International Business 13th Edition by Donald Ball,Michael Geringer,Michael Minor ,Jeanne McNett

Exercise 4

Piracy as a Means of Foreign Market Entry

Although we discuss elsewhere in this chapter the threats to companies from piracy of intellectual property such as brand names or patented technology, piracy can also contribute to the global spread of a product-sort of market entry by accident. a
Japanese anme has estimated global sales of $80 billion, 10 times what it was a decade ago. Former Japa­nese Prime Minister Junichiro Koizumi once called it the "savior of Japanese culture." Disney has purchased the American rights to a number of anime films. The Cartoon Network shows several anime series as part of its Adult Swim programming. TOKOPOP will publish 400 volumes of translated Japanese comics for U.S. consumption.
Two decades ago, there was no U.S. market for Japanese anime. The change occurred not through a concerted push from Japanese media companies but in response to American fans who pulled anime in.
Although Japanese anime was exported to the West in the early 1960s, some saw it as inappropriate for American children, and by the late 1960s it was available only in Japanese overseas communities. The advent of the videotape recorder allowed dubbing and sharing, and soon anime fans were contacting both Japanese citizens and American soldiers stationed in Japan for tapes. Fan clubs emerged as essentially lending libraries and dubbing centers. In the late 1980s and 1990s, amateurs began dubbing these tapes into English: this "fansubbing" spread. In the early 1990s, large-scale anime conventions brought artists and distributors from Japan, who were astonished to see this thriving content they had never marketed. They returned to Japan ready to service this market commercially. The fan clubs continued their operations, but stopped fansubbing and distributing titles as they became commercially available.
This "piracy" is now supported by the commercial industry, which in fact sponsors events where fan-made manga, b a highly derivative version of the commercial product, is sold. The media companies use these events to publicize their own releases, spot new talent, and monitor shifts in audience tastes.
The idea that some piracy actually helps to diffuse new products is not limited to Japanese anime. It has also been tested for software.
Careful analysis actually found that software piracy is not necessarily harmful to a software firm seeking to launch a new product, because it establishes initial adopters (pirates) and speeds up software diffusion: these initial adopters then influence others to buy the product. Generally speaking, however, as the product diffuses in the market, the level of protection against piracy should be increased.
In a third industry, an international sample across 25 countries suggested that piracy of theatrical movies was actually slightly beneficial to the movie industry!
How can piracy help a company to successfully, and profitably, enter foreign markets?