

-0.77

**

0.70

**

0.49

**

0.15

†

0.95

-0.41

**

0.39

**

Note: †p<0.1, *p <0.05, **p<0.01.

8

*

**

-0.08

-0.09

-0.71

**

-0.08

0.88

*
*

Table 2 Regression Model of Network and Size Effects on Average Film
Performance
Independent Variables

Model １Model 2Model 3aconstant number

70587.9551

28681.69-260016.58*-140039.27

employee (2007, logged)

51.30969425**

53039.5480503.98067**

75027.85

ROE

62572.95313**

27.23744434

proportion of animation films (PAF)

262132.33**

Model 3b

25.28

*

24.38

202807.81**

clustering coefficient (CC)910373.8306†

structural constraint (SC)

174432.71

intermediate of CC and PAF****

327951.42

**

13.33

**

R2

0.10

0.24

0.34

0.37

R2 adjusted for D. F.

0.08

0.21

0.30

0.34

0.22

0.13

0.04

96

96

96

96

9.23

*

5.37

N

**

913328.60

F values

ΔR２

9.56

Note: †p<0.1, *p <0.05, **p<0.01. Non-standardized coefficients are shown.

Conclusion
In the Japanese film industry, we find that the dynamic emergence of production
consortia enables the creation of many commercial film projects supported by major TV
broadcasters rather than big movie studio Furthermore, while TV broadcasters,
advertising agencies, publishers, book wholesalers, and, in some cases, retail store
franchises join these consortia, Japanese films benefit from concentrated short-term
advertising opportunities through multiple media outlets (TV, radio, magazines, ads inbookstores or convenience stores). Thus, Japanese films have become morecommercially successful and have regained their domestic market share in the 2000s.
With the increase in formation of production consortia, promotional alliance networks
have grown since the 1990s. Major television broadcasters, film distributors, advertising
agencies, publishers, and production and media companies that join these alliances are9**embedded within these networks. They jointly invest financial resources, provide easy
access to popular talent and production staff members, share managerial cost and risks,and promote advertising campaigns for their film projects in a short term. These
alliances facilitate the learning process for making current popular films. Using the
network analysis, we identified the growth of promotional alliance networks and theircohesive ties, recognizing the increase in number of firms, ties and shortening of
distance between firms.
However, in examining the network effects on filmmaking performance, we found thatthe cohesive ties within several regular production consortia of animation films arelikely to contribute to a high average performance of films. If, through these cohesiveties with partners, firms maintain stable collaborative relationships and continue tomake a series of a special title or unique taste, their concept and style may be supported
by regular audiences over the long term. For example, over twenty years, the production
consortium led by the Ghibli animation studio provided a sequence of successful
animation films including “Spirited Away” and “Howl’s Moving Castle” and these films
consistently retain the unique cinematic flavor of the famous director Hayao Miyazaki.
But, in the context of making real films, although bridging ties or structural holes thatcan facilitate planning and producing innovative films are considered to contribute tohigh performance, we identify their reverse effect and believe that bridging ties may notlead to cutting-edge films. We need to consider the fact that the Japanese audience tends
to demand ordinary Japanese films flavored with Japanese culture, while they also tend
to seek innovative Hollywood films, supporting several major consortia. Furthermore,in the latter period of the 2000s, many commercial films have been produced by“production consortium,” so not all promotional alliances can expect to makeremarkable profits. We must also longitudinally analyze the development of alliancenetworks and how network effects have changed from period to period. In considering
the rapid growth of Asian film markets and the growth limit for the Japanese market,
Japanese filmmakers should consider transforming domestic alliances into those thatspread out more widely through Asia.

Acknowledgement
The research for this paper is partly supported by a Grant-in-Aid for Scientific Research(C), No. 21530390 and No. 19530337, from the Ministry of Education, Science, Sports,
Culture and Technology, Japan.

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Authors
NAOKI WAKABAYASHI (e-mail: wakaba@econ.kyoto-u.ac.jp) is an professor of organizational
behavior, Graduate School of Ecnomics and Management, Kyoto University, Japan.
JIN-ICHIRO YAMADA (e-mail: chobu@hh.iij4u.or.jp) is an associate professor of entrepreneurship,
Faculty of Economics, Kagawa University, Japan.
MASARU YAMASHITA (e-mail: yamashita@busi.aoyama.ac.jp) is an associate professor ofmanagement, Faculty of Management, Aoyama Gakuin University, Japan.
RYUICHI NAKAMOTO (e-mail: gogo_finemotion@yahoo.co.jp) is a doctoral research fellow of
the Japan Society for the Promotion Science and Kyoto University, Japan.
HIROMI NAKAZATO (e-mail: nakazato@meiji.ac.jp) is a lecturer, Faculty of Information andCommunication, Meiji University, Japan.

12