Ask John: Does Gonzo Have a Future?

Question:
In mid-2009 Gonzo’s stock was finally delisted from the Tokyo Stock Exchange when the company’s total liabilities were revealed to exceed their total financial assets. From a business perspective, are most animation studios publicly traded? Aren’t most studios simply subsidiaries of larger parents, and was this the case with Gonzo? Is this situation unique to Gonzo, or is this common among animation studios? Finally, is this the end of Gonzo, or will they be back soon?

Answer:
To be honest, I don’t know enough about the financial nature of Japan’s anime studio system to provide definitive answers. I can only provide the facts I know mixed with speculation. To be best of my knowledge, many of Japan’s roughly 100 anime production studios are small, privately owned businesses. When I say small, I mean fewer than 100 employees – in some cases dramatically fewer. Earlier this year, Group TAC employed fewer than 10 people. Toei Animation is a subsidiary of the larger Toei motion picture studio. TMS is owned by Sega Sammy Holdings. AIC is now owned by pachinko machine developer Oizumi. But most studios are either independent or subsidiaries of smaller, specialized parent corporations. For example, the Gonzo anime studio is a subsidiary of Gonzo Digimation Holdings, a parent company that once produced animation, PC games, digital effects and animation, and handled content management. Production I.G and Xebec are subsidiaries of I.G Port, but I.G Port is still primarily a company centered within the anime industry. Part of the reason why there’s so much anxiety over the state of the anime industry is the fact that the studios that actually produce Japanese animation are small, independent corporations that rely on contracts from sponsors and producers to earn operating funds and capital necessary to function and produce anime. Studios like Gonzo and Group TAC face financial hardships because they don’t have parent companies that support them and diversify operating expenses and losses among a family of subsidiaries.

Thankfully for its supporters, employees, and the anime community, Gonzo has proven resiliant. Gonzo Digimation Holdings has had to downsize. The Gonzo animation studio has drastically reduced its activity. However, Gonzo isn’t dead. Earlier this year the studio produced the four episode Riot Act 2 web promotion anime series and a new opening animation sequence for the Tower of Druaga: The Recovery of Babylim PC game. The studio has also recently begun adding staff in preparation for a planned spring 2011 original 3D anime production. At this time, anticipating Gonzo roaring back to its former prominent position as one of Japan’s most active and successful anime studios seems difficult to imaging. However, long time anime fans will recall that prior to 1998 Gonzo was literally unheard of. The groundbreaking Blue Submarine No. 6 OVA series put Gonzo on the map and enabled the studio to grow rapidly. If Gonzo was able to launch its tremendous growth from just one small but impactful production, there’s no reason to assume that the studio isn’t capable of repeating the feat.