How Japan’s Kadokawa Corporation gears itself for the future

Tsuguhiko Kadokawa will be one of more than 40 leading international speakers (see biographies and photos made available so far) at the FIPP World Congress, taking place in Toronto, Canada from 13-15 October 2015. The Congress is the industry’s flagship international event, taking place every second year and attracting some 700-800 high-level executives. (See more at fippcongress.com). 

In advance of the FIPP Congress, Cobus Heyl asked him (via email) about Kadokawa Corporation, mergers and acquisitions to overcome challenges and exploit new opportunities, his views of the future of media and more. Here are his responses.

FIPP has members around the world. For those not familiar with Kadokawa Corporation and you, please tell them a little more about yourself?

I was born in Tokyo in 1943, and graduated from the School of Political Science and Economics of Waseda University. I am currently chairman of Kadokawa Corporation and also serve as a director and adviser for Kadokawa Dwango Corporation. 

I joined Kadokawa Shoten in 1966, and was responsible for launching various new business areas such as information and human-interest magazines like “The Television” and “Tokyo Walker,” and the “Dengeki” and “Kadokawa Sneaker Bunko” light novels. Through our use of techniques across the media mix, Kadokawa became the leader in pop culture in Japan. 

I served in various capacities in our industry associations including president of the Japan Magazine Publishers Association (JMPA), chairman of the Japan Video Software Association (JVA), secretary general of the Content Overseas Distribution Association(CODA), secretary general of The Anti-Counterfeiting Association (ACA), and chairman of the Tokyo International Film Festival. 

I currently serve as a member of the Cabinet Secretariat Intellectual Property Strategy Headquarters, project professor at the University of Tokyo Graduate School of Interdisciplinary Information Studies, research fellow at the MIT Media Lab, chairman of the Kadokawa Culture Promotion Foundation, as well as president of Kadokawa ASCII Research Laboratories, Inc. 

I have also written books on “The Cloud Era and <Cool Revolution>“ (Kuraudo jidai to <Kuru kakumei>) and “Copyright law that will not be defeated by Google or Apple” (Guguru, appuru ni makenai chosakukenho). Kadokawa published both, originally in Japanese.

Please tell us more about Kadokawa Dwango Corporation.

Kadokawa Corporation has its origins in Kadokawa Shoten, a publishing company that was founded in 1945. Over the years we developed much further, taking up challenges in areas such as the film business as part of our media mix. In addition, we entered digital media business through aggressive mergers and acquisitions. Thanks to our bold strategies, we’ve been expanding our business beyond the boundaries of traditional publishing. 

Currently, our portfolio covers a wide range of products — books, magazines, comics, anime, films, games and digital content. 

As one of the world’s truly unparalleled business entities, we are continuing the multi-faceted expansion of our unique intellectual property content into a variety of media. With an eye on the world market, we are aiming to be a mega-content publisher for the digital age. 

Kadokawa has the number 1 share in book sales on Amazon Japan but this accounts for only 40% of our total business. Just looking at this number, you will see that we are not just a publisher but transforming into a mega-content publisher. 

In October 2014, we merged with Dwango Co., Ltd., famous for its Nico Nico Douga, a video sharing platform in Japan. Together we established a holding company, Kadokawa Dwango Corporation, through which we are attempting to launch new content service models around the concepts of “From analog to digital” and “A fusion of reality and the Internet.”

The media industry is in a time of rapid change, driven by technology and changes in the way people consume content. What are the key media trends in Japan?

Digital networking and social media have been progressing as major trends here. Within this, the rapid spread of smartphones has brought about staggering disruptions to the business models of traditional types of media such as newspapers, magazines, music and television.

The individual interests of people have diversified, so much so that media and mass communications can hardly satisfy their wants. This means that we’re required to provide them with personalised content aimed at niche market segments.

The business merger of Kadokawa and Dwango is our response to this situation, and under Kadokawa’s slogan of “From analog to digital” and Dwango’s “From the Internet to reality,” we’re working together to create new content and services.

And how would you say does this compare to other markets in your environment?

With the development of communication networks in Japan, we’ve seen the gradual transition of media, from the PC era to the era of feature phones (the older generation phones are now called “Galapagos phones” here in Japan) and on to the smartphone era of today. This contrasts with markets like Southeast Asia where they’ve leaped from the PC era right into smartphones.

Japan has long been known for the impact of mobile phones on consumer habits. How has Kadokawa geared itself to take advantage of the mobile opportunity?

Back in the iMode days of Japan, we were quick to start up a company called Kadokawa Mobile to create business aimed at the mobile content market. Building further on the good relationships we have developed with cell phone carriers like NTT DoCoMo, partnerships that have deepened over time, we actively expanded our business into the smartphone era as well. We’ve launched services for the “d Anime Store” and “au Anime Pass” for video, and “d Magazine” for digital magazines, and these services are starting to show signs of becoming huge, profitable successes attracting some 3.5 million subscribers.

And in the market for e-books, our Kadokawa Group has acted quickly by launching “BOOK☆WALKER,” an e-book store directly managed by the publishers, as well as by developing the world’s first ePub viewer enabling people to read e-books in their Twitter streams.

Kadokawa has invested heavily in gaming. How does this fit into the overall business?

Following on from publishing and video, we believe that gaming is a key business that forms the third pillar of our company. Originally, our strategy, which we learned from attending FIPP conferences, was to look for opportunities to develop new business somehow related to televisions. So, besides our “The Television” TV programme guide magazine, we launched video game information magazines and game playing hint books like “Comptiq”, “Famitsu” and “Dengeki PlayStation” one after another. It meant Kadokawa enjoys the top share in the field of gaming information in Japan.

At the same time, at Kadokawa we positioned our media mix and intellectual property strategies as axes in our business, and we are leveraging a wide variety of content and characters created in our publishing business to develop them into games.

As part of these trends, and as content that transcends cultures and can be expanded globally, we have enhanced our strategies on the gaming industry and launched a company called Kadokawa Games and are working at creating global intellectual properties. Our acquisition of FromSoftware is also a part of this global expansion.

What are some of the lessons you have learned in this sector?

An example of “starting out small and growing big” is our “Kantai Collection” (known as “KanColle”). With DMM.com as our partner, “KanColle” is a browser game featuring cute girl characters developed by Kadokawa Games as the start of our low-budget, low-risk business. The use of these characters (Kanmusu) to personify warships has become a hot topic, with the number of users exploding through word-of-mouth, and surprisingly, more than 2.5 million people were playing this browser game as of January 19, 2015. From this game various further intellectual properties have been created, expanding into a mix effect that includes manga, anime, novelizations and movies.

Where else do you see the key growth areas for the company?

Aside from gaming, other business areas will include leveraging our magazine properties, such as d Magazine to provide Internet services and e-book services in which the market is seeing remarkable growth, and on-demand video delivery services to replace the DVD package market.

Considering the magazine media industry, what are your thoughts on its future?

It’s not possible to stop Internet and digital media trends. With the exception perhaps of magazines that lead in their genre, the business environment for print magazines can only be expected to become harsher. However, we now have other, new emerging distribution channels such as smartphone to utilise in this IT-dominated world. I think that the capabilities that publishers have cultivated through their magazine businesses in the past – capabilities such as curating, editing and other skills – all of these will see will increasingly be needed, with more and more opportunities into the future. But in this sense, magazine publishers are at a turning point too: how do they continue to create a new business model based on their existing skills and how do they tackle the challenge of transforming their type of business. I think the keyword in that transformation is “un-physicalisation” and added “services” of magazine media.

If you have to list top priorities for magazine media publishers to focus on, what will they be?

  1. Digital media (ebooks, digital magazines)
  2. Core marketing (micro-targeted marketing)
  3. Social media (user-generated content initiatives)
  4. Services

Finally, you will of course not only speak at the Congress in Toronto, but will be joining us for the whole event. What are you looking forward to at the Congress?

I look forward to exchanging views on the future of magazine media with publishers who have a similar awareness of the issues (facing the industry) as Kadokawa as well as with those already taking a progressive approach.

For more

Hear more from Tsuguhiko Kadokawa and other speakers like him at the FIPP World Congress in Toronto, Canada from 13-15 October 2015. Register today to join them in Toronto. 

What’s more, this year’s FIPP Congress offers you four-in-one events, with the Worldwide Media Marketplace on 13 October, the DNF – content on the move on 14 October and the Innovation Forum on 15 October, the latter two running as streams in the main Congress programme. This allows you to customise the experience to your particular needs, making use of one of three booking options available.

  1. All inclusive Congress ticket, which also gives you access to all of the above (WMM, the main Congress programme, DNF and Innovation Forum)
  2. Congress only, which gives you access to the main Congress programme, DNF and Innovation Forum
  3. WMM only, which gives you access to WMM and DNF

More than 200 people have registered so far, using our Early Bird booking option (available until 15 May 2015). They include CEOs and other C-suite executives, managing and other directors, publishers, editors-in-chief and departmental managers from 25+ countries – starting with countries with an A all the way through to Zimbabwe with a Z. Register today to join us in Toronto.

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