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Hello Kitty prepares to charm metaverse

The Japanese company behind Hello Kitty and her entourage of a dandy frog and evil penguin wants the world to spend an accumulated 300 billion hours with its characters by the end of 2031.

If Sanrio succeeds in restoring happiness to Japan’s beloved character – an icon of the country kawaii, or sweet, popular culture – the company believes it can tackle global rivals like Walt Disney.

Sanrio’s CEO said the plan for Hello Kitty’s dominance was to saturate the offline world and the meta-verse with her image. To do so, the company is seeking partnerships with Amazon, Netflix and other technology giants as well as launching non-fungible tokens.

Sanrio’s ambitious campaign follows a historic upheaval in the boardroom. In July 2020, the company’s 94-year-old founder, Shintaro Tsuji, resigned as CEO and handed over control to his grandson, Tomokuni Tsuji, 33.

In his first 19 months at the helm, Tsuji has been trying to breathe life into a brand that, while globally recognized, was fading under his grandfather. To introduce Kitty to a new generation of fans, he has developed the concept of “Sanrio timer”, a unit of time that consumers spend with the brand.

“Our goal is to create 300 billion Sanrio hours over the next 10 years, as the amount of time has become our new business focus. I know the goal is huge, but it’s achievable,” Tsuji told the Financial Times in an interview.

Tsuji took over Sanrio from his grandfather in 2020
Tsuji took over Sanrio from his grandfather in 2020 © Yoshio Tsunoda / AFLO / PA

Tsuji, one of the youngest CEOs of a company listed on Tokyo Stock Exchange’s executive board, said more than $ 1 billion had already been spent. hours of sending and receiving virtual Sanrio character stamps on the Japanese chat app Line. He added that the company was “eager to stay close to customers, both in the real and virtual world”.

Sanrio, a medium-sized trademark licensing company that in the last fiscal year to March 2021 amounted to 41 billion. across platforms.

“Today, it is not possible to simply insert images of characters on different products and make them grow,” Tsuji said.

Huge crowds in Osaka fight for an exclusive popcorn bucket and other merchandise from popular anime series Demon killer proved that contemporary characters have origins in many different forms of entertainment, Tsuji said.

“That’s why when we launch new characters, we think not only about products, but also about how we use social media, and whether we go in from anime, manga or games.”

Sanrio is not completely dependent on Kitty. It launched recently Aggretsuko, an animated comedy TV series that streams on Netflix after airing in Japan. The satirical show depicts a female red panda working in a typical Japanese company.

The series, which became a hit in the United States and was renewed for four seasons, was the result of “the collaboration with Netflix,” Tsuji said. “Collaborating with platforms, including Amazon Prime, will be one of our growth strategies in the future,” he added.

An advertisement for Sanrio's 'Aggretsuko', an animated Japanese comedy TV series released on Netflix

Sanrio’s ‘Aggretsuko’, an animated comedy-TV series released on Netflix, proved popular with the American audience © 2021 Sanrio co., Ltd. Tokyo, Japan Sanrio / TBS, Fanworks

The director said it was “very likely” that the company would explore partnerships with Sony, Nintendo and other Japanese entertainment companies to build a cycle of licenses across content categories such as shows and games.

Sanrio also hosted a metaverse music festival in December called Sanrio Virtual Fes in Sanrio Puroland, its amusement park, featuring characters performing alongside pop stars and video bloggers. Participants communicated with each other through avatars on different devices.

Sanrio had been “behind with digital strategy,” Tsuji said, but it was “wanted to play more in metaverse and NFTs.”

The deep shift in the company comes as its operating profit has fallen since a peak in fiscal year 2013. Grades from Disney Frozen and TV shows have supplanted Sanrio’s characters in the lucrative American and European markets.

Covid-19 has given the company a hard blow by forcing theme parks and shops to close. Retail goods, including packed lunches, pillows and toothbrushes, had made Hello Kitty a sensation in the 1990s under its former CEO, but profitability has been declining.

The pandemic was a blessing in disguise, said Tsuji, who has hosted a number of staff meetings over the past year. “This was actually a good timing to bring Sanrio back in recovery.”

“We wanted to take over the good points in 60 years of company history, but address the weak points we had,” he said, adding that lack of flexibility and organizational silos had encouraged employees to stick to the status quo.

Tsuji is building an intellectual property creation team to deliver on its global ambition. The team, which is expected to be formed in April, will be tasked with creating global characters to host Elsa and Mickey Mouse.

“It can be challenging to make a character who survives for 50 years from now, but you might be looking for a character who will make money in five or 10 years,” Tsuji said of his new creations.

“We need a global portfolio where the characters support each other even if one of them falls.”

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