Ask John: Are Fansubs Responsible for the Declines in American Anime Sales?

Question:
The number of American anime fans has increased, but anime’s profit is rapidly down because the spread of the internet helps an illegal copy of the anime. How do you think?

Answer:
This Japanese language article blames illegal online anime distribution for decreasing sales in America’s anime market. I can’t deny that unauthorized anime sharing online does compromise some retail sales, but I don’t think that fansubs and online distribution are the main reason why American anime DVD sales are in decline. Fansubs may serve as a tempting alternative for some potential American consumers, but fansubs also create market demand. Titles like Naruto and Fullmetal Alchemist would not have been the instant hits in America that they were if fansubs hadn’t created anticipation and advance demand for them. And I believe that fansubbing and other online distribution only reaches a small percentage of America’s potential anime consumers. Rather than online distribution, I believe that it’s America’s anime distribution industry itself that is most responsible for declines in American anime DVD sales. I’ve expressed this theory before, but I’d like to present it again with some supporting stastics this time.

Over the past few years many of America’s anime distribution companies have been continually rereleased their catalog titles at increasingly bigger discounts. Media Blasters, for example, has released the Gokusen anime series three times in less than two years. In that period the cost of the series has dropped by more than 75%. Very few consumers buy brand new anime DVDs now because they know that the discs will be available cheaper in a short time. American anime companies that habitually release discount priced boxed sets, and retailers that offer steep discounts have trained consumers to bargain hunt and refuse to support full priced new release DVDs.

Home Media Retailing Magazine has reported that the number of anime DVDs released in America during the first half of 2006 is down 18.9% from the same period last year. The July 2-8, 2006 issue of Home Media Retailing Magazine reports that the release of all foreign language home video in America is down 25.3% compared to the same period in 2005. “Continuing a slow but steady decline that began last year, consumer home video spending slipped 3.7% in the first six months of this year.” Unfortunately, I don’t have specific sales statistics for just the anime industry. In the same magazine issue, editor Thomas Arnold’s editorial “Loss Leadering Leads to Loss” argues that retail stores which heavily discount new release DVDs to entice consumers into stores, “has seriously devalued DVDs in the consumer’s mind.” According to Arnold’s editorial, as much as 60% of a new DVD’s lifetime sales now occur within the first week of release. “A consumer who is used to buying DVDs for $14.77 [during the first week of release] isn’t going to spend $25 or more for the same title.” “Weeks two to four [of a DVD’s release] have gotten very soft.”

American anime DVD sales don’t, and in most cases can’t, rely on support from just the hardcore fan community. ICv2 has listed Best Buy corporate purchasing agents as the fifth most influential figure in America’s anime industry because mass market retailers like Best Buy are America’s biggest consumer for anime. Retailers like Best Buy, Suncoast, and Walmart purchase thousands of anime DVDs to stock their stores nationwide. But the practice of “loss leadering,” selling new release DVDs at heavy discounts or even at a loss to attract consumers, that these nationwide chains practice, combined with discount priced re-releases from American anime distributors, have given consumers reason not to purchase new anime DVDs. Fansubs and online distribution generally reach only a percentage of the hardcore fan community, and many hardcore fans who download anime also purchase anime. The pricing and distribution strategies of America’s commerical anime distribution and retail industries is far more influential and impactful than the reach and effect of underground file sharing in the fan community. Once again quoting Home Media Retailing’s Thomas Arnold, “Loss leadering,” and, I interject, also all forms of drastic discounting, “Has actually led to a loss in business.”