More Than Entertainment: Japan’s Creative Industries and the U.S.-Japan Partnership

Investors and large firms are increasingly paying attention to the long-term growth potential of Japanese content industries. Keidanren, Japan’s largest business federation, has published policy proposals to boost Japanese IP in global markets since 2023. Sony now derives around 60 percent of its consolidated sales from entertainment businesses, up from roughly 20 percent a decade ago. Kodansha has established a production entity in Hollywood to develop live-action film and drama projects based on its own IP—a first for a Japanese publishing company. Toho, Japan’s largest filmmaker and owner of Godzilla IP, has announced investment plans to increase overseas revenue from 10 percent to 30 percent by 2032. More and more publishers, studios, and gaming firms are accelerating overseas expansion efforts.

For Japan, the growth of creative industries offers a rare opportunity to generate export earnings and global economic influence without relying on population growth or resource-intensive manufacturing. In addition to designating the content industry as a priority growth sector, related funding for content industry promotion and overseas expansion initiatives was doubled in the FY 2025 supplementary budget. These measures were accompanied by a long-term action plan aimed at increasing overseas revenue from Japan’s content industries from ¥5.8 trillion in 2023 to ¥20 trillion by 2033. In June 2026, the administration announced a plan for public and private investment totaling ¥33.7 trillion in the industry.

Importantly, the current shift differs from the earlier Cool Japan Strategy. Previous efforts often emphasized branding campaigns and infrastructure-heavy support models that struggled to generate sustained commercial success. The current transition is becoming more market-driven, creator-centered, and globally oriented, driven largely by growing recognition within the private sector that future growth depends on overseas markets rather than domestic consumption alone due to demographic decline and a shrinking domestic market. It is worth acknowledging criticisms of government intervention in this industry, yet several structural challenges—including working conditions, talent shortages, and accelerating outsourcing—do require policy attention.

Creative Industries in U.S.-Japan Relations

The convergence of U.S. and Japan’s strength is generating commercial momentum—but its significance is not purely economic. Shared platforms and co-produced content help shape the information ecosystems through which Indo-Pacific audiences encounter the world. These developments are creating significant new opportunities for U.S.-Japan collaboration in the creative industries.

The most promising area lies in the synergy between Japan’s globally competitive IP and the United States’ dominant digital platforms. Japan possesses internationally recognized strengths in anime, manga, gaming, and character-based entertainment, while the United States retains unparalleled capabilities in global-scale distribution. Together, these complementary assets enable both countries to expand their global reach, deepen digital trade, and compete more effectively in an increasingly contested entertainment market.

The commercial logic is clear: When more than half of Netflix’s global subscribers watch anime and viewership has tripled in five years, Japanese content is not a cultural add-on but a core driver of platform growth. Crunchyroll, the anime-focused streaming platform in the United States acquired by Sony Group in 2021, has already reached 21 million subscribers in 2026, a dramatic increase from 17 million last year. Japan contributes not only audiences but source material: distinctive worlds, compelling narratives, and richly developed characters that give U.S. platforms and studios a continuous pipeline of proven IP to adapt and distribute globally. At the same time, U.S. entertainment companies are increasingly adapting Japanese IP such as One Piece, Alice in Borderland, The Legend of Zelda, and Gundam into live-action productions.

Technology offers another promising avenue for cooperation. From Pokémon GO’s integration of Japanese IP with U.S. augmented reality to Japanese studios’ adoption of U.S.-developed game engines, creative and technological capabilities are increasingly intertwined. Yamaha Music, for instance, has integrated multiple U.S.-based entertainment technology startups called “createch” into its customer services, illustrating how Japanese firms can provide access to international markets for U.S. innovations, while U.S. startups contribute cutting-edge creator tools and digital production capabilities. These cross-border partnerships are likely to deepen as entertainment and technology ecosystems continue to converge.

Taken together, these developments represent more than a traditional licensing relationship. They increasingly resemble a transpacific entertainment ecosystem built on shared commercial incentives, complementary capabilities, and mutually reinforcing strengths. By enabling creators and companies in both countries to reach global audiences more effectively, this ecosystem has the potential to expand services exports from both the United States and Japan. As creative industries become more digital, global, and technology-driven, the U.S.-Japan partnership is well positioned to emerge as one of the defining collaborations in the global entertainment economy.

Implications Beyond Economics

The significance of these trends extends beyond industrial policy. Competition in creative industries increasingly plays a role in broader competition for attention, shaping where people choose to spend their limited leisure time. The information and narratives individuals encounter through content platforms influence decisionmaking, including consumer preferences, purchasing behavior, and sometimes perceptions of countries.

In this context, understanding who captures audience attention, and through which platforms and ecosystems, will become an increasingly important strategic question in the divided platform world. Chinese entertainment platforms and gaming ecosystems are rapidly expanding across Southeast Asia, the Middle East, and other parts of the Global South, driven in part by the global success of Chinese titles such as Genshin Impact and Black Myth: Wukong. Under the national goal of becoming a strong cultural nation by 2035, the Chinese government continues to support the development of its cultural industries as a means of strengthening Chinese cultural soft power and expanding international influence.

This does not mean that creative industries should be viewed solely through a zero-sum geopolitical lens. However, maintaining a meaningful share of the broader global information space has strategic significance, including efforts to counter disinformation over the long term. From the United States’ perspective, Japan plays an important role because Japanese content is closely connected to broader networks of democratic partners and trusted alliance structures. In the Indo-Pacific, where Chinese platforms and entertainment ecosystems are rapidly expanding their footprint among younger generations, U.S.-Japan cooperation in creative industries offers a meaningful counter-presence—one grounded in open platforms, creator autonomy, and shared democratic values rather than state-directed narratives. In this sense, cooperation between the United States and Japan in the creative industries is relevant not only to business opportunities, but also to long-term strategic and security interests.

Finally, it is essential to emphasize that content also makes a significant contribution to the long-term stability of relations between countries. Content fans create online communities, meet at physical events, and promote grassroots-level exchanges and personal ties. For example, Anime Expo in Los Angeles attracts a total of 422,000 attendees from around the world, with attendance continuing to grow. Such fan communities can serve as subnational actors in international relations and public diplomacy. Content also provides opportunities for people to develop an interest in each other’s culture and language. More than 90 percent of Japanese language learners in the United States reportedly cite entertainment as their initial point of interest. In the latest Gallup World Affairs poll, Japan was the most favorably viewed country among the American people, with 85 percent expressing a positive opinion. Although this result is not due to creative industries alone, many experts emphasize that creative industries now constitute a major component of Japan’s global influence.

Conclusion

Challenges remain. Japanese industrial policy may not fully deliver the intended outcomes for its creative industries. Japanese firms continue to face questions about how to capture more economic value domestically from globally successful IP. Regulatory fragmentation, growing geopolitical tensions, and debates surrounding generative AI and copyright protection also create uncertainty for creators and companies on both sides of the Pacific. Nevertheless, momentum for deeper U.S.-Japan cooperation in creative industries is clearly building.

Creative industries should no longer be viewed as peripheral to discussions of economic strategy or alliance relations. As digital platforms, IP, and audience ecosystems become increasingly important sources of economic and geopolitical influence, cooperation between Japan and the United States in the creative sector is likely to deepen further. The strategic significance of entertainment content will continue to grow as global competition increasingly extends into the digital attention economy.

Makoto Tsujiguchi is a visiting fellow from the Japan Business Federation (Keidanren) with the Japan Chair at the Center for Strategic and International Studies in Washington, D.C.