Economic Contribution of theJapanese Film and Television
Industry
Final Report

October 2019
Mitsubishi Research Institute, Inc.

This report has been commissioned by The Motion Picture Association (MPA) in
collaboration with Japan and International Motion Picture Copyright Association, Inc.
(JIMCA). JIMCA represents the interests in Japan of major motion picture companies and the
MPA.

Acknowledgements
This report required gathering data from number of sources, including publicly available datafrom domestic industrial organizations. We would like to thank the organizations below for
their help in our understanding of the data, as well as their cooperation with our interviews
and discussions.
Japan Satellite Broadcasting Association (JSBA)

Foreign Film Importer - Distributors Association of Japan (FFIDAJ)

Motion Picture Producers Associations of Japan, Inc. (MPPAJ)Japan Video Software Association (JVA)Japan Cable and Telecommunication Association (JCTA)The Association of Japanese Animation (AJA)The Japan Commercial Broadcasters Association (JAB)Japan Association of Theatre Owners (JATO)

Japan Film Commission (JFC)

Compact Disc & Video Rental Commerce Trade Association of Japan (CDVJ)(Japanese alphabetical)

Contents
1. Executive Summary.................................................................................................................... 1
1.1 FRAMEWORK AND METHODOLOGY ................................................................................................. 1
1.2 RESULTS FOR ECONOMIC CONTRIBUTION AND MARKET OUTLOOK ................................................. 1

2. Framework and Methodology .................................................................................................... 3
2.1 OUTLINE OF THE STUDY ................................................................................................................ 3
Purpose of the study ............................................................................................................. 3
Study items ........................................................................................................................... 3
Study flow ............................................................................................................................. 3
2.2 FRAMEWORK AND METHODOLOGY ................................................................................................. 4
Measures of economic contribution ..................................................................................... 4
Methodology and assumptions of economic impact ........................................................... 5
Methodology and assumptions of market forecast ............................................................. 6
2.3 DEFINITION OF INDUSTRY.............................................................................................................. 7
Categorizing the subsector .................................................................................................. 7
Structure of the Japanese Film and Television Industry .................................................. 9
Scope of industry and market .............................................................................................11
2.4 APPROXIMATIONS AND LIMITATIONS ............................................................................................ 12Time frame .......................................................................................................................... 12
Estimated versus actual figures ........................................................................................ 12
Unit for Evaluation ............................................................................................................ 13

3. Study results ............................................................................................................................. 14
3.1 FILM AND TELEVISION INDUSTRY (OVERVIEW) ........................................................................... 14
Economic Contribution ...................................................................................................... 14
Market outlook ................................................................................................................... 15
3.2 FILM PRODUCTION/DISTRIBUTION ............................................................................................... 18
Economic contribution ....................................................................................................... 18
Market Analysis ................................................................................................................. 18
3.3 FILM EXHIBITION ........................................................................................................................ 23
Economic contribution ....................................................................................................... 23
Market Analysis ................................................................................................................. 23
3.4 TV PROGRAM PRODUCTION/DISTRIBUTION .................................................................................. 29
Economic contribution ....................................................................................................... 29
Market Analysis ................................................................................................................. 29
3.5 TELEVISION BROADCASTING ........................................................................................................ 32
Economic contribution ....................................................................................................... 32
Market Analysis ................................................................................................................. 32
3.6 HOME VIDEO ................................................................................................................................ 38

Economic contribution ....................................................................................................... 38
Market Analysis ................................................................................................................. 38
3.7 INTERNET (ONLINE) STREAMING ................................................................................................. 43
Economic contribution ....................................................................................................... 43
Market Analysis ................................................................................................................. 43
3.8 ESTIMATION OF MARKET SIZE ATTRIBUTED TO CONTENT GENRE ................................................. 48
Estimation of market size attributed to films .................................................................. 48
Estimation of market size attributed to Animation ......................................................... 49
3.9 REGIONAL ECONOMIC CONTRIBUTION ......................................................................................... 51
Relationship with the region ............................................................................................. 51
Regional contribution ......................................................................................................... 59

4. Appendix .................................................................................................................................... 64
4.1 METHODOLOGY AND SOURCES OF DATA ...................................................................................... 64
4.2 MAIN QUANTITATIVE DATA SOURCES ........................................................................................... 71
4.3 DETAILS FOR ESTIMATION OF MARKET SIZE ATTRIBUTED TO FILMS ............................................. 72
4.4 RESTRICTIONS ............................................................................................................................. 73

1. Executive Summary
The goal of this study is to quantify the economic contribution of the film and televisionindustry in Japan. This study is basically an update to the study conducted in 2012 and 2015,
providing additional essence of recent industry trends as well as important aspects ofgovernment policy agendas such as content industry development strategy and regional
revitalization.
This study was conducted in collaboration with local industry organizations, in addition toquantitative analysis based on sources from governmental statistical agencies, industry bodies,and other parties, to provide robust results illustrating the industry structure.
1.1 Framework and methodology
In order to assess the economic contribution of the Japanese film and television industry, thisstudy estimates economic indicators such as gross output, value added, labor income, tax
revenue, and employment. These economic indicators were estimated through direct impact
which describes the economic activity within the defined industries, and indirect impact which
describes the economic activity in other industries triggered by the direct impact, as well as
induced impact which describes the further economic impact resulting from increase in income.
These are added to derive the total economic contribution for each indicator.
1.2 Results for economic contribution and market outlook
The economic contribution in FY2018 brought about by the film and television industry inJapan as well as its market forecast (2019 to 2023) are as follows:<Economic Impact>The total gross output in Japan arising as a result of the film and television industry isapproximately 5,660.1 billion Yen for the direct impact, and 13,705.2 billion Yen for the
total contribution including indirect/ induced impact.
-

The total value added is 2,455.3 billion Yen for the direct impact, and 6,853.7 billion
Yen for the total contribution including indirect/induced impact.

-

The labor income is 1,149.1 billion Yen for the direct impact, and 3,141.3 billion Yen
for the total contribution including indirect/induced impact.

-

The tax revenue generated from film and television industry is 514.0 billion Yen forthe direct impact, and 1,366.9 billion Yen for the total contribution including
indirect/induced impact.

-

The total employment created from film and television industry is estimated to be
137,412 for the direct impact, and 520,839 for the total contribution including
indirect/induced impact.
1The total value added for the film and television industry accounts for 0.45% of GDP1
for the direct impact, and 1.25% for the total contribution.

<Market Forecast>The distribution market (Film, Television broadcasting, Home Video, Internet
distribution) in the Japanese Film and Television broadcasting industry has beensteadily growing at an average annual growth rate of + 0.8% since FY2013, to reach
4,592.2 billion yen in FY2018.



Although the market might see decline trend in longer economy trend, it will continue
to grow moderately at an average annual growth rate of + 0.5%, and is expected to reach
4,630.3 billion yen by FY2023.

1

Nominal GDP for FY2018 : 550.4 trillion Yen (Announced by the Cabinet Office)22. Framework and Methodology
2.1 Outline of the study
In this section, the outline of this survey is explained.
Purpose of the study
The aim of this report is to analyze the contribution of the Japanese film and televisionindustry to the Japanese economy, quantitatively and qualitatively. In particular, this study
measures the direct and indirect economic impact derived from production, distribution andexhibition/ consumption of film and television content. In addition, this study includes industry
outlook with forecast over the next five years, considering the recent market trends in eachsubsector, which is defined in this report.
Also, apart from these macro-economic approaches, this study covers case studies to give apractical image of the economic effects originating in films and television broadcasting.
Study items
This report covers the study items shown in Table 2-1.

Table 2-1 Description of the study items
Study items

Description

ArticleMarket

The results include the past and recent market trend for each

3.1

trend

subsector within the industry, by explaining time series of

3.7

analysis

important statistics, and/or examples of major services.

Estimation

The results describe the economic impact of film and televisionof economic

industry as well as for each subsector for the year 2018. This is thecontribution

main purpose of the assignment.

Market

The results explain the industry outlook and estimates for market

outlook

forecast from 2019 to 2023, for major subsectors considering the

–

3.1.2

market trend analysis.
Economic

The study item focus on the estimates of the market size (direct

ripples

impact) attributed to film content and economic impact on regional

effects

economy, and to illustrate practical cases of economic effects.

3.8

Study flow
This study was conducted based on the following steps:
1

Research planning

Existing study surveys, analysis framework and research items

2

Data collection

Marketresearch,

Economic

indicators,

interviews

anddiscussions with industrial organizations
3

Analysis

Estimation of economic contribution, market trend and forecast32.2 Framework and methodology
This section describes the analysis framework and estimation / forecast methods used in thisstudy.
Measures of economic contribution
This study estimates the economic contribution of the film and television broadcasting
industry in four indices. Table 2-2 describes each index in detail.

Table 2-2 Economic index measured in this study
Index

Definition

Gross Output

Total amount of production concerning value of goods and services basedon labor and capital within the industry. This represents the total amountof revenue of all participants in the industry. Gross Output includes theintermediate inputs, which is the value of all goods and services used as
inputs to generate that output.

Value Added

Value that was added by activities within the industry, which excludes thevalue of intermediate input from the Gross Output. It consists ofproduction surplus, labor income and net indirect tax. Value Added is often
described as the gross domestic product (GDP) contribution of an industry.
It is the most commonly used measure of the value generated by anindustry or by the economy and can be used to compare with national GDP
statistics.

Labor Income

A subcomponent of Value Added which is distributed to the employer, whooffered labor within the industry. It represents the value of output
generated by the entity’s direct labor inputs, as measured by the income
to labor.

Tax revenue

Taxes (net of subsidies) paid by the industry.

Employment

Total of number of employees in each industry. In this study, in principle,
Full Time Equivalent (FTE) jobs are estimated, rather than total jobs
which includes part-time.

Export value

Export revenue or overseas sales of film and television content (package,
format, etc.) and related products such as merchandizing.

Economic contribution estimated in this study represents the contribution of film andtelevision industry to the domestic economy. In particular, it is the total of direct, indirect, andinduced impacts concerning economic index shown in Table 2-2. In this study, these are defined
as follows:4

Direct effectGross output, value-added, employment, and tax revenues that arise based on capital andlabor attributed to film and television industry. This represents the direct economic
activities in the industry, which includes, for example, production and distribution of film
and television content as well as film exhibition.
Indirect effectGross output, value-added, employment, and tax revenues that arise as a consequence ofchanges in the level and value for suppliers of goods and services to that industry. This
represents economic activities that are brought to other industries which provide goods andservices to the film and television industry. For example, it includes revenue in industries
which provide materials to location for film production.
Induced effectGross output, value-added, employment, and tax revenues that arise as a consequence ofincrease in the level and value of expenditure on goods and services due to the increasedlabor incomes, within the film and television industry and the industries that supply them.
The impact mentioned above are added together to present the total economic impact.
Methodology and assumptions of economic impact
Estimation of direct impacts
We estimated the direct component of the film and television broadcasting industry’s economic
impact in terms of its contribution to the four indices (Table 2-2). The estimation flow is asfollows:
First, we estimated the total revenue for each subsector, which we defined it as Gross
Output. The figures our based on industrial statistics published from the government andindustrial organizations. Also, we gathered the data for Employment (number of
employees: FTEs) from these statistics, and conducted necessary estimation to meet thedefinition of each subsector.



We selected an industry sector that best describes each subsector, from the national InputOutput transaction table. Input-Output transaction table is a format that describes thetransaction between goods and services of economic activities during the year. This study
used “Information and Communication Industry Input-Output transaction table”
published by the Bureau of Statistics of Ministry of Internal Affairs and Communications.
It categorizes industries that are relatively comparable to the industries defined in thisstudy.

We then used the Input-Output transaction table to estimate the ratios of Value Added to
Gross Output, Gross Output to Employment, and Gross Output to Labor Income in theselected industry sector, to derive the three indices from the Gross Output.

5

For Tax revenue, estimation has been conducted for indirect tax, individual tax, andcorporate tax. These components were estimated by multiplying effective tax rate to Value
Added, Labor Income, and Operating Surplus.
Estimation of indirect and induced impacts

The indirect and induce impacts were estimated by basically multiplying certain multipliersto the direct impact. The multipliers were obtained from the “Inverse matrix table” containedin the Input-Output transaction table mentioned in the previous section. Inverse matrix table
is a table which describes the value of economic activity required to meet the demand, when
additional demand in a certain industry is assumed. The sum of inverse matrix coefficient(“Multiplier”) is the total volume of effect in all the industries within the economy, when thereis 1 unit demand in a certain industry sector. Therefore, the multiplier describes the “pumppriming effect” (scale of impact on own industry as well as on other industries) and isrepresented in figure of 1 or more. For example, when a multiplier is “1.5”, “1” equals the value
attributed to its own industry and “0.5” to the other industries.
The induced impacts were estimated by first obtaining the portion of the estimated labor
income from the direct and indirect impact. This value is attributed to each industry based on
average propensity of consumption, which is the average percentage income spent, anddistribution ratio of private final consumption expenditure to every industry. Finally, themultiplier is multiplied to that expenditure and added up to derive the induced impact.
For the indirect and induced impact of Employment, this study focuses on employment basedon FTEs. However, the “Information and Communication Industry I-O table” mentioned above,
does not distinguish FTEs from the total number of employees. Therefore we combined thenational Input-Output table “Input-Output table” compiled by Statistics Bureau of Japan,
which aggregates the FTEs for all industries. In particular, we derived the ratio for FTEs tototal employees for each industry from the 2005 I-O table, and multiplied the ratio to theemployment table contained in the “Information and Communication Industry I-O table”. Next,
employment coefficients (ratio of FTEs to gross output) for each industry are derived in orderto estimate the multiplier for indirect and induced impact for employment, taking into accountthe increase in gross output mentioned above. The multiplier is then multiplied to the direct
impact (employment). Details of the methodology are provided in the Appendix.
Methodology and assumptions of market forecast
The market forecast is estimated for the distribution market (Film, television broadcasting,home video, internet (online) distribution), based on interview surveys with industry
organizations, by analyzing past market trends, financial results from major players, as well
as results of surveys conducted by industry associations. Detailed forecasts were conducted bybreaking down into sub-markets that internally have different growth factors. The forecast
assumed a moderate scenario considering economic and market trends.
6

2.3 Definition of industry
Categorizing the subsector
In this study, we categorized individual subsectors within film and television broadcasting
industry by the following two aspects:
Types of output (2.3.1.1 )Stages in the value chain (2.3.1.2 )Breaking the industry down in these aspects helps understanding the value added in different
stages of the economic activity in the industry. This section explains the industry andsubsectors covered in this report in terms of the two aspects.
Types of output
Types of output refer to the output of content in products or services within the industry. In
this study, the following outputs are included:- Films (domestic and foreign)- TV programs(domestic and foreign program distributed domestically, including commercials)- Other audiovisual content (such as original contents on internet distribution)
The categorization of the above is adopted from statistics published from governmentorganization, hence lowering the barriers in estimations. It currently represents the key
output of the industry.
However, when economically evaluating the content industry, it is difficult to distinguish thevalue added within the flow from production to final consumption. Moreover, considering therecent trends in the market environment, its range of outputs is increasingly transformative.
To give examples relating to film and television broadcasting industry; convergence among
different types of content, merchandizing originated in film/television programs, andincreasing

demandinmulti-screen(TV/PC/mobile)provisionoverbroadcastandcommunication network. The framework and industry categorization used in national
statistics do not currently reflect these trends. Consequently, analysis of outputs based on
traditional film screen and television screen will not reflect the whole industry. This is why wehave covered market trend analysis for each subsector to assess in a wider view, given that theestimates are bound by available statistics.

7

Stages of Value Chain (subsectors)
The value chain of the type of outputs, described in the previous section, which are produced
and provided to consumers, can be broken down into the following six subsectors:- Production- Distribution- Film Exhibition- Television Broadcasting（Terrestrial/satellite/CATV）

Distribution(Consumption)- Home video (retail and rental)- Internet (online) streaming
In this study, we analyze each subsector in terms of economic impact as well as market trend
analysis. The definition for each subsector is explained in Table 2-3.

Table 2-3 Definition of the each subsector
Subsector

Definitions

Production

Production subsector refers to producing the type of output defined in thisreport (film, television program, and other visual/video content), which
includes development, photography and related technical process.

Distribution

Distribution subsector refers to distributing the produced or completed
content. It does not include retail distribution.

Film Exhibition

Exhibition subsector refers to displaying the distributed films to the public,
through location such as cinema and theatres. The revenue is generated fromadmission fees paid by the audience. The figures used to derive the economic
impact includes other revenues such as merchandising in theaters (3.3 ), but
excluded from the market forecast (3.1.2 ) which covers direct revenue fromcontent.

Television

Broadcasting subsector refers to distributing of content through broadcast

Broadcasting

television media. In this study, terrestrial, satellite, and CATV is covered asthese are the main television media in Japan. The revenue is generated fromsubscription fees and advertisement. Internet Protocol TV (IPTV) is included
here and its market trend is explained within this subsector.

Home video

Home video subsector refers to selling or rental of content on physical format
such as DVDs/Blu-ray discs. The figures used to derive the economic impact
are retail based, which is the sales at retail and rental outlets.

Internet(online)

Internet (online) streaming subsector refers to distributing of content throughStreaming

internet media, viewed on multiple platforms (e.g. PC, TV, and Mobile). While
the analysis of market trends and the like has an overview, the quantification8

is for the paid distribution market.
Out of those listed above, film exhibition, broadcasting, home video and internet (online)
streaming are generally referred to as a “window”, which films, TV programs, and otheraudiovisual content are delivered to consumers. The film and television broadcasting industry
is one of the most advanced areas in the content industry in terms of multi-use/multi-window.
The film industry is especially remarkable in this trend. When a produced film is released, ingeneral, revenue is generated from admission fees paid by the audience through exhibition in
the cinemas and a portion of the revenue is paid to film production/distribution companies.
After a certain period, the same film is delivered to consumers through multiple windows, suchas pay-tv, home video (retail and rental) and terrestrial television broadcasting. Hence,revenue is generated from retail sales or advertisements. In addition, in recent years, internet
media and devices such as mobile phones/tablets are penetrating at an enormous rate, leading
to diversity of windows. Business model tend to diversify also, as well as choice in pricing for
consumers such as metered-rate (traditionally, Pay-Per-View) or flat-rate. This implies thatthe means to deliver film and television content to potential viewers is widening.
Structure of the Japanese Film and Television Industry
Japanese Film Industry

Industry structure of Japanese film is shown in Figure 2-1. Production companies
produce films, and distribution companies reserve screens in theaters and also roll out
sales promotion. Exhibition companies operate and manage cinemas. The majordomestic film companies, which are the four member companies of the Motion Picture
Producers Association of Japan, Inc. (Shochiku, Toho, Toei and Kadokawa2), integrates
production, distribution as well as exhibition. As for the exhibition companies, otherplayers include independent companies as well as foreign-affiliated companies whichmostly manage the cinema complex. Also, many of the Japanese films are now producedby the “co-production committee”. The committee consists of film companies, publishingcompanies, video retailing companies, advertising firms and broadcast operators. Coproduction committee scheme raises the recognition (of the film) relatively in a shortterm and contributes to the increase in exhibition mobilization, since fund-raising, riskavoidance and synergistic effect can be expected.
In the case of foreign films, there are mainly two ways to distribution. One way is when major
foreign studios (MPA member companies) distribute through affiliated distribution agencies3
Company name changed to KADOKAWA Co., Ltd. (second generation corporation) on July
1, 2019.
3 Warner Entertainment Japan, Sony Pictures Entertainment Japan, Walt Disney Japan,
Paramount Japan G.K., Twentieth Century Fox Film Corporation, and Universal Pictures2

9

and the other is for the Japanese distribution agencies to purchase a film through foreign
market. The member companies also purchase and distribute foreign films. Film exhibition
does not depend on the players categories (major domestic companies, independent, foreignaffiliated), and are released in various theaters such as cinema complex.

Figure 2-1 Structure of domestic film industry(Source： Mitsubishi Research Institute, Inc. based on multiple sources)

Television Broadcasting Industry
Figure 2-2 shows the structure of the Japanese television broadcasting industry. In Japan,
television broadcasting is broadly divided into terrestrial broadcasting, satellite broadcasting
and CATV. In recent years, IPTV (Internet Protocol TV) and 1 SEG broadcasting provided formobile phones have penetrated to a certain level. The terrestrial broadcasting consists ofpublic broadcaster NHK and commercial broadcast operators. NHK collects subscription fee
and commercial broadcast operators’ business is basically based on advertising revenues.
Commercial broadcast operators conclude “Network Agreement” to build cooperative
relationships such as programming, news report, production and sales business among local
stations. Currently, there are five commercial broadcast operators.
For satellite broadcasting, there are two categories; BS (Broadcast Satellite) broadcasting
which utilizes broadcast satellite, and CS (Communication Satellite) which utilizes
communication satellite. The former has been developed as semi-quasi-media and the latter(Toho-Towa is responsible for distribution). As for the other independent distributing
agencies of foreign films, Toho-Towa, GAGA Corporation, Asmik Ace Entertainment Inc., andothers can be listed.
10has developed as multi-channel specialized media. In 2002, CS broadcasting utilizing
communication satellite, which is at the same orbit as BS broadcasting (110°East), has started.
However, due to a revision in the regulatory framework, BS broadcasting and CS broadcasting(110°East) are currently categorized as “Primary Broadcasting”, which is the same asterrestrial broadcasting, and are referred to as “Satellite Primary Broadcasting”. Other
satellite broadcasts are categorized as “General broadcasting”, which is the same as CATV, andare referred to as “Satellite General Broadcasting”. As for the CATV, there are two categories.
One is which CATV provides retransmission of terrestrial television broadcasting programs.
The other is which CATV provides pay multi-channel packages that bundle retransmission ofterrestrial and BS broadcasting with specialized channels. Moreover, some provide services
with VOD services or internet connections and telephone services.

Figure 2-2

Structure of Domestic Television Broadcasting Industry(Source： Mitsubishi Research Institute, Inc. based on multiple sources)

Scope of industry and market

Based on 2.3.1- 2.3.2 and the scope and categories of the available statistical data, wehave set the target scope of this study as shown in
Figure 2-3. The economic contribution of each window in distribution (consumption) includes
11all visual content other than film exhibitions, as sum in general, and as for the films, revenues
related to the film content are described in section 3.8.
For the market outlook, we have set distribution (consumption) market, as whole, for forecast.

Figure 2-3 Scope of the industry and market(Source： Mitsubishi Research Institute, Inc.)

2.4 Approximations and limitations
Time frame
The economic contributions stated in this study are basically based on the economic activity of
in FY2018 or latest depending on the data source. However, note that the size of economic
activity of film and television broadcasting industry relatively tends to change year by year,
similar to other content industries such as music/books, and that the cycle goes beyond one
year and spans multiple years.
Forecast is based on past market trends and forecast of industrial organizations as well as
discussions. The duration of past market trends is for past 5 years.
Estimated versus actual figures
Numerical values were based on the latest data available, by using the actual value of thecorresponding year (FY2018). Also, for some subsectors, the available statistics do not fully
specify the component parts of the subsector defined in this report, therefore assumptions weremade in order to estimate the most approximate results. Approximations from the similar or
broader industry categorization have been used. This is provided in the Appendix.
The figures for Employment, we used the actual value for FY2018 or estimated considering
the ratio of the number of employees to the gross output in the industry that best describes
the subsector in focus. However, note that considering the labor-intensive employment
structure often seen in the film industry, there is a limit in estimating the snapshot of the12current employment status.
Unit for Evaluation
When considering the flow of added value along the value chain in the industry, there areimportant aspects such as to avoid double counting and to reflect the actual structure in eachsubsector. In particular, definition for the unit of evaluation is important whether it is basedon production or demand (consumption), or other aspects such as usage scenes.
For example, when evaluating based on production, in general, there is an advantage ofunderstanding the value added in the content (film or TV program) production stage. Therefore,
it can be said that it is a valid evaluation unit in understanding the cross-window or value
added within indirect economic effects to other industries, before the produced content isconsumed. However, compared to the general consumer goods where value added can beunderstood from differences between production and retail sales, it is difficult to discriminate
the value added, due to its intangible nature and mixed distribution channels such asbroadcasting or internet. On the other hand, when evaluating based on demand (consumption),
the value added includes all the value added in the distribution process. However, it is likely
to double count the value added and be over-estimated, since it is difficult to distinguishbetween Business to Business and Business to Consumer relationship. Therefore, there arelimitations in understanding the value added flow from content production to consumption,with a single evaluation unit. Moreover, there are limitations in available data across every
subsectors defined in this report.

13

3. Study results
3.1 Film and Television Industry (Overview)
The economic contribution in FY2018 brought about by the film and television industry inJapan as well as its market forecast (2019 to 2023) are as follows:
Economic Contribution
The economic contribution in FY2018 brought about by the film and television broadcasting
industry in Japan are as follows.
<Economic Impact>The total gross output in Japan arising as a result of the film and television industry isapproximately 5,660.1 billion Yen for the direct impact, and 13,705.2 billion Yen for the total
contribution including indirect/induced impact.
-

The total value added is 2,455.3 billion Yen for the direct impact, and 6,853.7 billion Yen
for the total contribution including indirect/induced impact.

-

The labor income is 1,149.1 billion Yen for the direct impact, and 3,141.3 billion Yen for
the total contribution including indirect/induced impact.

-

The tax revenue generated from film and television industry is 514.0billion Yen for the
direct impact, and 1,366.9 billion Yen for the total contribution including indirect/induced
impact.

-

The total employment created from film and television industry is estimated to be 137,412
for the direct impact, and 520,839 for the total contribution including indirect/induced
impact.



The total value added for the film and television industry accounts for 0.45% of GDP for the
direct impact, and 1.25% for the total contribution.

<Economic ripple effects>


The demand for film, television broadcasting, and internet (online) streaming induces
economic effect especially to the video production and distribution industry, an intermediate
sector in the industry. These businesses induce a significant effect on job creation due to theirrelatively high ability to absorb employment. Significant economic effects are expected byretroactively expanding to more audiences and continuing demand for new content andformat.



The impact on the neighboring industries and to regional/local economy have both demandand supply aspects. On the supply side, industry ripple effect from local production andconsumption are accelerated by building a value chain and utilizing facilities (cinemas,
outlets, etc.) based in that region/local economy. On the demand side, for example, recent
examples show economic impact on tourism, where visitors are inspired by content related toa certain region/local area.

14

Table 3-1 shows the detailed estimated results for economic contribution and Table 3-2 shows
the comparison results with other industries.
Table 3-1 Estimated economic contribution[Unit: Billion Yen, person]

SectorGross output
DirectFilm production

Total

Value added
DirectTotal

Labor income
DirectTax revenue

Total

Direct

Total

Employment
Direct

Total

264.8

616.6

110.0

308.3

51.5

139.4

19.2

58.1

10,096

19,234717.4

1,670.7

298.1

835.3

139.6

377.8

52.1

157.4

27,352

52,111

Film Exhibition

300.8

614.6

171.6

352.3

85.7

166.0

34.9

69.4

20,48868,145

TV Broadcasting

3,789.7

9,404.7 1,610.5

4,637.6726.6

2,113.1

355.5

940.2

50,067 316,134& distribution
TV production &distribution

Home video
Internet (online)
streaming

Total

389.5

844.9

209.4

467.0

102.1

215.1

41.3

91.7

25,76445,831

198.0

553.7

55.6

253.3

43.6

129.9

10.9

50.1

3,646

19,3855,660.1 13,705.2 2,455.3

6,853.7

1,149.1

3,141.3

514.0

1366.9 137,412 520,839(Source： Mitsubishi Research Institute, Inc.)

Table 3-2 GDP contribution of Film/television industry
Film Industry and Television Industry

Value added

Direct contribution

Total contribution

2,455.3 billion Yen

6,853.7 billion Yen

0.45%

1.25 %GDP Contribution4(Source： Mitsubishi Research Institute, Inc.)

Market outlook
The market forecast (FY2019 to 2023) in Japan is as follows. This forecast covers the market
for final demand, in particular, film exhibition5, TV broadcasting, home video (retail, rental)
and internet (online) streaming market.
Figure 3-1 shows the market forecast for film industry and Television broadcasting industry.

Nominal GDP for FY2018 : 550.4 trillion Yen (Announced by the Cabinet Office)The market forecast for film exhibition covers cinema business revenue. Economic
contribution covers both cinema business and wholesale/retail business, which includes
food/beverage and merchandise sales (see section 3.3 ).
4
515

Figure 3-1 Market forecast of film and television industry* Includes digital advertising for television content(Source： Mitsubishi Research Institute, Inc.)

Overview: The Japanese film and television broadcasting industry have been growing at
cumulative average growth rate of +0.8% since FY2013, and together is expected to reach
4,592.2 billion Yen by FY2018. Although the growth rate will decelerate due to structuralchanges in subsectors, the industry is expected to continue to grow moderately at annual
growth rate of +0.5% and to reach 4,630.3 billion yen by FY2023.

Film exhibition: A virtuous cycle of cinema hits continues, recording the highest box officerevenue as well as total number of films released in the past three years. Unexpected hits are
driven via SNS or “Word-of-mouth” effect, indicating potential revenue opportunities. In
addition, new usage of theaters such as ODS (Other Digital Stuff) and participatory
screenings are expected to induce additional revenue and attract new fans. The film
exhibition market is assumed to steadily maintain from roughly 220 billion to 230 billion yen.

TV broadcasting: Television advertising expenses, despite being affected by the overall
economy trend, have occupied approximately 30% of total advertising expenses, howevernegative impact from growth of internet advertising is increasing. Terrestrial broadcasting
revenue will turn downward by an annual growth rate of -0.7% to stay at 2,829.2 billion yen
in FY2023. Satellite broadcasting and cable TV market are expected to grow at annual growth16rate of +0.9%, to together reach 908.0 billion yen by FY2023, driven by advancement
infrastructure such 4K/8K broadcasting and additional channels.
Home video: Both retail and rental market continue to see down trend due to demand shift
toward internet (online) distribution, mainly in foreign films and dramas, genres which once
led the market growth. The current driver, live music and animation, may follow the current
trend which will lead to annual growth rate of -5.4% to result 277.1 billion yen (retail basis)
by FY2023.

Internet (online) streaming: The paid video distribution market has grown by double digits
over the past five years and has already surpassed the home video rental market and also
closing the gap between film exhibition revenue. Driven by the popularity among originalcontents, the customer base will be supported mainly through SVOD service. Major
broadcasters are providing their own VOD service, now exploring TV digital (internet)
advertising via catch-up online platform, and further development is expected insimultaneous internet (online) streaming of terrestrial TV programs. In total, the market
growth is expected to continue at annual growth rate of +13% to reach 382.6 billion yen by
FY2023.

17

3.2 Film production/distribution
Economic contribution
The estimated result of the economic contribution of the film production and distribution6 isoutlined in Table 3-3. The film production and distribution industry has brought the economic
effect of 616.6 billion Yen for gross output, 308.3 billion Yen for value added, 139.4 billion Yen
for labor income, 58.1 billion Yen for tax revenue, and 19,234 employees.
Production has an especially labor-intensive nature that involves a large number of staff
through a variety of processes, from planning to shooting and editing. Therefore, it has a highemployment coefficient in the information and telecommunications industry and has a great
job creation effect.
Table 3-3 Economic contribution- Summary of results[Unit: Billion Yen, person]

SectorFilm

Gross output

production

and distribution

Direct

Total

264.8

616.6

Value added
Direct110.0

Labor income

Total

Direct

308.3

51.5

Total

139.4

Tax revenue
Direct19.2

Employment

Total

58.1

DirectTotal

10,096

19,234(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
Revenue
The revenue in film production and distribution industries is shown in Figure 3-2. In thisindustry, before 2008 “film production/distribution revenue” was in the range of 100 billion Yen,
the market saw an increase trend over 160 billion yen during 2009 and 2010. However, in 2013,it has fallen to roughly 100 billion Yen, which led to decline in overall revenues. The decline in2013 is affected by the decline in the box office revenue. In 2010, there were three films thatgenerated more than 10 billion yen in box office, compared to one in 2013. This difference ofbox office hits is 26.5 billion yen in overall film exhibition revenue. Since 2015, the market has
been driven by box office hits such as animation film “Your name”, the market is again seeing
increase trend. As the industry basically depends on revenue share from exhibition revenue,
it is affected by the prosperity of works, whether it leads to box office hits. Especially inJapanese films, the box office hits include many animation films. In 2018, out of top 31
Japanese films which have box office over 1billion Yen (total revenue: 79.02 billion yen), 9 films(total revenue: 28.83 billion yen ) were animation films which accounted for 36% in terms ofrevenue.

According to the statistics by the Ministry of Economy, Trade and Industry (lastly
published in 2014), the ratio between annual revenue of the film production industry(including the rights revenue) and film distribution industry was 45% vs 55%.
618

On the other hand, due to diversification of media such as internet distribution as well as
rising demand for video content, various business entities are investing in content, and thus
production demand is increasing. For this reason, in addition to “film production/distribution
revenue”, which is the main business, rights revenue such as “consignment production revenue”
and “television rights revenue” are also growing. In 2007, revenues other than the film
production and distribution revenue accounted for 28% of total revenue, it has increased to
45% in 2017. Recently, however, video copyright revenues have decreased significantly due tothe decline in home video market.
Figure 3-2 Revenue from film production and distribution industries7(Source: “Survey of Selected Service Industries”, Ministry of Economy Trade and Industry)

Number of distributed films
The number of Japanese and foreign films released in Japan is shown in Figure 3-3. Reversal
phenomenon in numbers of Japanese films and foreign films was seen twice, in 1987 and2006. The number of films have significantly increased after 2011 for both Japanese andforeign films, surpassing 1,000 films in 2013. In 2018, there were 613 Japanese films and 579
foreign films, 1,292 films in total, the highest number ever released.
The background of these figures can be explained from several aspects. Firstly, digitization has
dramatically improved the efficiency of the film production environment. Some of the impacts
of digitization include the improvement of efficiency in filming and editing, as well as reductionof production cost. This enables production under small number of staffs, and post production

The index related to the film production and distribution business is extracted from the“Survey of Selected Service Industries (Production and distribution of video content)”. Notethat the survey was not conducted for 2011, 2012, and 2016.
719

companies specialized in computer editing has attracted attention. The shift toward digital
cinema and implementation of state-of-the-art equipment has all accelerated this trend.
Secondly, as it is more efficient to distribute films to multiple screens, due to increase of cinema
complexes and number of screens, the structure of film distribution has changed, where film
can potentially be released in theaters without major distributors, which had led to an increasein turnover of released films. However, as number of films increases, some films are eventually
screened, for example, only once per day, which can be considered as a decrease in opportunity
for audiences who wishes to see that certain film. In terms of distribution, creating box officehits via traditional mass media marketing and leveraging social awareness of films is
considered less effective compared to past trend. Practically, the revenue per film has been
decreasing. During the 2000s, revenue per foreign films was higher than Japanese films,
however it has reversed since 2011.
Figure 3-3 Number of distributed films and revenue per film (Japanese and foreign)(Source: Motion Picture Producers Association of Japan, Inc.)

Trends and future prospects
Promotions using the Internet
In general, the promotion of films after they have been completed is handled by distribution
companies. Traditional film advertisements are primarily previews of coming attractions
screened in cinemas, TV commercials, newspaper and magazine advertisements and so on. Up
20to now, TV and other advertisements have been timed to coincide with the film premiere, andto a certain extent it was possible to anticipate a return in the form of increased theater-goerattendance commensurate with the budget spent on advertising. However, the widespread useof the Internet in recent years has changed the way in which people relate to media, and people
generally get their information on films from the Internet. Accordingly, the persuasive powerof traditional advertising via the mass media has declined, and this kind of return on
advertising cannot be anticipated as in the past. Thus, there are limits to the effectiveness of
paid promotions such as paid TV spots.
In addition, the ways in which films are promoted have also changed, such as the effective
use of the Internet. The major changes are the use of SNS and the increase in promotions
aimed at mobile devices. The ratio of promotions that make use of Twitter, Instagram, YouTube
and other SNS is increasing each year. For example, if people who view an upcoming film on
Twitter immediately comment on it, their retweets will cause other fans to get excited as well,and the resulting word of mouth can cause a domino effect that catches fire and results in a
hit trend. This was true in the case of the film “Your Name” and “Shin Godzilla” which madea major contribution to the box office revenue in 2016; word of mouth on SNS was a major
factor in increasing attendance. In the case of these films, the synergy of promotions on theInternet and in other media before and after the premiere increased the number of retweets,
greatly increasing attendance in the second week and thereafter, and preventing attendancefrom dropping.
In this way, with many options in terms of media and content that are available toconsumers, the use of new promotion approaches to increase interaction with consumers andcreate buzz will be increasingly important.
The emergence of unexpected hit films
In 2018, there were 31 Japanese films and 23 foreign films that generated box office revenueof 1 billion Yen or more. These hit Japanese and foreign films accounted for 65% and 76%,
respectively, of the respective total box office revenues. Thus, the market structure isconcentrated, with 4-5% of films accounting for approximately 70% of the box office revenues.
However, in addition to films such as “Your Name” and “Shin Godzilla” that are expected to
become hits as well as other major studio films, the number of unexpected hit films is also
increasing. Examples include “One Cut of the Dead” which was made for a mere 3 million Yen
and yet achieved box office revenues of more than 3 billion Yen in 2017, and “Fly Me to the
Saitama” in 2019, which was a live-action version of a popular manga. After “One Cut of theDead” was shown at two theaters in Tokyo, the aforementioned word of mouth resulted in overcapacity crowds day after day. In response to this sudden popularity, the film was shownnationwide and attracted daily over-capacity crowds in regional areas as well. Not only was ita remarkable independent film hit, it even became a social phenomenon.

21

As noted earlier, the increased number of screens and the changing distribution structure
have provided increased opportunities to bring films to more cinema fans than ever before.
However, the results will vary depending on whether potential revenue opportunities can bediscerned. An industry that produces a type of content that can result in unexpectedly highreturns provides opportunities to aim for hit films and appeal to specific types of viewers, so
the focus should not be limited only to films that have large budgets and major companies thatcan devote resources and spend large sums on advertising.

223.3 Film Exhibition
Economic contribution
The estimated result of the economic contribution of the film exhibition industry is shown in
Table 3-4. The film exhibition industry has brought the economic contribution of 614.6 billion
Yen for gross output, 352.3 billion Yen for value added, 166.0 billion Yen for labor income, 69.4
billion Yen for tax revenue, and 68,145 employees. The average revenue structure of film
exhibition consists 77.3% in cinema business, and 19.3% in wholesale/retail business, which
includes food/beverage and merchandise sales. The economic contribution includes thesebusinesses in total to broadly capture the economic activities related to film entertainment.
Table 3-4 Economic contribution for Film Exhibition sector[Unit: Billion Yen, person]

SectorGross output
DirectFilm Exhibition

300.8

Total

614.6

Value added
Direct171.6

Labor income

Total

Direct

352.3

85.7

Total

166.0

Tax revenue
Direct

34.9

Total

69.4

Employment
DirectTotal

20,48868,145(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
Revenue and Number of Attendance
Revenue from film exhibition, number of attendances, and average admission fees at thecinemas is shown in Figure 3-4. In 1950s, the number of Japanese film productions had
exceeded 500 (see Figure 3-3). Production and distribution were active and the revenue fromJapanese films continued to increase. Film attendance exceeded 1 billion annually from thelate 1950s to the beginning of 1960s. Later, as television rapidly became popular andwidespread due to the Tokyo Olympics in 1964, inversely, film industry started to decline. 1
billion in attendance dropped to approximately one quarter by 1970s.
In 1970s, with the background of this sluggishness, average attendance fee rose and the
expansion of the box-office revenue was seen. In 1970s, although the percentage of foreign film
revenue increased, from the late 70s to the mid-80s, with the entry of KADOKAWA films,
Japanese films, which were overpowered by the foreign films and television broadcasting,became thriving and the revenue from exhibition increased rapidly. In 1980s, although itturned into declining tendency again due to growth in the rental market, the film exhibition
market saw an increase tendency with the development of cinema complex and the rapid
increase in screen numbers, after 1993. The number of attendance gradually recovered andfilm once again gained its position. In 2000s, due to the contribution TV broadcast operators,
Japanese film exhibition market maintained its condition and the revenue size of 200 billion
Yen and 160 million attendances. It should be especially stated that the revenue from the film
23

exhibition in 2010 marked the highest record in the Japanese film exhibition history. Althoughdecrease has been seen in 2011 due to the Earthquake crisis, the market revenue is pitchingup again, in 2016 the revenue was 235.5 billion yen, setting a new highest record. The market
has kept its revenue size since then.
Figure 3-4 Revenue from the film exhibition and number of attendances(Source: Motion Picture Producers Association of Japan, Inc.)

Number of screens
The number of screens in the Japanese cinemas is shown in Figure 3-5. The number of screens
once was 7,457 in 1960, continued to decrease due to the penetration of television. The numberof screens in 1993 decreased to 1,734, around 20% compared to the peak. However, after 1995,
the increasing tendency was consistently seen for the number of screens.
This is supported by the development of the cinema complex that has two or more screens in
one facility8. Since one preferable film can be selected within the same cinema complex frommany others, the choice widened for the audience, resulting in the increase in number of theattendance. Moreover, it can be said that the cinema complex has boosted demand amongresidents in the suburb area, because the location of the cinema complex is usually within a
shopping mall in the area. Cinema complexes attract various consumer segments to adjacentcommercial facilities (e.g. shopping centers) and public events, which lead to additional
Survey of Selected Service Industries (“Production and distribution of video content” and“Cinemas”), published by the Ministry of Economy Trade and Industry defines cinema
complex as multiple screens (6 or more) installed in one building / facility which ticket office,entrance, lobby / shop, projection room, etc. are consolidated and shared.
824

consumption of goods and services.
In 2010, 267 out of 527 cinemas were complex facilities with shopping centers9. In addition, it
can be assumed that the development of cinema complex brought change in film distribution
structure, as it lowered the barrier of film releasing without the support of the major
distribution companies. Therefore, the number of released films has increased, which had led
to the increase in number of attendances. At present, more than 80% of the screens areoccupied by the cinema complex.
Cinema complex, which is generally located in local shopping malls, contributes to theattracting various demographics of fans, not only in urban areas but also in rural areas. In
addition, with the spread of cinema complex, the business structure of film distribution haschanged, and it has become easier to reach nationwide without major distribution companies.
On the contrary of the increase in number of screens, the revenue from film exhibition per
screen has been declining since 2000, however it is reaching a floor due to the saturation of
number of screens and rising box office revenue. In 2018, there were 3,561 screens, in which
3,150 screens were cinema complex. However, the number of existing cinemas in regional cities
is decreasing. The viewing habit in film exhibition has been changing from going to regional
cinemas, to more comfortable complex facilities and selecting films from multiple screens.
Figure 3-5 Number of screens and revenue / attendances per screen(Source: Motion Picture Producers Association of Japan, Inc.)

Based on “Survey of Selected Service Industries (Cinemas)”, Ministry of Economy, Tradeand Industry
925

Trends and future prospects
Securing cinema fans and repeat customers
Since the 2000s, box office revenues and cinema attendance have remained steady at a
certain scale, and going to the films remains firmly established as a part of people’s lives. This
trend is said to has been supported by cinema fans who have cultivated the habit of going tocinemas starting from a young age. However, in recent years, demand has been boosted by avirtuous cycle in which the release of particularly popular films have attracted more people tocinemas, where they further learn about other new films.
Conversely, if this cycle is disrupted, the market may face challenges to increase revenue
or maintain attendance. In recent years, in particular, it has been pointed out that the
proportion of young people among attendances has reduced due to the spread of mobile
devices and Internet distribution services, and changing environment that allow people toview content from various types of media. Under these circumstances, companies havefocused their promotion efforts on cinema complexes, and they have invested in promotional
activities and various types of advertising campaigns that appeal directly to the people who
visits the cinemas. Examples include a campaign on “Service Day” — the first of each month,a day on which ticket prices are lower than usual. In a special campaign, moviegoers wereencouraged to see the film in cinemas on that day and then tweet comments on the film on
Twitter using the hashtag “#MovieDay” to be eligible to win a prize. In this way, companies
are incorporating the SNS word of mouth effect into their promotional approaches, using
familiar tools and media to attract viewers that include young people.
One example of how to attract repeat customers is Dreampass10, a program that began in
2010. Dreampass is a service that sells cinema tickets for films that moviegoers want to see,or screens films at cinemas on demand. Requests from moviegoers are collected via theInternet, and after negotiations with film distribution companies, tickets for films that areallowed to be screened are sold and the film is screened at a cinema complex. This serves tohedge risk, as the screening only become a reality after the user request for a screening event
has achieved a certain threshold of ticket sales. The policy can also help to attract
moviegoers during the off-season.
ODS and public viewing
Nowadays anyone can purchase an inexpensive large flat-screen TV and state-of-the-art
sound system in their home, thereby creating an environment for enjoying 4K, 8K etc. highresolution audiovisual entertainment. For this reason, it will be necessary to once again attract
existing cinema fans as well as find a way to develop new customers by providing value ofviewing in a cinema and having them experience this appeal for themselves.

10

Provided by TOHO Cinemas
26

From this perspective, progress has been made in recent years on new ways to use cinema
facilities, against the backdrop of digital content creation and advances in digital screen
technologies. Examples include the use of cinemas for ODS (Other Digital Stuff/Online Digital
Source) and public viewing, to screen recorded or live non-film content such as live music
performances

andconcerts, live sporting events, theatrical performances, kabuki

performances, comedy or other storytelling performances (such as rakugo and manzai) andother popular events at venues with limited capacity. This is expected to be effective inattracting audiences of core fans, particularly in the case of motivating people who live in nonmetropolitan areas to come to the cinema. For some time now, there have been regular
screenings at cinemas of filmed kabuki plays and “Met Live Viewing” performances filmed at
the Metropolitan Opera House in New York, as well as “theater movies” — recorded
performances of the Gekidan Shinkansen theatrical troupe that have been edited into films.
However in recent years, the number of screenings of live or recorded music performances andconcerts, etc. has increased, as have the box office revenues from these screenings. In somecases, attendance at such events has exceeded that of film screenings. These still amount for
only a small amount of revenue compared to total film box office revenues, but further growth
can be anticipated in this market.
Figure 3-6 ODS revenue and number of released works(Source: Motion Picture Producers Association of Japan, Inc.)

Emergence of participatory screenings
Another new screening mode that has been attracting attention and does not require theuse of special equipment is “Cheering Screenings.” This turns the cinema into a live concert
hall, where fans come to support their favorite character during the screening. The
performance is participatory, with the audience singing along with the film, allowing people27

to enjoy the film in the same way they would a live music performance or concert. Examples
are the film “Frozen” (where the audience sang along with the film) and the animated film
“KING OF PRISM by Pretty Rhythm” (where the moviegoers sang and supported theirfavorite characters). At such audience participation type screenings, fans are able to share
their excitement and emotional reactions, and this helps to develop repeat customers. This isin keeping with other recent trends such as hands-on experience and “experiential
consumption” (making consumer choices based on the value of the experience rather than thepossession of material things). In the aforementioned Dreampass service as well, the creationof “participation” by fans in the form of gathering requests for ODS film screenings is
becoming a trend.
Moreover, to take advantage of the 2020 Tokyo Olympics and Paralympics, companies are
moving ahead with plans to show the various sporting events at cinemas. They are also taking
this one step further by determining the home provinces of particularly promising athletes
who will be competing, and then working with local cinema complexes to show the competitionsof those athletes in cinemas where local fans can gather to support them.
Progress in entertainment and new ways of using cinemas, including the aforementioned
ODS and public viewing, will make it possible to develop new viewers regardless of whatgeneration they belong to or where they live. Accordingly, it is hoped that these efforts canresolve the problem of sluggish growth in viewing audiences (such as members of younger
generations not going to cinemas) and the difficulty of operating cinemas in regional areas
with declining populations.

28

3.4 TV program production/distribution
Economic contribution
The estimated result of the economic contribution of the TV program production/distribution
industry is shown in Table 3-5. The TV program production industry has brought the economic
contribution of 1,670.7 billion Yen for gross output, 835.3 billion Yen for value added, 377.8
billion Yen for labor income, and 157.4 billion Yen for tax revenue. As with film production, TV
program production has a wide range of work, including planning, filming, editing, sound, andstudio-related work, thus impact in employment is also high.
Table 3-5 Economic contribution for TV program production / distribution sector[Unit: Billion Yen, person]

SectorTV

Gross output

production

and distribution

Value added

Labor income

DirectTotal

DirectTotal

Direct

Total

717.4

1,670.7

298.1

835.3

139.6

377.8

Tax revenue
Direct52.1

Employment

Total

Direct

Total

157.4

27,352

52,111(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
RevenueOver the decade the revenue structure of TV program production has changed, where
proportion of TV program production/distribution revenue has decreased and consignment
production revenue and revenues related to technical services has risen.
Figure 3-7 Revenue structure of TV program production and distribution industry11(Source: “Survey of Selected Service Industries”, Ministry of Economy Trade and Industry)

TV Program Production/Distribution Revenue: Revenue from the production (excluding
commissioned) or distribution of TV programs. Video (including DVD) copyright revenue:
revenue from licensing rights to make TV programs (those copyrighted in-house) to othercompanies. Commissioned Production: income earned from the production of television
programs (including TV commercials) commissioned by other companies.
11

29

Revenue per company for TV program production and distribution industry saw a declining
trend from 2007 to 2013, and has risen in 2017. This may be due to factors such as an increasein the number of companies in the market and also reduction in TV program production costs,
in addition to the changes in revenue structure described above. In fact, according to the“Information and Communication Basic Survey” in 2017, “low production budget” had thehighest response (63.7%) in terms of management issues among production companies.
According to the survey, the number of produced TV broadcast programs (excludingcommercials) totaled 32,101 (2017 results, 221 companies). From this point of view,
improvement in supply and demand structure in production and distribution is expected which
would result in higher economic contribution in the long term.
Figure 3-8 Production and distribution per company(Source: “Survey of Selected Service Industries”, Ministry of Economy Trade and Industry)

International market development
Figure 3-9 and Figure 3-10 indicate the international revenue of Japanese TV broadcast
content. The export revenue of broadcast programs has increased from 13.78 billion yen in
FY2013 to 44.45 billion yen in FY2017, tripling in four years. By genre, “animation” accounts
for nearly 80%, followed by “drama”, “variety”, “sports”, and “documentary”. By region, “Asia”
accounts for nearly 60% of broadcast content export destinations, but exports to other regions
are also steadily expanding.
Overseas promotion is considered important in terms of further growth in content industry. Asa means of promotion, international co-production schemes have received attention, which isdifferent from conventional program licensing. International co-production generally refers to
the process of creating works between two or more countries by incorporating the needs andpreferences of different markets and combining the resources involved in both productions.
There are several approaches such as sharing actual production process, which includes
fundraising such as joint investment, production by producers/staffs/casts from both countries,
or from multiple countries focusing on a certain script made in one country. Although there arestill various issues in international co-production from the perspective of creating scripts and30

sharing responsibilities through dialogue in multiple countries, business relationships,
capacity building and development, benefits in knowledge sharing can be expected for further
development in the industry. In recent efforts, for example, international joint production
between Japan and ASEAN countries, contribute to the government plans represented by the“Cool Japan Strategy” and “Visit Japan Strategy”, development in international markets andcultural exchanges, and local production companies develop into local economies.
Figure 3-9 Overseas revenue of Japanese TV broadcast content(Source: Ministry of Internal Affairs and Communications)Figure 3-10

Overseas revenue of Japanese TV broadcast content (breakdown)(Source: Ministry of Internal Affairs and Communications)31

3.5 Television broadcasting
Economic contribution
The estimated result of the economic contribution of the television broadcasting industry is
shown in Table 3-6. The television broadcasting industry has brought the economic
contribution of 9,404.7 billion Yen for gross output, 4,637.6 billion Yen for value added, 2,113.1
billion Yen for labor income, 940.2 billion Yen for tax revenue, and 316,134 employees.
Table 3-6 Economic contribution for Television broadcasting sector[Unit: Billion Yen, person]

SectorGross output

Value added

Labor income

DirectTotal

DirectTotal

Direct

Total

733.2

1,703.1

378.1

921.8

193.5

446.5

2,186.5

5,715.0

817.3

2,695.3

429.1

CATV broadcasting

500.5

1,085.8

273.7

595.4

Satellite broadcasting

369.6

900.8

141.3

3,789.7

9,404.7

1,610.5

Public broadcasting
Commercial
broadcasting

Total

Tax revenue
DirectEmployment

Total

Direct

Total

77.3

182.1

14,01566,0181,282.1

175.5

537.8

21,473 182,628

81.7

229.9

61.4

124.4

13,58442,071

425.1

22.3

154.6

41.3

95.9

995

25,416

4,637.6726.6

2,113.1

355.5

940.2

50,067 316,134(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
Revenue

Total revenue and number of households of major broadcasting media is shown in Figure
3-11 and Figure 3-12, respectively. The operating revenue of the terrestrial broadcastinghas been sluggish in accordance with the declining tendency in the advertisingexpenditure. On the other hand, revenue is steadily increasing for satellite broadcasting
and CATV. One reason for this is due to increase in households upgrading a TV set andtuners to receive terrestrial digital broadcasting. In particular, for satellite broadcasting,the subscription of CS broadcasting has progressed to some extent due to the spread ofantennas and receivers that can receive both BS broadcasting and CS broadcasting (110degrees). As for BS broadcasting, number of subscribers continues to increase byproviding program menu to different market segment compared to free-to-air terrestrial
broadcasting and thus contributing to the overall advertising market. As for CATV, theshift to HD (High Definition), expansion of channel lineups, bundled service offers (withinternet and/or telephone services), resulted in increase in subscription leading torevenue growth.
32

Figure 3-11 Revenue of each broadcast platform(Source: "Revenue and expenditure of general broadcasters and cable TV broadcasters",
Ministry of Internal Affairs and Communications)Figure 3-12 Number of viewing households (HHs) of each broadcast platform(Source: Ministry of Internal Affairs and Communications)

Advertising spend
Total advertise spending in Japan has continued to grow steadily with the gradual growthin overall economy, reaching 6.53 trillion yen in 2018. The ratio of TV media advertise spending(terrestrial television and satellite/CATV media) in total advertising expenses, have remained
at approximately 30%, despite being affected by economic conditions such as domestic private
33

sector demand. Advertise spending for terrestrial television has been declining since 2016,
even though in 2018 sports programs such as the Winter Olympics and FIFA World Cup
contributed, the amount was 1,784.8 billion yen (-1.8% YoY), staying at 27.3% of total advertise
spending. For the satellite/CATV media, BS broadcasting, CS broadcasting, and CATV
broadcasting have been steadily increasing, however the market saw a decline to 127.5 billion
yen (-1.9% YoY) in 2018.
On the other hand, internet advertising has been growing for the past 20 years, driven byprogrammatic advertising and video advertising (including SNS). In 2018, it was 1,758.9
billion yen (116.5% YoY), a double-digit growth for the fifth consecutive year. It has contributed
to 26.9% of the total advertising expenses, close to TV advertising expenses.
According to Research Institute of JBA, the above trend is unlikely to be a temporary
phenomenon, and the negative impact of internet advertising expenses on TV advertisingexpenses is statistically proven in recent years. After 2019, advertise spend for TV and internet
may reverse, which indicates the overall market is in the midst of structural changes.
Figure 3-13 Advertise spending for television and internet

Trends and future prospects
Rollout of new 4K and 8K satellite broadcasting
In the effort to increase the resolution of digital broadcasts in Japan, the open bandwidththat has become available due to the termination of analog BS service and additionallyallocated bandwidth is being used to start broadcasting on new channels and shift from34

standard definition (SD) to high definition (HD) broadcasting. In addition, to achieve 4K and
8K transmissions, since 2015 regular broadcasting at 4K resolution has been provided on CS(Japan Sky Perfect TV premium service) and on some cable TV and IPTV platforms, and test
broadcasting at 4K / 8K resolution have been conducted on BS from 2016. Moreover, in
December 2018, actual broadcast service finally began on BS and other platforms under thetitle “New 4K8K Satellite Broadcasts.” Nine companies including NHK and key stations ofcommercial networks offer 4K broadcasts on a total of 17 channels on the BS and CS platforms,
and the world’s first 8K broadcasts are offered by NHK on one BS channel. Thus, it has become
possible to see numerous attractive programs in high resolution with vividly realistic images.
Increasing awareness of New 4K / 8K Satellite Broadcasts involves the challenges of
attracting more people to purchase the compatible TV receivers and other elements of thereception environment. However, as much of the live coverage of the upcoming Tokyo Olympics
and Paralympics in 2020 will be broadcast in 4K and 8K, this is expected to achieve widespread
penetration as a new media environment. In addition, the permit application process for BS
channels was conducted in September 2019, therefore introduction of new channels on satellite
broadcasting platforms is expected to continue.
This broadcasting trend toward increased resolution and the creation of numerous channels
will lead to related equipment investment and produce the demand for 4K / 8K and other newcontent, and accordingly these trends are expected to contribute to potential economic growth.
Convergence of broadcasting and communication
Against the backdrop of the complete digitalization of broadcasts, as well as the spread ofbroadband lines and Internet access terminals and the development of HTML5 and other
Internet technologies, the fusion of broadcasting and communications is creating new fullfledged services. In Japan, a new standard specification (HybridCast) has been established as
the technical infrastructure for achieving services that combine broadcasting andcommunications (Internet). Not only will HybridCast make it possible to provide detailed
images and data on TV screens utilizing telecommunications, it will allow interactive
coordination with social and personal services, and will enable smartphones and tablets andso on to be used as second screens.
In the future, the use of viewing data and other data provided by means of Internet
distribution infrastructure will be developed, along with new services and applications thatcan be accessed from the TV such as coordination with e-commerce. HybridCast is also
expected to lead to the creation of new business models and a ripple effect on peripheralindustries.

35

Business development of local terrestrial broadcasters
There are 127 12 commercial broadcasters (terrestrial broadcasting) in Japan. Of these,compared with the 15 broadcasting companies in the Tokyo, Nagoya and Osaka regions, it is
the local broadcasters in other areas that have experienced dramatic changes in the operating
environment in terms of media diversity and the like as a result of declining regional
populations and the popularity of the Internet. The major factor that determines the scale ofthe income from TV spots on local stations is the population in that area. As a result,population decline in regional areas is a body blow to local stations, and it is expected to bedifficult for local stations to increase the TV advertising that has constituted most of theirrevenue. The Japan Commercial Broadcasters Association predicts that the reduction in therate of growth of sales revenues from terrestrial broadcast television from now on will be moresignificant at local stations than at stations in the Tokyo, Nagoya and Osaka regions.13。
On the other hand, local residents rate local information programs highly, as seen incomments such as “I have a great deal of affection for them” or “They provide useful
information.” Local stations preserve journalism in the community and actively work tocollect and disseminate lifestyle-related information, information on disasters andinformation that is of interest to the community. Therefore, they serve as a member of thelocal community that helps to ensure the safety and security of the community and provides
stimulation to the community. It has been pointed out that this social role of local stations
will continue to be important.
From this perspective, policies to upgrade the operating infrastructure of local stations arebeing discussed, in order to ensure a source of local information and promote the distributionof local content (from the local region to the nation, and from the local region to othercountries).14 Specific examples include using the Internet to promote the distribution of local
content and disseminating local content overseas. Moreover, coordination with local
stakeholders such as local governments and local industries has been raised as an important
approach to enable local stations to work to resolve common issues such as regional
stimulation as a member of the local community.
Local content promotion by Cable TV stations
In Japan, there are 698 registered cable TV operators as of the end of 201815. Among them,
492 operators provide independent broadcasting (community channel) in addition toMember companies of JBA
Quarterly journal of commercial broadcasting management (December 2018)14 Ministry of Internal Affairs and Communications “Committee for various issues inbroadcasting / Strengthening the management of broadcasting business -Intermediate
report-” (July 11th 2019)15 Ministry of Internal Affairs and Communications
12
13

36

retransmission of terrestrial broadcasting programs. Through community channels, these
operators provide local information useful for local residents, such as local administrative
information, traffic information, disaster prevention information, disaster information, andlocal shopping information. The number of community channel subscribers is 29.62 million asof end of 201816.
Japan Cable Television Association (JCTA), to which 352 cable TV operators are members,
promotes in developing high-quality content production in these regions. Since 2011, it has
been operating the “All Japan Cable-Contents Management System (AJC-CMS)”, a content
distribution system that provides content to other regions' cable television. AJC-CMS is asystem utilizing Internet to distribute broadcasting programs to Cable TV stations nationwide
by sharing meta data, which functions as collecting, distributing, and distributing regional
contents. Cable TV operators in each region can obtain high-quality program from cable TVs
nationwide to coordinate programs near the area, for them to contribute to regional
revitalization and increasing the appeal and influence. In addition, it is possible provide
content to residents in other areas. Furthermore, prior to the new 4K / 8K satellite
broadcasting described above, in December 2015, JCTA started “Cable 4K”, the cable TV
industries’ first unified 4K community channel. Cable TV operators across the country are now
united to broadcast original 4K broadcast programs. In this way, cable TVs play an importantrole in distributing local information, by enhancing content production and coordination
capabilities through mutual cooperation in the industry.

16

Ministry of Internal Affairs and Communications37

3.6 Home video
Economic contribution
The estimated result of the economic contribution of the home video industry is shown in Table
3-7 home video industry has brought the economic contribution of 844.9 billion Yen for gross
output, 467.0 billion Yen for value added, 215.1 billion Yen for labor income, 91.7 billion Yen
for tax revenue, and 45,831 employees. Here, the economic contribution covers the final
demand (retail basis), therefore the retail market such as sales in retail outlets is included inaddition to the distribution from the manufacturer to retail and rental outlets (shipment basis).
Therefore, for example, the estimation includes the number of employees in retail shops andrental shops.
Table 3-7 Economic contribution of Home Video sector[Unit: Billion Yen, person]

SectorGross output
DirectHome Video

389.5

Total

844.9

Value added
Direct209.4

Labor income

Total

Direct

467.0

Total

102.1

215.1

Tax revenue
Direct

41.3

Total

91.7

Employment
DirectTotal

25,76445,831(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
Revenue (retail-based)
Revenue from home video sales is shown in Figure 3-14. The rental market was larger thanretail market although the relation reversed in 2012. The decline in demand for foreign films
and TV dramas, which had previously driven the market, as well as shift toward the internet
streaming has prominently induced revenue reduction. It is also worth noting that in 2018 therevenue of the rental market and the internet streaming (paid) market reversed.
In fact, according to a consumer survey conducted by the Japan Video software Association17,
in 2018, the purchase rate of retail home video (DVD, etc.) was 15.8%, and rental usage rate
for rental home video was 25.6%. The usage rate of internet streaming (paid) was 16.3%
exceeding the retail home video18. Comparing with statistics in 2014, number of retail home
video users decreased by 13.2% and rental home video users decreased by 31.1%. On the other
hand, internet streaming (paid) users have more than tripled. (See 3.7 for details on theInternet streaming).

“Video Software Market Size and User Trend Survey 2018 Report” (May 2019)
Purchase rate: the percentage of people who purchase one or more new home video in one
year. Rental usage rate: the percentage of people who rent one or more home video in one
year. Usage rate of internet streaming (paid) : the percentage of people who used internet
streaming (paid) in one year.
17
18

38

Figure 3-14 Revenue for home video vs paid internet (online) streaming(Source: Japan Video Software Association)

Revenue (wholesale-based)
Figure 3-15 shows revenue and number of shipments in wholesale market. In terms of retailmarket, although it increased rapidly with the spread of DVDs since 2000, it has decreased
since 2005. Although it has reached the floor after 2010, it has been decreasing again since2014 as well as number of shipments. In 2018, it was slightly lower than the previous year.
For the rental market, both revenue and number of shipments remained stable until 2007.
Although measures were conducted to strengthen inventory management at rental shops inaccordance with demand, due to the demand shift toward Internet (online) streaming, it
subsequently continued to decline gradually over 60% in the last decade.
Figure 3-15

Revenue from home video sales (wholesale to retail and rental shops)(Source: Japan Video Software Association)

39

Revenue by media and genre
Revenue for each home video media is shown in Figure 3-16. DVD has substituted former
major media rapidly after 2000, however its revenue has been in decreasing tendency since2005, after the substitution reached the completion stage. However, Blu-ray Disc, whichshipment started around 2008, has expanded its share steadily. Its result in 2018, accounted
for approximately 50% of the total home video revenue, a rise compared to 23% in 2011.
However, DVD demand interrupted 100 billion yen in 2017, and the overall package market
continues to decline.
Figure 3-16 Revenue by home video media(Source: Japan Video Software Association)

Figure 3-17 shows the revenue by genre in the retail market. Foreign films and overseas
dramas are declining due to lack of popular titles, and currently the market is driven byanimation and domestic music (music live video, etc.). In particular, live videos of popular
domestic artists and Japanese animation hits such as “Your Name” are leading the market.
For the rental market, although foreign films and overseas dramas are still strong due to its
revenue sharing business model, the market is decreasing year by year due to the shift toInternet (online) streaming. However, there is a certain demand for domestic dramas andfilms that are not necessarily provided for internet streaming services.

40

Figure 3-17 Revenue share by genres (retail market)(Source: Japan Video Software Association)

Figure 3-18 Revenue share by genres (rental market)(Source: Japan Video Software Association)

Trends and future prospects
Against the backdrop of the spread of e-commerce and video distribution services, theoperating environment for outlets that deal in DVDs and other video software products is
becoming more and more difficult each year. This is shown by the fact that the number of(rental) outlets that are members of the Compact Disc & Video Rental Commerce Trade
Association of Japan (CDV-JAPAN) has decreased by almost 30% during the past 10 years,
from 3,463 in FY 2008 to 2,495 in FY 2018. Another indicator is outlet size: outlets
measuring roughly 1,300m2 or larger accounted for 12.4% of the total in FY 2014, but by FY
2018 this figure had increased to 16.0%, indicating a period in which outlets compete tosurvive and it is mainly the largest outlets that are able to do so. One trend in this period isthe decision to deal in products other than home videos. A look at the business operations of41

CDV-JAPAN member outlets shows that the business is changing to one in which DVD
rentals are the mainstay but outlets are transitioning into becoming general outlets that deal
in various media: renting books and CDs as well and selling books, CDs and games (Figure3-19). For example, percentage of rental outlets selling books have increased from 45.6% in2014 to 65.8% in 2018.

（出所：CDV-JAPAN）

Figure 3-19 Percentage of rental outlets providing various rental/retail business
Tsutaya (Culture Convenience Club Company, Limited), a major player in the rental
business, is pursuing further changes to its operations as a retail enterprise by opening
landmark-type outlets that offer added value. For example, in May 2017, the company
opened an outlet in Tokyo’s Ginza district that offers a wide array of art products designed toappeal to inbound tourists from other countries. The company is deploying a concept with adifferent image from that of the traditional rental outlets.
Nevertheless, it will be difficult to realistically deploy this type of operation on a large
scale at other than large outlets — for example, at small and medium-sized outlets, or atoutlets in regional areas. Moreover, as in the case of cinemas, these brick-and-mortar outlets
that deal not only in rentals but also in other content products are centers for disseminating
media and culture in both urban and rural areas, and they are important centers that
continue to be a point of contact with local residents. Rental outlets in particular have amembership system, meaning that they have a connection to their customers (local
residents). They may rely on the potential as they seek approaches to provide added valuethat will enable them to play a new role in the community and service its needs.

423.7 Internet (online) streaming
Economic contribution
The estimated result of the economic contribution of the film/video distribution throughInternet (online) streaming is shown in Table 3-8. Internet (online) streaming industry
contributes 553.7 billion Yen for gross output, 253.3 billion Yen for value added, 129.9 billion
Yen for labor income, 50.1 billion Yen for tax revenue, and 19,385 employees.

Table 3-8 Economic contribution- Summary of results[Unit: Billion Yen, person]

SectorGross output

Internet (online)
streaming

Direct

Total

198.0

553.7

Value added
Direct55.6

Labor income

Total

Direct

253.3

43.6

Total

129.9

Tax revenue
Direct

Total

10.9

50.1

Employment
Direct

Total

3,646

19,385(Source： Mitsubishi Research Institute, Inc.)

Market Analysis
Market structure
Figure 3-20 shows the types of video distribution services based on type of content and modeof provision. The type of service can be divided into two general categories: video sharing
services and video distribution services. For each type, the modes of provision comprise video
on demand (VOD), which includes “catch-up” distribution (making a show available for viewing
on the Internet after its broadcast), and live distribution. Types of content include programs
aired by TV networks, and Internet-based service original films and programs etc. created bytelecommunications carriers and platform businesses. In recent years, in the area of live
distribution, live telecasts of sporting events and other content for which there is great demand
for real-time viewing have become popular. In this way, many different companies have entered
the market, each trying to distinguish itself from its competitors, and the market has beenstimulated as a result. Live distribution services for broadcast programs (Internet simulcastsof broadcast programs), which are seen as complementing traditional broadcasts, are expected
to be provided, initially by NHK.
In addition, from a business model perspective, services can be divided generally into two
types: for-fee services offered based on a one time charge or subscription model and freeservices that are based primarily on advertising revenues. This study focused on sales(economic impact) of the for-fee Internet broadcast service market in the latter case.
Specifically, this includes “Subscription Video On Demand” (SVOD)19, “Transaction Video On
19

Subscription Video On Demand: Monthly payment for unlimited streaming
43Demand” (TVOD)20 and “Electronic Sell Through” (EST)21 . Accordingly, it does not include“Advertisement Video On Demand” (ADVOD)22.
Figure 3-20 Domestic Internet (online) streaming service(Source： Mitsubishi Research Institute, Inc.)

Revenue
The domestic market for for-fee video distribution services has been growing rapidly due tothe popularity of broadband Internet and smartphones. The market was 59.7 billion Yen in2013, but by 2018 it had grown to 198.0 billion Yen (average annual growth rate of 27.1%).
This exceeds the rental market (154.2 billion Yen in 2018) and rivals that of box office revenues(222.5 billion Yen in 2018). As noted in 3.6, the use rate of for-fee internet streaming (paid)
services by consumers is already greater than the purchase rate for retail home video, and it
will soon be competitive with the use rate for rental home video, and it is ultimately expected
to reach the combined markets for home video retail and rental revenue.
In terms of business models, a GEM Partners survey (published results) found that SVOD
accounted for 76.0% of the overall market in 2018. The shares for TVOD and EST were 13.5%
and 10.6%, respectively. Calculating revenues using the market breakdown noted above, thisamounts to 150.5 billion Yen for SVOD, 26.7 billion Yen for TVOD and 21.0 billion Yen for EST.
A consumer survey conducted by the Japan Video Software Association found that, regarding
the consumer use distribution in the past five years for these three modes, SVOD was growing,
and the market was shifting from TVOD and EST to SVOD.

Transaction Video On Demand: Pay per view on rental basis
Electronic Sell Through: Pay per view
22 Advertisement Video On Demand: Free view with advertising
20
21

44

Figure 3-21 Revenue for internet streaming (paid) market(Source: Japan Video Software Association)

Trends and future prospects
Increase in “Internet original” content
With the profusion of video distribution services and platforms springing up and engaging
in intense competition with one another, each company is putting its main energies towarddistinguishing itself from its competitors with various selling points. In recent years inparticular, Abema TV, Netflix, Amazon and other major video distribution service companies
are achieving popularity and creating buzz by producing many “Internet original” programs incooperation with domestic networks and production companies and so on. A consumer survey
conducted by The Japan Video Software Association found that the most common reason thatpeople began using for-fee online streaming services was to view “original content”. This trend
is the same for SVOD, TVOD and EST. Accordingly, for consumers, both the number of content
as well as original content are important factors promote the use of online streaming services.
In addition, in the provision of video content over the Internet (“secondary use”), the fact thatmany issues relating to rights clearance and business remain to be resolved is another factor
spurring the creation of original content.
From the standpoint of the economic ripple effect, increased demand for Internet original
products will encourage the production of new video products. Specifically, this is the increased
production value of the “video production and distribution business” as in section 3.2 and 3.4
According to a survey 23 conducted by the Institute for Information and Communications
Policy, within the video software market, the market for Internet original programming is122.5 billion Yen for Internet original programs, and the market for video sharing is 43.1 billion
Yen (results for FY 2017). The market for Internet original programs has grown toapproximately 46% of the market for video creation and distribution (264.8 billion Yen) and23“Report on production and distribution of media soft”, IICP
45

approximately 17% of the market for TV program creation and distribution (717.4 billion Yen).
Providing original products will incorporate the growth of the video distribution services that
constitute a new distribution channel, and therefore it will help to expand the scale of theindustry.
Use of Internet distribution in the broadcasting industry and coordination
Companies in the broadcasting industry are also looking for ways to coordinate with Internet
media and incorporate their market growth. NHK and major commercial networks haveestablished their own VOD platforms, and they are offering VOD distribution of broadcast
programs and providing catch-up viewing services and so on. In October 2015, with the aim ofpreventing illegal video distribution, PRESENTCAST Inc., a company founded with joint
funding from five Tokyo-based commercial networks and four advertising agencies, debuted
TVer, a free advertising-supported catch-up distribution service for TV programs. TVer offers
programs provided by each of the TV networks that can be viewed on a PC (using a browser)
or on a smartphone or tablet (using an app). The number of anime programs and variety
programs is limited, but the company makes an active effort to offer TV dramas and othercontent. Moreover, in 2016 some quasi-key stations began participating in TVer, distributing
programs directly and enabling viewers to see local programs that were only broadcast in alimited area. As of August 2019, the service offered some 200 programs made available throughthe cooperation of the five Tokyo-based commercial networks and 10 other companies.
Approximately 80% of the viewings took place using a smart device. The company has grownsteadily and has worked to upgrade the service, for example releasing a “TVer TV app” in
response to strong user demand. Cumulative app downloads including the TVer TV app haveexceeded 18 million.
In addition to the aforementioned VOD, services that provide live feeds of broadcast
programs have also begun to appear. The for-fee satellite broadcast company WOWOW began
Internet-simulcasting its programs in 2018. NHK is also working on the necessarily
institutional steps and so on that are needed to provide Internet simulcasts of its broadcast
programs and is expected to begin full-fledged simulcasting in 2019 and thereafter.
Nevertheless, as terrestrial broadcasting remains the primarily media, finding opportunities
to earn revenues from the simulcasting of broadcast programs itself remains an issue, withthe exception of live broadcasts of sporting events that are in high demand. A new businessmodel is needed which Internet simulcasting is used to prime the pump and lead to catch-up
distribution and VOD and other secondary distribution or e-commerce and other broadcastlinked services.
Against the backdrop of these efforts, among the types of Internet advertising, expenditures
on “TV media digital advertising” (ads produced by the TV networks) have grown to a certain
scale. According to major Japanese advertising agency Dentsu, TV media digital advertisingin 2018 came to 10.5 billion Yen (of which advertising during catch-up services and other46

Internet video distribution accounted for 10.1 billion Yen).24 Internet advertising expendituresin total amounted to less than 1% of expenditures on TV advertising, but future growth isanticipated.

24“Advertising Expenditures in Japan” Dentsu
47

3.8 Estimation of market size attributed to content genre
Estimation of market size attributed to films
In this section, taking account the analysis in the previous sections, we estimated the market
value focusing on films, for each distribution window. The results are derived from studies
conducted by Institute for Information and Communications Policy (IICP).
In general, film is first distributed through exhibition, which we define in this section, as
primary distribution market. It is then distributed through home video (retail, rental), pay TV,
terrestrial broadcasting, TV/ PC online and mobile, which we defined as secondary distribution
market.
Figure 3-22 shows the market revenue attributed to films, and the share for each distribution
window. The figures are estimated by multiplying certain ratio to overall revenue (The details
are noted in the appendix). Note that the home video market (retail, rental) accounts for theretail market revenue, which covers the final consumption. The total revenue accounts for766.7 billion Yen. Primary distribution market, or film exhibition, consists of approximately
29.8%, and secondary distribution market accounts for 70.2%. This indicates that the overallmarket attributed to films is more than three times as large as the film exhibition market.
Figure 3-22

Market revenue and share attributed to films (2017)(Source: IICP report, Mitsubishi Research Institute estimates)48

Figure 3-23 shows the change in market revenue. As mentioned in 3.3 the primary
distribution market (film exhibition) has maintained its size. Secondary distribution market
has been declining, due to downward trend in home video market as well as television andsatellite media. On the other hand, in the past five years, internet distribution, especiallyinternet streaming over mobile, has increased significantly, recovering the past 10-year
reduction. The Internet streaming market (for PC + mobile phone) has already exceeded thebox office revenue (primary distribution market), and it is assumed to replace the previous
home video market. Thus, the film industry has a feature that the secondary distribution
market is much larger than the primary distribution. In recent years, there has been a trend
in windows and the duration, such as online streaming shortly after film release, or
simultaneously. Especially, the position of the Internet streaming has grown year by year.
Figure 3-23

Market revenue attributed to films(Source: IICP report, Mitsubishi Research Institute estimates)

Estimation of market size attributed to Animation
According to the industry statistics published by The Association of Japanese Animations,Japanese animation market in a broad sense which captures the end-user market 25 hascontinued to expand steadily, reaching 2,152.7 billion Yen in 2017, the first time exceeding 2
trillion Yen (Figure 3-24). Looking at the breakdown, in addition to TV, film, video, andInternet distribution, the proportion of merchandising and overseas sales is large, whichindicates that animation business has a large leverage effect, spreading to secondary use ofworks.
Looking at the trend in the past decade, TV related market have remained steadily since25

Market size based on estimated revenues in animation and animation-related product markets
49

peaking in 2015, and film related market has been rising year by year. Similar to the trend
described in the previous section, the market is seeing downtrend for video and the uptrend
for Internet distribution. Merchandising (including game software) has been declining
gradually since peaking in 2014, but it is expected to increase if market is assumed such as
smartphone games and digital merchandising, which is out of scope of the statistics. Liveentertainment related market is also expanding rapidly. Overseas sales have once peaked in
the mid-2000s, and have significantly decreased since then, but have risen sharply since 2015,
reaching the scale close to domestic market. On the other hand, overseas revenue changes
greatly, and the dependence on market and window (Internet distribution, etc.) of specificregion / country is increasing, and the animation industry (production side) does not entirely
benefit from distribution and smartphone games within overseas sales. Thus, the industry,
having a variety of windows, is facing challenges such as the need for early stabilization of thedomestic market, which is currently undergoing structural changes in terms of window.

50

Figure 3-24

Japanese animation market trends in a broad sense(Source: IICP report, Mitsubishi Research Institute estimates)

3.9 Regional economic contribution
The previous sections focused on the economic impact of the film and television broadcast
industry and trends in each sector basically from a macro perspective. This section will focus
on the contribution of the industry to the local economy, from both perspective of therelationship with the region (supply side) as well as regional contribution (demand side).
Relationship with the region
In sections 3.2 - 3.7 , each sector consisting the value chain in film and TV broadcast industry
were analyzed. This section focuses on the contribution of this value chain to the local economy
in terms of domestic geographical distribution. Figure 3-25 shows the relationship between
prefectural population and the geographical distribution of major industries. The vertical axis
shows the correlation between the population of each prefecture and the number of people
employed in individual industries. The higher, the greater the extent to which the industry is
specific to prefectures with a large population. The horizontal axis shows the degree ofdispersion (Gini coefficient) of each industry. The higher, the more uneven the industry isgeographically distributed.
Based on both axes, the major industries in Japan can be divided into four categories. Viewed
in terms of the value chain for the film and TV broadcast industry, both the “video, audio andtextual information production industry” — comprising “film production/distribution” (section3.2), “TV program production/distribution” (section 3.4) and “home video” (section 3.6) — and“Internet related services” comprising “Internet streaming” (section 3.7) belong to the group51

that is disproportionately located in (specialized with respect to) major large cities, a typicalTokyo-centric industry. In contrast, “film exhibition” (section 3.3) and “television broadcasting”(section 3.5) have a low geographical degree of dispersion and are located primarily in urban
areas, and can be categorized as “predominantly urban“ industries. However, as there is aparticularly low correlation with population within the group, they also have thecharacteristics of the lower left-hand group, which can be categorized as “local demand” group.
Accordingly, there are major differences in geographical distribution in terms of production
and distribution, thus effect to local economy differs. The production and distribution industry
is labor-intensive and attracts large numbers of people, so it tends to be concentrated in Tokyo(where there is an accumulation of resources and related industries). On the other hand, films
and TV programs and other content are delivered to end users via cinemas and broadcast
infrastructure based in each region. Moreover, internet related services are disproportionately
located in urban areas, and they provide services nationwide via the Internet.
In this way, the film and television broadcast industry produce works in a highly productive
environment in urban areas, primarily in Tokyo, and it provides these works to various
locations nationwide, and therefore it can be said to contribute to the local economy in thesense of stimulating demand in each local area. In terms of recent and future trend in regional
economy contribution, decentralization to regional areas is expected to enable the industry tobetter respond to local needs and convey information, and to discover potential content in theseregional areas. Specifically, this may include bolstering the content production by local
terrestrial stations and cable TV stations, as noted in the section 3.5 , and use of Internet
distribution infrastructure by local stations to distribute their original and regional content toother areas domestically and also globally, as noted in the section 3.7 . In terms of distribution(consumption), new opportunities to attract communities using cinemas have attracted notice,as described in the section 3.3 . Also, rental and retail outlets may have new roles and ways toprovide added value to the community, as centers for promoting local cultural perspectives.

52

Characteristic of prefectures with large populations
Less geographical disparity in location(urban industries)

Information services
Advertising

Eating and drinking
establishments

Communications

Internet related services

Real estateVideo, audio and textual information production

Disproportionately concentrated in major urban areas

Correlation with population

Education
Railway

Retail(Various
products)
Entertainment

Film exhibition

Size of circle: total number of employees
employed in that industry

Broadcasting
Chemical industry
Utilities

Beverage, cigarette andanimal feed manufacture

Disproportionately concentrated
in regional areas
TextileFood manufacture

Electronic component,
device and electronic
circuit manufacture

Medical care

Fishing
Forestry

Lodging
General construction

Agriculture

Less geographical disparity in location(local demand industries)
Characteristic of prefectures withsmall populations

Industry degree of dispersion in prefectures(Source: Mitsubishi Research Institute, Inc.)

Figure 3-25 Relationship between population and location of major industries
This section focuses on a broad overview of the film commissions that play an important rolein linking the production industry with local communities as part of the trends noted above,
as well as the expansion of production companies into regional areas.
The role of Film Commissions
Film Commissions (FC)26 play an extremely important role in supporting the film and TV
program production industry. Since the first FC in Japan was established in 2000, many FCs
have been established throughout Japan, primarily at local governments nationwide, with theaim of publicity and promoting tourism. As of 2019, there were 335 such organizations
nationwide (see Figure 3-26). The fact that the Association of Film Commissioners
International (AFCI) has approximately 300 member organizations is a sign of the large
number of FCs in Japan and how active they are.

Organizations that provide support to facilitate location filming of movies, TV dramas, commercials and other video
products. Film Commissions are public agencies that have the following three attributes:

Nonprofit public agency
Provides one-stop services for consultations relating to filming supportHandles all types of product content
26

53

(Source: Japan Film Commission)

Figure 3-26 Number of Film Commissions in Japan
FCs work to attract production companies, conduct promotional activities, provide support
for location filming, and conduct activities to stimulate the region using the supported works.
The following are examples of activities:

Collaboration between local residents and the video industry: film festivals andscreening events

Policy of inviting production companies as a tourism policy: film (screen) tourism

Preservation and use of cultural assets: facility renovation and preservation activities



Sales promotion for local specialty products: product placement

Coordination with local educational institutions: video production workshops

In addition, a wide variety of content is supported: films (documentaries, shorts), TV(dramas, variety programs, information programs, news), animation, stills, programs
distributed via the Internet etc. As shown in Figure 3-27, the number of works that have been
supported both at home and abroad is increasing steadily. Of the 50 top grossing films in Japan
in 2017, 38 Japanese works (28 live-action films and 10 animated films) received 100% support
for filming from FCs and local governments.
(Number of Works)■ Domestic■ International(Source: Japan Film Commission)

Figure 3-27

Works that have received domestic and international support (for filming)

54

Examples of Film Commissions is explained below.
<Sapporo Film Commission27>
Based on the vision of Sapporo City's “Ordinance for Realizing the city admired by the world
through the Power of audiovisuals”, promotion and support of location shooting have been
conducted in various genres such as TV dramas and commercials, and the appeal of Sapporo
through audiovisual content. The location support is not limited to the domestic market, andstaff members who can manage multiple languages are based in overseas, and detailed
services are provided to produce a “city of audiovisual” that can attract worldwide attention.
In addition, promotion have been conduced including human resource development to widen
the industry, such as preparing lectures for students and young producers, as well asinternational co-production schemes to shoot in Sapporo in collaboration between producers in
Sapporo and overseas.
Sapporo FC has succeeded in supporting a work from preparation to promotion by actively
proposing and coordinating the location to shoot. In addition, by creating opportunities forstudents in the city to learn on-site through filming, and also contributing to increased sales
at coffee shops that have become a shooting location and stamp spots for FC's stamp rally, etc.,
it has developed beneficial activities in the region.
<Kobe Film Office28>
As one of the oldest FCs in Japan, Kobe Film Office was established with the expectation of
attracting filmmakers from both domestic and foreign filming locations to convey thereconstruction of Kobe City and inducing economic effect in the region. It has succeeded in
attracting many large-scale works by responding to the needs of producers, such as providing
support for shooting that is difficult to realize such as in the subway and providing a one-stop
service, taking advantage of the location with various scenic spots such as urban cityscape andrural scenery, sea and mountains. In addition, the FC has been developing an beneficial
environment, through mechanism in which citizens are involved in work as volunteer extras
and staffs, and subsidies to fund part of location and hunting cost both for domestic andoverseas production projects that visit Kobe.
Other efforts to create an economic effect in the region include creation of location tours andpanel displays utilizing the locations. It attracted approximately 10,000 visitors to the panel
exhibition as a commemorative event for film “Death Note Light up the NEW world”. In
addition, the FC provides location map and location apps as to promote the support. In
particular, the app contributes to location guide to tourists coming to Kobe and also rediscovery
of local attractions to local residents.

27
28

https://www.screensapporo.jp/
https://www.kobefilm.jp/
55

<Saga-Prefecture Film Commission29>
As one of the objectives to discover local attractions through audiovisual production and to
make local residents reaffirm the local attractiveness, the Film Commission is responsible forregional revitalization, tourism promotion, and cultural promotion through location attraction.
Low awareness was a challenge for attracting tourists, however with the relaxation ofThailand's tourist visas in 2013, Saga FC conducted careful research in order to attract tourists
from Thailand. By researching Thai films and searching for a director in Saga, it succeeded in
attracting the later hit film “Timeline”. Local media have promoted areas where the actors
visited, which now attracts 300 people per day at most, visiting the shrines where there were
few tourists before the film release, and the shrine started to offer a fortune in Thai language.
In 2014, the FC succeeded in attracting one Thai film and two dramas. The number of tourists
visiting Saga Prefecture was 370 in 2013, but rapidly increased to 5190 in 2015.
Despite the fact that currently there are no direct flights and access is not as convenient, it
succeeded in attracting many Thai tourists by developing location tourism in cooperation with
the Prefectural Tourism Division. The local residents are trying to interact with Thai tourists,
and this has led to the revitalization of the region through FC activities.
Film Commission activities have a direct benefit in that inviting production companies tothe region results in spending on accommodations, equipment rental, location sets and so onin that region. The impact also extends to the service industries that provide services to thefilm crew, and therefore it can be expected to create jobs and new businesses and so on. These
activities also play a role in increasing tourism and the like (to be discussed later), stimulating
creative activities, cultural promotion such as prompting a reexamination of local culture, andalso community-building and fostering a sense of local pride through cooperation with thecommunity and the involvement of local residents. In this sense, from the perspective of theaforementioned decentralization of the value chain to regional areas, the function of Film
Commissions could be described as using local resources and potential and distributing the
production activities of what is an overwhelmingly Tokyo-centric industry to many regions,
helping to stimulate local economies.
In view of the role and importance of Film Commissions, the government, in its Intellectual
Property Strategic Program 2019 (June 21, 2019), established the goal of providing “support
for video works through improvement of the filming environment both at home and abroad"and sharing the burden of permitting procedures for location filming and gathering
information on locations throughout Japan and providing it to Film Commissions in various
locations, in order to promote filming and stimulate creative activities, and also to further
bolster its publicity activities both at home and abroad. The goal of the “Empirical study project
for attracting location filming for foreign video works as economic stimulus for local economies,
29

https://www.saga-fc.jp/
56etc. (project to attract foreign video location filming)” being promoted by the Cabinet Office isto determine how effective incentives would be in attracting major video work filming projects
to come to Japan from overseas and create successful examples in which location filming for
actual major video works was attracted from overseas, and to make a quantitative andqualitative determination of the benefits to the local economy.
Regional expansion of production companies
With the dramatic changes to the production and circulation value chain resulting fromadvances in digitalization, it has become possible for small- and medium-sized companies to
conduct business not only in Tokyo but also in regional (non-urban) areas. Production
companies with advanced editing capabilities can accept business from anywhere in the
country and send the results anywhere within Japan or overseas.
To take the field of anime as an example, historically there was a significant concentrationof anime production companies in the Tokyo metropolitan area. In recent years, however, there
have been many examples of companies expanding to regions other than Tokyo or other cities
and opening offices and working with local governments and local partners to conduct business.
Such company efforts are expected to create jobs and produce various benefits to society, thus
contributing to the local economy. As of 2016, there were 622 anime production companies
nationwide, of which 542 (87.1%) are located in Tokyo, and 576 are concentrated in the four
prefectures including Tokyo that collectively make up the Tokyo metropolitan area. The
remaining 46 companies are located in other regions, but since 2000, in an increasing numberof cases, even companies that have head offices located in Tokyo have established digitaldepartment studios and drawing departments in regional areas for purposes of staff hiring
and training and due to the availability of high-speed Internet. Table 3-9 shows some examples.
Some companies have studios in multiple regions. In many cases, these regional studios areused to generate a portion of the 3D graphics and so on for the works being created in theTokyo head office (including some very popular works); currently there are almost no examples
of complete works being created in the regional studios. However, for regional anime creators,
the ability to be involved in creating anime works that are being produced in Tokyo whileremaining in their home town is becoming a powerful incentive.

57

Table 3-9 Studios located outside of Tokyo

of Animation production companies based in Tokyo
Location(prefecture)

Studio name
Graphica, Inc.

Sapporo Studio

Hokkaido

Creators in Pack Inc.
StudioSapporoHokkaido

Lucky Pictures Inc.
StudioProduction I.G

Niigata StudioNiigata

LIDEN FILMS

Asahi Production
Shiroishi Studio

Miyagi

Miyagi

Sanzigen Inc.

Kanazawa

Ishikawa

Asura Film Co., Ltd.
StudioFukaya Studio

SaitamaTezuka Productions Co., Ltd.
Niiza Studio
WHITE FOX
ILCA, Inc.

Sunshine Corporation
StudioAsura Film Co., Ltd.
StudioLocation(prefecture)

Studio name
Osaka

Osaka

Osaka

Osaka

Kyoto Studio

Kyoto

Kyoto Studio

Kyoto

Yoshii

Okayama

Ufo Table Inc.
StudioTokushima

Tokushima

Saitama

Studio Kagura

Kagawa Studio

KagawaIzu Studio

Shizuoka

Trigger Inc.

Nagoya Studio

Aichi

Sanzigen Inc.

LIDEN FILMS

Fukuoka Studio
Fukuoka Studio

Sanzigen Inc.

Nagoya Studio

Aichi

GREEN

Oita Studio

LIDEN FILMS

Osaka Studio

Osaka

Asura Film Co., Ltd.
StudioFukuoka
Fukuoka
Oita

Okinawa

Okinawa(Source: Prepared based on references from The Association of Japanese Animations and individual company
websites)

In addition to this kind of company expansion, another trend that is attracting notice fromthe standpoint of regional stimulation is the production and circulation of local content bycooperative organizations that include local governments, local broadcasters, content
production companies, and sponsors. In recent years, these activities have spread to ASEAN
nations and other parts of Asia, and there is increasing dissemination of local content in foreigncountries. This overseas expansion is becoming increasingly diverse and includes joint
international production schemes that are based on local needs. In addition, Film Commissions
in major regions in Japan are also actively working to attract overseas broadcasters andproduction companies and other entities. Such activities are expected to have benefits in areas
other than business expansion such as cultural exchanges and regional stimulation, andfurther efforts are anticipated.

58

Regional contribution
From a demand side perspective, the impact can be organized in terms of the economic
ripple effect produced by the content that extends to other industries and fields. The
economic ripple effect produced by the content industry can be seen as the content in various
fields produced by the content industry that attracts product planning and stimulates
production in non-content industries, producing increased added value. A noteworthy
example is the increased added value from the production and sale of goods with anime
characters from a popular anime work. In particular, as noted earlier, the proportion of film
production and distribution income accounted for by rights revenue is increasing, and this isbeing deployed increasingly in other fields (see Table 3-10).
In this way, there are various aspects to the “ripple effect” produced in industries thatgenerally have little direct connection to cinema. This should be distinguished from theeconomic benefit (indirect benefit) that was analyzed in the preceding sections. In otherwords, of the indirect benefits, the scope of the primary ripple effect is mainly industries thatbring about intermediate input to the film industry, while the scope of the secondary ripple
effect is primarily the increase in all industries produced by the change in income that
resulted from the direct benefits and the primary ripple effect. However, in terms of actual
economic activities and economic value, the ripple effect discussed in this section overlaps
these indirect benefits in some areas, so it is possible that a portion of the monetary amountwill be included in the economic benefits estimated in the preceding sections.
Table 3-10 Categorization and examples of ripple effects
Segment

Description

Character,

Product planning / marketing for apparel, toys, or general merchandizing

Designthrough reconfiguration of content format and copyright management of films

Fashion

Product planning / marketing for clothing and accessories after reconfigurationof content format and copyright management of films

CultureProduct planning / marketing in related service market by expressing lifestylesof the film characters [Examples: “dance boom”, “soccer boom”]

Tourism

Consumption made by filming crew/ staff and tourists visiting film locations(lodging, meals, souvenir purchase and so on)

Transportation Consumption made by filming crew/staff and tourists visiting filming locations
on Transportation
Other fields

Increase in recognition (rise in popularity) of the filming location, etc.

59Tourism impact
Tourism impact is one of the typical ripple effects of film and television programming. This
includes, in particular, tourist’s consumption in transportation, lodging, meals, souvenir
purchases and rise in popularity of film and television program locations induced by thelocation tourism. Also, in Japan, content induced tourism for animated content is nowadays
referred to as “pilgrimage to sacred places” a term used to mean visiting the location of scenes
in animation, considering these places as equivalent to holy places for fans. As such tourism
impact is expected, many local governments, local commercial associations and local sponsors
perform aggressive invitation activities of filming location as well as promotion activities forthe purpose local economy revitalization; none the less the scale of the effect varies according
to the scale of the films producing, film director and the cast.
Table 3-11 shows various studies which has estimated the economic ripple effect of Japanesefilms and TV programs. The results indicate that although the magnitude of the effect may
depend on the content of the work, there are cases where an economic ripple effect was similar
to its box office income. Considering the economic ripple effects in a wider perspective, notlimited to just regional economies, it is assumed that the scale is even larger.
Table 3-11 Examples of Ripple Effects (Tourism impact) to the Local Area
Breakdown

Total
Title [year]

Area

Indirect/

economic

Direct effecteffects

Inducedeffect<Films>Bizan [2007]

Tokushim-City/

2.4b Yen*box-office:1.21b Yen

Tokushima Pref(in

(Bizan summit)

during Awa-festival)

by approx. 500 thousand per year

Ikuta-City/

3.79b Yen

1.09b Yen

Saitama Pref.

(in Saitama Pref.)(film revenue in Saitama pref.)Nobouno Shiro(“The floating castle”)[2012]

Tokushima

1.8b Yen (tourists’ consumption)

0.58b Yen

Pref. * Tourists within the prefecture increased

1.28b Yen

1.42b Yen*box-office:2.84b Yen(tourists consumption)

Rudolf and Ippai Attena Gifu-City,[2016]
Hida-City,*box-office:1.46b Yen
Your name[2016]*box-office:25b Yen

25.3b Yen

16.27b Yen (tourists’ consumption) 9.02b Yen(in Gifu Pref., 3 works *sacred pilgrims visitors was about 1.03

Oogaki-City /Gifu in total)
pref.

A Silent Coice[2016]*box-office:2.3b Yen

60

million<TV program>
Lucky Star [2007]

Kuki-City/

3.14b Yen

2.04b Yen (tourists’ consumption)

1.1b Yen

Saitama-Pref.

(in Saitama Pref. /* Tourists (sacred pilgrims) increased by

10year accumulation)

approx. 3.31 million during 10 years after
the airing

Ryomaden [2010]

Kochi Pref.

53.5b Yen

34.2b Yen (tourists’ consumption)

19.3b Yen(in Kochi Pref.)*Tourists increased (38% increase fromprevious year), and visitors to 4 venues in
the prefecture was 920 thousand (the past
average is approximately 260 thousand)Nagasaki Pref

18.2b Yen

10.4b Yen

7.7b Yen(in Nagasaki Pref.)(tourists’ consumption:11.2b Yen +investment in facilities:0.7b Yen)
*Visitors to related facilities increased by
1.027million

Yae-no-Sakura [2011]

Aizu Area/

21.5b Yen

8.18b Yen

13b Yen

Fukushima Pref.

(in Fukushima Pref.)(tourists’ consumption)

0.263b Yen(Constuction of taiga-drama museam)*

numberof

tourists,

mainlyin

Aizuwakamatsu, increased compared tobefore the Great East Japan Earthquake

Ama-Chan [2013]

Mare[2015] *1

Kuji-City/

3.3b Yen

2.1b Yen (tourists’ consumption)

Iwate Pref.

(in Iwate Pref.)*Tourists visiting related areas increased(5 Municipalities in North

compared to before the Great East Japan

Sanriku Coast)

Earthquake

Wajima-City/

6.6b Yen

4.24b Yen (tourists’ consumption)

Ishikawa Pref(in Ishikawa Pref.)* tourists to Wajima City increased by 340

1.19b Yen

0.927b Yen

thousand

Segodon[2018] *1

Kagoshima Pref.

25.8b Yen

16.8b Yen(in Kagoshima Pref.)(tourists’ consumption: 16.2b Yen +9b Yenfacility investment: 2.4b Yen)
*tourists to Kagoshima increased by 600
thousand (including 400 thousand fromoutside the prefecture)

Natsuzora[2019] *1

Hokkaido Tokachi 9.5b Yen
Area

6.3b Yen (tourists’ consumption)(in Hokkaido Tokachi *tourists to the region increased by 497
Area)

61

thousand.

3.2b Yen*1: Calculated based on the estimated number of incoming customers(Source) Bugin Economic Research Institute, Shikoku Bureau of Economy Trade and Industry,
Iwate Economic Research Institute, Bank of Japan Fukushima Branch, Bank of Japan Kochi Branch, Juroku
Research Institute Company, Kyusyu Economic Research Institute, Development Bank of Japan, Development
Bank of Japan and University of Kanazawa, Bank of Japan Kushiro-branchContribution Regional promotion
Recent trend can be seen in works that have originated in a certain region, spread not only
locally but also nationwide, regional development and promotion by attracting film commission.
In addition to attracting on-location shoots, PR activities being developed based on local
information by FCs rooted in the region, contributes to the local economy in creating synergies
between the work and the attractiveness of the region.
<Okayama Prefecture: Film “The 8-Year Engagement” (released in December 2017)30>
A non-fiction book based on the story of an actual couple in Okayama Prefecture. After the
release, the number of spectators was over 2 million at the end of January of the following year,
and the total box office revenue announced in January 2019 was 2.82 billion. This work
supports the production team in many aspects, such as the provision of location andcooperation of medical supervision related to the story, in cooperation with the prefecture andcity on location correspondence, and many media in event holding and location map creation
Exposed to. For this reason, Okayama's unknown attractions, such as romantic scenes using
Okayama trams and scenes on observation decks, have been transmitted, and the number oftourists has increased since the release.
<Fukuoka: The film "I want to eat your pancreas" (released in July 2017) 31>
Based on a novel, this work depicts the main character, “I”, who lives away from humaninteraction and grows up with his classmates suffering from illness. The film was shooted in
Fukuoka which is the important travel destination in the story, and FC's efforts have faithfully
reproduced the view in the story in promoting shooting at a high-quality foreign-affiliated hotel
and stalls which are in general difficult to conduct shooting. In addition, FC has actively
promoting local information, such as creating location maps of shooting locations, creating
travel packages, and presenting campaigns using film tickets. The promotion was not limited
to Japan, as it also attracted foreign tourists by providing information of the location in
multiple languages in conjunction with overseas screening of the film.

30
31

4th JFC Award Grand prize : Okayama Prefecture Film Commission
4th JFC Award outstanding performance award : Ibaraki Film Commission62

<Hiroshima Prefecture: Animation film " In This Corner of the World" (released in November2016) 32>
An animated film based on a comic series by a manga artist from the city of Hiroshima. The
story is about a main character’s daily life during the war in Hiroshima. This work is an indies
film that attracted about 39 million yen from crowdfunding for pilot film production, and thenumber of first screens for the first week was around 60 and the number of viewers exceeded
30 thousand, the box office revenue exceeded 2.5 billion yen in late March. The fan base
expanded from the region to the whole country. The promotion of location map supervised by
the Film Commission has attracted fans who was interested in experiencing the world of thefilm, evoked the movement of ”sacred pilgrimage”, and as local residents had much emotion to
not let the memories of the war to disappear, that effort led to the expansion of Hiroshima fansrooted in the region.
As mentioned above, the film and television broadcasting industry not only contribute to theoverall economy, but also contributes to maintaining and developing the local economy, suchas focusing on the region and attracting visitors to the region. Conventionally, spread of local
information and promotion have been conducted in each area, however the effect of using
audiovisual works and promotion of information that matches the view of the content that
impressed many, can further contribute to conventional efforts.

32

3rd JFC Grand prize: Hiroshima Film Commission
63

4. Appendix
4.1 Methodology and Sources of data
The estimation for economic contribution (gross output, value added, labor income, tax revenue,
and employment for each sector) was based on different data sources and assumptions, mostly
underlying on the basis of comparable industry within the national statistics. Here we describe
the data sources and methodology in details.
Film production/distribution
Item
DirectDetails
gross output

ImpactBased on the “2017 Survey of Selected Service Industries(Production and distribution of video content)” published by the
Ministry of Economy Trade and Industry. Revenue for “Filmproduction and distribution” was referred.

value added /Based on the ratio of value added and labor income to grosslabor income

output for the “Motion Picture and Video Production/
Distribution” in the “2016 Information and Communication
Industry Input-Output transaction table” published by the
Bureau of Statistics of Ministry of Internal Affairs andCommunications (herein after, I-O table.).

tax revenue

Estimation has been conducted for indirect tax, individual tax,
and corporate tax. These components were estimated bymultiplying effective tax rate, in particular, effective indirect tax
rate, effective direct individual tax rate and effective direct
corporate tax rate, to value added, labor income, and operating
surplus, respectively. Tax rates were derived from 2017 statistics
from Ministry of Finance and Ministry of Internal Affairs andCommunications.

employment

Based on the “2017 Survey of Selected Service Industries(Production and distribution of video content) “. FTEs related to
films

was

estimatedbymultiplying

FTEs

in

“Film/television/video production and distribution” with ratio of
the gross output of “Film production and distribution” to total.
Indirectgross output

Indirect impact is estimated by applying domestic self-/Inducedsufficiency rate and multipliers for “Motion Picture and Video

ImpactProduction/ Distribution” contained in the I-O table to the gross
output.
Induced impact is estimated by applying average percentage

64income consumed (0.745) and composition ratio of private final
consumption expenditure to every industry (derived from the IO table), to the direct / indirect labor income.
value added /Based on multiplying the ratios of value added and labor income

labor income

to the gross output.

tax revenue

Based on multiplying effective tax rate, in particular, effective
indirect tax rate, effective direct individual tax rate and effective
direct corporate tax rate, to value added, labor income, andoperating surplus for indirect and induced impact, respectively.

employment

Indirect/induced employment are derived from employment
coefficient and indirect/induced gross output, then multiplied its
impact ratio to direct impact for employment.

Television production/distribution
Item
DirectDetails
gross output

ImpactBased on “2017 Survey of Selected Service Industries(Production and distribution of video content)”. Revenue for TV
program production and distribution was referred.

value added /Based on the ratios of value added and labor income to the grosslabor income

output for the “Motion Picture and Video Production/
Distribution” in the I-O table.

tax revenue

The methodology is the same as in the previous tables.

employment

Based on “2017 Survey of Selected Service Industries(Production and distribution of video content)”. FTEs related to
films

was

estimatedbymultiplying

FTEs

in

“Film/television/video production and distribution” with ratio of
the gross output of “TV program production and distribution” tototal.
Indirectgross output

Indirect impact is estimated by applying domestic self-/Inducedsufficiency rate and multipliers for “Motion Picture and Video

ImpactProduction/ Distribution” contained in the I-O table.
value added /The methodology is the same as in the previous tables.

labor income /tax revenue /employment
Film Exhibition
Item

Details
65

Direct

gross output

ImpactBased on “2017 Survey of Selected Service Industries(Production and distribution of video content)”. Total revenue forfilm exhibition including exhibition and related business wasreferred.

value added /Based on the ratios of value added and labor income to the grosslabor income

output in the “Cinemas / Performing theaters/ Event halls” in
the I-O table.

tax revenue

The methodology is the same as in the previous tables.

employment

Based on FTEs for Cinemas, provided in the “2017 Survey of
Selected Service Industries (Cinemas)” published by the
Ministry of Economy Trade and Industry.

Indirectgross output

Indirect impact is estimated by applying domestic self-/Inducedsufficiency rate and multipliers for “Cinemas / Performing

Impacttheaters/ Event halls” contained in the I-O table.
value added /The methodology is the same as in the previous tables.

labor income /tax revenue /employment
Television Broadcasting
Item
DirectDetails
gross output

ImpactGross output consists of revenue of terrestrial television,satellite and CATV. Terrestrial television is the sum of revenueof NHK(FY2018) and commercial broadcasters. Revenue ofcommercial broadcasters is based on “Income statistics ofcommercial broadcasters for FY2017” published by the Ministryof Internal Affairs and Communications. Revenues for FY2018
were estimated based on growth forecasts published by ResearchInstitute of JBA and financial results for FY2018 for five major
broadcasters. Satellite and cable TV, revenues for FY2018 were
estimated based on the Ministry of Internal Affairs andCommunications “Status of commercial broadcasters in FY2017”and historical data.

value added /Based on the ratios of value added and labor income to the grosslabor income

output in the “Public broadcasting”, “Commercial television
broadcasting”, “Commercial satellite broadcasting”, “Cable
television broadcasting” contained in the I-O table.

tax revenue

The methodology is the same as in the previous tables.
66

employment

Based on the ratios of number of employees to gross output inthe “Public broadcasting” ”Commercial television broadcasting”“Commercial

satellite

broadcasting”“Cabletelevision

broadcasting” in the I-O table.
Indirectgross output

Indirect impact is estimated by applying domestic self-/Inducedsufficiency rate and multipliers for each industry selected as

Impactabove, contained in the I-O table. Rest of the methodology is thesame as in the previous table.
value added /The methodology is the same as in the previous tables.

labor income /tax revenue /employment
Home Video
Item
DirectDetails
gross output

ImpactBased on the revenue statistics published by the Japan Video
Software Association. Note that the figures represent revenue
on retail basis.

value added /Gross output was divided into wholesale revenue (published bylabor income

the Japan Video Software Association) and remaining retailrevenue. As for the wholesale revenue, estimates were derived
based on the ratio of value added and labor income to gross
output for the “Motion Picture and Video Production/
Distribution” in the I-O table. For the remaining retailrevenue, estimates were derived based on ratio of value added
and labor income to gross output for the “Retail business” in
the I-O table.

tax revenue

The methodology is the same as in the previous tables.

employment

For the wholesale, estimates were derived based on the “2017Survey of Selected Service Industries (Production anddistribution of video content)”. FTEs related to home videos
was estimated by multiplying FTEs in “Film/television/video
production and distribution” with ratio of the gross output of“Video (DVD)” to total. For the retail, estimates were derived
based on the ratios of number of employees to gross output inthe “Retail business” in the I-O table.

Indirect/Inducedgross output

Indirect impact is estimated by applying domestic selfsufficiency rate and multipliers for “Motion Picture and Video67

Impact

Production/ Distribution” contained in the I-O table.
value added /The methodology is the same as in the previous tables.

labor income /tax revenue /employment
Internet (online) streaming
Item
DirectDetails
gross output

ImpactBased on the revenue statistics published by the Japan Video
Software Association (JVA). Note that the figures represent
revenue on retail basis for paid Internet (online) streaming
services.

value added /Based on the ratios of Value Added/ Labor Income to Grosslabor income

Output in the “Internet based services” contained in the I-O
table. This includes IPTV services.

tax revenue

The methodology is the same as in the previous tables.

employment

Based on the number of employees provided in the “Survey on
Information and Communication Industry (Internet based
services)”. FTEs were estimated by applying the ratio of total
FTEs to the total revenue, to the Gross Output.

Indirectgross output

Indirect impact is estimated by applying domestic self-/Inducedsufficiency rate and multipliers for “Internet based services”

Impactcontained in the I-O table. Rest of the methodology is the sameas in the previous tables.
tax revenue

The methodology is the same as in the previous tables.

value added /The methodology is the same as in the previous tables.

labor income /employment
The ratio and multipliers derived is provided in the tables below. Figures used, attributed tothe same sector in the I-O table, are provided in the same table.
Film production/distribution, Television production/distribution, Home video
Ratio or multiplier
Direct impact
Indirect impact

Value

Ratio of value added to gross output

0.42

Ratio of labor income to gross output

0.19

Multiplier for gross output

1.86

Multiplier for value added

2.16

68

Induced impact

Multiplier for gross output

1.47

Multiplier for value added

1.64

Film Exhibition
Ratio or multiplier
Direct impact
Indirect impact
Induced impact

Value

Ratio of value added to gross output

0.67

Ratio of labor income to gross output

0.33

Multiplier for gross output

1.48

Multiplier for value added

1.41

Multiplier for gross output

1.52

Multiplier for value added

1.44

Television Broadcasting
Ratio or multiplier
Direct impact
Indirect impact
Induced impact

Value

Ratio of value added to gross output

0.42

Ratio of labor income to gross output

0.19

Multiplier for gross output

1.98

Multiplier for value added

2.21

Multiplier for gross output

1.50

Multiplier for value added

1.67

Internet (Online) Streaming
Ratio or multiplier
Direct impact
Indirect impact
Induced impact

Value

Ratio of value added to gross output

0.28

Ratio of labor income to gross output

0.22

Multiplier for gross output

2.21

Multiplier for value added

3.37

Multiplier for gross output

1.59

Multiplier for value added

2.19

The parameters for estimating tax revenue are as below.
Parameters

Value

Year

Source(b Yen, %)Indirect Tax revenue

33,183 2017 Ministry of FinanceNominal GDP

547,495 2017 Cabinet Office (SNA statistics)

Effective indirect tax rate
Individual direct tax revenue

6.1% 2017 Ratio of above two parameters
40,549 201769

MinistryofInternal

AffairsandCommunications
Compensation of Employees

Effective direct individual tax
rate
Corporate direct tax revenue
Operating

Surplus/

Mixed

IncomeEffective direct corporate tax
rate

271,108, 201715.0% 201728,257 2017

Statistics office
Ratio of above two parameters
MinistryofInternal

Communications

101,885 2017

Statistics office27.7% 2017

Ratio of above two parameters

70

Affairsand4.2 Main quantitative data sources

Income statistics of commercial broadcasters, published by the Ministry of Internal Affairs
and Communications.



Survey of Selected Service Industries (“Production and distribution of video content” and“Cinemas”), published by the Ministry of Economy Trade and Industry.



Survey of Information and Communication Industry (Television program production)
published by the Ministry of Internal Affairs and Communications.



The 2017 Information and Communication Industry Input-Output transaction table,
published by the Bureau of Statistics of Ministry of Internal Affairs and Communications,
March 2019.



Revenue statistics, published by the Motion Picture Producers Association of Japan, Inc.,
updated annually.



Revenue statistics, published by the Japan Video Software Association, updated every half
year.



National account, published by Ministry of Finance, Ministry of Internal Affairs andCommunications ,Statistics office71

4.3 Details for estimation of market size attributed to films
MarketFramework

Methodology

SourceFilm Almanac

PrimaryFilmRevenue from exhibition ofFilm

Distribution

Exhibition

films

revenue

Marketproducedforexhibition

theatrical release

Secondary

Terrestrial

Operators’

Distribution

Broadcast(subscription, advertising)revenuefrom broadcasting films

percentage of film

Almanac,broadcasted

NHK Radio &Marketrevenue

Broadcast operators’ Commercial*

Broadcasting

television year
book
Satellite

Operators’ revenue

Broadcast,broadcasting films

fromSatellite

broadcast

NHK Radio &operator and CATVs’ television year

CATV

revenue*percentage of film

book,
MIC materials

broadcastingHome Video

Revenue from film video

Wholesale Revenue*(retailratio)+
video

margintotal*

JVA materials

rentwholesalemarket share of film
videos*averagerental price
Online(PC

Internet,

Mobile)Online Video (film) revenue

User

average

expenditure

IICP survey*

number of internet
users

/

mobileinternet users*MIC: Ministry of Internal affairs and Communications*JVA: Japan Video software Association(Source: “Report on production and distribution of media soft”, IICP)

72

4.4 Restrictions
This report has been commissioned by the Motion Picture Associations which has been
prepared solely for the purposes herein. Mitsubishi Research Institute, Inc. accepts no liabilityof any kind to any third party and disclaims all responsibility for the consequences of any third
party acting or refraining to act in reliance on the information provided in this report.
All the data collected for the preparation of this report is publicly available; hence we have notconducted an audit in respect to various government departments or other organizations thathave provided the information necessary to undertake this assignment. The statements andopinions written in this report are given in good faith, based on information available at thedate of this report, and on the basis that all information relied upon is true and accurate in allmaterial respects, and not misleading by reason of omission or otherwise.

The views

expressed in this report represent our independent consideration and assessment.
We reserve the right, but are under no obligation, to revise or amend our report if any
additional information which exists at the date of our report, but was not drawn to ourattention during its preparation, subsequently comes to light.

73