Define dead?

- Alive != Dead -

So – over a month since the last post and a lot has happened. Almost so much that it’s hard to pick what to talk about so expect several posts over the next few weeks everyone who is still interested.

Let’s start with a good old classic – the ADV situation. Now you would expect hard-hitting journalists in the anime industry to be on the ball with this situation by now, a situation that by all means has been ongoing for at least the last year. However even as late as last week I’ve had some asking “Eek! ADV’s situation doesn’t look too good at present, does it?”

It’s simple really – a year ago things got ugly between Sojitz and ADV with the fallout becoming almost immediately apparent. It tends to be what happens when you integrate a US-founded company with a Japanese one, I would affectionately call it “Death by Spreadsheet” – a phrase I’m sure after Anime Expo this weekend [1] they’d agree on*.

Being a company with a semblance of corporate common sense, they did not talk about their situation for the biggest 5-6 months of the “crisis” leaving fans grumbling about how terrible the situation looked. By now none of it is news, more of a post-mortem really with the unenviable question of “Is ADV about to close?”

All of the above isn’t news, nor even commentary – just a pre-amble to the story to come. After Anime Expo the answer to fans would seem to be a “I’m not dead yet…” quote, with talk of a new partnership coming up on the way along with talks for 23-30 titles at present.

Like Manga in the UK, ADV has been around in the US for a long time and weathered trouble in the past. But here’s an interesting question:

“What if ADV US’ new partner wasn’t a Japanese company like before?”

In a twisted way the idea above makes sense. No I’m not talking a moustache-twirling villain from Britain running everything from the shadows, but I’m talking another US company. ADV US has always had a very strong presence in the anime industry as a production house, one that has its own dubbing facilities, talented ADR directors and a cast + casting system firmly in place. At present ADV have publicly stated they are in talks with Funimation to continue production of the titles acquired by them in the recent shift of Sojitz and ARM to work with them for sales now. Is it really a big jump to imagine that ADV may formalize their decision now?

Sure, fans buzzed with rumours even before Expo, expressing a firm belief that ADV would be bought up by Funimation, pigs would fly and the Moon has been proven to be made of cheese. Suddenly vindication seemed to come when Funimation took Sojitz’s titles on board. The interesting part is at the very least ADV are negotiating to keep producing the anime – which when you look at it from an industry perspective makes perfect sense for situation. It takes the now heavy workload partially off Funimation’s own teams and keeps the profits within Texas for a good chunk of the US anime market too.

15 years+ old, who's to say another 15 isn't to come in some form?

So what’s the underlying point to the conjecture there? Well if you remember previously I discussed how companies would be retained by Japanese licensors possibly for any extra abilities they had like ADR facilities etc instead of handling licenses. The above is merely a logical development – instead of US companies giving way to Japanese ones there’s another related possibility.

Everyone can see the US market is, like the UK, reached saturation point – meaning the number of companies up until now could do with a decrease. However the US will still be churning out roughly the same number of titles a year as it has been for the last year most likely. This creates a problem – if you are but one company with one dub studio and regular cast – what do you do?

Simple answer is you look for specialists in the field already – so the easiest option for a Texas based company would be to find a Texas based running mate. One acquires the licenses, sells the titles but splits production work with the other, with the possibility of the running mate acquiring its own titles at times too.

Who knows how the logistics of such a concept would work is not really something worth discussing just now – but one thing is. The definition of “dead” may need to be rewritten – as licensing wise its wings may have been severely clipped but production wise, the odds of death are greatly reduced…

* I digress to say from heavy personal experience spreadsheets seem like the glue that holds Japanese companies together, as they should! They’re efficient, easy to read provided you write them correctly and can be edited and redistributed with new information normally obvious immediately. There’s normally one for everything…and they’re really easy to do when you get used to it. Honest

———-

My deepest apologies to all – of late I have been mostly quiet due to the start of convention season at the end of May for London Expo and there have been some happenings that mean I have had zero time to write in this blog. The astute (or in fact very bored) may have noticed pieces also springing up in Neo, I’ll look at how possible it is to spring those up here at some point in the future too – to make a completed work if you will as they are shorter than my usual pieces.

The Boutique Model

Well the last few weeks have been overly hectic here – without discussing anything that gives the game away there are some interesting developments coming to the UK market soon it seems.

As I was discussing elsewhere this month – there’s been a rise in announcements of late from Nozomi Entertainment in the USA. These guys form the licensing and production side of TRSI and are highlighting a resurgence of a licensing model that hasn’t been seen for a while: discriminate picking of titles that will appeal as “boutique” releases to fans.

Recently titles that large companies like ADV, Bandai and Funimation couldn’t hope to do big numbers on have been picked up by TRSI. Maria-sama ga Miteru? Aria? If you had to click or even hover your mouse over those links to jog your memory odds are you’re not really the target audience. If however your eyes caught on them with vague curiosity at the least – then you are the target audience. Perhaps you’re a friend who professes to be a big fan of the shows has discussed them before or you yourself found it based on a scanlation you’ve read or fansub you downloaded.

The underlying point is – instead of setting the targets outwards to the “new generation” of fans waiting to be indoctrinated beyond what they catch on TV or such, now the sights are being set inwards on fans who may be tempted into buying rarer releases. It’s a good idea, these series will often be snapped up subtitled and will provide fans with a chance to own legit series they enjoyed already.

Maria-sama ga Miteru - one of the more ‘niche’ titles - years ago nobody would have dared touch this. Are we about to see a rise on these kind of titles in the US and eventually UK market too?

What are the odds of seeing these titles in the UK now? After all the UK has its share of hardcore fans so why can’t a small company do the same here? Sadly the answer is very little.

Why? Quite simply there’s no good outlet here. Sure any one of the 5 main distributors could pick up the rights and produce similar releases, but even if they held the releases as their own web stores only the sales would never exceed 100-200 units maximum. This is attributable purely to the fact places like TRSI already have a heavy subscribed amount of clients buying other products on their site willing to give such releases a go. This is the equivalent of a company several times the size of say UP1 in the UK releasing a title like that. However here, you would get some sales from the hardcore – the rest would scoff and download sub-only from the net instead sadly.

Is this kind of model a good one though? One where series are released in 13 episode boxsets, subtitles only along with a bundle of shiny extras? Of course –after all would Bandai Entertainment use the same model initially for their release of Gurren Lagann otherwise?

Well the answer is yes – but TRSI are certainly not the first to use this model successfully. At least in terms of subtitle only, shiny extras and a good episode count for good effect. Again take a look at France – many of their releases lack a dub unless an AAA title but each release often has 13 episodes on them with extras the UK and US either do not get or get less frequently.

It’s a model considered for the UK often, as has been piloted by one or two companies in the past for anime releases. It’s the old problem of not being able to guarantee sales numbers for a half season boxset at 39.99, nor the high number to break even at a release for 24.99 for half a series initially. One or two companies based on strong ties to retailers can – but the majority just can’t take that kind of risk.

Here’s the interesting question, if the industry decides the model above is the only profitable one left and it can be proven to be sustainable for unit sales – the question is will it encourage enough fans to buy anime to grow the market? After all, more titles at affordable rates could give a boost and encouragement to try more “out there” releases.

The cynic in me thinks this has very little chance of happening – then again you really do never know. Stranger things have happened after all…

REGULAR SERVICE WILL NOW RESUME AGAIN! APOLOGIES FOR THE DELAYS ON UPDATING EVERYONE!

(More than) a fistful of DVDs

There was a point in the hazy past where it was joked that after a night catching up after an event, if everyone in the industry there got in the same taxi and something happened to it…the industry would be in a sticky spot. OK so not that much has happened to change that really nowadays – just the context for everyone getting together has changed.

A roll off from last week if you will – but now a new problem is facing the industry and to many it may not only bamboozle but seem downright ironic. The UK anime industry may be on track to repeat the mistakes of the past by almost fueling its own demise by over stuffing the market if it isn’t careful.

You would think a larger number of DVDs coming out would be good news - but as always sadly that isn’t really the case. With so many titles coming out – ranging from the fantastic to the weird fans are now spoilt for choice. Therefore those buying anime no longer have a choice between Title Y or Title Z – they really do have upwards of 5-10 choices per month, often not including new series hitting the market more frequently now! One company in the coming month has 3 new releases on the same day, which most people can see – will give a bit of a punch to sales to say the least.

If this were France, Germany or the US I’d push out as far to say as it wouldn’t really be an issue – given larger numbers of purchasers for the quality titles at least you can rest assured each one would receive a fair, if not excellent, selling. However for the UK now it’s increasingly becoming a kind of stepping stone game to make sure nobody falls into the water losing great numbers of sales on their new releases. You may well have noticed at least one company taking drastic steps in an attempt to combat this – with their titles stretching into the hazy distance of 2009 now for a 6 volume series to finish!

A sign fans are all but used to by now it seems, one potential solution to an excessive number of releases…

Arguably this is the wrong way to deal with it but in the end that comes down to marketing strategies though so depends who you ask! One thing is for sure, the amount of volumes coming out each month steadily increases each year. That makes it incredibly simple – either new fans who are willing to pay for their anime fix will step up and support the industry…or a number of things could happen to try and stem any losses prolific releasing may cause.

I’m hardly one to shy away from doom and gloom here but it’s a situation I genuinely feel for one reason or another the industry can and will avoid. Yes, I know, not so fun when it’s not the end of the world or dramatic! The underlying interesting point is how will it happen and also what will be the driving factor? Licensing wise people are leaping into bed with one another so quickly you’d assume we’d swapped scenes for the New York Mayor’s office (up until recently anyway)! So it may be that there’s just a drought of licenses for some and the rest work together to space titles out – or the results could be nastier.

Either way – a total meltdown of the industry due to excess of DVDs is at least hopefully something that will not go down on the tombstone of the UK anime industry. Not this time anyway, although how many health warnings from its doctor it will need before it vows to change is a different question…

Another delayed post, another apology! Only another 2 weeks of this to go I promise…

Once again with the delays…

It seems every second week there’s an apology for a delay - and I must apologize again this month as the next 3 weeks is a pretty intensive crunch time for us for any number of reasons. There will be updates during the next three weeks but they may well be at sporadic times in the respective weeks. I can only apologize for this profusely and normal service will resume soon!

Let’s talk anime’s popularity in the UK for a moment shall we. I’m going to let people in on a well known, if commonly ignored fact. The sales figures in the UK very often don’t add up.

Sure if you’re delusional enough the hordes of fans who will hail a title as a dashing success in the UK because they bought the release (or know someone who did) equates to a successful release. But here’s the scary thing - the total number of people buying more often than not wouldn’t fill a large pub or Cineworld screen. In extreme cases DVD sales for some releases don’t really exceed the number of review copies going out, nowadays this is becoming more and more a universal for every company on certain releases now.

Let’s not get into a background rant about fansubs stealing business or how the tin foil lining to my hat isn’t keeping the aliens out of my mind as much as it used to etc and let’s consider what this from an income point of view. At the price point of 19.99, those kind of sales figures discuss in a twisted way worked. Sure you weren’t making shed-loads of money - but enough to guarantee your immediate future.

However in an ironic way the anime industry for the larger part has become a victim of the pop status many in the industry have propagated for it over the last few years.

“It featured at x or y festival - that means it sells fantastically doesn’t it? So why do they charge 19.99 for it? Down with extortionate prices or we’ll import!” say many of the import-savy fans, faced with closer release dates but not equal to US rates.

So lo and behold most of the companies have almost been arm-twisted into lowering their prices on stand-alone volumes and short of any company with exceptional ties to retailers what happens? Sure it may pan out at about the same point as before at first but after a while you’re suddenly going to start seeing “pubs” feeling the pinch and either having to consider raising their prices again, trying new ways to distribute their titles or just shutting up shop.

What many distributors wish they could look like after every sales meeting, reality more often than not can prove disappointing though.

From a personal viewpoint yes, single volumes should not be 19.99 for 4-5 eps a DVD - in fact I would argue there are better formats for a release if you look at France or Germany as examples. Inevitably you are going to start seeing revamping of release structures coming, following in the wake of some companies already doing so.

It’s a sticky situation, price cuts are inevitable now - there’s no escaping that - but ask yourself this, even if a remodel of releases is done to compact titles down to say 2 releases per series or 1 complete box. At a price point of even £34.99 for a complete series, will it sell enough to fill a cinema? If not - then the odds are it’s going to be a release style that does especially badly for the company both in the short term and the long….

Pirate Generation

For anyone easily hurt or riled by allegations of Crunchyroll being illegal and quite grimey look away now.

If you’ve not done so or are expecting a rant then unfortunately not! In today’s shorter than usual blog post I’d like to point out the extreme irony of Crunchyroll though. A site based on its pirated content, with a userbase consisting of at least 60%-70% who can’t tell what they’re doing is wrong, who can blame them though? A brief look at their profiles gives the game away, often the average age is 14 of them!

This highlights a crucial fact: Just as companies are coming to terms with the fact Crunchyroll are there to stay (for now at least until the cross one too many lines), there’s a bigger problem they need to accept first. If you look at every takedown Crunchyroll has done, in an almost spiteful way they have kept the comments for those items open, and in them at least one or two per 5 comments says something to the effect of:

Hi! Lol sux this is down here, come to my site instead, we have all the parts to My Aunt is A Magical Badger www.yarrshivermetimbers.com

At the end of the day - what companies need to start taking in, very seriously, is the battle for “pricing video” on the internet is basically lost. For every takedown you do on Crunchyroll there is someone willing to, with or without help*, there will be at least 2 individuals who try to capitalize on the fact or “bring it to the masses for free”. Increasingly over the next 5-10 years as this generation of barely into puberty kids hit the phase where they can plan big - it’s not far off to say you will see hundreds if not thousands more sites like this. All because kids don’t want to know that it’s illegal or the harm it may be doing to the work they enjoy watching for free so much.

The CEO of Crunchyroll & artists rendering of the userbase, as seen from the eyes of many in the industry…

If France successfully fostered a generation of manga fans (and continues to) then this may well be the next phenomenon. Not the UK/EU/US fans who were weaned on anime seeping into their everyday lives like regular cartoons - but a generation who are very digital savvy, with all the tools needed to create a YouTube-esque site for their favourite anime at their fingertips.

Wired wrote a very interesting article on the point a while ago, about how the new price point is in fact £0.00 (or $0.00) if you will. Check it out if you’ve got a moment and see, this isn’t a revolutionary nor is it a proprietary idea. In the end it’s just something companies may need to focus on and redevelop their models so they can profit from streaming however they can.

I suppose it’s safe to say that despite VC backing, Crunchyroll may well go under at some point. The question is, will the industry really be ready to step up and take a plunge into what they can do with a price point of “Free.”?

* The cynical side of me wonders how much of these new sites have had some kind of help given the speed of them to pop up..

What does the global model mean for the UK market?

“You know,” mused a colleague from a different company, “it’s only a matter of time until Japan starts digital distribution of shows subtitled worldwide around the globe.”

People laughed at the Novotel bar at London Expo one evening as he said that, as if it was the most outlandish notion ever. Japan getting its act together? They need us to handle the native audiences. Don’t they?

That exert was from 2005. Now, with Gonzo starting worldwide distribution shortly - it’s becoming a matter of fact. On the tips of many people’s tongues at the moment though is: “What does it mean for the UK distributors? People will still want DVDs won’t they?”

Flash forwards three years almost to the day and you’ve got companies finally putting the pieces together and making their moves on the digital world. Whether its a big surprise or not, the first company to be making ground shaking maneuvers that affect the UK is not a UK company having badgered Japan, but Japan itself.

Digital distribution isn’t the biggest stranger to the UK scene - ADV Films gave it a shot as did MVM in their own ways but it’s Gonzo, as discussed last week, who have announced simultaneous worldwide release of their latest two titles; Tower of Druaga: the Aegis of Uruk and Blassreiter.

Is this the poster child of anime releases from now on?

The big question is though - what does it mean for UK distributors? Sure on a small scale with just one or two titles being treated this way at present, it’s not a big issue. Let’s play hypothetical games here and say that Japan as a whole moves that way though, simultaneous worldwide distribution digitally. Will it be negative for DVD sales? Debatable - but it certainly won’t make more sales like TV would, especially when “download to own” is added to the mix. Why?

Well if you do adopt a legitimate release online and pay X amount online then buy DVDs if you are a less than hardcore fan who just wanted to watch a show once? Add a way to beam it to people’s HD TVs etc and you’re onto a winner there that reduces the need for DVDs very quickly. Admittedly I come into the camp of marketer who has an unerring faith that a segment of the fan community will want to get a solid product they can fondle, covet or otherwise get their paws on.

What this probably means ultimately - is smaller distributors at least in the UK slowing down if not stopping releases while the bigger ones partnered up to Japanese companies or who are smaller parts of a big Japanese group will survive. By survive they will help push new titles in their respective regions and handle the production of sets after the digital run is complete or such. Basically coming down to outsourcing the work and arranging dubs, handling DVD distribution etc as need be.

Companies that survive will have something Japan needs. It may be elaborate dubbing studios and access to experienced voice actors and actresses from the anime scene, perhaps they have exceptionally strong ties to retailers in their region, or even just they are part of a bigger corporation who knows the lay of the land very well and can guide their parent group into what to do etc. The point stands - it may well become a case of not purely how many units of DVDs you were able to shift for the past few years to fans, but what shiny extras you can offer the licensers from now on.

Just like the anecdote earlier, this isn’t new news either, out-with the comments in 2005, the gist has been predicted further back than that in the unusual form of someone who managed to predict the future of anime in digital form but didn’t really take DVD into account at the time of writing!

With the initial overtures underway it won’t take long to see how it truly affects the UK scene though. Will we see smaller independents bow out or perhaps hang in there by releasing titles not coming out as a part of a worldwide digital scheme?

There’s a lot of small questions there, all of which may well be answered sooner than people would like to believe perhaps…

Tower of Druaga image (c)NGBI/Izumi Project

The Worldwide Model

First off the bat! Apologies for the several week hiatus, could not be helped really though I am afraid!

Since I last posted a lots has happened!

Let’s start by taking a look at the most recent happenings. As people may recall I made some predictions at the start of the year, some of which were a long time coming, others a bit less desirable. So far it seems like within Q1 of 2008 most of those have come true though. While not the biggest shock that they have come true, I admit I thought those predictions would last for at least the rest of the year…

Most recently in the list of fulfilled predictions comes from Gonzo. In their dash to be first out of the barn, GDH have announced they plan to release their latest shows simultaneously worldwide. Using several of the latest streaming sites such as BOST TV, Crunchyroll and Youtube.

Seems reasonable so far doesn’t it? Finally a company listening to what the fans want and giving worldwide release online so fansubbers can pack up their bags and go home, right?

Most of the industry, fandom et al seem to have several questions on their mind right now, primarily though:

1) Who’s going to be translating it?

2) How long will it take for fansub groups to come up with new reasons to release subs illegally for the shows.

3) Is there really a profit to be made from the current model that seems to be coming into place?

4) Why now?

The one lodged at the back of my head though is “Why now?”. It’s not a big secret at present that getting a worldwide release structure established is not far off anyone in Japan’s agenda at present - like it or not for the distributors in the UK and US.

It’s also not a big secret that Gonzo aren’t the only ones stirring their cauldrons, cackling wildly and preparing digital distribution plans of their own for launch. With Gonzo’s latest titles being close to release and until recently CrunchyRoll.com being enveloped by Cease and Desist orders from Japanese licensers you have to wonder how far ahead this business model has been planned.

Likening it all to the Tortoise and the Hare for a moment - there are at least two other companies that spring to mind who could well be ready to make moves shortly for worldwide distribution. One of these companies already has the Japanese infrastructure so basically just needs to set up client-side servers in the relevant countries to get the system running. When you look at it like that, the real battle for the worldwide audiences may well have just began and while using established sites like YouTube and BOST is clever - it’s not an exactly lucrative financial model. You’re sharing the profit with several different companies and hardly raking in the cash from a crowd who were downloading only before, even if you throw in some download to own scheme that was sufficiently DRM-free.

Meanwhile, the other companies who have been planning models for worldwide distribution and have waited patiently in the background can sit and see how well Gonzo does whilst refining their models. One thing is for sure, by the end of 2008 there will likely be more than one company releasing titles worldwide immediately and more than likely the first one to do so may not profit the most from it…

For example - you may have series x out on Youtube with download to own from your own site. Jolly good. Now how do you keep people coming back for more? Releasing every series coming out from now on works - but there’s still going to be long gaps between as new series are produced and only a few shows per season for Gonzo will come up. Looking from another corner of the industry, unless pieces of the puzzle have not been shown to everyone yet, something seems lacking from the model. While the PR effect of this for them is undeniable - it’s dubious as to whether they’ll actually profit from it greatly. By the end of 2008 whether there has been a profit or not should be apparent one way or another though!

What does this mean for the UK/EU market? What about DVD distribution? That almost merits a post of its own to be frank - there’s certainly a lot to talk about - so stay tuned for that in the near future.

Updates are back to a regular basis now I promise!

References:

BOST TV: http://www.bosttv.com/gonzo/

Crunchyroll.com: www.crunchyroll.com

CrunchRoll.com scandal story: ANN Article.

Youtube: http://jp.youtube.com/user/GONZODOGA