Ask John: Will Higher Licensing Costs Mean More Old Anime Released in America?

Question:
In several columns you have mentioned increasing licensing costs as a key factor in the decreased size of the American anime market. Do you see a shift in the kind of shows now being licensed because of this? Are American companies more eager to release older or lower-profile shows to avoid the higher costs of newer hits?

Answer:
An increasing number of American licensors are being priced out of the market because the cost of licensing has increased so much in recent years. Over the past three years, distributors including AD Vision, AN Entertainment, AnimEigo, Central Park Media, Manga Entertainment, Synch-Point, and Urban Vision have drastically reduced the number of titles they license. The cost of licensing 25 minutes of animation has increased by ten times or more over the past few years. Japanese copyright owners and home video distribution companies don’t know precise sales statistics for anime in America. They only know that anime is more popular in America than ever before. And during the boom years of the American anime industry, during roughly 2002-2004 when the most new titles were announced for American release, bidding wars for desirable anime series between American distributors inflated the cost of anime and gave Japanese licensors a skewed perception of the value and sales potential of anime in America. Unfortunately, now that average anime DVDs sell fewer copies in America than they did several years ago, Japanese licensors still demand exorbitant licensing fees. As a result, there are fewer companies in America these days that can afford to license anime.

For reference, in the first ten months of 2003 there were roughly 85 anime titles announced for American release. During the same period of time in 2004, that number increased to over a hundred. During the first ten months of 2005, the number of titles announced for American release dropped to half as many as announced during the same time period in 2004. In 2005 through the end of October, there have been only about 50 new titles announced. Clearly, American distributors are licensing fewer shows than they did in 2003 and 2004. Instead of most current Japanese anime getting licensed for American release, as was the case in 2004, in 2005 there are fewer companies licensing and fewer shows being licensed. The titles that are being licensed are primarily whatever can be acquired cheap, and whatever has the most American market potential. Unfortunately, older and lower profile shows generally don’t fall into either of those categories.

Higher licensing fees are having an oppressive effect on the American anime industry. Declines in American sales are also having a smothering effect. American consumers just aren’t buying as many anime DVDs as they did earlier in this decade. Consumers are buying fewer anime DVDs, being more selective about which anime DVDs they buy, and being more conscious about paying less for anime DVDs. These trends force domestic licensors to be more selective about what they acquire and how they release shows in America. An older anime title may be slightly less expensive to license, but it’s an unwise acquisition if it won’t sell. Even a minimal expenditure is still an expenditure, so for a distributor concerned about finances, it’s wiser to license nothing at all than license a cheap, older show that will loose money because it doesn’t sell well in America.

Increasing costs combined with decreasing profits doesn’t encourage distributors to look for alternative titles. It just results in fewer companies investing in fewer titles. American distributors who have money to spend look for high profile titles that have strong American market potential. American distributors who don’t have a lot of money to spend do whatever they can to remain solvent and relevant. This may sound like a dour prediction, but a careful examination of the current state of the American anime community reveals that it’s true. There’s really nothing the average American anime fan can do to affect the prices Japanese licensors ask for anime translation rights. But American fans can resuscitate the American anime industry by purchasing more anime. If you want to see a bigger variety of anime in America, and a greater number of older titles released in America, buy more of the overlooked anime DVDs that are already available in America. Buying more anime DVDs supplies American companies with more money that they can use to license more shows. Buying lower profile or obscure shows lets distributors know that they can safely invest in unusual, vintage, and niche market titles.