Japanese manga, anime, and video game characters are beloved across the globe (and happen to generate big business), but when it comes to Japanese intellectual property (“IP“) rights, have you ever heard things like “They won’t accept any deals!” or “They won’t approve anything!” from your colleagues and peers? Such a reputation may cause newcomers to either enter the space with misconceptions or give up entirely.
The world of Japanese entertainment rights may be different, but it’s not an impenetrable fortress. Over the past 17 years (nine in Japan, eight in the United States), I’ve worked with creators, producers, studios, TV stations, game companies, toy makers, and more, and come to understand three principles which universally show up in successful players in the space, which I will call the Three Universal Principles of Japanese Entertainment Rights.
These principles are rooted in Japanese business culture which are in turn derived from Japanese culture itself. If you already have some understanding of Japanese culture, they may feel like connecting dots. If you are totally new to Japan, they may feel shocking or even illogical to you (and that’s okay). While understanding and learning the Three Principles of Japanese Entertainment Rights certainly won’t guarantee your success in brokering deals and working with hit IPs, it is my hope that it can inform your strategy and decision-making as you start working with Japan.
THE THREE UNIVERSAL PRINCIPLES OF JAPANESE ENTERTAINMENT RIGHTS:
Principle 1: Character IP is a treasure
A lot of craft goes into creating the characters and worlds of manga, anime, and video games. Think of the people who create these as craftspeople of the highest order, who impart some of their essence onto their creations. The resulting IP isn’t a thing just be bought and sold, but something unique and useful to the world. It is a treasure (takaramono – 宝物 – in Japanese).
Thinking of these character IPs as treasure, respect is a key word that comes to mind, both in how you work with the IP once you’ve made a deal and in making the deal itself. Imagine yourself at a fine antiques shop in Kyoto and spotting an immaculate vase from the Meiji Period. Would you insult the shop owner by offering them five dollars for the vase? Definitely not! If you were famous for painting over antique vases and the shop owner knew who you were, would they sell you something their ancestor worked on? Unlikely. The same goes for character IP.
Principle 2: “Strict” approvals are only a thirst for excellence
Have you heard some of the typical approvals “headaches” for Japanese IP before? Like when a contract might call for a five or even ten business day response period, where just one response (not even a good one!) can reset the clock. Or stories where after ideas are submitted, nearly everything or even everything is outright rejected? “If only the Japanese knew how to do business here!” is something I’ve heard time and time again.
Let me tell you something: there are no creators, editors, managers, producers, etc., in Japan who just make things difficult for fun. Remember, character IP is treasure, so we have to treat it accordingly. The representatives of these IPs simply want something that is excellent to come about. Of course, the definition of “what is excellent?” often comes up, which is where bridging cultures, negotiating, and just having plain amazing creative direction can come in (outside the scope of this article),
Principle 3: “Upside” respects the craft of the IP, regardless of the chances for a windfall
We all know that not every IP is going to be a billion dollar property. Representatives for franchises in Japan both big and small realize this, too. So how do we still respect the treasure of character IP in putting together proposals and deals? The answer is having a plan for upside.
Upside can be a backend royalty, it can be the lift in something (whether the deal is royalty accruing or flat fee), or it can even be something else. What’s important is that a structure is in place so that if something does take off, even a little bit, the property can benefit. Remember, the IP is something that was crafted and that the stakeholders want what’s best for it. This is why I’ve seen big companies sometimes do small volume merchandise licensing contracts where the overhead is greater than the upfront deal value, and why I’ve seen licensees with better revenue sharing potential get picked over much bigger players. In both cases, the upside was there.
Working with Japanese entertainment rights holders may be different than what you’re typically used to, but if you can treat their IP as treasure, understand their thirst for excellence, and find ways to give them upside, you’re already off on the right start.