Ask John: Why Do American Anime Distributors Partner With Japanese Investors?

Question:
I am investgating why Geneon has been shut down and it might has to do with their recent partenership with Denstu. Why do U.S anime manufacters make partenership with the oringnal Japanese companies?

Answer:
Japanese advertising agency Dentsu acquired Japanese company Pioneer Entertainment in July 2003. Shortly later, in October 2003, Pioneer LDC and Pioneer Entertainment changed their name to “Geneon Entertainment.”

In June 2006 the Mitsubishi owned licensing rights management company d-rights partnered with Dentsu and acquired a 34% management share of Geneon USA.

In August 2007 d-rights ended its affiliation with Dentsu, at which time full control of Geneon Entertainment and its American branch, Geneon Entertainment USA, returned to Dentsu.

On September 26, 2007, Geneon Entertainment USA announced its plans to cease domestic anime distribution. Dentsu reportedly lost 5.1 billion yen (about US $44 million) following the closure of Geneon USA. Presumably Dentsu would have lost even more had Geneon USA continued to operate. This timeline implies that Dentsu shut down its American subsidiary as quickly as possible after regaining full control over the company.

Obviously, in this case, Geneon was not a case of an American manufacturer establishing a partnership with a Japanese company. Geneon is a Japanese company that operated a distribution subsidiary in America for several years. Some American companies, however, have established partnerships with Japanese companies.

TOKYOPOP was launched with investment funds from Mitsui Venture Capital Corporation and Nippon Venture Capital Company. Although TOKYOPOP is an American company, TOKYOPOP is registered as a Japanese corporation funded by Japanese investors Softbank Finance, Mitsui Venture Capital, Nissho Inter Life, Nippon Venture Capital, Impress Group, and Tekinvest.

In June 2006 AD Vision obtained significant financial backing from a direct investment by Japan Content Investments (JCI), a group consisting of Sojitz Corporation, Development Bank of Japan, and KlockWorx, and seperate financial backing by JCI subsidiary company ARM. JCI/Sojitz ended its continuing financial contribution to AD Vision and repossessed its properties managed by AD Vision in mid 2008.

Media Blasters, FUNimation, and Manga Entertainment have established partnerships with Japanese investors for the co-production of specific titles, but do not receive sustaining financial backing from Japanese investors.

The establishment of financial partnerships with Japanese companies and investors provides domestic anime companies with more capital to spend on acquiring, manufacturing, and distributing anime in America, and may give these American companies primary or exclusive access to original Japanese properties. For a company that specializes in acquiring and distributing Japanese media, a partnership with Japnese investors can be very desirable and beneficial, as long as the partnership remains mutually beneficial and profitable.

The failure of Toei Animation and Bandai Visual to establish viable domestic anime distribution channels serves as evidence that Japanese distribution companies need the expertise of American retail and distribution specialists to make anime distribution in America successful. That’s why Japanese companies have established American subsidiaries including Bandai Entertainment, Synch Point, and Viz Media. American companies that seek to become nationally influential and successful need the financial help of big Japanese companies. Domestic distributors without Japanese investment, including Media Blasters, AnimEigo, and Nozomi Entertainment may be respected and popular within America’s hardcore anime fan community, but they haven’t been nationally and internationally successful on the scale of companies like FUNimation (which secured Japanese style financial backing from American investor Navarre), Viz Media, AD Vision, and TOKYOPOP which benefit from backing by wealthy investor companies. (Media Blasters has achieved some degree of major international influence, but primarily in the field of live action film production and distribution.) Partnerships with Japanese companies and investors may be desirable, but, as ADV Films’ recent troubles atest, these partnerships don’t always work out.