Open letter to the community from the CEO of Bang Zoom Entertainment

[Draneor]

Originally Posted by Spectacular_Insanity

Even hardcore otaku like myself are only willing to pay so much per DVD.

You may want to re-consider how "hardcore otaku" you are if $25 (the cost of two meals) seems expensive for a series you love. But I realize that "otaku" is used among English fans like "everyone gets a sticker."

More to the point, several boxsets of Full Metal Panic have been released for several years now. You can get the first for at least 46% off online or about $50 (not to mention no sales tax). Try RightStuf during a studio sale, DVDPacific, or Deepdiscount. If you wait a bit, FUNimation may even release it on Blu-Ray or perhaps their new S.A.V.E line (entire season for MSRP of $19.99 to $29.99 which, again, you can get up to 46% off online). The R1 anime industry has been lowering the price to make anime affordable for poor college students. Singles are basically dead these days.

[Last Sinner]

I like the majority of your argument. Karice. Because it is incredibly pertinent and you're living there. 2010 has seen less titles being made and some studios not doing a series every season. Hopefully that will lead to a rise in quality. Your points on manga were true - the paper and ink side of manga is a small part of it. DVDs are an extras market, but...I've never been into them, to be honest. I guess I may be in the minority on that one. I only buy my DVDs or manga titles if I am certain I like the product and am willing to go all the way to the end. *shrug* The majority of my fave series aren't merchandise oriented, either. So I guess I'm somewhat left of centre.

It sounds like Japan is a very oriented extra market, because in Australia, extras are almost non-existent. I would struggle to fill both hands with titles that had notable extras over here, in all honestly. Which is why I base my purchases on the product alone. If I tallied up what I've spent since I became a fan in 2003, I'd say I've spent a bit over 3k in manga purchases, a bit over 1k in merchandise and a few hundred on anime DVDs, so about 5k all up, give or take a few hundred either way. I've always been of the opinion if I really like it, I'll buy it. My DVD purchases have been lax due to having to wait until this year to get a decent one. Australian DVDs seem to be very finnicky and don't like the mjaority of players, at least from my experiences anyway. -_- Another reason my DVD purchases are low thus far, but with RightStuf becoming more prominent and their prices being the best going around, I am going to pursue them.

That was a good link. It made a lot of truths very clear. I know a few people like that locally but I know a good number that aren't. It's very reminiscent of what the characters go through in Genshiken - newbie to fandom to reality check to success. It doesn't have to be a bad thing to be an anime fan. It just shouldn't be the only thing which one's life revolves around, which that article made very clear.

Nice thoughts, Karice. Thanks for the enlightenment. Didn't know extras was such a big part of the whole picture.

[DragoonKain3]

Originally Posted by karice67

As people have said before, the industry in the West needs to change. As a start, licensing companies probably need to become more selective about the series they choose to bring across, but where they (and you, the consumers) go from there in terms of DVDs and other merchandise is still up in the air.

I think it isn't as simply as that.

1) Western market is about what goes for cheap (as someone in this thread has said), and not for extras. I personally LOVE paying the extra bit for 'collector's edition' of anything, but I'm far FAR from the norm. If you ask the average consumer if they'd rather have extras or shave a few more bucks off the sticker price, more often than not they'd do the latter.

(Compare this with the Japan mindset, where as Konata of Lucky Star puts it aptly, Japanese are a big sucker for anything that has 'limited', 'collectors', or 'extra' in it.)


2) Licensing companies being selective with their shows means the more niche shows gets cut (which the hardcore thrives on), and only big name stuff like Naruto gets licensed. Even right now, maybe 80% of the shows that I am interested in buying, never actually gets licensed for me to buy in my region.


I think that's the biggest problem with the western anime industry right now... the casual and the hardcore's views are so divided in the matter that companies are damned if they do and still damned if they don't. On one side, you've got one who likes to get things as cheap as possible, while the other side doesn't mind paying for the extras. What exacerbates this is that what the former likes to watch is, by and large, separate what the latter likes to watch.

So what can the industry do to please both sides at once, which is paramount since anime fanbase are so few number that companies needs both sides to thrive? Well, I'm not nearly as imaginative as I'd like to be, so I don't have the answer to that question. But if it was anything easy, I'm sure the industry would've figured it out by now.


---

And I think that is where the PC gaming industry analogy, as fitting as it is until now, ends. PC gaming is by and large the hardcore side of gaming (the more casual side falls more into consoles), as only those truly dedicated have gaming rigs thats updated in a regular basis. So its easy to see that companies are just being douches when your target demographic is more or less uniform throughout and they all want the same thing, but said companies are just too busy using piracy as a scapegoat when its really their own deficiencies is the crux of the matter.

The anime industry, where the hardcore and the casual are mixed in, is a lot harder to please. A move in one direction might not necessarily be a move forward to the industry as a whole.

For example...

1) Try before you buy
In PC gaming, its about having a proper demo before the game is released that would help lower piracy. Can't work with the anime industry, since try before you buy here means you have to show the entire series first. It would be like the PC gaming industry allowing you to try the entire game for free before deciding to buy it, which of course, isn't really feasible in that industry.

It's a huge pleaser to hardcore anime fans if there's legal 'try before you buy' method thats relatively inexpensive (read: streaming), but honestly, the casuals aren't so impressed with it due to subs. Or at least that's what I find that's true of my general area, where the casual community heavily favours dubs.


2) Price
At least the anime industry is one-upping the PC gaming industry here, where they have started to drastically reduced their MSRPs. This really pleases the casuals of anime, but leaves a lot of hardcores a bit lacking as they have less incentive to buy anime as these releases have very little to none in the way of extras. The only little bit of extras they usually have (meaning cover art, lithographs, post cards, translator notes etc.) are vast of the majority of the time not there with the box releases.


3) Digital distribution
For PC gaming, this means Steam/Impulse/D2D/etc, which is relatively successful as a 'pay per download' scheme. Anime industry on the otherhand, has shown that pay per download is largely ineffective via CR's attempts, in both sides this time.



And that's not going into the crux of the problem: that its the source quality that's the problem with anime. Unlike PC gaming, where games are still produced top notch, it is the general thought in the anime industry that both the average quantity and quality of the shows are in decline. Is it any wonder then that the general anime interest is down as well?

But if there's one thing anime industry still has in commong with PC gaming industry, its that they still use piracy as the scapegoat, when the problem is obviously something else.

I mean, does the industry seriously think we (as the hardcore group) are going to stop 'pirating', when what little of the popular shows that's released (like K-On, Darker than Black s2, and Bakemonogatari, just to name three series here that's popular enough to have its own subforum) aren't even scheduled to be released here yet?

[Nightbat®]

Originally Posted by panzerfan

The Japanese NHK reported that the decrease in Japanese sale volume comparing 2009 to 2008 was by 6.6%, which is huge considering that the value of 2008 sales is 418.7 billion yen. Manga itself, being 191.3 billion yen had a 9.4% decline.

LMAO!

name one thing that DIDN'T decline in 2009

Ah yes, I forgot unemployment went up!

[GDB]

Originally Posted by karice67

Again, how about overhead, marketing and royalties? As was noted by TinyRedLeaf.
Because of those overhead costs, I don't think a download system will work in Japan. But as I mentioned before, studios are finding new ways to make their DVD packages appeal to fans. Whether this will work well enough in the West, where everyone is looking for the cheapest deal possible, is another question.

Way to take what I said about American companies and apply it to Japanese companies.

A licensing company doesn't have to deal with overhead costs that are even close to what Japan's companies have to deal with. Royalties depend on the licensing agreement, and the level of out-of-company marketing done nowadays is ridiculously small.

[Vexx]

Originally Posted by Nightbat®

LMAO!

name one thing that DIDN'T decline in 2009

Ah yes, I forgot unemployment went up!

Ah.. there was this little World Wide Economy Crash they're conveniently ignoring if they're using that as a supporting point.

[Sister Princess]

Originally Posted by SaintessHeart

I am sure Les Paul and Korg will certainly thank them for driving up their sales.

I still believe this is a mere lie.

[0utf0xZer0]

Originally Posted by karice67

The market here in Japan is quite frankly saturated. I could do with far less titles to choose from each season...especially now that they're coming up with fantastic extras that have made me start collecting three different series in the past year.

This is actually what I'd call the one big downside to the Japanese pricing model: when fans can only afford a few series per year, won't most fans gravitate towards titles that are big hits? From the sales numbers I've seen, the top few shows sell like five or ten times as many DVDs as other shows. I'm not going to claim that every show deserves to get good sales numbers, but there are lots of series that I think are great that sell under 2000 units per volume in Japan.

As someone else has already said, the Japanese e-book market (which apparently includes manga, though not the most popular titles atm) is sizeable and growing. Unfortunately for overseas fans, most publishers probably don't accept foreign credit cards, but that's another matter. However, the e-book market still has a long way to go, starting with customers realising that e-books only remove printing and storage costs - overhead, marketing and royalties remain (source).

Off topic, but what sort of ebook readers do you have in Japan?

Originally Posted by karice67

Sure...but from the way you all talk about what anime you buy, there are a couple of major difference between the Western and the Japanese market. Think about it: even in Japan, what's the difference between the series that sell and those that don't? The extras. I haven't bought Bakemonogatari, Durarara!! and Working (amongst other things) just to watch those series again. I'm far more interested in the singles, side stories and character commentaries, and they just about make the Amazon price worthwhile. (Stores that sell them full price typically provide some other exclusive extra, and different stores will provide different extras.) Secondly, people who just want to watch a series would just go to a video shop to rent the DVDs - anime, Japanese movies, American movies and tv shows are all available.

Do rental versions not come with extra features too? While I can see why a rental shop would only want to rent you the discs for a show rather than the entire packaging, wouldn't these discs still include features like commentary tracks?

I get the impression that rentals play a much bigger role in the Japanese anime fandom than they do in Canada. I've sometimes heard the rental market pitched as an alternative to fansubs for sampling series, but in Canada that's not really a solution because aside from the fact so much stuff never gets licensed, it's very hard to get anime through rental channels in Canada - I can't even find a lot of recent anime on Zip.ca, which is a national online rental service, to say nothing about how little is available for rent through local shops. And that's even before we touch on the issue of how much stuff never gets licensed for distribution here.

[karice67]

Originally Posted by GDB

Way to take what I said about American companies and apply it to Japanese companies.

A licensing company doesn't have to deal with overhead costs that are even close to what Japan's companies have to deal with. Royalties depend on the licensing agreement, and the level of out-of-company marketing done nowadays is ridiculously small.

My bad.
But still, their overhead costs are to do with the initial license along with subbing and dubbing, the costs of which I don't have clear figures for (except for subbing, which at ~$120 per episode for Crunchy Roll is pretty cheap). Sure, they aren't as high as the Japanese companies, but given the price demands of Western fans, I don't think it's sustainable at present for companies to rely on DVD sales at extremely low prices.

Does anyone have any figures on licensing costs?

@0utf0xZer0
(1)Hm...other then those that really love a series no matter what, I'd say fans probably gravitate to series that provide them with the extras they want, which might range from director commentary and seiyuu extras to specially designed boxes and postcards etc. But I might be just speaking for myself and the few other people I know who buy DVDs.

(2)e-book readers? Most people probably use their cell phones. Or computers.

(3)I only brought it up because a few people were saying that DVD prices in Japan are ridiculous. They are - but we pay for what we get, and rentals etc ensure that we have legal options. The culture is completely different in the West, making it difficult to compare them. Hence, I have no idea what kind of model would work in the West.

@DragoonKain3
I don't think it's that simple myself...but I still think cutting down on the number of series would be a start. Or perhaps, they could try selective marketing aimed at the collectors (e.g. Eve no Jikan, which had just 3000 copies made of each disc...and enough buzz now that people are probably going to buy the movie version too). Branching out into other merchandise more might also help, but they'd have to find/create the market for that first.

As mentioned before, I have no idea how they/you can turn the industry around. But I do believe that not only licensing companies, but consumers need to compromise too.

[Wervy]

So they are blaming the fans because they are failing, and not the horrible quality of their dubs? Hell, I would pirate their work just on the principle of this. If you fail to run a busness because your product is inferior you must be a child to blame others.

[bayoab]

Originally Posted by 0utf0xZer0

This is actually what I'd call the one big downside to the Japanese pricing model: when fans can only afford a few series per year, won't most fans gravitate towards titles that are big hits?

You have to remember there is a huge second hand marketplace in Japan. (Like, it probably rivals the first sale market on a relative scale.) The second hand market means that fans can reclaim some* money from old products to put back into brand new products.

*Based on the prices, I'd estimate anywhere between 25% and 75% of the original cost.

Originally Posted by karice67

Does anyone have any figures on licensing costs?

Supposedly between 5k and 15k/ep right now for a brand new series for R1 home video rights.

[Kaioshin Sama]

You know what, I think at this point if there's any blame to be placed for the faltering and stalling of the anime industry that it should rest as much with the Japanese industry as anyone? I agree that historically the Western industry has been horribly mismanaged, but the incredible shortsightedness on the Japanese side of things in the past few years has been something of a gong show too. There are many things about this situation and how the industry has gotten to the point where it is staring into the abyss that I just cannot understand. It's practices as of late make me think that they actually want the industry to shrink rather than grow and expand:

- Why the utter refusal to lower prices for products as an effort to broaden it's appeal to thriftier consumers? Are they actively trying to keep the product within the dominion of the hardcore otaku consumer demographic?

- Why the attempt to foist what should be a regionally specific pocket market economy on Western viewers (Bandai Visual) and making the importing of something as simple as a video game an often $100+ affair (Playasia, Amazon.JP etc)? Of course people will be tempted to go to pseudo-pirate and indie sites like YesAsia or pirate products themselves if they feel the products value does not match the price.

- Why the continued narrowing of anime's scope and target demographic appeal more and more towards the hardcore moe otaku over the past several years; seemingly without a plan b or much of an attempt to at least diversify? The sudden explosion of niche eroge and light novel adaptations that are simply unmarketable to the average Western consumer seems a bit like putting too many eggs in one basket to me. What if even one or two times the niche demographic doesn't come through.....

- Why the acquiescing to the often unreasonable demands of the hardcore moe otaku demographic? Why seemingly rely on them and them alone....to cater to their needs and to try and avoid their tantrums (see the Kannagi incident as an example) instead of making a greater effort to reconnect with and listen to the voices of older and maturer audiences that have been left behind in the rush to get in on the moe boom?

And to the anime industry itself I have to wonder....why ask why the situation has become so dire? Maybe it's time for an internal audit instead of more finger pointing and blaming of only the pirates and misfits

[0utf0xZer0]

Originally Posted by Kaioshin Sama

- Why the utter refusal to lower prices for products in an effort to broaden it's appeal to thriftier consumers? Are they actively trying to keep it within the dominion of the hardcore otaku consumer demographic?

I posted about this a few pages back... basically, the Japanese producers maintain this pricing because it allows a show like Clannad to pull in a domestic market DVD revenue that's in the same ballpark as the US market revenue for a show like Battlestar Galactica - in a market with half the population.

Originally Posted by Kaioshin Sama

- Why the continued narrowing of anime's scope and target demographic appeal more and more towards the hardcore moe otaku over the past several years; seemingly without a plan b or much of an attempt to at least diversify? The sudden explosion of niche eroge and light novel adaptations that are simply unmarketable to the average Western consumer seems a bit like putting too many eggs in one basket to me. What if even one or two times the niche demographic doesn't come through.....


- Why the acquiescing to the often unreasonable demands of the hardcore moe otaku demographic? Why seemingly rely on them and them alone....to cater to their needs and to try and avoid their tantrums (see the Kannagi incident as an example) instead of making a greater effort to reconnect with and listen to the voices of older and maturer audiences that have been left behind in the rush to get in on the moe boom?

Which brings me to the second part of the equation: one poster a few pages back quoted an article as saying that the number of shows aired in the 7PM to 10PM - you know, time slots that actually generate ad revenue - has dropped dramatically the past few years. And of course you don't produce the same kind of show you'd produce for a 10PM time slot for a 2AM one because the demographics are different. From what I can see, the net result is that the system pretty much puts control over what kind of anime gets made into the hands of network executives.

(I suspect there's a little bit of "erogame companies are willing to foot part of the bill in exchange for the adaptation raising their game's profile" going on too.)

Edit: actually, upon reflection, the bulk of the niche "sells 2K DVDs" moe titles out there seem to produced by small studios, which leads me to suspect that what's really going on is that small studios are saying "we'll produce anything you want, so long as you foot the bill" and the companies in the moe business are the only ones willing to step in to pay that bill.

[Kaioshin Sama]

Originally Posted by 0utf0xZer0

Which brings me to the second part of the equation: one poster a few pages back quoted an article as saying that the number of shows aired in the 7PM to 10PM - you know, time slots that actually generate ad revenue - has dropped dramatically the past few years. And of course you don't produce the same kind of show you'd produce for a 10PM time slot for a 2AM one because the demographics are different. From what I can see, the net result is that the system pretty much puts control over what kind of anime gets made into the hands of network executives.

Which makes it even less surprising that the studios seem poised to start taking the OVA and Movie route more and more.

Edit: actually, upon reflection, the bulk of the niche "sells 2K DVDs" moe titles out there seem to produced by small studios, which leads me to suspect that what's really going on is that small studios are saying "we'll produce anything you want, so long as you foot the bill" and the companies in the moe business are the only ones willing to step in to pay that bill.

I seem to recall the ANNcast that was linked in the opening post mentioning that niche moe titles are basically the B-Anime of the current era whereas historically it was ultra-low profile and often independently produced pornographic OVA's. It's kind of a sad state to see the industry in because these 2K a disc B-titles strike me as fairly far from low profile. I can't see any reason why things should be the way they are now.....but they are....

[Tk3997]

The problem with Anime Industry according to me:
1. Most of what Japan puts out is shit I don't want
2. The guys in the west don't release the stuff I do 90% of the time.
3. When they do they waste money dubbing it and then overcharge for it so I don't want to buy it anyway.

Really if you think I'm gonna pay more for a half dozen episodes of a new anime series then I will for a new Halo game or a half dozen books that will give me dozens of hours of entertainment you're out of your mind.

[karice67]

I'm still in the process of finding out more about the state of the anime industry here. (Personally, I think it's returning to sustainable levels, but there are many more factors that I'm not entirely aware of yet.)

But I did find this interesting response to Eric Sherman's post.

More to discuss?

[Vexx]

Originally Posted by Tk3997

The problem with Anime Industry according to me:
1. Most of what Japan puts out is shit I don't want
2. The guys in the west don't release the stuff I do 90% of the time.
3. When they do they waste money dubbing it and then overcharge for it so I don't want to buy it anyway.

Really if you think I'm gonna pay more for a half dozen episodes of a new anime series then I will for a new Halo game or a half dozen books that will give me dozens of hours of entertainment you're out of your mind.

The "dollars per entertainment hour" of cost is something many providers of entertainment totally fail to reckon with.
100hr RPG for $60? ... 60cents/hr outstanding.
30hr RPG for $60? ... $2/hr wtf?

$10 for a 2hr movie? .... $5/hr it had better rock.
$20 for a rewatchable epic movie? .... the more I rewatch it the cheaper.

... and so on. All that entertainment is competing with each other whether they think so or not.

I used to have an a analogous discussion with an HR manager at a non-profit. She'd do her salary comparisions against "other likewise non-profits" and I'd say, "But that's not what you're competing with for talent, you're competing against everyone who needs that talent and that's why you can't find anyone."

[0utf0xZer0]

Originally Posted by Kaioshin Sama

Which makes it even less surprising that the studios seem poised to start taking the OVA and Movie route more and more.

At some point, I figure that the costs to set up a server farm are going to become cheap enough that most producers are going to say screw buying late night time slots and just stream their shows.[/Quote]

Originally Posted by Kaioshin Sama

I seem to recall the ANNcast that was linked in the opening post mentioning that niche moe titles are basically the B-Anime of the current era whereas historically it was ultra-low profile and often independently produced pornographic OVA's. It's kind of a sad state to see the industry in because these 2K a disc B-titles strike me as fairly far from low profile. I can't see any reason why things should be the way they are now.....but they are....

I really do think the idea that these shows help promote the games/manga/etc. they're based on helps explain it... if you can sell 6000 extra copies of your game by producing a twelve episode anime, it's pretty much equivalent to selling an extra thousand copies per volume of the anime on your balance sheet. What makes less sense is when a 2600 unit per volume series gets a second season (Nyankoi being the example I'm thinking of here), since I doubt a second season has the same value for increasing source material sales that a first season does.

I don't know why many seemingly not low profile titles get such poor sales, except for the case of Umineko, which was basically that the franchise's fans hated the fact that the director had to cut stuff to make it fit in 26 episodes. Those changes (which I'm fairly certain were necessary to get the production out the door) did way, way more to damage a show's sales than a spat over a characters virginity in Kannagi ever did - in fact, Kannagi's director credits that show's high DVD sales to the popularity of the manga and sees his show as a rare example of the source material serving the anime rather than the other way around.

Originally Posted by Vexx

The "dollars per entertainment hour" of cost is something many providers of entertainment totally fail to reckon with.
100hr RPG for $60? ... 60cents/hr outstanding.
30hr RPG for $60? ... $2/hr wtf?

$10 for a 2hr movie? .... $5/hr it had better rock.
$20 for a rewatchable epic movie? .... the more I rewatch it the cheaper.

... and so on. All that entertainment is competing with each other whether they think so or not.

I used to have an a analogous discussion with an HR manager at a non-profit. She'd do her salary comparisions against "other likewise non-profits" and I'd say, "But that's not what you're competing with for talent, you're competing against everyone who needs that talent and that's why you can't find anyone."

I personally don't see the $/hr measure as that applicable to fansub watchers though. Let's face it, we're essentially buying anime after the fact so that the Japanese industry will keep pumping out more stuff that we can watch on fansub. I'm rather proud of the fact I do my part by the industry and have an immensely more respect for the college kids who scrounge together $100 a year to buy a couple box sets than I do for the freeloaders.

On the flip side, if it weren't for fansubs (and other methods such as CR), the $/hr measure would be important to me, so it's unlikely I'd be watching much anime under that scenario.

[karice67]

Originally Posted by Kaioshin Sama

- Why the utter refusal to lower prices for products as an effort to broaden it's appeal to thriftier consumers? Are they actively trying to keep the product within the dominion of the hardcore otaku consumer demographic?

What exactly do you want them to buy? Buy DVDs just to watch a show? I've already given one good reason why such customers don't have to do that. Another reason would be that we simply don't have enough space in our apartments. Other merchandise? Same space problem. But most of that merchandise is cheap enough that people will buy it if they really want it.

As for the rest, people in the industry are apparently aware of most of the problems. But it's not that easy to change it because of the Japanese business and career mindset. Try listening to this podcast - what "Chi" says about Japanese culture is pretty much in line with what I've experienced, and really goes a long way to explaining why it's so difficult to get change started. It might even be a matter of educating the upcoming generations of leaders and waiting for the incumbents to retire.

[Spectacular_Insanity]

Originally Posted by Draneor

You may want to re-consider how "hardcore otaku" you are if $25 (the cost of two meals) seems expensive for a series you love. But I realize that "otaku" is used among English fans like "everyone gets a sticker."

More to the point, several boxsets of Full Metal Panic have been released for several years now. You can get the first for at least 46% off online or about $50 (not to mention no sales tax). Try RightStuf during a studio sale, DVDPacific, or Deepdiscount. If you wait a bit, FUNimation may even release it on Blu-Ray or perhaps their new S.A.V.E line (entire season for MSRP of $19.99 to $29.99 which, again, you can get up to 46% off online). The R1 anime industry has been lowering the price to make anime affordable for poor college students. Singles are basically dead these days.

I was using it as an example.

And being an otaku isn't like fulfilling some set requirement... it's a label anyone can give themselves. And I don't consider myself hardcore, anyway. I never stated that I did. It was simply a hyperbole to make a point.