Surface Tension: The Threat of a Animation Bubble Burst

[bayoab]

Originally Posted by Nosauz

This is my main problem about supporting the American anime industry, I find that even though I love the product being made, my purchase has very little portion of the profits going to the company that did the brunt of the work.

According to industry members, depending on the agreement, anywhere between 50% to 75% of the wholesale price of a DVD ends up back with the Japanese companies that they bought the series from.

[sa547]

Originally Posted by Toua

Although this is standard practice for late-night anime TV show, it's not the studios that have to pay for TV slots in Japan, the ones that pay for it are production committees.


This is how the anime business works:

1.) A production committee is a gathering of different sponsors from the entertainment industry who finance a given production.

2.) They hire production houses such as animation studios, sound studios et cetera, and other contractors such as seiyuu. They pay these people a one time sum for their services, forget royalties and all that bullshit.

3.) Then they pay TV stations money for a given timeslot. If you think about it, it makes sense because TV stations basically sell air time. Production committees then decide how they want to make use of it. As they can't get third-party sponsors for their production because everyday Japanese hate otaku, they fill their time slot with ads for products of all sponsors included.
Obviously, a different business model applies for anime aired in prime time. Those rely on profits from third-party advertisers that look at ratings.

4.) Production committees then recoup costs from media mix sales (DVD, novel, comic etc), merchandise sales, and other licences.


The real tragedy is that production houses get paid very little. These companies don't have strong labor unions, they're not rich to stand up in court against productions committees that forget to pay them, bigger production houses have to outsource a lot of work overseas, and even then their employees make a bare minimum. So the cycle of exploitation continues.

Thanks for clarifying on how the system works. Turns out that doing animation business to be hellishly more complex, with almost everything taking out of the gross until there's little left. Hence the common knowledge that some of them working in the industry -- be it lower-tier seiyuu or junior animators -- who work below the "line" have to moonlight as waiters, convenience store cashiers, etc.

I'd like to add the fact that IMO that local TV stations in my country buy broadcasting rights of a title from, say d-Rights or Sunrise, then they air it in dubbed form. This is one of the legal ways for me (although in a very long way) to support the efforts of the studio financially and to recoup their costs, despite the fact that localization is a hit-or-miss proposition (with fans these days so sensitive about the dubbing).

Going back to topic, @Vexx, either the spokespersons are telling the truth or they're seeking blame for their faults, taking advantage of the current economic downturn.

[dahoosafeth]

visiting the ANN forum most certainly didnt help answer any of my queries, but instead has left me with more doubts and worries than before. I noticed that the focus there was more on the issue on the effects of fansubbing, and whether its the root cause of the problem. couple that with the fact that other entertainment industries i.e. videogames ( correct me if im wrong, infact ill be glad if i was) have not been effected all that badly, does point to the fact that there is something wrong with the anime industry apart from the recession. having said that, it has been hammering out close to 200 bilion yen for the last few years, and only since 2007 ( as far as i know) have they been incurring serious losses. would that be due to the fact that the anime community which depends on fansubs has grown rapidly since then, or that the global recession started then as well? its all slightly distressing

at any rate, is there any way we can gauge the severity of the problem/what the problem is and its implications just from the article?

edit: http://www.yomiuri.co.jp/dy/features...20TDY13002.htm

[sa547]

TV stations once competed with each other to air quality animation in the prime-time hours of 7-10 p.m., particularly in the slot from 7 p.m., earning the support of young viewers. They were able to garner ratings of more than 20 percent with some programs. However, due to the decrease in the number of children because of the low birthrate, and in light of the diversification of means of entertainment now available to children, such as video games and mobile phones, the potential audience for anime programs in prime time has dwindled significantly.

...

TV viewing habits not only in prime time but for terrestrial broadcasts in general are believed to have been changing in recent years, partly due to the widespread availability of satellite or cable television services, as well as due to a trend of working people getting home at later hours. It is clear that animation is no longer the central player in prime time.

Things have changed considerably, and I wonder what Japanese children are actually watching in these days. Apart from the usual educational programs... Soap operas, perhaps?

@dahoosafeth: there's obviously a parallel in the situation going on here in my country. In the minds of local TV stations here, anime is not a salable asset.

Based on my observations over the few years, anime programming on free-to-air television in the Philippines has decreased as well (to the extent of only one or two titles on the 5:30pm slot, and the schizophrenic decisions of TV station CEOs and program acquisition managers).

Add that problem with the following factors:
* cable television,
* pirated DVDs,
* the Internet,
* cellular phones,
* computer games (including MMOGs),
* dedicated channels for anime such as Hero TV and Animax SEA, but facing heavier competition from American cartoons offered by CN, Nickelodeon, and Disney (all three "Americans" popular with parents wanting their children to learn the English language, and also popular with the advertisers),
* and the continuous overwhelming mainstream popularity of soap operas from Latin America and East Asia (i.e. although both came from Hana Yori Dango, Meteor Garden was far more popular than its anime equivalent) and fantasy shows (called "fanta-serye")

So it boils down there that one of my 9-year-old nieces asks me if there's a Goong (a Korean teen soap opera) replay on TV tonight. Or that my nephew is asking me permission to go down to the nearest computer shop and play online games. If they want to watch TV, it's soap operas and noontime variety shows.

[jsieczkar]

Originally Posted by dahoosafeth

visiting the ANN forum most certainly didnt help answer any of my queries, but instead has left me with more doubts and worries than before. I noticed that the focus there was more on the issue on the effects of fansubbing, and whether its the root cause of the problem. couple that with the fact that other entertainment industries i.e. videogames ( correct me if im wrong, infact ill be glad if i was) have not been effected all that badly, does point to the fact that there is something wrong with the anime industry apart from the recession. having said that, it has been hammering out close to 200 bilion yen for the last few years, and only since 2007 ( as far as i know) have they been incurring serious losses. would that be due to the fact that the anime community which depends on fansubs has grown rapidly since then, or that the global recession started then as well? its all slightly distressing

at any rate, is there any way we can gauge the severity of the problem/what the problem is and its implications just from the article?

edit: http://www.yomiuri.co.jp/dy/features...20TDY13002.htm

The very heavy doom and gloom of "there will be no more anime" is over the top. As Toua pointed out the studios that make the shows see very little of the revenue, especially the smaller ones that do not have the resources to self produce titles. This has caused a paycheck to paycheck system for several studios, add to it the number of studios competing for titles is very high which means that the Production groups can drive the market price down. How are the video game companies staying afloat, the big ones have far greater amounts of cash reserves then what the anime industry has. The little inde developers have very little overhead to compensate for, the mid-sized companies are struggling to survive.
For the American movie industry theaters are really hurting, but companies like Netflix are doing well. Why pay $30 for a family to go to a movie at a theater when for $18 you watch 18 moves a month. The companies who come up with new ideas will survive those stuck in ruts will die...unless the government keeps them afloat. Or they are like several major companies that have massive rainy day cash reserves ie Toyota.

Never go to the ANN boards if you want to learn something. The same people will hijack every single thread.

[Ryuou]

Although I think fansubs have a detrimental effect to an extent on the industry (it can be easily argued that they're actually better for the industry) and they need to be dealt with soon, they are not the cause of the bubble bursting. If in fact it is.

The anime industry needs to be revamped and they need to learn how to monetize more effectively. Higher quality is also necessary.

One of my goals if I become successful financially is actually to open an Anime production studio. So I have a lot of ideas about how the industry should adapt.

[dahoosafeth]

Originally Posted by jsieczkar

The very heavy doom and gloom of "there will be no more anime" is over the top. As Toua pointed out the studios that make the shows see very little of the revenue, especially the smaller ones that do not have the resources to self produce titles. This has caused a paycheck to paycheck system for several studios, add to it the number of studios competing for titles is very high which means that the Production groups can drive the market price down. How are the video game companies staying afloat, the big ones have far greater amounts of cash reserves then what the anime industry has. The little inde developers have very little overhead to compensate for, the mid-sized companies are struggling to survive.
For the American movie industry theaters are really hurting, but companies like Netflix are doing well. Why pay $30 for a family to go to a movie at a theater when for $18 you watch 18 moves a month. The companies who come up with new ideas will survive those stuck in ruts will die...unless the government keeps them afloat. Or they are like several major companies that have massive rainy day cash reserves ie Toyota.

Never go to the ANN boards if you want to learn something. The same people will hijack every single thread.

what worries me the most is the small tidbit about anime not being shown on the same timeslot.. if anime is no longer seen as profitable in japan... then it really is an issue isnt it? so, what now? if things are really as serious as its being made out to be is there anything we can actively do? or do we just have to wait and hope for the best ?

just out of curiousity - how did the japanese anime industry pick itself up after the 1980's crash - wasnt a large part of it to do with hooking up with US companies?

[Nosauz]

anime is profitable, otaku in japan support the industry, if it wasn't profitable you wouldn't have all these industries based around anime. What we are talking about is a slow down in the industry, because all industries go through a growth and shrikage cycle, it just some are worried with the compounding of the global economy the industry might shrink or burst so to say. Similar to other sectors of the economy that have burst in the past, like housing, to blue chips. Like any industry as long as you have a solid product that consumers want, with time you can rebuild, this happened with blue chips, it will happen with housing, it really depends on what your selling.

[oompa loompa]

Originally Posted by Nosauz

anime is profitable, otaku in japan support the industry, if it wasn't profitable you wouldn't have all these industries based around anime. What we are talking about is a slow down in the industry, because all industries go through a growth and shrikage cycle, it just some are worried with the compounding of the global economy the industry might shrink or burst so to say. Similar to other sectors of the economy that have burst in the past, like housing, to blue chips. Like any industry as long as you have a solid product that consumers want, with time you can rebuild, this happened with blue chips, it will happen with housing, it really depends on what your selling.

wait, i was just going to ask the same thing. Before i go any further, I have very little knowledge of the subject, so pardon my ignorance - but, sure companies have been earning 20 billion yen or so less in revenue ( btw, have figures for 2008 been released? 2007 might have been a brutal year, but it would spell a lot of trouble if it decreased by the tune of another 20 billion or so ). still, its to be expected, its no secret that the japanese economy hasnt been doing the greatest for a long time now, yet the animation/entertainment industry boomed, which peaked recently in the last few years. therefore, isnt it logical to assume that theyre still making profits, even if they arnt as huge as before? that would indicate the economy slowing down in face of recession, not a crash of an industry - does anyone know if they are incurring losses? however, if the US anime market crashes, it will have severe implications.
having said that, the article about the change in time slots is worrying, i hate to put it in.. such a stupid way, but if japan itself loses faith in anime, it would spell disaster. however, is there any real reason to believe that? the article states that kids might not grow up watching anime, might specifically refer to the timeslot where kids could watch, rather than the whole industry in total? i would hope that thats what the author intended on applying.. im curious to what implications shuffling time slots around like that really has. well the more i read about it the more i believe that there is need of some serious revamping of business strategies.. i sure hope digitizing the media helps as its intended to - yet as far as i know a lot of what is available for 'legal' streaming and download are dubs - not something that will break the fansubbing trend .
anyways, what does all of this really indicate, an issue, while being serious, blown out of proportions, or a very real threat to the existence of the anime industry?

[Nosauz]

why would a us crash be that detrimental to the japanese industry, the us produces zero anime, all it does is distributes the product. Japanese otaku fandom is what really supports the industry, having a slice of the U.S. pie is nice but in all actuality they could survive with out the us. Right the american anime industry is flawed in the way it handles its fan base and its overall marketing. Basically the only real community that the anime industry owns right now is Anime News Network, and you can tell they've been bought, just read some of their reviews, on average pretty much every anime scores 8 or above, its basically a big comercial for anime products. The U.S. slice is not critical to the japanese at all, if the u.s went poof most likely they would scale down production but that in itself would not warrant a complete implosion of that industry.

[oompa loompa]

Originally Posted by Nosauz

why would a us crash be that detrimental to the japanese industry, the us produces zero anime, all it does is distributes the product. Japanese otaku fandom is what really supports the industry, having a slice of the U.S. pie is nice but in all actuality they could survive with out the us. Right the american anime industry is flawed in the way it handles its fan base and its overall marketing. Basically the only real community that the anime industry owns right now is Anime News Network, and you can tell they've been bought, just read some of their reviews, on average pretty much every anime scores 8 or above, its basically a big comercial for anime products. The U.S. slice is not critical to the japanese at all, if the u.s went poof most likely they would scale down production but that in itself would not warrant a complete implosion of that industry.

forgive me if im wrong, but didnt the increased introduction of anime in the US market bring the anime's industry after the 'crash' of the late 1980's back on its feet? if i am wrong, its a good thing

[Nosauz]

Its true us markets help, and actually a lot of shows would never get finished with out money from u.s lisence deals, but still the majority of money that supports the industry come from Japanese otaku, not american otaku, who really aren't even otaku. The mentality is very different, you'll rarley see an american fan buy 52 copies a game to get all the phone cards, though this is just one example, the fandom in japan is much stronger and should be since this were most of the material orginates from. And really when you think about how much japanese fandom supports, not only do the support most of the industry but they also support an entire doujinshi market too. so with the loss of americans, which won't happen, wouldn't be the end, it would just mean a shift from 200+ titles a year to a quater of that.

[oompa loompa]

Originally Posted by Nosauz

Its true us markets help, and actually a lot of shows would never get finished with out money from u.s lisence deals, but still the majority of money that supports the industry come from Japanese otaku, not american otaku, who really aren't even otaku. The mentality is very different, you'll rarley see an american fan buy 52 copies a game to get all the phone cards, though this is just one example, the fandom in japan is much stronger and should be since this were most of the material orginates from. And really when you think about how much japanese fandom supports, not only do the support most of the industry but they also support an entire doujinshi market too. so with the loss of americans, which won't happen, wouldn't be the end, it would just mean a shift from 200+ titles a year to a quater of that.

strange, I never thought id be saying this, but thats some of the best news ive heard all day - if thats a scenario where the industry does not adapt too well - i certainly hope youre right though i would like to know your rationale behind that - hopefully they will adapt though.

[dahoosafeth]

err.. how credible is greg ayres take on this in your opinion?

[ArrowSmith]

Originally Posted by Nosauz

your really just not looking hard enough? Kara no kyoukai, darker than black, evangelion, beserk, there are a lot of adult titles, you just have to look for them. And its not like their hidden.

On the note, pundits just assume one point and run with it without really analyzing the other aspect, this is what makes them stand out, this is the one problem with talking heads, they rarely are grounded in reality, their in their own little verse where everything is black and white. This leads to good pundits allowing a base to gather moment under them but they really take everything to the extreme. I think the truth is non japanese anime fans just want what japanese anime fans get in support from the industry, nothing more nothing less. If thats a sense of entitlement, then I find the word entitlement has been greatly distorted. As a consumer of a product, I don't want to pay twice as much as the guy across the ocean and also get an inferior product. It doesn't make sense. It's like selling me fois gras, but serving me chicken liver, then to add insult to injury the guy next to me who order fois is getting fois and he gets a complementary bottle of beur blanc. Hell its gonna take a long time till what I want as a fan comes but right I just want something comparable, and something that relies on blind faith, or internet testimonials of whether or not a product is good just isn't going to cut it. I think its very safe to say that the Anime industry is very similar to the infomercial industry, they give you a 10 minute (mind you the anime pitch is proabably 30 seconds of your typical narration voice) pitch and expect you to relieve your cash like a 40 yr old virgin whos with a 5 dollar hooker. My whole schtick is why am I as a willing consumer being treated like a second class citizen. If the americans are not part of your demographic then don't market to us, and don't bitch that we don't buy your shitty hand me downs, I mean its basicaly segmenting the fanbase based on the geographical boundries, whilst we live in a digital age that pretty much unites the world.

You have to realize the Japanese are very racist and look down at the Americans.

[bayoab]

Originally Posted by Nosauz

anime is profitable, otaku in japan support the industry, if it wasn't profitable you wouldn't have all these industries based around anime.

This statement is way too general. As a whole, it is true. However, when broken down to specific shows, it is not always true. There are shows out there that companies took a loss on making. There are some shows which sold really well, and the company still lost money on them.

Originally Posted by Nosauz

why would a us crash be that detrimental to the japanese industry, the us produces zero anime, all it does is distributes the product.

Licensing costs are figured into some of these show's budgets and without licensing, they can't afford to make the shows.

Japanese otaku fandom is what really supports the industry, having a slice of the U.S. pie is nice but in all actuality they could survive with out the us.

It can survive, but nowhere near the size it currently is. It will probably drop 30-50% in size.

Basically the only real community that the anime industry owns right now is Anime News Network, and you can tell they've been bought, just read some of their reviews, on average pretty much every anime scores 8 or above, its basically a big comercial for anime products.

What are you talking about? ANN doesn't even hand out numerical scores. ANN pans shows repeatedly. They frequently get accused of putting reviewers who they know from past history are more likely to write a controversial review. ANN is not in anyone's pockets.

[cyth]

Originally Posted by bayoab

It can survive, but nowhere near the size it currently is. It will probably drop 30-50% in size.

I highly doubt that. John Oppliger made this approximation not long ago on AnimeNation's blog:

In 2003, Newsweek Magazine reported that Toei Animation earned 35% of its annual income from international sales. In 2004 Toei earned 40% of its revenue from American & European licensing & sales. But Toei is probably an unusual exception since the studio is Japan’s largest anime producer, and its productions are among the most popular anime titles in the international market. By comparison, Gonzo reported in 2005 that only 8.2% of its revenue came from American sales, 1.7% of its revenue was generated by European sales, and a mere .7% of the company’s revenue came from Oceaniac and Asian sales outside of Japan. Roughly only 8% of 2008’s new Japanese television anime series have been licensed for American distribution, with less than 5% of 2008’s new television anime licensed for American DVD release.

Originally Posted by bayoab

What are you talking about? ANN doesn't even hand out numerical scores. ANN pans shows repeatedly. They frequently get accused of putting reviewers who they know from past history are more likely to write a controversial review. ANN is not in anyone's pockets.

Yeah, I have to agree with this. ANN only cares for its own pocket; they had no problems criticizing the way the R1 industry operates. Seeing as how the R1 anime advertising market is quickly shrinking, they may not be around for that much longer in this current form.

[Quarkboy]

Originally Posted by dahoosafeth

err.. how credible is greg ayres take on this in your opinion?

His fundamental points are sound but his arguments are somewhere between flawed and outright lies.

[SeijiSensei]

Demographics pose a serious threat to the long-term health of the otaku market in Japan. The birth rate continues to decline, and Japan's population becomes older and older. Since anime viewing falls with age, the market for anime in Japan will inevitably shrink in the years ahead. Of course, this is a slow, extended process, not something that will force studios to close their doors in the next twelve months.

One compensating factor that's often discussed is the tendency for younger Japanese adults to remain at home with their parents. Nearly three out of five 25-29 year-old men are still living at home along with just under half of the women.* Young people living at home presumably have more money to spend on entertainment than they would if they were building a family and establishing a household.

__________

*Comparable data for the US were harder to find, probably because the incidence of adult children living at home is so much lower. From Table F1 in this report by the Census Bureau, roughly five million households had a child over 25 years of age at home, or some 6% of the estimated 78 million "family" households in 2008, with another 8% having a child between 18 and 25.

[sa547]

Originally Posted by dahoosafeth

err.. how credible is greg ayres take on this in your opinion?

I'm afraid this thread does not include the opinions of Mr. Ayres in this discussion, as his health is currently not in good condition, and he may not have a greater grasp of the knowledge of what is going on with this so-called "bubble crisis" (pardon the pun).

Now let's get back to topic.