Chances are that if you’re an anime/manga fan, you think Japan is cool. But do you know about Cool Japan? Well, if you don’t, they’re now connected to one of the biggest anime distributors here in America. Let’s dive in.
Cool Japan
After the anime boom in the late 90s and early 00s (which also coincided with some big hits on Japanese video game systems), many people started to think of Japan as “cool”. After all, this was the country that was home to Dragon Ball, Yu Yu Hakusho, Tenchi Muyo!, Sailor Moon, and Final Fantasy VII — and these were often unlike anything audiences had ever seen before. News outlets started to notice how many teens and young adults were embracing Japanese media, and combined with the rising acceptance of “geeky” or “nerdy” — from video games to computers to the Great Recession that made many nostalgic for the 90s and earlier — the “Japan = cool” idea took off and continues to this day. Besides the obvious anime sections at Walmart or the large number of import sites, you can see a surprising amount of merchandise of Western/American franchises with Japanese text, like this bag from F.Y.E. with “Snoopy’s doghouse” written in Japanese.
Of course, whether Japan is actually cool is up to personal opinion, but that’s neither here nor there. But it’s a form of what analysts call soft power — in this case, using its culture to give the country a positive image.
Cool Japan Fund
Because of this, by the early 2010s, the country of Japan fully embraced its new mantle of “Cool Japan”. The country decided to market itself as such to foreign countries with the help of a new initiative called — you guessed it — Cool Japan. In 2013, the government launched the Cool Japan Fund. The mostly-taxpayer funded enterprise would invest in companies that have a Japanese focus/inspiration to foreign markets. The Japan Times called the Fund’s focus as “small- to mid-sized purveyors of cultural products — everything from lacquerware to action-figure manufacturers”. When it was announced, VIZ Media’s founder had reservations but was hopeful that the Cool Japan Fund wouldn’t be limited to just large businesses and that the government was dedicated to the project.
According to its website, “Cool Japan Fund makes investment decisions based on criteria (①Alignment with policy, ②Profitability and performance, ③Wider influence)”. The government planned to spend ¥50 billion over 20 years with additional monies from private organization. The goal is to at least break even by its 2034 deadline.
Cool Japan Fund’s Investments
One of the current heads of the Cool Japan Fund stated in July they’ve invested in 35 projects to date. They also keep open the possibility of reinvesting more if asked.
Well, that sounds nice…except the program has mostly been a dud.
Analysts and others (including singer Gackt) criticized the government for making poor choices with the Cool Japan initiative, wasting taxpayer money on the Fund on bad investments or pet projects, and falling behind other countries (namely South Korea) in regards to exporting its pop culture. For example, this article pointed out that Doraemon was chosen as the anime ambassador despite Doraemon having limited exposure in English-speaking countries.
By 2018, Cool Japan Fund was over ¥4 billion in the red thanks to a series of failed or lackluster projects like
- A Japanese channel airing in Southeast Asia that never expanded outside the region
- A Japanese department store in Malaysia that CJF ended up pulling out of investing
- Cafés in the U.S. focused on Japanese tea with its first location lacking a license for customers to eat and drink inside the store
- Anime live action adaptations that never came to fruition
Not everything they’ve invested in has been a bomb. For instance, in 2014, they put money into Tokyo Otaku Mode, which is still running.
Management of the Cool Japan Fund has shuffled around due to internal problems (including accusations of sexual harassment) and the lack of results. The Japanese government has decided to hand off its Cool Japan strategy to businesses, organizations, and celebrities, but the Cool Japan Fund is continuing.
So with that background established, let’s focus on their latest investment: a little company called Sentai Filmworks.
The Sentai Investment
Cool Japan Fund has now given Sentai Holdings, LLC (aka Sentai Filmworks’ parent company, which also includes divisions like streaming service HIDIVE and VOD channel Anime Network) $30 million. Japanese site Animation Business Journal reports that this gives Cool Japan Fund a majority stake in the company.
According to the press release:
“Through this investment, the Cool Japan Fund aims to provide support at the copyright level. In turn, this effort will increase the overall presence of Japanese anime in the North American market and help expand the scope of associated/exported merchandising. This will be done by Cool Japan Fund’s two-pronged approach to not only sell streaming platform rights via niche-market copyright acquisition, but also to bolster the marketplace by fostering relationships with and making important investments in overseas partners.”
So there are a lot of questions about this deal.
First, will Cool Japan Fund want to exercise rights as an investment partner? As the press release proclaimed that one of the reasons they invested in Sentai is because “Sentai’s independent status makes it a rarity in North America as a licensor of Japanese anime, which is beloved not just in North America but throughout the world.” So Sentai wouldn’t be much of an independent company if it’s becoming Japan’s newest pet project. Cool Japan has been criticized before for not listening to its target audiences or overseas experts, so there’s reason to be concerned that Cool Japan Fund may come up with “brilliant” ideas that don’t suit the US marketplace.
More importantly, is Sentai Filmworks’ financial situation more precarious than we might have thought? Obviously the company decided to apply for cash from Cool Japan Fund. Have they been looking for someone to perhaps buy them, but no dice? And was this the only way the company could get some cash influx? Sentai Filmworks has sort of bounced around while its rivals have eventually become a part of large corporations. That’s not to mention the deep pocketbooks of Netflix. Sentai did team up with Amazon for the short-lived Anime Strike service, and HIDIVE was added to AT&T’s VRV service. However, they did have to create their own video platform, and many early subscribers to HIDIVE are still only paying $3.99 a month until April 2020. Plus they to seem to have some of the best discounts on anime releases, often selling titles for 60%+ during their sales. Combined with the added pressure of all the major media conglomerates preparing to launch their own streaming services (Disney+, HBO Max, etc.), even if Sentai is doing fine, they’re smart to already be preparing for the future.
Still, considering Cool Japan Fund has lost about $4 million in their various investments, including making some superbly amateur mistakes (how to you back a café and can’t actually serve customers there?!), it does make me worried that this will end up being another bad gamble. I don’t want it to be of course. A major anime licensor sticks around, more anime is licensed, more anime fans are made, and Japanese taxpayers get their investment back. Everybody wins.
…But we’ll just have to wait and see if that really happens. Hopefully Sentai can prove to be one of Cool Japan Fund’s success stories.