K2 Pictures founder details $100 million film fund and Japan plus one strategy

Kii Muneyuki, founder of K2 Pictures, detailed the financial structure and operational strategy of his company at the Taiwan Creative Content Fest in Taipei on Saturday. The presentation covered the fund's recent closing, its target output, and its specific approach to international distribution.

Muneyuki said K2P Film Fund I closed its equity round in February at $33 million. The fund is currently backed by approximately 30 companies. MUFG Bank, Japan's largest lender, led the round. Other investors include Bandai, Dentsu, the Development Bank of Japan, and property firms Tokyu Land and Mori Trust. Muneyuki serves as the fund's general partner.

The equity is paired with loans that will eventually total $67 million. This brings the planned total capital to $100 million. The fund aims to produce 50 films over a seven-year period. Muneyuki noted that more companies approached K2 for investment after the round closed. He said the round could reopen if existing backers agree, though he has not yet made a final decision.

The company completed six films this year. These include Look Back, the live-action adaptation of Fujimoto Tatsuki's manga, which competed at the Venice Film Festival. The slate also includes Trophy, the debut feature by Son Myung-ah, which is scheduled to open in Korea. Muneyuki stated the goal is six or seven releases per year. He described the current pace as pretty tough for the first year of operations.

K2 operates under a strategy it calls Japan plus one. This approach involves pairing Japan with one specific other market for each project. Muneyuki argued that different countries value different aspects of Japanese culture. He noted that American, French, Taiwanese, and Korean audiences have distinct preferences. Japanese audiences also have a different view of their own culture.

The fund's next project is The Nuke Crab, a noir directed by Koto Nagata. The film is set in Fukushima and follows those who profited from radiation clean-up funds in the Tohoku region. K2 unveiled the project at Cannes in May. The shoot is targeted for next year. Nagata said the subject is socially taboo in Japan and rarely taken on by major studios. She aims to secure international sales early so an overseas release can run alongside the Japanese one.

Muneyuki said he believes audiences in Eastern Europe, including Poland and Ukraine, will connect with the film's themes. He cited the Chernobyl accident as a shared historical reference point. The company has opened outposts in Taiwan and Korea to distribute its films directly in those markets. Muneyuki stated that 99.9% of Japan's overseas film business consists of licensing deals. He argued that direct promotion raises the value of Japanese titles abroad.

Profits at K2 are calculated on a title-by-title basis. Seventy percent of profits go to investors. Thirty percent go to the creative side. Muneyuki said producers do not put up money for the films, but the films exist because of their creativity. Greenlighting decisions rest with the company's six or seven producers. Muneyuki said he does not block a project a producer is set on, provided costs can be balanced against likely revenue.

The company was established as an alternative to Japan's production committee system. Muneyuki said that system kept out foreign and outside investment, making it difficult to share returns with creators. He is currently discussing with lawyers the need for a law that allows content to be securitized, similar to real estate. He said producers can line up pre-sales and streaming rights for first-time directors to ensure a debut does not lose money. He wants to keep launching new directors and wants them to remember K2 when they succeed.