Philip Do Japanese users really have a preference for censored videos, or wouldn't they be happy to get around that by signing up to a site outside of Japan?
The model is already from the West, so the only reason for the censorship is probably the Japanese crew. Thus, the question is, why can't a US/European crew mimic the style and make such content available to all users in an uncensored form?
I'm from Germany, and when a lot of censored video games were released here 10-20 years ago, I didn't hope that US companies would produce censored games as well, but did what was necessary to import the uncensored games from other countries.
So I don't think this censorship is really necessary to address the Japanese market - unless you want to sell the material through local distribution - which would also be strange in an age of worldwide digital distribution through the internet.
We don't have that censorship in Germany anymore (even display of swastika is allowed in many cases) for that reason. It became clear that censorship by regional rules doesn't work in a modern world of digital distribution.
I know Japan is a bit slow in terms of Internet related developments, yet this doesn't seem to me to be a forward looking business model to adapt to the local Japanese market.
Offering comparable content without censorship seems to me to be a much more appealing goal that offers a unique selling point - not only for the Japanese market, but for a worldwide audience.
