Ask John: Can You Explain Aniplex America’s Pricing Policies?

Question:
I love what Aniplex is trying to do license-wise with releasing titles available to the US, like Fate/Zero, Kara no Kyoukai, and Oreimo. These titles are quality shows, but some of these prices seem very high to me. The current Oreimo Blu-ray set is listed as $279, Fate/Zero Blu-ray at $329, Bakemonogatari Blue-ray, while lower, is at $150. I understand that some of these are imports, and the Japanese pricing scheme is much higher at times, but at those prices, is it really profitable in the US market? Do these items sell well here?

Answer:
America’s anime fans now find themselves ensnared by a quandry that’s partially of their own design. While we rationally recognize that anime is a commercial art, we don’t typically treat it as a commercial art. Rather than willingly or eagerly paying for anime as a way of expressing our appreciation for the medium and showing our gratitude to the artists that painstakingly created the anime we love, we perceive anime as merely another consumable, disposable entertainment product that must compete with other comparable media, despite the fact that anime isn’t like other media. Certainly, anime is entertainment cinema, just like Hollywood movies and American television programs. But anime has a unique flavor and design that we don’t get from any other type of cinema. That uniquely particular character is what attracts us to anime and turns us into such ravenous fans. However, instead of being willing to pay extra for that extraordinary viewing experience, we expect and demand that anime be available to us on the same terms that other homegrown entertainment is offered. The scales, however, are very different. Even poorly viewed nationally broadcast television programs are still watched by hundreds of thousands of viewers. Even Hollywood movie flops still attract multiple tens of thousands of paying viewers. Anime in America has never reached those sort of demographic numbers, and these days has an especially small audience of paying consumers. Simple economics calculates that fewer sales require a higher amount per sale in order to earn a comparable total revenue. Mainstream American releases that sell hundreds of thousands up into millions of home video copies can sell each DVD or Blu-ray volume cheaply and make up for the lower cost with sales volume. Anime doesn’t sell hundreds of thousands of copies in America, so it has to maximize revenue from each DVD or Blu-ray that does sell. Sadly, history has abundantly proven that lowering the cost of anime DVDs and Blu-rays in America does not increase sales enough to compensate for the decline in per-unit sales income.

We get what we pay for. Conversely, when we don’t pay, we don’t get. Because Americans have been buying fewer anime DVD and Blu-rays since 2007, the number of new anime discs reaching American consumers has shrunk. Today’s active domestic distributors have, through time-tested experience, calculated a rather precise formula for how many copies of a new anime release they can expect to sell depending on whether the title is DVD only or DVD and Blu-ray, or subtitled only or bilingual, and price those releases accordingly to cover their licensing & production expenses. Aniplex America recognizes that the domestic consumer audience for anime home video is very small now, and any astute observer can interpret that the majority of the American consumers that are still aggressively buying home video releases are now typically adults with disposable income more than children and teens. So Aniplex of Japan is shrewdly calculating the viability of particular releases in America.

According to The Japan Times, last year the average Japanese household had over $175,000 in savings. Payscale.com reports that the current average annual salary for a professional in Tokyo is over $65,200. Typically Japanese consumers have the disposable income to afford generous prices for anime. Japan is and always will be the primary home of anime and the market that generates the most anime sales. So Aniplex of Japan recognizes that its primary market is Japan. Furthermore, particular anime with cult followings like Fate/zero, Kara no Kyoukai, Bakemonogatari, and Ore no Imouto ga Konna ni Kawaii Wake ga Nai will never become big mainstream hits in America. These shows will never get mainstream American television broadcasts and will never become the next Dragon Ball Z or Evangelion here in America. Since these shows are destined to never sell an especially large number of home video copies in America, there’s very little incentive for Japan’s Aniplex company to devalue these shows by offering massively discounted American versions. When Japanese consumers are willing to pay high prices for these niche shows, they’re expressing their opinion that these shows are worth the price. The faith that Japanese otaku have in the value of these shows may weaken if they find that the same shows are worth exponentially less overseas. Putting a high price on particular anime series conveys the message that these shows justify the high cost because the shows are creative art. When Aniplex knows that only a small number of Americans are ever going to buy these shows, regardless of the price, Aniplex has logically decided to offer these shows to the few Americans who appreciate the shows as much as Japanese fans do: American collectors that are willing to pay as much as Japanese collectors do. In effect, Aniplex isn’t trying to earn big profits from the American market; the American market is just an extra, tiny supplemental market to Aniplex’s core Japanese audience. By offering official American releases, Aniplex could be said to be just doing a favor for the few hundred American consumers that would have considered going through the trouble and expense of personally importing the Japanese releases anyway.

I’m 40-years-old. I’ve purchased every one of NISA’s limited edition home video releases and Aniplex America’s $150 Kara no Kyoukai DVD & Bakemonogatari BD sets (regrettably, $300+ per Fate/zero collection is too expensive for me to afford). I don’t know for certain, but I wouldn’t be surprised at all if under a thousand American consumers have purchased either of the KaraKyo DVD or Bakemonogatari BD releases. Aniplex can release titles like Kara no Kyoukai in America at $150 and sell a few hundred DVD sets, or it can earn the same amount of revenue by dropping the price to $50 and selling a few thousand DVD sets. For example, if 1,000 Americans buy the KaraKyo DVD set at $150, the total sales revenue is $150,000. If the KaraKyo DVD set costs only $30, 5,000 consumers have to purchase the set in order to generate the same $150,000. Aniplex can be reasonably certain that a thousand Americans will be willing to buy the KaraKyo DVDs virtually regardless of cost. However, selling 5,000 copies, even at only $30 per set, is not nearly as certain considering current American sales trends. So the wiser and safer route for Aniplex is to just bet on a very small number of fanatic collectors being willing to pay Japanese prices. Selling just a few hundred imported DVD sets to American collectors at Japanese prices is less work for Aniplex and less compromise to the integrity and value of the anime while generating the same amount of income.

When American consumers demonstrate a willingness to eagerly and aggressively buy a lot of anime DVDs and Blu-rays, Japanese companies will be more willing to release their titles in America and compensate for low retail prices with sales volume. In 2005, during the peak of the American anime boom, Japan’s Toei Animation and Bandai Visual both launched American distribution arms to release their Japanese anime directly into America themselves. While both efforts encountered some setbacks, the efforts prove the idea that Japan’s anime industry will try to distribute anime in America if the American market demonstrates a willingness to support anime. Rignt now America is not showing a major interest in purchasing anime home video releases, so Japanese companies like Aniplex aren’t trying to accommodate a consumer demographic that doesn’t exist. Japanese companies like Aniplex and Nippon Ichi Software know that a very, very small ultra-hardcore American audience of adult collectors willing to pay top-dollar for high quality anime home video releases exists, so these companies are offering limited edition anime releases to that very small niche audience.