Can planned new content industry command center avoid Cool Japan Fund's failures?

The Japanese government is in the early stages of creating a new central entity to bolster the country's content industry, which encompasses anime, video games, and other creative works. This initiative comes as the government prepares to disband Cool Japan Fund Inc., a public-private investment fund that has been plagued by significant financial losses.

While some government officials argue that valuable lessons can be drawn from the fund's shortcomings, others contend that no such insights have been incorporated into the new organization's design.

The Cabinet Office, the Ministry of Economy, Trade and Industry, the Agency for Cultural Affairs, and the Ministry of Internal Affairs and Communications are spearheading the formation of this new body. Its core objectives include consolidating content-related budgets that are currently dispersed across various government departments, intensifying overseas marketing efforts for Japanese content, and combating piracy.

The government intends to introduce a bill related to this project during the 2027 regular Diet session, with plans to operationalize the organization later that year.

Japan's Growth Strategy, unveiled in July, positions the content industry as one of 17 strategic sectors and sets a goal of attaining 20 trillion yen (approximately $127 billion) in annual overseas sales of music, games, anime, and other content by 2033. The government anticipates that combined public and private sector investments will amount to around 34 trillion yen (roughly $215 billion) by the end of this period.

However, there is no assurance that these government-led endeavors to promote the content industry will prove successful.

The Cool Japan Fund, established in 2013 under the previous administration of Prime Minister Shinzo Abe, has amassed losses totaling 54 billion yen (about $342 million). One of the primary reasons for the fund's struggles has been the government's limited capacity to pinpoint promising investments. Private investors tend to take the lead when it comes to funding companies with strong potential in the content industry.

Moreover, structural shifts in the industry, such as the emergence of dominant global platforms, have left several anime and video-streaming ventures backed by the fund unable to generate profits, ultimately resulting in their withdrawal.

To differentiate itself from the Cool Japan Fund, the new organization will eschew the public-private investment model, in which the government bears investment risks and assumes a leading role. Instead, it will prioritize leveraging private-sector expertise. One potential model being considered is the Korea Creative Content Agency, which has received strong government backing and supports the growth of K-pop and South Korean TV dramas.

The Japanese government envisions this new organization collaborating with the private sector to facilitate overseas expansion and nurture industry talent.

Nevertheless, concerns persist that the new body may replicate the Cool Japan Fund's failures due to its broad scope, encompassing fields ranging from biomaterials to food. The new organization will thus focus exclusively on content. A senior official from the Ministry of Economy, Trade and Industry expressed reservations, stating that Japan's anime and video game industries have flourished through private sector strength, and government intervention could backfire.

In contrast, officials from the same ministry argued that Cool Japan Fund has been unfairly criticized based on the poor performance of some of its supported projects, including the Junglia Okinawa theme park. They also highlighted the fund's achievements, such as promoting several anime titles, while acknowledging the inherent difficulties the government faces in accurately identifying which content is likely to succeed.