Cool Japan Fund postmortem finds video game, anime, and manga investments profitable

Following an infamously unsuccessful run that resulted in losses of about $340 million, the Cool Japan Fund–a domestic initiative launched in 2013 to boost Japan’s soft power–is due to be dissolved. On November 9, Japan’s Ministry of Economy, Trade and Industry (METI) published a review of the Cool Japan Fund’s performance, offering insights into which of its investments were worthwhile, and which of them led to losses. It also defined “lessons” it has learned from the ordeal, which it intends to apply to future policies.

The study found that when it comes to investments in the content industry, the video game, anime, manga, and music sectors generated solid returns for the fund, with an overall recovery rate of 120%. However, 30% of all content-related investments went into the live-action sector, which was “a non-growth market at the time,” according to the presentation. Consequently, investments in live-action performed poorly, with a recovery rate of just 46%. In particular, investments in joint ventures focused on distribution (such as broadcasting) accounted for 30% of the fund’s investment in the sector but resulted in 80% of its losses.

Among its “seven lessons learned,” METI mentions that as it works on an overhaul of Japan’s content industry policies, it intends to exercise caution when providing large-scale support to low-growth markets, joint ventures, and early-stage businesses with limited track records. Instead, it aims to expand support for promising IP and businesses in growing markets, as well as to strengthen direct support for content production, making sure that funding reaches the creators themselves. It remains to be seen whether and to what degree this will be reflected in future policies.

While the Cool Japan Fund is most strongly associated with entertainment content like anime and games, in actual fact only about 30% of the fund’s money went towards these industries. Significant investments went towards other sectors, and the initiative’s largest investment (approximately $88 million) was in a startup developing artificial spider silk, which failed.