Ask John: Why Isn’t Anime Digital Distribution More Common?

Question:
With more and more people getting their fansubs online- without paying a cent for them- isn’t the Japanese anime industry thinking of ways to put more money in their pockets instead of losing out to people who translate and distribute more series than actually make it to US shores? Would it work for Anime companies to hire English translators to sub the first few episodes of a series and put them up on their site with American commercial advertisements? Then they can use the viewership to gauge what series would really be worth sending outside of Japan?

Answer:
Regrettably I’m not personally in contact with representatives of Japan’s anime industry often enough to have a personal and intimate impression of the plans and goals of the Japanese industry. I can only make comments and predictions based on second-hand observation. I believe that my observations are valid, and think that my speculation may be informative.

In early November, Media Blasters CEO John Sirabella stated publicly, “Right now in Japan the big issue is DRM and Digital rights… it is getting a little crazy since it seems that Blu Ray and HD DVD are just being jumped over and everyone is talking Digital.” That statement, from someone qualified to make such a statement, is particularly revealing. The amount of anime available online in Japan has significantly blossomed in the past year or two. Adult anime distributors including JVD and Pink Pineapple now offer commercial downloads. Bandai and Animate host commercial online viewing. Major Japanese multimedia websites including Gyao and BIGLOBE offer both commercial and free anime episodes and series online. An increasing number of anime series are being created specifically for internet broadcast, including Sin in the Rain, Bakumatsu Kikansetsu Irohanihoheto, and Ayumayu Gekijou. However, many of these online options are exclusively limited to Japanese viewers.

The availability of officially authorized anime online in the English speaking world seems to trailing far behind its availability in Japan. AD Vision offers a selection of its titles for commercial online viewing. Cartoon Network offers a selection of anime. IGN offers premium downloads of CPM and Manga titles, but so far commercial digital distribution hasn’t made a big impact in America because of highly restrictive digital rights policies and relatively expensive costs. I don’t know why Japan’s anime industry has been seemingly hesitant to allow wholesale digital distribution in America, but Japan’s distribution industry does seem very reserved about allowing digital distribution outside of Japan.

Since the Japanese industry seems to be intentionally limiting the digital distribution of anime in America, the potential of American distributors offering online preview episodes of new series may be a moot point. In theory, the principle of American distributors offering a variety of sample series online then fully licensing whichever of the shows is most popular with American viewers sounds like an intelligent strategy, but it probably won’t ever happen because there are also major drawbacks to that strategy for Japanese distributors. Simply offering a selection of episodes from multiple shows potentially compromises revenue. If an anime episode costs thousands of dollars to produce, giving it away for free is not necessarily an effective way to recover production expenses. Adding advertising may generate some revenue, but internet advertising generally doesn’t generate a lot of profit. Advertisers pay much less for web ads than for television broadcast or print ads. There’s even less incentive for Japanese distributors to allow free access to a selection of their anime titles if they know in advance that some or many of the titles won’t be licensed.

I honestly don’t know enough about trends in the anime distribution industry and the direction the future is taking, but I doubt that digital distribution will ever totally supplant packaged media. Segments of the retail industry have already begun to resist digital distribution because digital distribution has the potential to reduce walk-in retail store sales. Furthermore, the American anime industry may resist wholesale digital distribution because going 100% digital eliminates the need for an American anime industry. A Japanese distributor needs only efficient translators and powerful servers to enable international commercial anime distribution. New release commercial digital distribution may also not become viable because digital distribution allows for and virtually mandates a lower retail price, but anime must be sold for a relatively high retail price in order to recover production costs. Digital distribution will not reduce production costs, so a drastic industry wide decrease in anime retail price may harm the anime production industry more than help it. Finally, digital distribution has a significantly greater vulnerability to international video piracy than physical media.

Digital distribution is unquestionably the wave of the future. The Japanese industry has already made significant strides into commercial digital distribution while the technology is still in rather tentative stages here in America. I think the Japanese industry is more comfortable and secure with allowing digital distribution in Japan than rapidly advancing the distribution method overseas. I’m sure that the anime industry will continue to see authorized digital distribution increase slowly in America, but I suspect that the Japanese industry feels safer with taking progress slower and more carefully in foreign markets.