Ask John: Is American Licensing Slowing?

Question:
It seemed like in the early part of the decade there was a huge rush to license everything under the sun, but it seems of late that has slowed to a crawl and a lot of great shows are being left out. I’m not sure if this was due to sales or expense of the show to license. Is this at all indicative of the current state of things with R1 companies? Is it now to the point where they are just unable to take risks on potentially unprofitable shows or was the first few years just their way of testing the waters? My concern is that we may be on the downslide when it comes to quality licenses and may soon be depending once more on fansubbers more and more to get those shows with no chance of hitting stateside.

Answer:
Particularly during the spring and summer of 2005 there was a lot of discussion and speculation within the American fan community over the over saturation of the American anime market and diminishing of the American anime industry. We saw some impact from market saturation and instability in 2005 with anime industry companies like Studio Ironcat and Gutsoon closing, and significantly fewer licenses being announced at the 2005 Anime Expo convention. I think that we’re now still being affected by the ripple effect of the “crash” of the anime market in 2005. And I won’t be surprised to see conditions for the American anime industry to get worse before they get better. I’m not eager to predict bad news, nor am I unusually pessimistic. I simply like to look at facts and prepare for the worst so that I’m pleased if I turn out to be mistaken.

During the early part of the 2000s, many of America’s anime distributors expanded rapidly and aggressively acquired licenses in bulk, seemingly in a calculated effort to corner the market and leave as few scraps as possible for the competition. However, paying for distribution licenses requires profits generated by DVD sales. With the consumer base for anime leveling off while the amount of product available steadily increasing, DVD releasing began to be as much a financial drain as a profit source. Deep discount retailers, and discount priced DVD re-releases further hurt the industry. A DVD that sells for less generates less profit. And the abundance of cheap anime DVDs has trained American consumers to avoid paying full retail, or close to retail, for anime DVDs, which has resulted in distribution companies spending a lot to license titles and release DVDs that either don’t sell or don’t generate significant profit. Market conditions have had an impact on the American anime industry, and look like they’ll have an even bigger impact in the future. Thousands of Target stores nationwide stopped carrying anime DVDs in October 2005 and sent back all of their inventory to distributors. Best Buy stores have also returned millions of dollars in unsold DVDs to distributor, or dumped them onto liquidators who resell them at drastically discounted prices, which further undermines the sale of profitable DVDs. The Musicland Company’s recent bankruptcy has left FUNimation, AD Vision, Media Blasters, and Geneon owed literally millions of dollars which may never be paid. Distributors including Viz and TOKYOPOP are also owed millions, but at least have “secured debt” meaning that the odds of them getting paid back are slightly better. Undoubtedly other retailers will fill in the void left by Suncoast and Media Play stores no longer carrying manga and anime, but the bigger question is how losing millions in unpaid debt, and/or having millions worth of unsold DVDs suddenly shipped back to anime companies. Even getting back hundreds of thousands of unsold DVDs is a financial burden because companies need to pay to transport and store these discs, and pay federal taxes on them as inventory.

Looking closely at America’s industry reveals that the power in the industry is definitely shifting, and the industry itself seems to be losing potency. While AD Vision was once a licensing juggernaut, routinely announcing as many as a dozen new acquisitions at once earlier this decade, the company’s unreserved hoarding seems to have placed the it in a tenuous situation. ADV Films is no longer the premier American licensor. Their acquisition of new anime titles has declined drastically, to the point where the company has had to cancel some of its acquisitions, and publicly acknowledge intentionally mis-translating a series to create controversy that would boost its sales. Furthermore ADV’s only recently announced anime license has been a re-release of a title formerly distributed in America by AnimEigo. Anime Crash seems to have gone silent. Central Park Media hasn’t scored a hit release in quite some time, despite having the potential blockbuster adult title Angel Blade. Releasing only two-thirds of the series then delaying the release of the final episode for months really drained much of the enthusiasm for the title that existed among American fans. CPM has lately taken to licensing short, stand alone titles like Kakurenbo, Munto 2, and Negadon presumably because longer series aren’t a financial possibility for the company right now. Manga Entertainment, so far, has only one new anime title scheduled for release this year. RJP-Pro announced plans in 2004 to release Tenbatsu Angel Rabbie, but the release never materialized. Super Techno Arts has no announced releases in its future and seems to have dropped its plans to release the Shadow OVA series. Synch Point presently has only one anime DVD scheduled for release this year. Urban Vision has no announced anime releases in its future and has moved into distributing live action Japanese films.

Bandai and Geneon are progressing relatively as normal, but one or both may show signs of stress this year. (Although not as widely reported as AD Vision’s 2005 lay-offs, Geneon also laid off many of its employees in 2005. And Bandai’s acquisition of new anime titles has noticeably slowed.) TOKYOPOP and Viz are both sustaining and growing on the strength of their print releases rather than anime DVD releases. Only Media Blasters and FUNimation seem to be sustaining growth in the anime field, although Media Blasters seems to be supported by its expansive catalog of live action international films more than its anime catalog. FUNimation seems to be the only remaining established domestic anime company that is pursuing and acquiring distribution rights to high profile, eagerly anticipated anime series. The success of FUNimation’s Dragonball, Yu Yu Hakusho, and Fullmetal Alchemist properties, and the deep pockets of its parent company are surely responsible for its growing prominence as America’s foremost anime distributor.

Especially last year there was a lot of discussion about the increasing cost of licensing anime. Increasing costs coupled with decreasing DVD sales and American consumers paying less for their anime DVDs has put America’s anime industry is a tough position. When money is tight, one of the most logical tactics for a distributor is to re-release catalog titles instead of investing in new licenses. We’re seeing exactly that occurring. Companies including ADV, Bandai, and Media Blasters are releasing multiple discounted releases. Nadesico, Evangelion and Rurouni Kenshin, for example, have been released on American DVD three times each, with each release at a lower price. Bandai will be releasing titles including Escaflowne, Arjuna, and Angel Links for the third time on domestic DVD this year. Meanwhile, excellent recent titles including Maria-sama ga Miteru, Monster, Bleach, Zipang, Emma, Honey & Clover, Kamichu, Full Metal Panic Second Raid, Noein, Rozen Maiden, Mushishi, Kasimasi, Tactical Roar, and Ayakashi all remain unlicensed for American release quite possibly because most American distributors just can’t afford them, or can’t afford to take the risk of investing in any of them.

I firmly believe that certain American anime distributors conducted business in the early 2000s with a priority on greed and immediate revenue, thoughtless of establishing a sustainable market. You’ll never catch me seriously saying that any particular anime shouldn’t exist, but I do believe that some discretion should be applied toward licensing anime for American release. I also believe that care should have been exercised in developing a stable American anime industry. Instead, it seems to me as though select companies indiscriminately licensed every anime title they could get, released more DVDs than the domestic market could support, and based their release strategies around generating quick, immediate profits without thought about how their pricing tactics would condition the market for the future. I’m aware that it may seem irresponsible to now plead with fans to support the industry, but without fan support, there won’t be an American anime industry.

I have no doubts that the English speaking fan translation community will provide access to anime that the American industry doesn’t license. In fact, I have no doubts that the fansub community will continue to translate titles that are licensed for American release, but are not yet actually released. The immediate gratification of the internet, the easy accessibility of anime from Japanese sources online, and the ease of creating fansubs have outdated the traditional VHS era fansub ethic of stopping underground distribution of licensed titles. Today’s fans want anime immediately, not months or years after it’s licensed for American release. But the role of fansubs as a supplement and advertisement for official releases has not changed. Fansubs have never intended to be, and should never become alternatives for official releases. I do think that the high-water point of American anime licensing has come and gone, but the fact that fewer anime titles are being licensed these days shouldn’t encourage fans to consume more unlicensed fansubs. Instead, now more than ever, fans need to support the industry they love. Anime creators depend on the existence of an anime industry to provide their paychecks. In order for there to be an anime industry, fans have to support the industry by purchasing anime products. I’m not irrational enough to encourage consumers to pay more for their anime. Instead, buy more of it. I can assure you that American anime distributors want to acquire and distribute more anime, but they need money to do that, and money comes from DVD sales.