By Mark Schilling
Japan has a notoriously complex distribution system for goods from shampoo to sushi,
with layers of middlemen between supplier and consumer, linked up and down the chain
by relationships that may go back generations and are all but impossible for outsiders to
penetrate.
Film distribution is less Byzantine than the norm -- a film goes through only one
distributor on its way to the market -- but the process of booking and exhibiting films
here has only-in-Japan aspects that range from the mildly quirky to the head-scratchingly
opaque.
Of the 2681 screens in operation in Japan by the end of 2003, 190 multiplex sites
accounted for 1533. With Warner Mycal in the lead, operators of multiplexes (or
"cinecon" are they are called in Japanese), began challenging the dominance of the Big
Two exhibitors -- Toho and Shochiku -- a decade ago, although the Big Two, after a slow
start, now own and operate multiplexes themselves.
Toho and Shochiku still wield much booking clout, mainly because the theatres they
directly operate are in prime downtown locations and because other theatre owners in
their networks follow their programming lead. "Affiliates are bound to us by contract, but
the independent cinema complex operators are free to book what they like," says
Kazutaka Akimoto, Shochiku's Deputy General Manager of Film Programming, "They
seldom do, though -- they know our track record and trust us."
The downtown picture palaces, such as Shochiku's Marunouchi Picadilly 1 -- an 802-seat
theatre in Tokyo's Ginza area -- serve as barometers for theatre owners around the
country. "If we put a film in the Marunouchi Picadilly 1, they know that it's major -- and
they'll book it for their own theaters," explains Akimoto.
Theatres in Japan once mostly came in two types: those that specialized in Japanese films
and those that specialized in foreign, mainly Hollywood, product for wide release, though
this distinction is no longer as strictly observed as formerly. For years Toho and Shochiku
block booked the former while booking the latter more flexibly in response to demand --
called "free booking" in Japan. Then, as part of a restructuring drive that began in 1998,
Shochiku started free booking its Japanese films as well. (Toei, a major distributor
specializing in domestic films, has always block booked.) "With block booking there
were times when we didn't get the fit right -- and we were stuck with it," says Akimoto.
"With free booking it's easier to make adjustments, especially now that even theatres in
the provinces have more screens. If a film does better than expected, we can move it to
another screen to make way for the next one."
Also, bookers do not simply take their cues from a film's foreign release: i.e., big in
Seattle doesn't necessarily mean big in Sendai. "The biggest factor for booking own films
is the quality. Another important factor is what we paid for them," explains Akimoto. "If
a minimum guarantee is high, we need a wide release to recoup. On the other hand, we
may put a film we paid relatively little for into wide release -- or into the arthouse circuit.
That's a choice we make."
Shochiku uses three basic release patterns for its arthouse films: 1) mainly arthouses, with
ten to twenty screens nationwide, 2) a mix of about fifty to seventy arthouse and
multiplex screens and 3) a release on 100 or more screens for films that, like Dancer In
the Dark, with a gross of Y2.4 billion ($22 million) or My Life Without Me, with a gross
of Y700 million ($6.42 million) that have break-out potential. "It's an extremely hard
decision to make," says Shochiku acquisitions manager Kaz Moriguchi. "The best way to
control the risk is to start small and expand naturally." Going straight for the big score
may be more rewarding, but "the downside of failure is so great," says Moriguchi, that he
would rather err on the side of caution.
Another way to reduce risk is to co-release major films -- a strategy Shochiku adopted
when it joined with Nippon Herald to release the Lord of the Rings trilogy. Other
partners include Toshiba and Gaga Communications.
Release strategies are somewhat different for an independent like Gaga that buys both
arthouse and big-budget Hollywood fare, but owns no theatres of its own. "We make a
projection of admissions based on content, scale and cast," says Keiji Hamano, President
of Gaga Distribution Company. "If we don't think a film can gross at least Y300 million
($2.75 million) to Y400 million ($3.7 million), we can't easily justify putting it into wide
release. Also if we have a film, that didn't do very well in a major chain , we will put the
sequel in the arthouse circuit. On the other hand, if a film does well in the arthouses, we
negotiate with the owner of the big downtown theatres and widen its release."
The decision to go wide or not has a major impact on the P&A budget. The P&A for a
Gaga arthouse film is in the Y30 million (?this is the ($272,727) to Y60 million
($550,459) range, for a commercial film in wide release, from Y100 million ($917,431)
to Y1 billion ($9.18 million). "For arthouse releases, free publicity, in magazines and
elsewhere, is vital because the P&A budget is so low," says Hamano.
More and more releases from both the majors and independents tend to be either arthouse
small or Harry Potter-ishly big. Meanwhile, the prospects for films that are neither are
becoming grim. "Films need to have something really distinctive about them, like
Fahrenheit 911 or The Passion, if they are going to work in this market," commented
Akimoto. "It's becoming harder to attract audiences with films that are just middling."
Instead of mediocre Hollywood fare, audiences are turning out for Asian films, especially
from Korea, whose popular culture is currently enjoying a boom in Japan. "We had good
results with both (Kim Hyeong Jeong's) Double Agent, which grossed Y400 million
($3.6 million) and (Praschya Pinkaew's) Ong-Bak, with the latter earning Y500 million
($4.6 million)," said Hamano. "We're probably going to see more Asian films (in this
market)."
Shochiku is also following this trend: it's 2004 lineup includes Hou Hsiao Hsien's Cafe
Lumiere, an Ozu homage that it financed, and Kim Kyu Hyun's actioner Tube. Coming
up in 2005 is Lee Eon-hee's drama ...ing. "We used to buy American films in order of
size, starting from the top in terms of budget and working our way down," says Shochiku
acquisitions manager Kaz Moriguchi. "Now we're looking more for films with something
unique, no matter where they come from."
With much of the industry now looking East -- the lineups of even the Japan subsidiaries
of Hollywood majors feature Japanese and Asian films -- the battle for hot titles has
become intense, pushing up minimum guarantees. Which presents the sellers of those
titles with an enviable dilemma -- who of several strong competitors to go with?
One of Gaga's big advantages, Hamano believes, lies in its network of regional offices.
"Our close ties to local communities means that we can more finely tailor our bookings
and publicity to local needs," he explains. "That's a big point in our favor."
Another, Hamano believes, is the largest number of films that Gaga distributes -- 55 this
year alone. "This enables us to have our own publicity team and give volume discounts
for our services -- another our strengths," he says.
Shochiku's main selling point is simpler. "We control both distribution and exhibition,"
Moriguchi says. "Also we not only directly manage theatres (72 by last count), but have
strong ties with many more." Shochiku operates five free-booking circuits (out of a total
of thirteen in Japan, including seven run by Toho and one by Toei). It thus had a network
large enough put Harry Potter and the Prisoner of Azkaban on nearly 800 screens for its
June 26 release. This one-two punch, contends Moriguchi, "makes it easier to coordinate
and execute marketing campaigns." It also, he says, "enables us to book films faster than
the independents, from the moment of acquisition...The whole process is just smoother
with us."
Toho and Shochiku both have close relationships with the Japanese subsidiaries of
Hollywood majors. The former has particularly strong, if not always exclusive, ties with
Fox, the latter, with Warner. Both also deal with UIP, Buena Vista and Sony. "All of the
majors in Japan have strong marketing teams," says Akimoto. "We leave the publicity of
their films up to them."
With the Japanese market now resembling the US in its sharp division between the hot
and the not, opening weekends are also following the US boom-or-bust pattern. A film on
wide release in Japan commonly earns one-third of its gross in its first week -- and 40%
to 50% of its first week gross on its first weekend, or 13% to 16% of the total. "The share
accounted for by the opening weekend is increasing, while the number of blockbuster
releases is growing," comments Moriguchi.
Also, the rise of cineplexes outside urban centers has caused the balance of power to shift
from town to country. The nine major cities -- Tokyo, Yokohama, Kawasaki, Nagoya,
Osaka, Kyoto, Kobe, Fukuoka, Sapporo -- used to account for 60% or even as much as
70% of the box office of a given film. Now, however, the percentages have been
reversed, with some films getting as much as 80% of their gross from the hinterlands.
But whatever the split, the success or failure of a film can often depend on the decision of
one man -- the theatre booker. "It can be tough, this job," says Akimoto. "But it's also
fun."
