Ask John: Why Do Some Seemingly Obvious Licenses Not Reach America?

Question:
As I understand it, fan service shows tend to sell fairly well. Yet certain titles remain conspicuously unlicensed even though the North American industry is facing a slump. How can shows like Ladies vs. Butlers, Seikon on Qwaser, and Manyuu Hikenchou be left on the sidelines while companies make other acquisitions that are questionable at best sales-wise? If Queen’s Blade, Kanokon, and Highschool DxD can be licensed, why not other fan service titles?

Answer:
Having been involved in difficult anime licensing negotiations myself, I can confirm from first-hand knowledge that anime distribution licensing is a tremendously complicated and convoluted process, often made especially difficult by the complexity of permissions necessary on the Japanese side. Nearly all of the core American anime licensing companies are small, privately owned businesses, meaning that they have ultimate decision-making power within themselves. The Japanese side of the partnership is not as simple. Typical anime are produced by production committees – investors, sponsors, and producers representing several Japanese businesses and private investors, many of them not otherwise affiliated with the anime industry at all – that raise the funds to commission the production of an anime. Since these disparate interests all own a portion of the anime, they must all agree – either in advance or when a licensing offer is made – to allow a foreign licensor to translate, market, and distribute the anime that the production committee paid to create. This requirement for unilateral agreement means that if even a single person on the original production committee doesn’t want the anime distributed internationally, or feels like the licensing terms aren’t favorable, or believes that he/she isn’t getting fair compensation, the licensing negotiation comes to a standstill until the hold-out is convinced and satisfied.

High profile and popular anime titles are likely to sell better in America than obscure or unpopular titles. However, because they’re popular and have greater potential than unpopular shows, Japanese licensors and master rights owners may naturally expect more for high profile and popular titles; they may expect a bigger up-front or minimum licensing fee, a bigger percentage of revenue from sales, or may expect a guaranteed minimum title exposure like a guaranteed TV broadcast or theatrical screenings. Furthermore, big and popular titles in Japan may not always be big and popular in America, but imagine trying to convince, but not insult, a half-dozen Japanese corporate executives that their blockbuster (in Japan) anime is worth very little in America and should therefore be sold to an American licensor for a very low price. A licensor may think that since a title is worth X amount in Japan, it should also be worth a comparable amount in America that has more than double the number of citizens and theoretically a larger consumer audience. In effect, demands from Japanese licensors may elevate certain anime titles out of the practical reach of American licensors. For example, in 2005 AN Entertainment was offered the option to license the Pita-ten anime TV series, which was popular in Japan at the time, at a non-negotiable minimum cost of over a quarter of a million dollars. The show would never have sold well enough in America to recover that licensing fee, to say nothing of supplemental rights & materials acquisition costs and localization, advertising, and distribution costs. Now, ten years after its Japanese broadcast, Pita-ten has still never been licensed by any distributor for American release.

Licensing is a delicate and fickle dance dependent upon the desires, demands, and practical fiscal flexibility of both the American licensor and the Japanese distributor. Since American distributors are privately owned, some companies won’t look at certain titles just because the company owners don’t personally like or aren’t interested in certain shows. For example, Viz Media avoids “fan service” anime, Discotek concentrates on vintage anime, Manga Entertainment avoids TV series in favor of movies and short OVAs, and NISA only licenses highbrow niche TV series. So the number of American distributors that would even seriously consider acquiring ecchi fan-service anime shows is very limited. Such anime that seem like they have American market potential, like Ladies vs Butlers & Manyuu Hikencho, may not reach America because the Japanese licensors refuse to allow a domestic Blu-ray release, or refuse to allow an uncensored version in America, or refuse to allow an American home video release until after the prime home video sales period in Japan has passed, or can only offer American distribution rights if the original music is replaced, or may simply demand too much money for the license because Japanese popularity has created unrealistic impressions of the program’s international value. Or maybe, as happened to AN Entertainment once, the Japanese master licensor is eager to sign a deal but one individual involved in the production refuses to give his assent, thus putting a stranglehold on the entire licensing procedure. Every license is different, and different circumstances affect the American release or non-release of every individual anime title.