Class 4: A New Relationship between Animation and Media – What has Nico Nico-dōuga* Brought about?

*Lit. "Smile Videos"

Yoshiro Kataoka, Executive Officer of DWANGO Co., Ltd

Time & Date: 18:30 - 20:00, February 26th, 2013

The class has finished. [ The Archive of the Class ]

From cinema to television… animation has been developed with the changes of media. Nevertheless, what happens now at Nico Nico Douga seems to be very unusual in the context of the worldwide animation scene, in that the audience shares remarks on the videos and watches live-distributed screening and events simultaneously. Mr. Yoshiro Kataoka has created musical shows based on manga/animation as a new genre and conducted a media strategy for animation in the style of "one content for multi-use". Let's hear his outlook for the future of animation.

The Archive of the Class

Okamoto: Today, for Class 4, we have invited Mr. Yoshiro Kataoka, executive officer of Dwango Co. Ltd, who are the operators of Nico Nico-dōuga[1] (hereinafter Nico-dō).

Kataoka: First I will quickly introduce myself. It has been about 40 years since I have been involved in the job of production starting out with the sales of Uchu-senkan Yamato (English Title: Space Battleship Yamato.) From there I became a producer for Asahi Tsushinsha (Currently Asatsu DK a.k.a. ADK) and have produced many anime such as Touch, High-School! Kimengumi , and Rurouni Kenshin (a.k.a. Samurai X).

Okamoto: Touch is a big hit that everyone knows. How did it start?

Kataoka: This was my undertaking, but at the time there was strong opposition within the company that I worked for. There were opinions such as "This may be a great comic book but it won't work as anime", or "We won't get sponsors to make character merchandise". My boss and colleague said that if I write a letter of resignation and was willing to put my job on the line, they would take the proposal to the television station, so I wrote a resignation. The proposal was then taken to Fuji TV and after the previewing the first episode, their executive said it was not interesting. But we forced it in and once it aired it got a highest audience rating of 34.7%. You may ask what I specifically did as a producer. Well, there was quite a lot. Amongst the directors and creators on the scene, there are many people that want to explore deeper into the content by staying within a narrow sphere. To delve deeply into a concept or what they hold as most important to the piece is, in a sense, the fate of the creator. On the other hand, the mission of the producer is to expand it in order to get as many people as possible to watch it. In other words, to make the piece easily understood by all. Of course, there are always differences in the way of thinking between the producer, the director, the animators, and the scriptwriter. The role of the producer is to clash swords with them. Once I started making a lot of anime at ADK and I had many subordinates, it became difficult for me to go to the actual production scene. The plays I had been watching at the time were so boring so I started making anime and comic books into plays. The first play was Saint Seiya a.k.a. Saint Seiya: Knights of the Zodiac , performed by SMAP (one of the most popular male idol groups in Japan) right before their debut and Tenisu no Ojisama (English title: The Prince of Tennis), which is still a social phenomenon. As I was working on these, I could not find any more anime that I wanted to make and the plays almost reached their final form and there was not much for me to do. At such a time, I met Nobuo Kawakami, the chairperson of Dwango who founded Nico-dō. Currently, my main job is to produce plays for Nico-dō's paid streaming. I also work in the public transmission and distribution of anime.

♦ Anime Business called "Animyu"

Okamoto: When I asked Mr. Kataoka to speak mainly about Nico-dō in this session I was told "I do belong to Nico-dō but I put as much weight and hopes on anime musicals and these are inseparable." Can you speak about anime musicals before we go on to speak about Nico-dō?

Kataoka: Firstly, I would like you to think about the relationship between the anime characters and the fans in thinking about the reason why anime musicals are so important for the anime business. Broadcasting flows from top to bottom, it is a one way street. Many people become fans of anime characters watching these broadcasts. Moreover, I think if you post comments on Nico-dō while watching broadcasts, you become an even bigger fan of the character. In a sense, a two way communication is formed there. From the point of view of the audience in the theater watching a character on stage, a loved character is recreated on stage and that character is working up a sweat, putting his best effort. In Tenisu no Ojisama, Kazuki Kato plays a character called Keigo Atobe. The fans thought he was so well suited for the role that he was called Katobe, not Atobe. Of course, they were to begin with fanatical fans of Atobe, but once they saw Keigo Atobe played by Kazuki Kato, they loved that new character even more and they would never dare to separate from him. The ultimate goal of anime creators is for the content to be loved eternally whereby the character has permanence. Also businesswise, this is a very lucrative. My personal theory is that you can capture a fan's heart exceptionally better when a real person plays a character rather than a one way television broadcast. For example, investment of 17,000,000 yen is made in one episode and 200,000,000 yen for 12 episodes. How can you recover this cost? Until about 6 years ago, cost recovery was approximately half by DVD and Blu-ray sales, 1/3 by overseas licensing, and the remainder through merchandise sales revenue including games. However, with illegal video streaming sites becoming rampant, people have stopped renting videos and the cost recovery model from video packages such as DVD's has become extremely low. In addition, the overseas anime market has disintegrated. In this kind of climate, it becomes important to increase orders by digging into the pockets of existing customers. I can understand why adaptation of an anime for stage is establishing itself as a genre in terms of making more adamant fans for a longer period. It has undeniably contributed to building permanence of characters and created a source of income as a new genre. In addition, not only anime fans but theater fans come to watch them.

Okamoto: You can see from the widespread usage of the word "animyu" which means musicals of anime, comic books or games, that it has established itself as a genre. Mr. Kataoka, why do you think that it has gained so much popularity?

Kataoka: Tenisu no Ojisama has established animyu as a genre but during the planning stage, I had frequent comments such as "who will come to see a stage about sports?", "it won't be possible to reproduce so many characters". At the premiere only about 300 people came to the venue which could accommodate 750. This is my personal opinion, but we now live in what we Japanese call an "ubiquitous society" where IT related gadgets are prevalent and everyone can easily enjoy entertainment any time. Entertainment becomes more and more a part of the individual's personal life. Therefore, people may have more of a need to feel the warmth of other people. In the theater, the actors run through the aisles and you can feel the passing wind and even in some cases the sweat. That is delightful and I think humans are like that.

Okamoto: The charm of Tenisu no Ojisama is that there are actors acting it out in front of you, while in Nico-dō where you now work, it is sharing a time and place but through the monitor. Both are opposites. That is very interesting.

Kataoka: My motto is to cherish the sense of human contact. When I see theater, I do not feel it is one way. It is often thought that theater and live-action movies or drama, which are acted out by real people are similar but they are completely different. I think that theater and anime use the same forms of expression. Both of Anime and theater incorporate abridged and exaggerated expressions. In theater, if you say on stage "this is the living room and here is the table", it becomes the living room even if nothing is there. The audience converts that in their brain like "yes, this is a living room" and sees it as such. Anime likewise uses coded expressions, for instance if someone is batting their eyes, it shows bewilderment. This is also converted in the brain. In other words, audiences in both theater and anime participate actively in the action of "seeing". When you think about this in these terms, you can understand that anime and theater are similar and why anime musicals are establishing itself as a genre.

Okamoto: It's also important that it is a well-known story and character, isn't it?

Kataoka: For example, even if a child went to see a musical in a school event and says to his/her mother "I went to see Ikoku no Oka (lit. Hills of a Distant Land) today", a mother who does not frequent the theater would not really understand and the conversation will end. If an 8th grader goes to see Tenisu no Ojisama with her mother, and speaks about it at school, the conversation expands to who was playing Syusuke Fuji, how it was, if they looked alike, if he sang well. It is not only about what happens around the stage and this is something that a producer that creates entertainment should think about.

Okamoto: It is also interesting that it can be enjoyed in even more depth. When you see something that you know absolutely nothing about, understanding can remain in the initial superficial level but when you see it knowing the original story or character, the view point shifts closer to the creator's.

Kataoka: Yes that is right. When we took questionnaires, 70% of the respondents who saw Tenisu no Ojisama said it was their first musical. In the remaining 30%, there were many Takarazuka Revue[2] fans that initially watched it without ever have seeing the anime. As for musicals watched before, in the beginning there used to be many people who wrote Takarazuka or other theatrical companies but lately there is an increase in other titles such as BLEACH or Kuro-shitsuji a.k.a. Black Butler. The background behind why anime musicals have become so well known is that the common language between youngsters when they speak with their friends comes from manga and anime. Another characteristic of all anime musicals, not only Tenisu no Ojisama, is the common understanding that the emphasis should be on the character. There isn't really anyone who is like the characters portrayed in the second dimension. Actors are evaluated on how much effort they put in to become closer to the character. Here is a reason why young actors are casted. It is difficult for an established actor already with an image to assimilate with the character. The actor needs to be anonymous. But unknown actors do not have much experience and the technical ability is lower. Actors do their best to utilize the opportunity given, to be able to make a living in show business for the rest of their lives, they work hard and are very eager to be successful. And there are many warm fans that will convert in their brains the inexperience in technique and evaluate how much effort and hard work was put in becoming the character. There is also the attractiveness of young people. It gives rise to the feeling of wanting to "raise" these actors in women fans and many people will always come to both of opening and closing performances.

♦ Nico Nico-dōuga – Media that Gives Back to the Creators and the Content Holders

Okamoto: The audience/users of Nico-dō, which you say is your other wheel to musicals, are quite different. Please let us hear more about your work at Nico-dō.

Kataoka: Firstly I will speak about the target profile of Nico-dō. Currently we have 30,000,000 registered users, and out of this we have 1,900,000 premium members that pay 525 yen per month. Every month there is always an increase in members and we are continuously growing. According to the Ministry of Internal Affairs and Communications statistics, there are currently 12,000,000 people in their 20s. And 90% of them are registered to Nico-dō. In sex ratio, 67% are male and 32% female and recently the ratio of women is rising although there are still many more male users.

Okamoto: You have changed jobs to DWANGO, but what do you want to achieve there?

Kataoka: There is a goal to develop anime in Nico-dō. When you look at Nico-dō lately, you will see that videos that infringe on copyrights has almost all been eradicated. Many people say so but it can be said that the Japanese animation business scheme has been destroyed because of illegal videos. 2006 was the peak of the Japanese animation industry and around this time you see an increase in illegal video streaming sites. No matter how many illegal sites you shut down, they are just replaced by others. So we thought the shortcut to driving out illegal videos was to stream anime through legally licensed routes. We want to make a scheme whereby we pay royalties and the creators and content holders receive money.

Okamoto: Specifically, what kind of anime is streamed?

Kataoka: Nico-dō started anime streaming regularly in October 2011. Nico-dō's anime is divided into 6 sectors. Newly released anime that is now distributed once a week, streaming of approximately 500 pieces of old anime, full episode broadcast which is basically free, anime promotion programs which notifies of new anime releases and event information, and live broadcasts of anime events and live performances, such as "Anisama[3]". The newly released anime are not Nico-dō's original contents but we broadcast by licensing distribution rights from the content holders.

Okamoto: If full episodes can be seen for free, how do you generate revenue?

Kataoka: A good example of successful streaming of old anime is, I am sorry that I mention the name without permission, is Tatsunoko Production (hereinafter Tatsunoko). Tatsunoko may have an aim of generating revenue from old anime by charging for broadcasts but they live stream a few episodes at a time to bring viewers in while having a system in place for paid viewing for people who want to watch the other episodes. They utilize the psychology that people want to watch more, if they start to watch a little. As I have stated before, the full episode broadcasts are generally free. Then how do we generate revenue? For example, when we air the full episodes of a big hit such as Maho Shojo Madoka Magika a.k.a. Puella Magi Madoka Magica, we get a great deal of viewers. Which means there are between 30,000 to 40,000 viewers that will access the site simultaneously, so we set a maximum access number to make sure the server does not go down. Once this number is reached, it is not possible for other viewers to have access. However, there is a way if you desperately want to watch it, and that is by becoming a premium member for 525 yen a month. Then you receive high quality, priority viewing over the general non-paying members. This is how we gain our paying members and it is well known by Nico-dō users. In the past two and a half years, we have run over 200 full episode broadcasts and have attracted a total of 41,000,000 viewers. This number indicates that full episode broadcasts have become commonplace amongst anime viewers. A large portion of Nico Nico-dōuga's revenue source for the anime streaming business is of course pay per view fees by viewers but membership fees of premier membership is just as large.

Okamoto: For content holders, Nico-dō not only generates revenue from old anime but has gained recognition as a promotional marketing media.

Kataoka: Yes. If anything I think the promotional factor is what is most hoped for. Anime broadcasts used to be aired under the strong stereotype that it should be broadcast by the terrestrial television stations before any other media. That is because terrestrial TV has had substantial ability to spread the title even to the unknowing. Although this still holds true, the moment that it is broadcast on terrestrial television, it is instantly copied and streamed on illegal video streaming sites. Normally what should have become profit is simultaneously lost when it is spread by airing on terrestrial television. We think that the ideal business model for content is a media plan where the release can be controlled by separating the core fans, light users and passersby – receiving fees first from core fans and then having many people watch it in free media. Even if a pirated video later becomes uploaded onto illegal streaming sites, the initial money paid by core fans would have been paid to the content holder. As I spoke about such ideas in different places, the Kadokawa Group Holdings said that they would broadcast all their own-produced anime on the internet first. So we were able to stream Seitokai no Ichizon (lit. Student Council's Discretion) , before the television stations and our viewers which were normally about 30,000-40,000 jumped to 53,000. There are that many fans that would even pay, if they can see it first.

♦ Wiping Out The Notion That Internet Viewing Should Be Free

Okamoto: In Nico-dō, there are also channels operated by businesses and organizations.

Kataoka: You mean Nico Nico Channel. This is a channel that is set up and operated by the content holders themselves. Nico-dō is not a broadcasting station but an open space. We provide the servers and make the conducting wires for the customers and have guiding tools. As of November 29th 2012, there have been 2,208 channels set up and I am now actively working on content holders since it seems better for them to stream publically on their own channel rather than Nico-dō buying and streaming their contents. Nico-dō also promotes a function called "Blomaga" (combination word of blog and magazine). We came up with this to wipe out the notion that the internet is for free viewing. It unifies blogs, mail magazines, Nico Nico live streaming, users' live streaming, Nico Nico official live streaming and online selling tools. For example, the blomaga for the popular voice actor, Satomi Akesaka, is 315 yen a month. The 300 yen excluding the consumption tax is divided as follows. First we take 14% for both billing fees to the payment-processing company and copyright royalties under a comprehensive licensing agreement with the music copyright collective. Then we give back 70% of the remaining of the 86% to the channel proprietor and Dwango keeps 30% and uses it for server maintenance, program development and public relations. So far distribution of "blomaga" is restricted to celebrities but we are thinking to open it up to our users. Then there will be a system where an individual can receive money for an article, mail or blog they wrote. We want to expand this type of distribution business into the acknowledged anime business scheme not only in Japan but globally. Then we can eradicate illegal video streaming sites globally.

♦ By Rewriting An Original, the Copyright Is Reborn And Lives On

Okamoto: The complaint that I've always had towards internet media is that even when it is released, there is little or no cash going back to the creators. I understand Nico-dō has started a new system to resolve this problem.

Kataoka: You are speaking about "Contents Tree" that we started in 2011. This is a system where whatever a Nico-dō users posts, another user can edit freely. In copyright laws, there are regulations of who the rights-holder is and royalties need to be paid to the person prescribed. You cannot make changes and cannot erase the name of the rights-holder. However, at Nico-dō, we think that the life of a copyright is prolonged only when it has been renewed. In other words, once it is rewritten a copyright can be reincarnated and be reborn. A good example is The Tale of Genji[4]. The Tale of Genji is a story that Murasakishikibu wrote in the 1100s but it has been rewritten over and over and has survived until today. Jyakucho Setouchi and Fumiko Enchi have updated it, and each time it becomes something different. Copyright surviving in this way is something beneficial for the work itself. If it is not updated, it will be buried and will eventually disappear. "Vocalo music[5]" made by voice synthesizer software is extremely popular on Nico-dō, and it is alright to change the words of a vocalo song that some other user uploaded. An answer song is made deriving from the original and sometimes this becomes a hit. A Contents Tree is created when a user specifies the "parent" (the original song) when posting a piece. One characteristic is that the relationship of how it was derived is demonstrated as in a family tree. We have also made a system where, when a certain view count is reached, we pay money to the user who is the "parent" in the Contents Tree. In the music arena, we pay the Vocalo parents royalties after calculating usage if I remember correctly, once every three months.

Okamoto: When a user registers that he used this song and that is fed back, a substantial amount of money in the millions can be paid out to the original creator.

Kataoka: At Nico-dō, we call this "Kodomo Teate" (child allowance). In the society, we call the money that the government pays out for children kodomo teate. At Nico-dō, the child pays money to the parent. And once the child pays the parent, the parent pays the grandfather, and the grandfather pays the great grandfather. Royalties are paid out also to the second and third spin off creators.

Okamoto: Is that paid by Nico-dō and not the users?

Kataoka: Yes. I stated previously that a copyright can only continue to survive when it is renewed but the weakness of this is that royalties cannot be paid to the original creator. So we distribute funds by deciding on an annual budget from the premium membership fees and then decide on an applicable rate and pay accordingly.

♦ Anime Industry's Crisis and the Role of the Producer

Okamoto: Sometimes I feel as though anime in Japan is over consumed. An anime should be tasty many times over. Therefore, I believe the role of the producer is to connect, make it work as a business and pay back. That is exactly your profile Mr. Kataoka. An anime producer who was making contents himself, venturing out to new genres as musicals and Nico-dō, and truly expanding the content called anime.

Kataoka: Musicals and Nico-dō streaming are all peripheral businesses. The core of the anime business is after all something the creators produce. I think, therefore, my role is to set the stage so that new talents rise in succession and those talented people can work on new projects. Now Japanese anime is in a very critical position. It seems strange that you can only make 12 episodes per series. If you want to portray a worldview, the events that take place, the relationships, turning points, catastrophe and a grand finale you need at least 26 episodes. During the age of the First Gundam series, the standard was 52 episodes. However, I have a sense of grave concern that we cannot create in this way any longer and want to do something about it. Lastly, I want to say to you please love anime. It is natural that the creators love their piece of work but I also want the dealer and all the people involved to love the piece. Everything can only start there.

[ Footnote ]
[1] Nico Nico-dōuga (Nico-dō)
Japan's largest video sharing service which started in 2006. Users can upload videos on the site and watch uploaded videos. The main characteristic that differentiates this service from other video sharing and streaming services is a function where users can post comments on the content real-time and this function has enabled the formation of a unique community and culture amongst the users.

[2] Takarazuka Revue
A Japanese all-female musical theater troupe. They have big hits such as Berusaiyu no Bara (English title:The Rose of Versailles), an adaptation of the popular girls' manga series. 90% of the fans are female and fanatical fans support actors much like a family member would from their debut until they become stars.

[3] Anisama
Anisama, or Animelo Summer Live is the world's largest anime song live performance event. It has been held every year since 2005. It was started as a co-sponsored business between Dwango and Nippon Cultural Broadcasting Inc.

[4] The Tale of Genji
Japan's oldest full length romance novel set in aristocratic society in the Heian period. It is said to be written by Murasak Shikibu, a lady-in-waiting for the imperial court. Many writers such as Akiko Yosano, Jyun'ichiro Tanizaki, Fumiko Enchi, and Jakucho Setouchi have translated it into modern Japanese.

[5] Vocalo Music
Songs that use VOCALOID such as Hatsune Miku. VOCALOID refers to a synthesizer singing technology Yamaha developed as well as the products which use that technology. By inputting the melody and lyrics you can synthesize singing based on the sampled voice. Nico-dō users post their creations spontaneously. Users make spin offs (answer songs or re-creations) and then people react to the spin offs and make new spin offs (2nd re-creations).