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Once-bankrupt Japanese movie studio revives with Asian market's help

TOKYO -- Japanese movie studio Nikkatsu is performing a comeback drama in the Asian theater.

     Nikkatsu once thrived thanks to a series of blockbuster films, including "Taiyo no Kisetsu" ("Season of the Sun"), in which legendary Japanese actor Yujiro Ishihara made his movie debut. But the company failed in 1993 and emerged from bankruptcy years later.

     Nikkatsu is now trying to produce new movies in Asia outside Japan with the ultimate goal of becoming "Asia's No. 1 major studio," as President Naoki Sato put it. Under Sato's leadership, Nikkatsu will seek to make a complete comeback.

"Golden Asia"

"Saiyuki Hajimari no Hajimari," a Chinese movie, is to premiere in Japan on Nov. 21. The movie's English title is "Journey to the West: Conquering the Demons." It is a fantasy-comedy film directed by Stephen Chow, known for the hit film "Shaolin Soccer."     

     Nikkatsu and Toho-Towa are in charge of distributing "Saiyuki Hajimari no Hajimari" in Japan. The film is the first product under Golden Asia, an Asian movie label launched by the two firms in July.

     Nikkatsu and Toho-Towa are set to release a series of hit Asian movies under the new label from the end of this year and into next year.

     Nikkatsu is in charge of not only distributing but also buying products for Golden Asia.

     Nikkatsu has a certain degree of reputation for its ability to purchase Asian movies. The company distributed "Kitto Umaku Iku," an Indian film, in Japan in 2013, which proved to be a record-setting hit for an Indian movie, generating 170 million yen ($1.56 million) in box-office receipts.

     But it is often said that movie production is like a gamble. It is impossible to predict accurately whether a new movie will be popular -- and how much -- before it is actually released.

     Still, Nikkatsu is taking risks and buying and distributing Asian movies as part of its far-sighted strategy.

Joint production

Nikkatsu President Sato said, "We will create success stories in the Japanese market through Golden Asia and promote joint international production of movies. We will produce movies with top creators in China and India and will also challenge Hollywood."

     Sato's long-term strategy may sound too ambitious. But his company has already taken steps toward full-scale joint international movie production.

     "Killers," a film jointly produced by Japan and Indonesia, was released in the two countries in February this year. Nikkatsu was involved in the movie's production and distributed it.

     People under the age of 18 are not allowed to watch the movie starring Japanese actor Kazuki Kitamura, as it contains many violent scenes. But as many as 180,000 people have watched the film in Indonesia, making it one of the biggest hits there in terms of box-office receipts.

     "Aru Yasashiki Satsujinsha no Kiroku," a film jointly produced with South Korea, was also released in both Japan and South Korea in September this year. In South Korea, the movie is also distributed through the Internet.

Looking outside Japan

Nikkatsu President Sato moved to the company from Kadokawa Pictures in 2005. As a reference, he uses a business model in the manufacturing sector that pursues cost-cutting and technological innovation.     

Nikkatsu President Naoki Sato speaks to The Nikkei Business Daily.

     Many Japanese manufacturing companies have moved their production bases to emerging markets, where labor costs are low, and are trying to cash in on local demand that is growing amid the strong economic growth in the region.

     Japan's population is unlikely to grow in the near future, and annual box-office revenues in the country have now declined below 200 billion yen. Therefore, Nikkatsu is now looking outside the country.

     Nikkatsu set up a joint venture with its top shareholder Nippon Television Network and major Thai movie studio Kantana Group in June. Kantana Japan, based in Tokyo, will market Kantana Group's vaunted computer graphics (CG) and animation technologies.

     Kantana Group's CG and animation production division has received orders from major studios in Hollywood. Labor in Thailand is very cheap, compared with the U.S., Europe and Japan.

     Kantana Japan will engage in marketing in Japan to win contracts from movie studios and other customers while producing high-quality products in Thailand, where production costs are low.

     Nikkatsu President Sato said, "We want to make our company's international operations, including those in Asia, equal to those in Japan."

     Nikkatsu's annual sales are much smaller than Toho's. Sales at Toho, Japan's top movie studio, totaled 197.6 billion yen in the fiscal year ended February 2014.

     Unlike Toho and Shochiku, another major Japanese movie studio, Nikkatsu has no entertainment division and is seeking evolution while specializing only in movie production and distribution. 

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