Fighting Reverse Importation Is Rational

Fighting reverse importation is also a hard thing to do. It’s like a chain of unfortunate events, by the time you get to the point we are in, a lot of other things had to screw up first. But really, there’s no need to get upset when Japan decides to torpedo the BD release of Persona 4 anime by making it less appealing to the home-grown Japanese crew. What’s sad is how they made it less appealing to everyone. (Okay, except the potential dub-only crowd, a crowd that probably should DIAF.)

How do I explain it? You start with ANN’s licensing write up. The key concept to take note on is the Minimum Guarantee–that’s the bulk of the money anime licensors make on most titles. Some titles do okay and beat the MG, and US companies make that money back over time to a point in which the profit sharing kicks in. That’s when the situation becomes ideal. The details of these contracts, well, vary and I don’t know anything about the specific beyond what typically gets passed around.

The MG is generally pretty much pissant for majority of the late-night variety of anime. Let’s say it’s $25000. Now compare it with a best seller. For example, let’s say your profit Fate/Zero BD boxes  (just for example; that one sold really well so it’s probably not a good example but let me use a box set to simply the math) is 30% of MSRP (total MSRP for the 2 boxes is  75600 yen, so 30% of that is 22680 yen). If you lose 1000 units would-be sales (for a frame of reference, F/Z BD box #1 sold 43000 copies on the first week) from reverse importing that means you lose 22,680,000 yen or roughly a quarter of a million or 10 times of the MG. Well, great, the average late night anime sells at around the “Manabi” line, which is something like 4000 units. So that factor of 10 makes sense, right?

Of course, if you want to be the North American licensee of Fate/Zero you will be paying a lot more than $25000 for your MG. Of course, Persona 4 anime is not Fate/Zero. Or is it? P4 anime sold over 20000 BD on its first week. If we really just ballpark it and assume P4A cost roughly the same as F/Z (7600 *9 + 4000 = 72400 yen) and assume it will do half as well in Japan (disc 10 is not out yet) as Fate/Zero and it will only lose 500 units from reverse importation, at 30%, it comes to about 130k-140k.

Of course, we don’t know the extent of reverse importation (and, in addition, people who do not import the Japanese set because they prefer the domestic one) so I can only guess, but the numbers are very convincing. Let’s say if your average 1-cour collection R1 DVD yields something like $14 profit, that means in order to match $140,000, the domestic licensee has to sell through ten thousand copies to break even. I guess you can tweak the numbers here and there to make it look not as bad, but 10000 units generally is like, R1 bubble-era best seller level of sales.

Does it make sense to you now that nobody has licensed Fate/Zero? Unless you are Kaze, of course.

Does it make sense to you that P4 anime BD doesn’t have a dub? Only partly. There are other ways to fight reverse importation. But that this element exists and Japanese companies, who can do math as good or better than I can, want to fight it, seems to be a natural course of action once you take a closer look.

One last kicker: Shawn K. mentioned roughly 500 units of Kara no Kyoukai BD box sold through Aniplex’s “official import” program. Think about it for a minute.

For more actual acts of reverse-importation, I wrote about this which is just more about how Clements blogged it on his Milky Crisis doohicky. And the reality is that like bootlegging (as opposed to internet piracy/file sharing sort of thing), people buying Infinite Stratos or P4 anime are just Japanese kids who probably aren’t buying the domestic release anyway even if they have the money to blow on it. There’s going to be a percentage distribution, where we can only reasonably claim a subset of total reverse imports as economic replacements. It certainly can be a matter of ethics–as in, a guilt-free way to “fight the system” and “support the creator” all the same. In other words, things that doesn’t really matter on the spreadsheet.

Because the math is pretty clear. It only takes a little bit of that substitution effect make all that MG money moot gravy. Japanese accountants just need enough to justify a 3-digit loss of sales!

Another angle to this is that P4 is an Aniplex title. How will Aniplex play its cards? Especially in light of their recent spat with Amazon? Seems to me that this move went down to the wire with Sentai, how it’s announced right after Otakon. I can’t say what works and what doesn’t, but such is the fate of popular otaku titles in Japan I guess. Clements pointed out the obvious and salient thing: a lot of this depends on the overall economic climate. With the way the yen is, the price gap between Japanese release and every other release is going to widen and there’s absolutely nothing we can do about that. It’s just another factor moving the wrong way on someone’s spreadsheet, another link in a chain of unfortunate circumstances.

The only saving grace is that I think P4 anime is going to be popular enough in America that the DVD sales will be okay to make it somewhat profitable. The price change on the BD seems like a concession on Aniplex’s part, too. Is that enough to convince the people who would have purchased P4 anime if it was DVD only but now won’t be because there’s a gimped BD? Time will tell.

One Response to “Fighting Reverse Importation Is Rational”

  • vendredi

    There’s little to add to this really. As you point out there’s far too many systemic causes that I don’t think there’s really much a particular company can actually do except maybe bite the bullet and accept the new reality that DVD/BD gains aren’t going to be as lucrative domestically as they used to be (if they ever were).

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