I rather like the lucid description of the home video business. It’s clear that this was Justin’s area of concentration in his feature describing the “Anime Industry.” Quotes, because it’s more about finance than industry.

I have a no-longer-hidden agenda about this: if people can learn and be equipped with how the finance end and the way money moves between parties in this industry, they would at least try to only whine about intelligible things and say things that makes sense. Or so I hope. Actually any improvement from the status quo is desirable, and I was hoping a home videos guy like him can at least answer this question:

Why didn’t anyone buy Kaiba?

Let’s recall Crunchyroll’s troll graphics reposted from /a/

It’s oh-so-easy to believe that the success of an anime project is based on how well it sells on DVD or BD or what have you. After all, it’s true. But it’s also not true in a bunch of cases. There are a lot of nuances and it’s not always the same thing even if we narrow things down to only late night anime bankrolled by the typical production committee. It’s not even always the same thing if we narrow it to just, say, noitamina shows (maybe a topic for another day). The break-even factor is also a big deal; by default a production committee show doesn’t need to make all its money back from home video (with exceptions). Anything that is an adaptation already is going to have the original material being pushed by some marketing person trying to sell it.

Anyway, the point is, this is not so simple! It may not even make the kind of logical sense you think it makes (or I think it makes).

So when I’m reading this pretty neat essay about the home video business (kind of wished he went into BD vs DVD a bit, but oh well) and you see this chart:

I’m like, great, now everyone is going to think somehow home video sales to break even equals the cost of the production equal a production that doesn’t lose money. It’s not even what Justin was referring to at that point.

Which is, actually, okay. Because people who don’t know much about the finances of all this wouldn’t know what the Manabi line is. But those who do would be like, wait, why is it so high?

Actually it is always good to be critical of stuff you read on the internet. And Manabi line was born on the internet. So let’s go to the best write-up we have so far about that.

2301~3000 
Many titles fall in this category. Marginally performing shows, many of which didn’t sell as much as their popularity would make you think they would.
Ex: Manabi Straight!, true tears #1, Sketchbook, Gun X Sword, Yami to Boshi to Hon no Tabibito

3001~4000
The line of profitability. Also the line at which one could say a title is doing okay, but some may call some titles that sell this many a failure, so it’s quite hard to judge.
Ex: Denno Coil, Soul Eater, School Days, Linebarrels of Iron, Super Robot Swars OG, etc

First thing, easy low-hanging fruit: the Manabi line is the oricon first-week figure. Note that in Justin’s write up there is a big point about how even some poorly sold show can break even in the long run, and that’s really at play here. To that end, some numbers I read suggests that for the typical late-night anime we’re looking about maybe 10-15% additional Oricon-recorded sell-through until it gets lost in the noise. So the 3000 or 2900 figure for the Manabi line is ballpark enough.

Second, it is quite hard to judge, even for 2ch types in general. That kind of accounting is just off limits to outsiders. And it would be expected that different productions break even at different points, even if they may be within the proverbial ball park. So given that I am not the 2ch type, I am not going to make a guess here. Or rather, should you?

Man, she really is a problem child.

So when it comes down to it, it’s not extremely difficult to break even. I think that is the whole point behind late night TV anime. There are a lot of juicy stuff that supports this in detail that is left out of Justin’s first part write-up, so maybe one of these days we can talk about it. For now, please just don’t get the wrong idea about something something BD/DVD sales something profit. It is not so simple.

I know I know I just linked to a simple ranking where BD/DVD sales something something …wait, just what does it mean? It’s kind of a trick question isn’t it? Significance, I think, is the metric. Which may not be the same thing as profitable or success. Something to think about.

I’ll leave you with one more thing to think about: Manabi Straight is getting a Blu-ray box. It joins the rest of the cast of digitally-created anime from before Macross Frontier. I mean, most shows break even is a pretty safe bet I’d say.

This is something I normally don’t think about but it is something I make decisions on everyday.

Just what is “covering the news” for anime? What is “anime news”? I mean let’s get it out of the way first, by anime I mean how I tag my posts by the moniker “modern visual culture.” It’s like why Genshiken is more about lounging around, a lifestyle and perspective, rather than just content–games, manga, anime, whatever. Culture sounds like the right term, but I don’t think it conveys the message in a direct, intuitive way.

But anyway, you know what I’m referring to by “anime news.” I think such kind of trivial game is what defines the coverage provided by Anime News Network. When it comes to the culture, though, that’s how everyone else covers the news. From ANN’s new  “interests” posts to half the stuff on Sankaku Complex (as the other half is outright porn). I mean with Kotaku East, it’s already well within the same target.

When I started writing for Japanator back in ’08 I wanted to see a Gawker-style blog covering the news. The usual 2ch coverage blogs were really where most of the goods were at–in fact if we took that away the amount of online news for “anime” (which I will continue to use quotes for when used in this context) would drop by like, 75%. But in 2012 terms that isn’t really a problem. The time gap between when something hits 2ch and something hits our intrepid ANN news team to the time it hits the 9001 blogs that repost from the same group of blogs is trivial. I mean the REALLY big news break on twitter just as fast, these blogs merely provide text space beyond the 140th character.

Plus I would imagine most people reading that are more interested for IP they like and for overall amusement value. Well, I guess I’m going to ask the handful of people here: do you even care about “anime news”? Do you read it? Why do you read it?

I’m more inclined to think that there are a few modes in which we consume news. It’s therefore first order of business to cover news that satisfy these modes of consumption. Obviously it still can be informative even if people are just looking for some LULZ in their “animu newz”; some news need the right spin on them, and it’s up to a news site to put the right spin on them. I think that’s the biggest problem to “anime news” in general: I’ve not seen too many people crunching out these blurbs doing that. I mean I guess this is partly why Artefact gets readers.

By right spin I mean simply putting it in a way where it gets people to realize that there’s more to it. To do it in a way that doesn’t make you the laughingstock is not easy, and at least you would want to at least be banking it if people are going to look down on you. And to some extent ANN is just too tied up with its corporate interests to rock the boat much. Such is the catch-22 of hiring full-time writers. There’s no money in this business as far as I can tell, besides to basically work half way as an advertising agency, or as a social network/media piracy site, or something in between.

There’s nothing wrong with that per se, let me quickly add–anime (and game and manga etc) in English-language is a poorly, horribly covered thing. It can use all the ads it can get. But it becomes a limit in terms of actually covering the news. You can’t piss off Funimation, you can’t piss off the cons you sponsor, etc.

Personally I’m getting pretty tired of it. At least there is a distinct improvement over years past in terms of the overall primary news sites being able to elevate news from merely ads-disguised-as-news (even if it still happens). We have to accept that “anime news,” by default, involves some amount of that. But I don’t know what can be done; it seems nobody really gives it a damn.

What I want to see more, as I probably have mentioned elsewhere, is original coverage. I want to see more American/western news. I want to see more of, say, MAL covered by American sites than 2ch, LOL. I think this is exactly the problem that “anime news” coverage in English language have–we’re not shameless enough to dig everywhere for everything, and those who are shameless enough aren’t interested or is unable to do so (eg., porn). Curating the news in a way where we take the information we see everyday and repack them as “news” is ultimately what I want to see. I want to see a lifestyle being written up, where the pieces of new information such a news site bring us edifies us and tells us important things, but also make us aware what goes beyond just the grinding that happens to be the life of a poorly paid online blogger.

I guess it’s all about having the right narrative after all.

And this is not to say anything of features and editorials, which slinks over to a different kind of mindset.

Is it? I don’t think so.

[Hey, it’s free PR for expensive Blu-ray box amirite]

For the unfamiliar, the thinking goes that by making these tailor-made releases (sold usually exclusively from RightStuf) which are glorified Japanese releases slapped with a store-specific bonus (a translation booklet) it will lead to a line of anime where in order to buy and own, prospective buyers have to pony up Japanese prices for these (typically luxury) goods.

Generally this is the thinking parroted by people with too much time on their hands (ie every whiner in the ANN forum re: Aniplex releases), so they default to worrying. However, is there any merit to it? It’s a fair question that deserves a closer look.

At about a year since that first controversial Kara no Kyoukai box’s release, Aniplex USA has handled a few other SKU, with the first Fate/Zero box being the repeat of the first expensive experiment. Let’s lay down some information that we know about the these releases. We  know that they are a low-risk experiment to test how big the “import” market is. Low risk meaning it doesn’t cost Aniplex a lot of money or good will. And by import I mean not only people who are empowered enough to know what to buy from Amazon Japan or HMV or whatever, but people who are willing to put up big bucks for a deluxe release as long as there’s enough hand-holding to meet their expectations as a “normal” customer.

To repeat myself, the gap between the goods and the person who would like to buy it is wide and deep when it comes to buying things sold in Japan from over here. By doing this legwork for us, I’m thinking Aniplex just wants to grow their sales of Japanese items organically without making any core changes to their business. It is relatively cheap and easy to make a translation booklet and put subs in some anime, especially this day and age. Doubly so since the anime itself will get a time/sub job via simulcast deals. Thus also the “low risk” statement earlier.

If we assume that a growing line of titles will get the same treatment (for sanity’s sake I’ll use the term “weeaboo-glove” to refer to this treatment, as opposed to white-glove), will this mean more titles will fall in this gap? Will more titles become faux-import only?

Absolutely yes.

So why don’t I think so in regards to the titular question of this post? Mainly because this is a failure to measure the BATNA.

In a hypothetical world, where Aniplex isn’t doing this weeaboo-glove treatment, titles like Kara no Kyoukai will be more akin to, say, Horizon in the Middle of Nowhere–available for purchase, comes with subs, and nobody would raise a stink about this. However once the ads and PR drops in “America” the situation drastically changes for some people. I’m not sure why, but it’s like they expect something as Aniplex crossed some kind of line.

It’s something of an experiment in the first place. When Aniplex and NISA entered the fray after the anime bubble that popped a few years ago, they said as much. We know they were trying to do different things to find the best niches to operate within. They explored dubbing, putting shows on TV, doing limited releases and doing traditional releases. From a business perspective I don’t see the weeaboo-glove imports any differently, it is just another experiment.

But from the consumer perspective that is obviously a gap. By selling it in such a way it is now a “domestic” something or another. Even if I get the same 2-day speedy service from Amazon Japan off of any of their catalog items that they’re willing to ship oversea (to the degree that I may very well buy Fate/Zero from them over Dark Lord’s offering). I guess the translation booklet is part of the deal? And I can see a gap where someone who is familiar with importing will understand how that booklet is just a store-specific tokuen (which is very common-place), and not some kind of crazy “IMMA GONNA RAISE PRICES” conspiracy. But not everyone understands this.

If that 5-letter abbreviation about the best alternative to a negotiated agreement confused you, don’t. It’s just another way to say it’s difficult for some people to see what the alternative is for people who don’t know how anime works as an industry oversea, so irrational thoughts took the best of them. What Aniplex USA is doing is already what they have been doing, in essence. The only things different are things that are, from their end, trivial; but it makes a big difference for a few buyers. The alternatives, in which either you do not buy what Aniplex USA is selling, or in a world which Aniplex USA isn’t doing this service, is definitely not better for you–either you have a world with fewer consumer choices while prices remain the same, or you have a world with less industry participation while prices remain the same.

Mainly because all these things already exist in all three hypothetical worlds. It’s seems, at least to me, the group of people who dislike what Aniplex is doing, seems blissfully unaware what is out there to be imported unless it crosses some magical threshold. I might look condescendingly to these guys, but I know this magical barrier is real and if people don’t even know stuff is there to be bought, surely I cannot expect people to know the ins and outs of the industry over there.

Here’s the real story.

Most, with an ear turned to industry, know that Aniplex USA has been shopping Rakkyo since the very beginning. It’s an ambitious and unique title and fronts a very popular otaku property in Japan, so the asking price is relatively high. The timing of it is also pretty bad, given the 7 films spanned from 2007 to 2009, the worst period of the recent global recession. This is on top of the rocky history that Nasuverse products had in America, with questionable sales from Geneon’s release of Tsukihime anime (ok sure it doesn’t exist) and Fate/Stay night. Domestic licencees have little incentive to pay big, even for a quality title, simply because they cannot afford the price of mediocre success, let alone failure.

I think this is the ultimate gap: From another perspective, one can read what I just wrote and think that the Aniplex USA release of Rakkyo was a gesture that they are finally recognizing the big spending importer. These are the people who, since the very beginning, have been doing the tough part of actually importing anime. In the LD/SVHS fansubbing days, it’s these people who provided the clean raws that would actually survive 13 generations of tape dubbing (and often times also the genlock and SVHS decks). Now all this is truly a thing of the past, when Japanese publishers are making these specific products for that crowd. This is as close to an explicit nod as it gets.

The truth is a lot more ugly, though. It’s not a secret that the R1 licensing industry is not the hottest place to be. US licensing costs has gone through a period of market adjustment, i.e., licensing revenue has dropped because demand has decreased. In other words, again, it necessarily means over-priced titles will not get licensed, in order to have the licensing cost even out. The mechanism of this probably involves Funimation leaving items on the table for smaller operations with less overhead like Zombie ADV to risk on a cheaper production for a smaller crowd. The devil is in the details here and I don’t have any, but this confluence of problems is likely why nobody has licensed Rakkyo yet.

Of course, the demand for Rakkyo is always there. And with demand of anything there’s a price curve. Everyone knows the license still has some value overseas, and when Aniplex’s stuck with this (and other) titles, they decided they will try to realize that value on their own. In order to do that, it’s pretty clear that Aniplex just gambled at it, snipping at the top of that price curve, hoping that enough will bite to make it worth their while, and meanwhile leaving the majority of the R1 market vacant for that potential licensee down the road. Because obviously if everyone had a pimpass Rakkyo box, nobody would be buying the cheaper release unless it is REAL cheap. Having a $400 box at least gives a subsequent re-release a lot of breathing space in terms of the licensee setting the price. At least in theory.

Fate/Zero? I think it’s really the same story. It is no coincidence that both are Nasuverse titles. Or that how the Kenshin releases were also high profile but is not a super hot property over in the US, not to mention the somewhat complicated licensing situation.

I’m thinking for brand new IPs, it’s unlikely we’ll see this play out because the licensing prices have definitely gone down. I’m going to guess this is also why Sentai has picked up a bunch of titles just this past month.

To go back to the original question, there’s still some room for doubt in that in a world where anime demand/supply is depressed–fewer titles get licensed, and a higher percentage of licensed new titles fall into the “cheaper, mass retail” model like FMA or Bleach, the cost of anime on average out-of-pocket of American buyers, will be lower. In that world the price of more niche titles will likely be more expensive, or it won’t exist at a localized price. But believe it or not this world is almost the present-day reality. It’s easy to see once you start looking at MSRP for today’s anime on a per-title basis between Sentai and Funi and how it is trending up, how Funimation finally got a clue and started doing what Hollywood is doing. In order to lower the price of those things, well, it is anyone’s guess as to what would be effective.

This is why I think a select handful of Aniplex titles (among all publishers) being retailed to importers is not likely to change anything in the big picture. It’s not anything novel, and it seems more like something they’re doing as a response to the present market condition than something else.

Let’s just put down as much ideas/facts as possible here. Kickstarter, for the unaware, is an online crowd-funding site that provides start-up capital for people who wants to start a project. A lot of the projects on the site tend to be manufacturing some problem-solving device (like the 9001th iPhone holder for your car), specific types of media like independently published games and music and film, and other services. The crowdsourcing part works where the project provides tiers where backers get a perk depending on how much they contribute. A deadline is set in which the project needs to hit a funding goal. When the goal is met, the project is to go forward; if not, nobody pays anything and the project ends.

It’s very common for successful Kickstarter (KS) projects to include a lot of end-user communication (or at least, the promise of) in which the backers are also the target market and a market sample. This communication will happen throughout the process and in the case of a successfully funded project, during the process in which the promised thing is being developed. Depending on the nature of the project that communication can also be part of the service the project provides (think of bands that use KS to fund studio albums). For backers, not only they can look forward to the end result, they also realize there’s some amount of risk involved. A natural thing is for KS projects to have fairly low cost of entry, both because of its consumer-facing nature and to reduce the element of risk. The wikipedia article lists some of the best-funded examples.

Well, how does crowdfunding has to do with anime at all? I guess it can provide enterprising creators some incentive to produce independently published works. Given the relatively low barrier of entry in the doujin scene, one would think this is probably unnecessary. Or rather, the bottleneck is in distribution and not initial fundraising. This is really the very first question we have to ask in order to go forward.

When it comes to anime, fundraising is a much more serious endeavor. Typically anime is created in such a way, where a pitch gets sold to potential investors (and from what we can tell it varies from typical committee and their holding companies to anyone who has money to pitch in). Once there’s the financial green light, the process move forward.

There are other components in which anime-related (and it doesn’t have to be–games and manga and all that can be handled in this way) things can be done for a consumer base who are willing to pay ahead. While I don’t really see how international licensing could work in a way that makes it viable, something more along the lines of creating and marketing a product (say, a PVC figure of Ritsuko Akizuki for mass production) can be handled in this way. At least, not taking financial viability into consideration. And as I alluded to earlier, some projects are more suited than others. The hard part would be the whole “working internationally on a shoestring budget” part.

Which is to say, if I was an “established player” with the connections and channels, I could then solicit the right artists and pony them up for this kind of thing. They would be guaranteed a payment (whoever’s finally in charge probably has to pony up something to get it going even on KS) and then if the fundraiser is successful, the hired guns will crunch out the thing. As long as the producer person is familiar with the idea behind a successful KS and executes, it shouldn’t be a whole lot different than most projects.

There are some actual examples of this. I think in the figure world, there are a lot of examples of similar kind of thing where an established company do a limited pre-order run of some figure. When GSC’s oversea shop went live they had to struggle with shipping those damned thing, and it is a distribution problem that all indie projects have to struggle with in one way or another. In the figure example I can see it being a particular boon being able to communicate to fans as to what they want and what you can expect early on. I guess in the context of a company soliciting funds, it’s really just a matter of plugging the users in with the creators directly.

At any rate, I think it’s easy to identify a potential need in the distribution model to lower the cost of producing independently financed or crowd-financed goods. It’s in that context in which KS is just one facet of a bigger solution.

Anyway, that’s just my thoughts. You can read more about it in this thread over at Fandom Post. Just note that the post is more about the value proposition of the high rolling importer and the role of the “real” Japanese otaku who are fine with paying $300-600 for a 1 or 2-cour anime.