SM9704: Japanese animated films, featuring cute images with improbably big eyes and cuddly creatures with squeaky voices: Strategic Management Coursework, NU, Singapore

Japanese animated films, featuring cute images with improbably big eyes and cuddly creatures with squeaky voices, used to be scoffed at as a cultural curiosity whose appeal in the West was limited to children and cartoon junkies. But in recent years the market for anime has found a wider audience, becoming one of the country’s most valuable exports.

There are about 430 anime production companies in Japan. They employ large numbers of people to create hundreds of detailed drawings that the films require. It takes 100 people about three to three-and-a-half months to complete a 21-minute program for a typical TV slot. If the program becomes a big hit, the profits are shared by the TV broadcaster, the advertising agency, and the financial backers who invest in the projects. The studio that created the anime is paid costs but is excluded from profit sharing. Programmed costs on average about Y13m to make, and the production company on average receives about Y9m to Y10m from TV broadcasters. Some anime production companies generate additional revenues through toys, T-shirts, and other merchandizing if they retain rights to drawings of popular programs, but most have to forgo the rights to the original drawings in order to pay overheads and finance the production of the
projects.

• Analyze the above description of the Japanese animation industry using Porter’s Five Forces model.
• How can the widespread availability of high-speed broadband internet influence the industry’s structure and competitive conditions? And; in continuation, why and what strategies can be adopted for superior business performance by a typical mid-sized production company?