Otaku mode can be unlocked after you clear the game once on any difficult mode. The enemies hit really hard (~ 2000 damage when you are at level 30+ and have all equipments are at 999 strength), so you should try to avoid doing side missions and run away if you cannot handle big groups of enemies. Let your partner handle the enemies so that you can hit them from behind. Before you fight with the final boss, you need to defeat 20+ hyper vampires which is the hardest fight on Otaku mode, so make sure you upgrade or give your partners (Shizuku and the girl whom you are in their route) good equipment so they can survive as long as they can. The final boss is not a big deal if you have all equipments at 999. You should avoid doing Shion's route in Otaku mode since you are forced to fight with many bosses at the same time.
If your clothes are torn during a fight, you can buy them back at the store 5 Day's in Electric Town Plaza.
Whenever you see your partner's clothes almost are torn, press to put them on standby so they can heal themselves (no item is required).
Please take note that someone mentioned they could not unlock this mode after they cleared the game on Easy mode. Just make sure you start the game on Casual or Gamer.