As in the rest of Asia, the Japanese were introduced to the cinema through the cameras and cameramen of the globe-trotting Lumière Brothers Company. Film came to Japan in 1897 with the Japanese still flush with victory from the Sino-Japanese War (1894–1895), the first mark that the Japanese campaign of modernization (which meant in some measure increased industrialization and westernization) was working to make Japan an equal member of the European new world order. The Russo-Japanese War (1904–1905) was the culmination of this initial phase of societal transformation. Along with increased industrialization and the need for Western-style higher education came increased urbanization, an influx of people into Japan's already rather impressively populated urban centers such as Tokyo and Osaka—moves that proved particularly useful for the growth and development of the new urban entertainment form known as the cinema. This introductory phase of the cinema found Japan the object of the Western gaze as the Lumière cameramen turned an Orientalist eye on Japanese life. As the Japanese themselves began to shoot motion pictures—they began their own efforts around 1898 and by 1900 were manufacturing their own projectors modeled on the Edison machines—it seems inevitable that they, too, would shoot with an eye for the exotic, the uniquely Japanese. This seems a twofold strategy: to see themselves through the eyes of the West, to give the West back an image of Japan created in the West's image through its own technology, but also to begin that process of Nihonjinron (the study of the essence of "Japaneseness"), which would culminate in the actual promulgation not only of specific laws regarding the content of film, but actual invocations to create a kind of intrinsic or idealized Japan as the 1930s gave way to the 1940s and the expansion of the Pacific War. Even into the modern era, debates over what is (and what therefore is not) "typically" Japanese have continued to swirl around films and filmmakers working in this contested terrain.

The earliest films of geisha dances, popular street scenes, and other bits of exotica were typically exhibited at fairs or in traditional amusement districts in Tokyo, Osaka, and Kyoto. This pattern quickly asserted itself, and by the middle of the first decade of the twentieth century, film in Japan had become primarily an entertainment-oriented, commercial enterprise whose appeal was largely to the urban working and lower-middle classes. With the rapid growth of the larger cities during this period, there was an ample audience not only of the working and middle classes, but also of young people. In other words, the movies could not have asked for a more perfect situation in which to insert itself, and indeed, before too long permanent theaters were built to accommodate film, and companies arose that specialized in the production of motion pictures. The Kinki-kan was converted from live theater to film in 1900, while in 1903 the Denki-kan became the first theater built specifically for film. The Yoshizawa Company, which had started as an equipment manufacturer and turned to production with proto-documentaries at the turn of the century, built a film studio in Tokyo in 1907. At this same time, the Yokota Company began its foray into fiction filmmaking, so that by the end of the first decade of the twentieth century, Japanese cinema was actively engaged in producing and exhibiting films for an increasingly voracious audience. The innovations of the M Pathé Company in 1905—larger theaters, uniformed usherettes, higher admission prices, and the establishment of a trust organization that merged the four top production companies, leading to the formation of Nikkatsu Studios—set the tone for the monopolistic practices that helped the Japanese cinema grow and develop along organized Fordist models of mass production, economies of scale, and contract labor.

Films of this era generally fell into two dominant modes: Kabuki stories and (semior pseudo-) documentaries. The Chinese Boxer Rebellion (1898–1900) and, especially, the Russo-Japanese War gave Japanese audiences a chance to explore the world around them with the satisfied air of newly modernized global citizens. It has been claimed that approximately 80 percent of all films made and released in Japan in 1905 were devoted to the Russo-Japanese War, but as the war faded from immediacy, the number of such films dropped. But it is arguable, too, that they dropped because audiences preferred the increasingly sophisticated storytelling of the Kabuki-derived dramas. Certainly that unique institution of the Japanese cinema, the benshi (or katsuben ), derives from this moment with its roots in Kabuki and Bunraku (puppet) theater. Along with the usual musical accompaniment, this narrator, who explained the film, provided live, almost synchronized dialogue, filled in narrative gaps, and otherwise added an audio component to the visuals, giving Japanese cinema a full, multimedia presentation. Kabuki-derived stories gave audiences a chance to see famous actors recreate portions of their well-known roles and even allowed the development of the rensa-geki (chain dramas), which integrated filmed portions into live theatrical entertainments.

If the reliance on rensa-geki was short-lived as films got a bit longer and audiences became more willing to experience film for its own sake, the benshi became virtually institutionalized. Some argue that the relative lateness of sound's arrival in the Japanese cinema (1931) and audiences' willingness to continue to patronize so-called silent cinema was owed to the popularity of the benshi , as well as to their numerical strength. In 1927 there were, for example, over seventy-five hundred registered film narrators—testimony to both their popularity and clout. For commentators as otherwise different as Nöel Burch and Joseph L. Anderson, the benshi is in many ways the primary reason that the Japanese cinema developed unique storytelling procedures, shooting styles, and pacing. Certainly, it endowed the Japanese cinema with an available tradition where psychological realism and tightly controlled plotting give way to a series of intense scenes and revealing moments; of narrative ellipsis; flat staging; and, for all that, longer films that reproduce the pacing and techniques of Kabuki and Bunraku. Naturally, there are other traditions of Japanese art and culture from which the cinema has drawn, including the novel and painting, but some might argue that a good deal of Japanese cinema's uniqueness stems from this theatrical orientation.

The theatrical orientation of early Japanese cinema extended importantly into the 1920s with the rise of the shimpa (new) theater and its frequent adaptation into the cinema. Both Kabuki and shimpa , and so, too, the cinema, relied on so-called female impersonator actors ( onnagata ) to play women's roles. But such a convention began to break down with the more intimate presentation of the cinema; the gradual introduction of close-ups; and competition, so to speak, from the naturalist theater known as Shingeki (New Theater). The dominant mode of shimpa was the melodrama, a genre that, by definition, may be said to foreground women and women's issues, and so the use of onnagata actors became increasingly untenable. Actor-directors trained in Hollywood, such as Kisaburo (aka Thomas) Kurihara (1885–1926), also helped divorce Japan from this particular theatrical mode, so that after 1922, with the success of Rojo no reikon ( Souls on the Road , 1921), the days of the onnagata on film were numbered (though the tradition still continues in Kabuki).

In the early 1920s, Shochiku Studios arose as the primary competitor to Nikkatsu. Relying on Hollywood-style production practices, eliminating the onnagata , and producing shimpa -style melodramas in order to attract working-class and middle-class women, Shochiku took the competitive edge over Nikkatsu, which specialized in Kabuki-derived action and swordplay movies. It might be said that here lie the origins of Japan's two cinematic mega-genres, the jidai-geki (period play) and gendai-mono (modern story), although it is true that the Kabuki theater utilizes the same basic divisions. With stars like Matsunosuke Onoue in the 1910s and, even more importantly, Denjirô Ô kôchi (1898–1962) under the direction of Daisuke Ito (1898–1981) at Nikkatsu and Tsumasaburo Bando (b. 1950) working for Shozo Makino (1878–1929) and his son Masahiro Makino (1908–1993), the jidai-geki became a foundational genre for the Japanese cinema—a status it would retain well into the 1970s.

But it was in the realm of the gendai-mono and its numerous subgenres, such as the tendency film (or keiko eiga , which depicts contemporary social problems and issues treated from a generally leftist perspective), the nansensu (nonsense) comedies, and especially the shomingeki (stories of the lower-middle class), that the Japanese cinema truly flourished, for it was here that most of the great actors, actresses, writers, and directors of the day made their mark on world cinema history.

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