What is the Production Committee System? Basic Structure and Historical Explanation for Overseas Companies
For overseas companies considering entry into Japan's content business—including anime, films, and games that have earned high acclaim in global markets—the "production committee system" represents a crucial mechanism that must be understood from the outset.
Structure and Function of the Production Committee System: Foundation of Japan's Content Business
The production committee system constitutes a primary funding and risk distribution model within Japan's content industry, realising content production through joint investment by multiple companies. This article examines its specific structure and functions.
Structure and Operating Mechanisms of Production Committees
A production committee is a business entity formed through joint investment by multiple companies involved in the planning, production, distribution, and sales of content. For example, the production committee for "Demon Slayer" includes participants such as Shueisha as the original publisher, Aniplex handling video and music distribution, and ufotable responsible for animation production. Each company contributes funds according to their business domain and anticipated revenue, with the committee as a whole securing the necessary production funding.
Rights Licensing and Value Creation Structure
Distribution of rights and revenue is determined based on investment ratios, though in practice, rights licensing is typically established according to each company's business domain. Specifically:
- Publishers: Publishing rights, related book development
- Animation production companies: Video production rights
- Music companies: Music production and sales rights
- Toy manufacturers: Merchandising rights
- Broadcasting stations: Broadcasting rights
This rights distribution structure enables each company to monetise through leveraging their expertise within their respective business domains.
When developing business related to Japanese content, it is essential to understand this multi-layered rights structure and construct appropriate negotiation strategies with the relevant rights holders. International hit works such as "Demon Slayer" and "Your Name" are recognised as successful examples realised through this production committee system.
What are the Advantages and Disadvantages of the Production Committee System?
The production committee system in Japan's content business represents a unique model where multiple companies invest and distribute risk, possessing a structure that contrasts with America's vertically integrated model. This system features a decentralised structure where publishers, animation production companies, broadcasting stations, and others jointly invest, with each company holding rights in their areas of expertise. However, creators tend to be positioned at the bottom of the rights structure, facing challenges such as contract opacity and alienation from profits.
There are various evaluations from overseas, with America sometimes pointing out creative constraints through comparison with the vertically integrated model. However, specific critical content is not clearly defined. Specific references to European evaluations are few, with the complexity of rights management being identified as a barrier to international expansion. While participation examples by Chinese companies (for instance: bilibili) and Korean companies in the production committee system can be confirmed, specific information regarding adoption trends in their own countries is limited.
1. Comparison of Japanese and American Business Models
American Vertically Integrated Model
The vertically integrated model represented by America's Disney and Universal involves a single company consistently managing everything from content planning and development through production, distribution, merchandising, and even theme park development. This model emphasises speed and efficiency in decision-making, enabling large-scale capital investment under clear brand strategies.
Characteristics of Japan's Production Committee System
In contrast, Japan's production committee system features a decentralised structure where multiple companies including publishers, animation production companies, broadcasting stations, and advertising agencies jointly invest, with each company holding rights in their areas of expertise. This approach realises financial risk distribution and the fusion of diverse expertise, whilst also encompassing challenges such as decision-making complexity and cumbersome rights management.
2. Detailed Analysis of the Production Committee System
Historical Background and Development Process
The origins of the production committee system can be traced to elements found in "Mushi Production," established by Osamu Tezuka in the 1960s. This production company adopted a mechanism for collecting funds from multiple sponsors for anime such as "Astro Boy," laying the foundation that connects to the current production committee system. Subsequently, the term "production committee" began to be used in the film industry during the 1980s, and by the 1990s it had become established as a major production format for anime and films. The catalyst for this system's widespread adoption in its current form was the commercial success of "Neon Genesis Evangelion," broadcast in 1995. This work demonstrated the potential for multi-faceted content development, as revenue from related products and secondary usage significantly exceeded broadcast income. Entering the 2000s, the expansion of late-night anime slots and the proliferation of internet distribution heightened the need for new business models that did not depend on television advertising revenue, further generalising the production committee system. Today, approximately 80 per cent of Japan's visual content, particularly anime works, is said to be produced through this system.
Structure and Roles of Participating Companies
The typical composition of a production committee is an alliance of companies with different areas of expertise, including publishers, broadcasting stations, animation production companies, advertising agencies, toy manufacturers, and music publishers. Each participating company has a clear division of roles, handling different aspects of the work based on their expertise. Publishers primarily handle provision of original work usage rights and book sales, broadcasting stations secure broadcasting rights and provide broadcast slots, animation production companies handle actual video production, advertising agencies formulate and execute promotional strategies, toy manufacturers utilise merchandising rights, and music publishers primarily handle development of theme songs and insert songs. In many cases, original publishers or broadcasting stations serve as managing companies performing overall coordination, but decision-making within production committees is fundamentally conducted through consensus among participating companies, undergoing complex processes that adjust the interests of each company.
Risk Distribution and Funding Mechanisms
The core function of the production committee system lies in risk distribution and efficient fundraising. The production cost for a single anime work is generally estimated at between 100 million to 300 million yen for one cour (13 episodes), and for a single company to bear this represents considerable risk. In production committees, each company invests in units ranging from several million to tens of millions of yen, securing the necessary production funding as a whole. Investment ratios are established according to company scale and expected revenue, with these ratios becoming the basis for subsequent revenue distribution. This mechanism enables large-scale project implementation whilst limiting individual companies' financial risks. Particularly noteworthy is that participating companies can also achieve monetisation within their respective business domains. For example, broadcasting stations secure advertising revenue, publishers handle related book sales, and toy manufacturers pursue product sales, ensuring multiple revenue sources.
Rights Distribution and Secondary Revenue Utilisation Reality
Rights and revenue distribution within the production committee system possesses a complex structure. Fundamentally, copyright (property rights) is distributed to participating companies according to investment ratios, though in practice, rights licensing is typically established according to each company's business domain. This enables broadcasting stations to prioritise utilisation of broadcasting rights, publishers of publishing rights, and toy manufacturers of merchandising rights within their respective business domains. Regarding revenue distribution, whilst overall work profits (secondary usage fees, overseas sales, streaming distribution, etc.) are distributed according to investment ratios, individual revenues arising from each company's business activities (for example: book sales profits) fundamentally belong to that company.
The particularly noteworthy point in this structure concerns the position of animation production companies that handle actual production and creators who contribute creatively, such as animators and scriptwriters. Production companies often have low investment ratios due to financial constraints or frequently cannot participate in production committees at all, resulting in a structure where they are alienated from both work rights and revenue. According to actual data, even for hit works, returns to production companies are reported to remain at approximately 10 per cent of domestic sales and approximately 6 per cent of overseas sales. Regarding creators, since payments from production committees to production companies are recorded collectively as "production costs," the commercial success of works does not directly translate to increased creator income.
This rights and revenue distribution structure has been debated in recent years as an issue related to the sustainability of Japan's content industry, whilst simultaneously being evaluated as a successful model that enabled multi-faceted development through cooperation among multiple companies. When foreign companies enter Japan's content business, understanding this complex rights structure and establishing appropriate negotiation strategies is essential.
3. Challenges Faced by Foreign Companies
Cultural Barriers and Business Practices
Japan's content business possesses unique commercial customs that constitute major barriers for foreign companies:
- "Nemawashi": A culture of informal preliminary consultations
- Consensus-building processes: Production committees fundamentally seek unanimous agreement or high levels of consensus
- Ringi system: Multi-layered approval processes requiring several weeks to months for decisions
Legal Framework Differences
Japanese copyright law has developed the concept of "sub-rights," with the legal establishment of the concept that copyright can be divided into multiple rights (reproduction rights, performance rights, public transmission rights, etc.). Furthermore, moral rights of authors are personal rights that cannot be assigned or waived under law (Copyright Act Article 59).
4. Success Case Studies
Successful Examples of Overseas Companies in Japanese Content Business
Netflix: Exclusive Content Production Model
Since entering Japan in 2015, Netflix has achieved success through its unique model that does not adopt the production committee system. Original content such as "Terrace House" and "The Naked Director," which secures exclusive distribution rights in exchange for bearing the full production cost, has provided benefits to production companies including reduced fundraising burden and risk avoidance.
bilibili: Gradual Entry and Value Provision
Chinese major video streaming company bilibili began by acquiring legitimate distribution rights for Japanese anime targeting China, gradually deepening relationships, and from 2018 onwards has participated as an investing company in multiple production committees. The strategic characteristic of this company lies in enhancing its value within production committees by providing unique data and insights regarding the Chinese market, rather than being merely a funding provider.
Strategies of Foreign Companies That Achieved Production Committee Participation
While foreign company participation in production committees has been increasing in recent years, companies that have succeeded in achieving this share common strategic approaches. The most important element is gradual trust-building. Many successful companies do not aim directly for production committee participation, but instead choose to begin with relatively low-risk transactions such as acquiring distribution rights or merchandising rights, accumulating track record and trust. For example, Korea's CJ Entertainment established its position in the Japanese market through stages beginning with Korean distribution of Japanese films, then co-production, and finally production committee participation.
Furthermore, localisation strategies have also become keys to success. Rather than simply dispatching expatriate staff from headquarters, hiring local personnel well-versed in Japan's content industry and delegating important decision-making authority is common among many successful companies. Particularly important is granting such local staff high trust from headquarters and sufficient decision-making power, enabling rapid responses aligned with Japanese business customs.
Moreover, companies that can provide value beyond mere funding to production committees have succeeded. For example, China's Tencent utilised its powerful digital platform and game development capabilities to achieve participation in multiple production committees through concrete value propositions of game adaptations of anime IP. Similarly, foreign companies that can provide elements difficult for Japanese companies to achieve independently, such as international product development networks or unique technologies, tend to more easily acquire influence within production committees.
5. Overseas Company Entry Strategies and Practical Approaches for Success
Utilisation of Intermediaries and Partnership Building
In entering Japan's content market, utilisation of specialist intermediary companies and building relationships with appropriate local partners become keys to success.
When selecting intermediary companies, track record in Japan's content industry and depth of personal networks should be prioritised above all. It is particularly important to give priority consideration to companies with practical experience in the production committee system and existing relationships with major rights holders. It is also necessary to confirm that they possess expertise matching the client's business domain and that there are no potential conflicts of interest. For effective utilisation, position them as strategic partners rather than mere agents, involving them in planning from early stages.
In local partner selection, it is important to comprehensively evaluate three points: industry reputation and influence, technical and creative capabilities, and financial situation. Particularly when aiming for production committee participation, investigating candidate partner companies' past roles and influence within production committees proves beneficial.
For effective partnership building, clarifying common vision and goal-setting and forming agreement on both short-term commercial goals and long-term strategic objectives becomes fundamental. Establishing effective communication structures to minimise misunderstandings arising from different languages and cultural backgrounds is also indispensable.
Gradual Approaches and Long-term Relationship Building
Since Japanese business culture strongly emphasises relationships and trust, gradual approaches prove effective. In initial stages, starting with collaboration involving limited risk, such as acquiring limited distribution rights or merchandising rights in specific regions, is recommended.
As a concrete example, a major Korean entertainment company began by acquiring domestic distribution rights in Japan, pursued gradual expansion through stages such as theme song provision by artists and participation in co-production, building trust at each step whilst establishing market position.
In relationship building, not only the economic conditions of transactions but also building personal relationships should be emphasised. Regular visits and face-to-face communication, along with attitudes demonstrating understanding of cultural backgrounds, help build relationships beyond mere contractual partnerships.
Risk Management and Building Expert Networks
To achieve sustained success in Japan's content business, comprehensive risk management strategies and building expert networks are indispensable.
To address the complexity of rights relationships, creating comprehensive rights relationship diagrams (rights maps) and regular updates prove effective. Particularly for production committee system works, clearly understanding and documenting each rights holder and usage conditions is important.
Building expert networks also constitutes an important element. Establish cooperative relationships with legal specialists well-versed in entertainment law, accountants familiar with industry-specific accounting practices, and marketing specialists knowledgeable about local market trends. In expert selection, emphasising personal networks within the industry and practical experience, rather than merely technical expertise, proves effective.
Participation in industry organisations such as the Association of Japanese Animations and the Japan Video Software Association provides opportunities not only for access to the latest industry trends but also contact with trustworthy specialists. By positioning these specialists as strategic advisors rather than mere service providers, more valuable support can be received.