Ask John: Are Discount Priced DVD Lines Beneficial?

Question:
On the assumption that you are aware that Bandai Entertainment has announced plans to “re-release” certain anime titles under the name “Anime Legends” (thus following in the footsteps of AD Vision’s “Essential Anime” and Geneon’s “Signature Series”), are you surprised that this is happening?

Answer:
Actually, the only thing that surprises me over Bandai’s upcoming “Anime Legends” line of discount priced DVD re-releases is how long it’s taken Bandai to introduce a line of discount priced catalog titles. Considering the present state of the American anime industry and community, I’m not surprised in the least over distributors re-releasing catalog titles. Discount priced re-releases are a tricky business, but regardless of their intangible effects, they do generally generate profits. Now that the Japanese industry has realized how much demand for anime there is in America, Japanese licensors demand exorbitant licensing fees. Unfortunately, average anime DVD releases in America don’t sell as many copies as they used to, so American anime distributors aren’t earning as much as they used to. So during a time when American distributors are earning less, Japanese licensors are demanding more. Since it’s quickly becoming too expensive to license multiple new titles, it becomes logical for American distributors to seek ways of earning more profit from properties they already own.

Resoliciting a catalog title requires a minimal investment. It’s less expensive to print new covers for an already finished DVD than pay new licensing fees, translation and dubbing costs, mastering fees, replication costs. Catalog title re-releases can be reissued at a lower retail price as well because the debut release probably generated enough profit to recover the title’s acquisition, translation and production costs. So a re-release has a bigger profit margin than a debut release. Some domestic distributors, most notably AD Vision, Central Park Media, and Media Blasters, have created virtually an entire franchise of just multiple re-release anime DVDs. For instance, by the end of this year AD Vision will have released five different editions of the Robotech series (mini boxed sets, individual discs, saga collections, Robotech Remastered, Protoculture Collection).

From a short term perspective, discount price lines of catalog DVDs are a reliable, low risk revenue source, which makes them an attractive innovation for distribution companies. Furthermore, specific branded lines of catalog releases like “Anime Legends,” “Anime Essentials” and “Signature Series” encourage a collector mentality and also attract casual consumers. Collectors may feel a sense of necessity to complete a collection of “Anime Legends” DVDs. Casual consumers may be attracted to such DVD releases because “Greatest Hits” style branding theoretically eliminates some of the uncertainty from a purchase. A ”
Greatest Hits” branded release should be reliably worthwhile, unlike a new release of uncertain quality. These characteristics may help boost sales, which benefits the anime distributor.

At the same time, discount priced DVD lines also have harmful intangible effects on the anime community. Creating a line of discount priced catalog titles virtually assures astute customers that they’ll eventually be able to purchase an anime series cheaper sometime in the future. So discount priced resolicitations undermine the stability of the anime market. Anime is more expensive to license now than it ever has been. Considering that the consumer market for anime DVDs in America hasn’t dramatically grown recently, domestic anime companies have to charge high prices for premier releases in order to recover initial acquisition and localization costs. But re-releases have accustomed consumers to avoid paying “first run” prices for premier releases. We’re already seeing this trend affect the anime industry, and I expect the trend will become more severe in the future. We’re beginning to see domestic anime distributors release more resolicitations than new titles because the American fan community and consumer market isn’t supporting or encouraging the release of new titles. It’s perfectly fine for anime fans to make lists of which anime series they’d love too see released on American DVD next, but if current trends continue, those new releases won’t happen because too few American consumers are buying them. So many American anime fans and consumers are now bargain hunting and waiting for bargain prices and re-releases that anime companies aren’t earning enough to afford new acquisitions. Decreasing retail prices while still earning healthy profits only works if the lower prices generate a major increase in sales. That’s not happening in the American market because the size of the American consumer market for anime isn’t dramatically enlarging.

So American anime fans and consumers are demanding lower prices. And many American companies are responding to this demand and earning short term profits. But we’re now seeing the result of the past several years worth of flooding the market with cheap re-releases- decreased consistent profits for anime companies, a smaller variety of anime being licensed for American release, and fewer titles being licensed for American release. Discount priced anime DVD lines are a logical, attractive, and short sighted source of income for the anime industry, and an immediate benefit to the anime fan community. But over the long term these lines of discount priced DVDs devalue anime itself and undermine the ability of the industry to earn the revenue necessary to prosper and grow. Limited resolicitations and discounts, as seen in the Japanese industry, encourage growth and consumer spending. The rampant resolicitations that have flooded the American market are drowning new releases and cannibalizing the industry’s profits instead of massaging them into growth.