Ask John: Is the Digital Distribution of Death Note a Sign of the Future?

Question:
How long do you think it will take before digital distribution of anime becomes widespread? Viz is planning a digital release for the Death Note anime. This makes a lot of sense because much of media these days is moving towards digital distribution. This especially fits well with anime given the tendency of many hardcore fans to download unofficially subtitled episodes days after the original Japanese release. Do you think that domestic anime publishers will ever begin to use digital distribution as a way to more widely sell anime and even better please hardcore fans? Do you think that a giant sort of iTunes-like service will ever arise for the digital distribution of anime?

Answer:
Since Viz Media made its announcement about plans to distribute the Death Note anime online, recently, the English speaking fan community has been abuzz with debate and speculation. Everyone seems to have an opinion on the matter, so I hope that I’ll be able to provide a unique, or at least a less conventional response. Unlike the debate that’s raging in the fan community, I’ll attempt to answer partially from the perspective of a professional anime distributor.

First, it’s important to contextualize Viz’s announcement. The plan to offer commercial downloads of Death Note marks the first time a full anime series has been released commercially in America online before its DVD release. Series such as Prince of Tennis and MAR have premiered online in America, but not as retail products. The release of Death Note is unique because it’s not a promotional tactic nor is it a supplemental, alternate form of availability. The online release of Death Note is the premier, primary American release format for the series. I base that statement on the fact that Viz only revealed plans for a DVD release after being pressed for information, and Viz has yet to clearly confirm plans for a bilingual DVD release. The online distribution of Death Note may turn out to be an insignificant event or even a failure. It may also be a revolutionary landmark event for America’s anime industry and fan community. Ironically, the precedent that the online distribution of Death Note sets may be both a benefit and a tremendous threat to the American anime industry.

Digital distribution is very tempting for a commercial distributor because digital distribution eliminates the expenses of printing physical packaging and replicating discs, the cost of warehousing inventory, physically transporting product, and much of the cost of soliciting material product. Digital distribution is the ideal method of delivering anime to consumers because it has no excess costs and no potential for unsold inventory. Distributors benefit from streamlining the product delivery process and eliminating costs. Consumers benefit from faster releases and the significant possibility of a greater number of licensed titles available for purchase. When distributing anime is so cost effective, distributors may be far more willing to license and offer a wider variety of titles. So, on one hand, commercial distributors may see digital distribution as a clear goal.

However, digital distribution also poses a major threat to the American anime distribution industry as it exists now. In the present market, Japanese owners are forced to license distribution rights to international distributors because local distributors are necessary to oversee local manufacturing and physical sales and transportation to retail outlets. Digital distribution requires only a competent translator, and servers and software that can be located anywhere in the world. Digital distribution could allow Japanese distributors to sell their anime directly to consumers worldwide, eliminating the need for regional sub-licensors. In other words, exclusive digital distribution has the potential to extinguish American commercial anime distribution companies. If there’s no physical product to assemble and transport in America, then Japanese distributors don’t need physical representatives in America.

The argument may be made that English dubbing will force the employment of regionally based distributors, but that argument isn’t sound for two reasons. First, Viz has already announced that its digital distribution of Death Note will be subtitled only. It’s possible that Viz’s decision is motivated by a desire for expediency. It’s also possible that economic realism plays a role. Presuming that the retail cost of downloaded episodes is lower than the cost of episodes on physical DVD media, since the cost of voice recording remains constant, a distributor will have to sell many times more downloaded episodes just to recover the cost of dubbing. Commercial digital anime distribution is only viable if cost is minimized, which requires avoiding the tremendous expense of dubbing. Second, Toei’s attempt at directly releasing anime in America, namely Air Master, Interlude, and Slam Dunk, included an English dub, proving that Japanese distributors don’t necessarily need to rely on an established American distribution company to produce an English localization. In effect, regardless of how anime is translated for digital distribution, Japanese distributors don’t need American companies to organize and offer commercial anime distribution.

Digital distribution probably won’t doom America’s anime industry to extinction, though, because demand for physical product remains strong. Based on reaction from fans I’ve read on several online message boards, overwhelmingly American anime fans prefer commercial DVDs to commercial digital downloads. Physical DVDs allow consumers to watch anime how, when, and where they choose. Digital rights management (DRM) encoded electronic files do not offer the same flexibility. Furthermore, America’s retail industry will resist exclusive digital distribution. In October 2006 the nationwide Target Corp. retail chain threatened serious financial embargo in response to Hollywood’s advocacy of digital distribution. From small independent specialty retailers like AnimeNation to nationwide retail chains like Target and Best Buy, American retailers depend on having physical merchandise to sell. The retail industry will oppose a wholesale transition to electronic distribution because the incentive for consumers to shop from home is the bane of retail stores.

Digital distribution is undeniably a growing trend and market force. Death Note may be an ideal flag-bearer for commercial anime distribution because it’s a high profile show with a lot of demand that should establish reliable evidence of the viability of digital distribution. I can’t think of any current or forthcoming anime title that’s likely to sell better in digital format than Death Note. At this point in time it’s impossible for me to predict success or failure for Death Note because details including as price, format, and DRM restrictions haven’t been revealed yet. The reaction I perceive from the anime community is that the initial digital distribution of Death Note is an interesting footnote, but not an eagerly anticipated revolution or a product that will be widely supported. But I have no doubts that Viz’s announcement is just the first of more to come, and I anticipate that if the digital release of Death Note is even mildly successful, American fans will have the opportunity to buy translated downloads of obscure and niche market anime series that aren’t viable commercial releases on DVD media.