Ask John: Is Anime Too Expensive in America?

Question:
This is my opinion on the Anime industry in America. People download anime because it’s better then paying $30 a DVD and only getting 3-5 episodes. For series that are over 50 episodes, it’s not worth it. Person to person or web servers that charge a flat fee and give the user a large download are more efficient. This is America were people look to get the most for the lowest price. So what is John’s opinion on the American anime industry? Do you agree that if venders would give more episodes per disc, or a double disc set for $30 that has 13-15 episodes people would buy more? An alternative is lowering the price. At $5.00 a DVD that has 3-5 episodes per disc, people would start buying more. With international prices as high as they are, there is no way anime will last much longer in America.

Answer:
Since you’ve asked for my personal opinion on the expense of anime in America, that’s what I’ll provide. My honest opinion may not reflect the attitude of the majority of American consumers, but I think that may be explained by the fact that my devotion to anime is more intense than the average consumer, and my perspective on anime is a bit more international than the average American consumer. It should be a given that every anime fan would like anime to be cheaper. Ideally anime would be free and commonly available to anyone interested in watching it, but free, easily accessible anime isn’t a fiscal possibility and doesn’t account for the costs of creating and distributing anime. Ironically, I don’t think that lowering the price of anime will dramatically increase its dissemination in America because even free access to many anime titles in America doesn’t increase demand for them or interest in them among American viewers. Ultimately, contrary to many American consumers who seem to feel an entitlement to anime, I’m personally very grateful to have access to the amount of anime that is available in America at American, rather than Japanese, prices.

Anime doesn’t cost a lot to produce relative to similar live action movies, but there’s also not a high profit margin associated with anime. Although there are occasional exceptions, offering anime to consumers free or at a minimal cost won’t generate enough revenue to keep the anime production industry in business. In Japan, anime is available for free on television because sponsors pay its production costs in return for advertising consideration. But animation studios earn their profits from residual sales of DVDs and merchandise. In America, anime costs what it does not because American distributors are reaping massive profits but because distributors have to charge as much as they do in order to stay in business. American distributors including AD Vision and Geneon have laid off employees. Nearly all of America’s anime distributors have reduced the amount of anime they license and release. Companies don’t streamline and cut back whey they’re earning handsome profits. The anime industry makes up less than 2% of America’s home video industry, so although anime seems high profile and common in America, it’s not. American distributors are forced to either pay expensive licensing fees or drop out of the licensing market, and dubbing costs can double the expense of bringing an anime to America. American distributors frequently discount their releases because lower prices do stimulate sales, but lower prices have only a limited effectiveness. And domestic anime prices are restricted by the need to recover costs and operational expenses. The average suggested retail price of an anime DVD in America has always been around $30. (According to Home Media Retailing’s DVD Release Report, the average retail price of an American anime DVD in 1997 was $27.97. Retail price peaked at an average of $33.06 in 2000. As of April 2006 it’s $26.23.) That may seem expensive, but it’s roughly half the average cost of typical anime DVDs in Japan that have even fewer episodes and less bonus content than American DVDs. Average American consumers may complain about the cost of American anime DVDs relative to the cost of domestic Hollywood films, but anime isn’t comparable to domestic American film. Anime is a specialty imported luxury that commands a commensurate price. Personally I’m grateful that anime doesn’t cost more in America than it does. Like most consumers, I look for bargains, but I’ve also imported numerous Japanese anime DVDs and paid Japanese prices for them, and even purchased several anime series that I’ve liked multiple times, on imported Japanese and domestic DVD. For me, a reasonable price for anime is determined by how much I like a show more than comparison to other DVD prices.

Since I work for an anime retail company I have a first hand opportunity to see what anime sells, what doesn’t, and how much consumers will pay for anime. I’ve literally seen AD Vision and TOKYOPOP anime DVDs remain unsold when priced at $1 each. Drastically reducing the price of anime encourages tentative consumers to commit and may encourage rabid collectors like myself to indulge. (My DVD collection contains dozens of still unopened anime DVDs that I have little interest in. They’re discs that I purchased just because they were cheap; I wanted to contribute to the anime industry; and because I figured that I may have need of them someday.) However, even drastic discounts won’t convince consumers to purchase anime that they’re not interested in. Nothing better illustrates this principle than fan translated anime. Fansubs are distributed online for free, yet countless fansubs have a small following. If even hardcore anime fans refuse to watch shows that they can get for free, it’s logical to assume that casual mainstream consumers won’t purchase certain anime DVDs regardless of how cheap they are. Domestic anime companies already discount their catalog or under performing titles to stimulate sales, but domestic distributors don’t release anime DVDs with high episode counts and low prices because even drastically lowered prices won’t generate enough sales to offset the losses incurred by releasing such DVDs. High volume DVDs cost more to produce because they contain more expensive video and more expensive localization effort. Selling such DVDs at a lower price minimizes profit on each disc sold, so in order to earn the amount of profit necessary to stay in business, a distributor has to sell a greater number of high capacity, low priced discs. If achieving that balance was possible, America’s anime distributors would have already adopted that strategy. The unfortunate fact is that releasing a DVD set with 15 episodes and a $10 retail price won’t sell enough copies in America to break even. A major Hollywood movie can retail at $15 because it will sell millions of copies. Anime DVDs don’t remotely approach those sales figures regardless of how cheap they are. There just aren’t enough American consumers interested in anime to stimulate sales figures that high.

Being an anime fan costs nothing. Collecting anime is expensive. I don’t wish to sound reproachful, but I think it’s necessary to be mindful that anime is not a right. It’s a privilege. That’s especially true for Americans. Virtually by definition, Japanese animation is made for Japanese consumers. Instead of feeling disgruntled over the expense of anime, Americans should feel grateful that they have access to anime at all. Americans pay less for anime DVDs than Japanese collectors do, and American DVDs have more episodes and more bonus features than Japanese DVDs. As I’ve said, I myself am eager to get anime cheaper, but I’m also mindful of how lucky I am to be an American anime fan. As domestic distributors continue to seek ways to generate revenue, and seek to squeeze profit from nearly exhausted releases, I’m sure that anime will continue to get marginally cheaper in America, but there is a certain minimum cost for anime that will always exist, and that cost will likely always be higher for Americans than the cost of domestic American video. I know from first hand knowledge that America’s anime industry is struggling, and some of the price drops on anime in America are motivated by desperation and necessity. I’ve stated before that I believe that America’s anime industry is partially to blame for digging itself into a financial slump by heavily discounting anime and giving consumers misleading expectations about the cost of anime, and by greedily extorting consumers with overpriced limited editions and exaggerated hype over undeserving properties and companies. But American consumers are also partially at fault for expecting and demanding impossibly low prices for anime. If consumers buy more DVDs, the price of anime DVDs should naturally decrease. But when consumers stop buying new releases and wait for bargain priced releases, they force distributors into the untenable choice of either meeting consumer demand and losing money, or releasing discs at a break even price and being accused of price gouging.