Hello Kitty prepares to enchant the metaverse

Sanrio, the Japanese company behind Hello Kitty and the gang, made up of an elegant frog and an evil penguin, wants the world to dedicate 300 billion cumulative hours to its characters by the end of 2031.

If it succeeds in restoring success to one of Japan’s most beloved characters – an icon of the “kawaii”, or cuddly, side of Japanese popular culture – the company believes it will be able to take on global rivals like Disney.

Sanrio’s chief executive said the plan for Hello Kitty’s world domination involves saturating the offline world and the metaverse with its image. To do so, the company is looking to partner with Amazon, Netflix and other tech giants, and aims to launch NFTs, collectible digital assets.

Sanrio’s ambitious campaign comes after a historic revamp at its helm. In July 2020, Shintaro Tsuji, 94, the company’s founder, left the executive presidency and handed the command to his grandson, Tomokuni Tsuji, 33.

In his first 19 months at the helm of the company, Tsuji tried to breathe new life into a brand that, although recognized worldwide, was losing steam under the command of his grandfather. To introduce Kitty to a new generation of fans, he developed the concept of “Sanrio hours”, a unit for computing the time consumers dedicate to the brand.

“Our goal is to reach 300 billion Sanrio hours in the next ten years as we make these time units our new business focus. I know it’s an ambitious goal, but it’s achievable,” Tsuji said in an interview with the Financial Times.

Tsuji, one of the youngest chief executives of a company listed on the main floor of the Tokyo Stock Exchange, said that more than a billion hours had already been spent sending and receiving virtual stamps of Sanrio characters on Line, a Japanese app. of chat. He added that the company was “eager to stay close to customers, both in the real and virtual worlds.”

Sanrio, a midsize company whose core business is brand licensing, recorded 41 billion yen (US$355 million) in sales in the fiscal year ended March 2021, and paid attention to strategy Disney to expand the scale of its business through the acquisition of content production companies, and the construction of a universe of characters with products on different platforms.

“Nowadays, it’s not possible to simply paste images of characters on various products to make them grow,” Tsuji said.

Large crowds vying for an exclusive popcorn bucket and other merchandise from the popular animated series “Demon Slayer” recently in Osaka proved that contemporary characters come from many different types of entertainment, Tsuji said.

“That’s why when we launch new characters, we think not just about products but about how to use social media, and whether we’re joining from anime, manga or games.”

Sanrio is not entirely dependent on Hello Kitty. Recently released the comic animation series “Aggretsuko”; after debuting on Japanese television, it is now available via streaming on Netflix. The satirical series depicts a red panda working in a typical Japanese company.

The series, which became a hit in the United States and had its contract extended to four seasons, was the result of “a partnership with Netflix”, Tsuji said. “Collaboration with platforms like Amazon Prime will be one of the growth strategies in the future,” he added.

The executive said it was “highly likely” that the company will consider partnerships with Sony, Nintendo and other Japanese entertainment companies, in order to build a license cycle in multiple categories of content, such as television shows and games.

Sanrio also hosted a music festival in the metaverse called Sanrio Virtual Fes at the Sanrio Puroland theme park in December. The festival featured Sanrio characters, who performed alongside pop stars and influencers who maintain video blogs. Participants communicated with each other through avatars on various devices.

Sanrio had been “lagging behind in digital strategy,” Tsuji said, but is now interested in “studying greater participation in the fields of the metaverse and NFTs.”

The company’s profound change comes at a time when its operating income has declined since peaking in fiscal 2013. Characters from Disney’s “Frozen” movie and television shows have been taking over the space that used to belong to Sanrio’s characters. in the lucrative US and European markets.

Covid-19 dealt a heavy blow to the company as it forced the closure of theme parks and stores. Merchandise sold in stores, including lunch boxes, toothbrushes and pillows, made Hello Kitty a sensation in the 1990s under Sanrio’s former chief executive, but profitability is falling.

The pandemic turned out to be a windfall, said Tsuji, who has run a series of employee meetings over the past 12 months. “It was currently a good time to bring Sanrio back recovered.”

“We wanted to build on the strengths of the company’s 60-year history, but address the downsides we had,” he said, adding that a loss of flexibility and a lack of contact between operational areas had encouraged the company’s employees to cling to the past.

Tsuji is assembling an intellectual property creation team to realize his global ambitions. The team, which is expected to complete its training by April, is tasked with building world-class characters capable of battling Elsa and Mickey Mouse.

“It can be challenging to create a character that survives 50 years from now, but we can focus on characters that can be monetized in five or 10 years,” Tsuji said of his company’s new creations.

“We need a worldwide portfolio where characters support each other even if one of them fails,” Tsuji said.

Translation by Paulo Migliacci