The partnership will help create intellectual property that Rakuten can adapt into manga, games, character goods and other merchandise that can be sold at its online marketplace. It also aims to benefit its other business units such as retail, television, telco and travel.
"Owning our own intellectual property will create a significant impact in expanding our 'ecosystem'," Makoto Arima, Rakuten's group executive vice president told Nikkei Asian Review. In addition, "we want to distribute the movies we produce globally."
Rakuten and The H Collective will each hold 50% in the coming Rakuten H Collective Studio. The two companies established Rakuten Distribution in May, which will sell H Collective films to Japanese theaters.
With the studio, Rakuten also plans to start streaming original programming over its online video platform Rakuten TV, which will offer some movies ahead of rival services. The production of TV commercials based on scenes from Rakuten movies is also under consideration to boost its advertising arm's revenue to 200 billion yen (US$1.88 billion) by 2021. That is double what it was in 2018.
It also intends to leverage its future movie library to help its cellphone service provider gain traction. Rakuten enters the carrier business in October and plans to roll out a 5G network sometime in 2020.
The move into original content follows that of Amazon and Alibaba Group, two ecommerce giants that have already invested billions in original streaming content to lure more customers.
The Tokyo-headquartered company currently receives 20% of its overall revenue from overseas markets but is actively looking to expand its global footprint.
Hiroshi Mikitani, Rakuten’s founder and CEO, has made efforts to boost the company’s brand presence overseas, with a stake in Lyft Inc. and sponsorship of the FC Barcelona soccer and Golden State Warriors basketball teams. Last month, it organized the Rakuten Cup, inviting FC Barcelona and the English team Chelsea FC to play in Japan.
According to GumGum Sports, an artificial intelligence company that analyses the media value of sports sponsorships, the Warriors drove US$19 million worth of value to Rakuten in the 2018-19 season from social media value alone (with US$3.8 million of that coming from team-operated accounts).
The inclusion of broadcast television results in a generated value “north of US$40 million”, according to GumGum and a healthy return on investment for Rakuten based on the reported US$20 million annual sponsorship fee.
Sourced from Nikkei Asian Review, Bloomberg, Fortune