How Do The Way Things Work in Japan?
Marketplace for Media Products in Japan
Here we would like to describe some aspects of the market of Japan that you might find helpful, or interesting, and sometimes unusual. We aim to be both honest and casual, which means that we’ll talk to you as if we’re meeting you in person as our clients.
In this first article, we set out to provide an overview of the publishing market.
We’re planning to cover more detailed subjects for our next articles. These will focus on “Retail Trends”, “Digital Publishing”, “Decision Making Process”, “Negotiation” and so on.
Overview of the Publishing Market in Japan: A Sunset in the Country of the Rising Sun?
First, the bad news! The publishing market in Japan has been steadily shrinking over the last couple of decades. Since1996, with a peak point of total annual sales of $21.5 billion (both books and magazines), it went down to $16.9 billion in 2013.
The number of bookstores decreased dramatically from 21,495 in 2000 to 13,943 in 2014. Small and medium independent, privately owned bookstores disappeared in the last two decades. We, the middle aged generation, might feel a bit of nostalgia for those small stores, with their subtle paper smells, and rather shady interiors. Alas, they are almost all gone now.
For you, the foreign contents holder, your main focus will be on the translation and licensing market. The translated book market is also decreasing, accounting for a share of just 10%, and a monetary value of $900 million. This may not sound so small, but the percentage of translated books in Japan previously stood at 20~30% of the market before the shrinkage. For licensors, this is not good news, as Japanese publishers are no longer buying many overseas contents rights. Of course, it’s still easy to sell the rights for blockbuster titles, as you might well imagine. The difficulty is in selling “good contents” without any outstanding sales records, no major author recognition, and little or no promotion, i.e. small or medium scale of titles. (We will tell you more later why this tendency is strong in Japan in our future article: “Decision Making Process”).
We can’t deny that this publishing market shrinkage reflects the large decrease in the Japanese population: around 300,000 less every year since the peak point of 130 million in 2008. The decreasing population and aging society (expressed as “Silver Age”) are making a big impact, not only in the publishing business.
So as a result of the declining domestic market, considerably many Japanese publishers are now trying to expand their business abroad. Their focus is mainly on the Asian markets, as they’re thinking that the Japan brand and their contents should be well accepted in these territories, and many other Asian populations are young and increasing. The publishers here are more conscious that the publishing market of Japan is reaching its saturation point.
Considering all the above aspects, “is the Rising sun going down”?
The answer is yes – and no. Especially from the view of foreign companies who are interested in doing their business in Japan, the answer will be “No”. Why?
Here, now, is the positive side!
First of all, the market is still attractive for foreign companies, with its annual sales volume of $16.9 billion (books and magazines) compared to the US with $33.3 billion, and the UK with $9.4 billion. Such volume is still too substantial to ignore if you are an aggressive minded businessperson.
If you are a book exporter, there is some share of the market for foreign language books, with sales volume of around $8.2 million. Alongside this market sector, there is also the English language education market, which has a value of $6.6 billion volume. Some foreign textbook publishers could build new opportunities by entering the burgeoning ELT market by extending the boundaries of their activities beyond the publication of books, i.e. by developing English education programs and schools, utilizing their language books.
Talking about the retail business, large chain bookstores are built in every brand new shopping mall throughout the country. They are large, clean and comfortable, attractive to consumers. Also, convenience stores, with over 50,000 nationwide outlets, are selling magazines and some books. Amazon Japan and other domestic e-commerce retailers became very popular. In particular, Amazon Japan, which is taking a great lead on e-commerce for books and magazines, accounts for $1.6 billion of annual sales.
Shrinkage of the industry will result in big changes or drastic innovation. The Japanese publishing industry has enjoyed a comparatively wealthy business for a long time, even while complaining that the business is tough. Certainly, though, more players in the industry are now suffering financially and struggling. It seems that everybody in the industry realizes that they can’t all survive if they don’t start something new. However, those lacking the imagination, skills or knowhow can’t move forward.
This could be a good time to acquire Japanese publishers, establish your Japanese office, or build up a joint-venture, rather than simply selling your products or licenses to Japanese buyers. At least, the environment for such investment ideas is becoming easier than ever.
Previously, when we talked to foreign companies doing business in Japan, “do as the Romans do” was the principle for success. However, now it might be “when one door shuts another opens”. If you have confidence in your products or business, you will be able to open “a new door” more easily than before.