Content Arbitrage Daisuki

Last AX I had a good chat with a rep from Viki. Not much came of it but I got a good once-over about what they do. I think it’s very important to realize what Viki is really doing in terms of what they are trying to do: content arbitrage. If you ever play the ’80s-90s BBS game Tradewars, you should understand what I mean. If you watch or read Spice & Wolf you should understand what I mean. TL;DR: Buy Low Sell High. And since times immortal (or whenever trade became a thing) this is typically done via traders across different geographic regions.

The Internationals

With the internet and our ever-more-global commercial market, it’s actually just the same with this new media crap. What sells for $$$ to Korean, Chinese and Japanese middle-age women probably is worth nothing to the broadcasters of, say, South Africa. I don’t know. But you get the idea. It’s like how big telenovelas in Brazil or Mexico are probably worth nothing in Singapore or Indonesia. Or are they?

I mean, it’s probably worth something, but to tap into that geographical and cultural market you need these proverbial traders to get the money flowing. Or in Viki’s case, fansubbers who fansub and a media delivery framework. Viki provides not just the delivery framework, but also a framework for fansubbers to attach themselves to the thing and thus make everyone’s lives easier. And hey, at least these fansubbers are doing it with the blessings of the content owners (even if you could equally say they’re being exploited for free labor–one man’s crowd-sourcing is another’s free lunch). Through this process, it turns something that’s worth nothing into something that you can make money from. The original content owners never intended their K-dramas or telenovelas to sell across the world, much like most anime producers back in the days. So at least they are doing very little work for some free licensing revenue, however little that it may be. It’s bonus cash.

This is basically the idea behind Crunchyroll as well, but the anime market in North America is trickier (which, despite their international claims, is still their #1 bread and butter). Ever since the early 00s, at any rate, foreign money became a much bigger part of the anime production equation. Of course one big reason why is that anime is pocket lint compared to how much money a prime-time TV drama costs and can stand to make (which is what Viki primarily dabbles in). Even just a good chunk of change from dead-ADV or dead-Geneon can mean a lot to those mix-media committees. It’s just that this is something more specific to the larger oversea markets like France, Germany, UK, Australia, North America, Korea, HK/Taiwan/China, Singapore, and whatever else I left out and probably shouldn’t. Nobody is making much money from a license in Zimbabwe or Nepal. Or even first-worlds like Turkey or Iceland. How much revenue can you get from those places for anime or other foreign-culture media products? Well, one thing you could do is do it in bulk, and the technologies we have today make it feasible (in terms of making a buck).

I don’t know how much you care for Crunchyroll’s license announcements, but one thing interesting about them is that they try to reach out internationally. So with each new stream they list the countries they are streaming in. There aren’t a lot of CR shows streaming in Iceland and Turkey, I can tell you that much; probably more shows are streaming in South Africa. But maybe there are some local-language effort? I don’t know. And of course they are doing something for Latin America if you ever look at the subtitle options for some of these shows.

This is all basically what I was thinking about when I read the latest news about this thing.

The Japanese financial newspaper Nikkei is reporting on Wednesday that Asatsu-DK (ADK) will begin streaming anime titles overseas in April. Six major anime companies are investing in ADK’s subsidiary that is handling the streaming. The venture will translate and host popular works from over 500 titles, and it plans to recoup costs through fees and advertising.

ADK issued third-party stocks worth 340 million yen (US$3.69 million) in its 100%-financed subsidiary Daisuki. The anime companies Toei Animation, Aniplex, Sunrise, TMS Entertainment, and Nihon Ad Systems (NAS), along with Dentsu, are investing in the subsidiary. ADK plans to retain a 26.3% stake in Daisuki.

Nikkei notes that Toei’s One Piece anime and Sunrise’s Gundam anime have garnered many fans overseas. Daisuki’s site will present new titles nearly simultaneously with their Japanese broadcasts. The venture will also stream live programs to anime fans in English. [Links removed.]

(Also click on the source link, and read the follow up.)

The second thing I’m thinking about is–hey, what live programs? Do we get to see those cheeky anime-based TV shows hosted by seiyuu-types? I’m sold if that’s the case.

After sleeping on it, the third thing was more like, “oh boy, a Japanese start-up that begins as a wholly-owned subsidiary.”  3.69 million USD is a sensible amount of startup capital, it’s ball park for what CR has to work with. But let’s remind ourselves what CR is/was in the beginning and how their services were. And to be honest, given how Nico US failed I have a lot of doubt in terms of Japan’s ability to do a tech startup (as what this really is) in the global market. It’s going to be a wholly owned subsidiary of a media company. Is that better than worse when TV Tokyo owns a minority stake in your venture? I hate to be pessimistic  but there are not a lot of reasons why we should assume it can execute. To be honest the whole idea feels more like DOA, not because it’s a bad idea but because it’s likely run with the strings and chains attached to the same old suits that causes all these problems in the first place. The fundamental truth is that it’s harder to succeed as a new business in Japan than in a lot of other, similar countries. On the bright side, these companies are really trying to compete and execute, because they’re not in a good position to sit idly.

Well, I guess this is also why I’m not particularly worried about it in regards to how it may impact Crunchyroll. I think it’s ultimately a good thing for the licensors and the consumers if Daisuki succeeds, and it’s just the status quo if it fails.

PS. One more note about Viki. There are some reasons why their initial attempts at anime are all distinctly old school. For one, they’re really good with Tezuka Pro. Second, oldies like the Rose of Versailles just don’t have the monetary strings attached to them as new projects do. I mean, at this point I don’t think anybody cares about making money off it in that sense, especially when it will be pushed to markets that have really no exposure or any stakes to go with it. That isn’t to say no amount of convincing the Japanese took place, but I guess at least Viki and the North America anime market have a track record.

PPS. If they brought over shows-nobody-cares-about like Tokyo Encounter, I will so be the first (or the first 100 w/e) in line for this service.

PPPS. Oh man this song is in my head again.

One Response to “Content Arbitrage Daisuki”

  • omo

    To respond to Author

    I think comparing it with Netflix’s problem with content provider is only valid in an extremely broad sense that we’re talking about a pricing negotiation between content provider and the content delivery platform. In Daisuki’s case, we’re basically not even there yet.

    I think it’s a better comparison to, say, Cablevision or TW versus CBS or whatever media company bickering over pricing to carry certain channels, to Netflix’s problem.

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