Wednesday, February 23, 2005

Can Americans learn something from the Japanese about entertaining kids?

It amazes me how entertainment businesses are constantly bemoaning how tough it is to get American kids interested in their products and as a result disappoint investors looking for growth. A major complaint is that kids are getting older, younger--known in the trade as "kagoy," meaning kids are moving up the age scale in their consumption of entertainment. Moreover, new ideas have a tougher time of breaking through because of the recalcitrance of companies to take risks in the face of competition from big box retailers and the internet. What products that are made can be categorized as either licensed collaborations or retro goods dusted off for a new generation. Is it no wonder that kids find what is being sold as boring and mediocre? The NY Times illustrates how toy manufacturers have fallen into this trap.

Now take a look at the strategies of Japanese companies. Despite being in a depressed economy for over a decade, Japan successfully exports its entertainment goods into the hands of American consumers, especially kids and young adults. Whether the products are manga, anime, video games, toys, or trading cards Americans have sought out Japanese companies for new and interesting products over American companies despite vast cultural differences between the two nations. To be fair, the amount of revenue Japanese companies and US importers earn is still a small share of overall entertainment expenditures, but it is growing at a faster clip than most American firms in the industry.

Why are consumers buying Japaneses goods over American goods? Two possibilities come to mind.

First, for the most part Japanese companies are constantly putting out new products and retiring old products, while refining along the way. What I mean by this is that creators often decide to retire older products despite being still viable in the marketplace because they feel it has run its course and to make room for new products. Particularly this is evident in manga and anime which often the authors and directors have a specific story to tell and after that just ends. American companies in contrast often push the product until it completely exhaust consumers. How many different iterations of Barbie does there need to be? However, companies like Pixar do invest in new ideas and has been well received by consumers. Even those Japanese companies that do reuse their older properties like Bandai with Gundam put in an effort introducing new angles and concepts into the basic formula.

Second, Japanese companies use a multi-prong strategy in marketing their products. They develop a brand that can be sold as comic books, animation, video games, and toys that complement each channel. However, the ideas of the creator is always the selling point, not a team of marketers. Typically a company teams up with a popular manga artist to roll out new products from that property: an animation series, a toy line, and a video game. But a hot property in the form of an anime series or video game can be the originating point for outgrowth. While some large companies, notably Disney, have been able to leverage their brands into many entertainment venues, others like Mattel and Time-Warner have been at most been able to penetrate only one or two venues and often at great marketing expense.

Just like American auto executives had to visit Japanese companies to learn just-in-time manufacturing, American executives might want to visit Japanese entertainment firms to find out how they make and market products that attract and retain young customers.