Selling Hollywood in Japan : Quirky Distribution, Lack of Theaters Create Problems

TOKYO —  When Nippon Herald Films bought distribution rights to “Basic Instinct,” a steamy American film about a bisexual murder suspect, it hardly seemed a winner in a market dependent upon a conservative, largely female audience.

However, Japanese marketers put a new spin on the movie described by some American critics as contemptuous of women. Nippon Herald changed the title to “Smile of Ice” and de-emphasized the sexual scenes widely discussed among American audiences to focus on the character played by Sharon Stone.

With the Japanese public knowing little of the controversies surrounding the movie in the United States, Nippon promoted the film as the story of an intense, complex woman.

This “human” story was a big hit in Japan during the just-ended summer season.

Such marketing make-overs are becoming increasingly important in selling foreign films in Japan. Though Hollywood still has a powerful attraction for most Japanese, income from the distribution of foreign films was down 20% in the first half of this year--the third consecutive decline.

A Byzantine distribution cartel, a shortage of theaters in key city centers and a shrinking, tough-to-define market has made selling movies in Japan an often mysterious and unpredictable job for Hollywood. “Hook” and “Batman Returns,” for example, were pegged as certain hits at the beginning of the season but sometimes showed to half-empty theaters.

There is no question that American films are popular in Japan, earning the bulk of the $312 million in foreign film revenues last year. Their popularity makes film entertainment one of the few areas in which the United States has a continuing trade surplus with Japan.

But only about 15% of the feature films made in America make it into Japanese theaters. While America’s nearly 60% share of the Japanese film market seems impressive, it is low compared to the 80% or more share American films typically command in other developed nations, including culturally snobbish France. Foreign film revenues in Japan have barely climbed from the level they were a decade ago.

One small distributor of foreign films has achieved surprising success with American films. In the spring, Nippon Herald Films had five films in distribution that garnered a 60% share of box office revenues. A small Shinto altar in Nippon Herald’s office has tacked onto it small envelopes containing money offerings and the names of recent hits--a token of thanks to the Japanese gods.

The gods may have helped, but Hilo Iizumi of Nippon Herald’s international division was a key to the films’ success.

To build interest in the David Lynch film “Twin Peaks: Fire Walk With Me,” Iizumi and his partner, publicist Naoyuki Sakagami, kept details of the film from the press. But they staged a mock funeral for the movie’s murdered heroine, Laura Palmer, in front of a crowded train station to expand interest.

“You have to get the women talking about (a film),” Iizumi says, noting that with men working long hours, 70% of the typical movie audience is women, mostly unmarried.

Iizumi argues that Terminator II, in which Arnold Schwarzenegger plays a high-tech robot bent on murder and destruction, became the second-best-earning foreign film ever in Japan with $44 million in ticket sales because it was promoted as a “heart-warming story” to appeal to women.

No doubt the presence of Schwarzenegger helped. The large proportion of young women viewers means a male star can make or break a film.

Kotoe Watanabe, a 24-year-old clerical worker at a bank, said she didn’t particularly like “Dances With Wolves” but went because Kevin Costner starred in it. What did she think about Robin Hood? “I wish I could be the princess,” she says.

But clever marketing and big-name actors are of limited use in making a film a success in Japan. Regardless of the popularity of an American film, it is unlikely to be shown in more than a dozen theaters in Tokyo and 100 theaters nationwide. A fairly popular movie in America will show in 2,000 theaters.

There are only 1,800 movie theaters in Japan, less than a tenth the number in the United States. There is a scant audience for movies outside major cities, and within the cities, high land prices provide no incentive to add additional screens.

Perhaps a more important factor is that the two big Japanese film studios control virtually all film distribution in Japan. Theaters are either owned by one of the big studios, Toho and Shochiku, or they have exclusive contracts that allows the studios to determine what films they show and when. The film studios use their power to force the theaters to run the films they produce, regardless of their quality.

In a squat, grayish building in back of an aging downtown movie theater are several floors of gray metal desks pushed up against smudgy walls and piled high with dusty papers. At 9:30 a.m. only a few workers are in and they are languorously fanning themselves in slow strokes with small Japanese paper fans.

Apart from a few wrinkled posters, there is little to indicate that this is the headquarters of Shochiku Co., Japan’s second-largest film producer and theater chain owner. The office’s condition reflects the long decline in Japan’s theater business in tandem with the falling quality of its movies.

The company is caught in a bind, officials say. “Movie theaters showing American movies bring in more customers,” says Tatsuo Meguro, board director in charge of movie theaters at Shochiku. “But if you have made the film yourself, you get higher profits showing your own films.”

And Meguro notes proudly that Japan is the only place in the world outside the United States where the domestic industry has a 40% share of the film market, a share it would like to maintain.

To keep its share up, Shochiku shows foreign films in just 30 of the 120 theaters in its distribution chain. Only 800 of the 1,800 theaters in Japan are designated as theaters that can show foreign films.

The rest are committed to showing domestic films. Since those films are often poor in quality--in many cases low-budget pornography--the arrangement further depresses the theater business and discourages movie attendance.

Takamitsu Ikeda, editor of Nikkei Entertainment, a trade publication, says that if Japan had open, so that each theater could determine what movies to show, “Japan’s movie studios could collapse.”

Shigeru Musha, president of United International Pictures, the overseas distributor for Paramount and Universal, says the industry is using smoke and mirrors to hide its poor earnings results.

When Musha left the air force after World War II to join Toho, Japan’s largest film producer, annual attendance at movie theaters was over 1 billion visits. Last year film attendance fell to a low of 138 million.

Even that number may be exaggerated since Japanese film companies often force investors to buy hundreds of thousands of tickets that may never be used.

Pressuring regional theaters to use more foreign films is not necessarily the solution. Sony scored a coup by placing “Hook” in 220 theaters, the largest circulation for any foreign film, but the results were mixed.

Industry insiders say attendance at some rural theaters may not even have been enough to justify the cost of printing the extra copies of the film.

To balance the rural poverty and city center crowds, a growing number of developers are building mini-theaters in the suburbs that hold about 200 people and have smaller screens but can be run more cheaply by using video projectors controlled by computer.

With more young Japanese owning their own cars, entrepreneurs are converting large parking lots at shopping centers and ski resorts into drive-in movie theaters.

There is also talk of government action to break the Japanese film producers’ monopoly over theater chains--as U.S. occupation authorities tried to do after World War II.

None of these proposals is likely to do much in the near term to bring the public back into movie theaters and help Hollywood boost sales here.

The immediate need, Iizumi says, is for American studios to do a better job of marketing. Too many studios, he says, simply import the entire campaign package used in America to Japan without recognizing the differences in the market.