Forum - View topicNEWS: ADV Takes Over Geneon's Sales, Marketing, Distribution
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Siegel Clyne
Posts: 200 |
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AnimeNation's John Oppliger has some interesting observations on the state of the American anime industry in his "Ask John" column, Is America's Anime Industry in Recovery Right Now?, dated August 8th, 2007.
Note: The preceding column was written before the announcement of the Geneon/ADV deal. Whether this news alters John's views on the subject in any way, shape or form, I don't know. John also describes who licenses anime to international distributors in his "Ask John column, Why Do Licensing Agents Acquire Anime?, dated August 23rd, 2007.
Anime News Network interviewed John Oppliger in 2005. |
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Tempest
 I Run this place.ANN Publisher  Posts: 10420 Location: Do not message me for support. |
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I don:t know who 'theinformant' is, but sources that I know and trust have informed me the exact same thing. This goes well beyond sales & marketing, and will eventually hit production. Dentsu has placed Geneon USA in palliative care. -t |
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CCSYueh
 Posts: 2707 Location: San Diego, CA |
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So are we looking at Geneon vanishing entirely as a label in the US, or more they're cost-cutting by sub-contracting out their US production staff? When my job was eliminated a dozen yrs ago I read an article on the automation of phone services-no, that machine telling you to press 1 for this, 2 for that will NEVER be more efficient than a live body, but it is far cheaper & therefore more attractive to businesses seeking to reduce their bottom line. The idea of contracting work out to an existing company with proven talent in the field so they can slash costs would be enticing, particularly as I've always felt Geneon approached this completely as business. Their lack of extras & expensive box sets have always screamed "We're giving you this anime for a better price than if we sold it in Japan. What more do you want?" At one of their last panels at Comic-con, they had NO info on Saiyuki Reload-just the trailer. They didn't even know if they were putting it out on 6 dvds like ADV did per season or the 7 they actually did as I recall when I asked them. It's sad for the workers, but this kind of unemotional decision sounds totally in line with Geneon's past behavior. I've seen comments from time to time on how hard it is for some of the licensees trying to deal with the Japanese Companies (Toei comes up a lot)--can't this be seen in a similar view? The Japanese parent company looked at the sales in the US, the cost of US production & found a cost-saving move? What's a bunch of foreign workers to them? I have to think some of the US employees had to have issues. My husband worked at Safeway in the 80's when they had the rep of being the most expensive of the grocery stores. My husband said their produce manager was always begging the store manager to do something, convince corporate somehow their produce prices were far higher than other stores in SoCal & finally Safeway sold off the SoCal stores (yeah, I know there's more to it-hostile takeover-Safeway went into debt to buy up stock to protect themselves so selling stores was the quickest way to make up the debt-then Vons defaulted on paying & the stores belong to Safeway again even if they're still called Vons). Some of Geneon's employees had to see the comments out there against their product & had to know something had to give. Yes, like Safeway prided itself on the quality of their produce & meat (the meat's guaranteed-you can take it back if it turns out badly whne you cook it) Geneon probably prided itself on the quality of their product, but sadly a lot of the American public are more interested in quantity over quality. Geneon had good titles, but a lot of American fans seem very willing to pass on a title (they've already downloaded it, right?) if they don't feel they're getting enough bang for their buck. I've seen ADV dvds loaded down with extras even if they're fluff like clean open/close, commentaries, actor auditions, & translator notes. Commentaries are usually interesting & even fun to listen to at least once. I love hearing the outtakes. Extras don't make me buy a title I don't want, but if I'm on the fence, they'll tip me over to taking it home. Clean open/close & trailers aren't much in the way of extras. (Trailers? Aren't those just ads pitching other titles & you want me to be happy to have them?) |
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Invader_Spooch
 Posts: 96 |
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I have to agree with CCSYueh on this one.
I used to like Pioneer back in my early anime days (1996 on), and they definitely tend to snag a decent amount of series I like, but their dubs leave a lot to be desired acting-wise, and their refusal to adapt to a different and (at the time) growing market makes them a poorer company for it, which is evidenced by how bad their sales have been these past couple of years. They rarely put any worthwhile extras, their older DVDs stay way overpriced for what they're worth, and don't get me started on their lackluster frequently reused VAs (if I close my eyes, and can tell I'm listening to anime, then it's a bad dub). Considering all that, coupled with times where they just snag everything they can to snatch any potential profit from their competitors (their Saiyuki Reload dub was TERRIBLE and insulting to me as a fan of the stellar first series dub, the actors were awful and totally phoned it in), it just feels like they could give a crap about the consumer. Yeah, it's a business, and they're out to make money, but making their fans happy and developing a relationship with the customer would encourage repeat business moreso, and they just fail at that, which part of that can be blamed on their marketing department etc. I welcome a potential takeover/buyout/etc of Geneon, because I haven't been happy with a release/dub of theirs in a LONG time, and buying official DVDs of their licensed shows becomes a huge chore more than anything for me nowadays. |
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inthebiz
Posts: 34 Location: Burbank, CA |
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There are no doubt many reasons why Geneon USA may be in trouble.
The whole Anime production/consumer cycle is going through a tough time. But, it is obvious that the single most destructive issue here is the greedy and inflexible license fee demands made by the Japanese licensors and anime producers. They act like it is still 1999, and that every one of their wonderful productions will make millions in America, just like Dragon Ball Z. With hundreds of releases chasing the same dollar, US companies can no longer pay $25,000 - $50,000 each episode, then pay for a quality dub, and still make a profit. All the money is going straight to Japan, with no budget left over for a decent dub, or in many cases, any dub at all. If we want to blame anyone for the problem (including crappy dubs), let's put the blame where it truly belongs: on the stupidly high prices demanded by the production groups in Japan. They are the ones that will eventually bring this industry to its knees. |
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jsevakis
Former ANN Editor in Chief
 Posts: 1684 Location: Los Angeles, CA |
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Maybe that's partially true, but your comments lead me to believe that you've been fed a line, and haven't actually talked to these licensors yourself. Your comments about not being able to afford a dub also lead me to believe you've not been privy to reading a contract. The cost of producing TV anime has tripled in the last decade. The Japanese DVD market is also maturing, and R1 imports back into Japan for a third of the price (or less) of R2 are a growing problem for them. Hence, if they're going to part with their intellectual property, it has to be worth at least the amount they're likely to lose in reverse-imports, plus the production burden relative to whatever value they've attached to the R1 market in relation to the rest of the world. While certainly some blame lies in exaggerated expectations, there's a flip-side: if the R1 company can't market the title to the point where it's profitable for themselves, they shouldn't have licensed it to begin with. |
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Porcupine
 Posts: 1033 |
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I don't know any hard facts about the anime industry, but so far I'm more inclined to follow the thought processes and conclusions of jsekavis rather than inthebiz.
Maybe you two guys could definitively answer this question for me...I asked this a while back but couldn't really get a reputable answer from someone who really works in the industry. When an anime is licensed, is the fee paid to the Japanese companies in the form of a one-time XX dollar payment, or in the form of XX dollars or XX percent profit off of each DVD that is sold? The comments by inthebiz seem to suggest the former case, which would pose a lot of risk for the licensing company as inthebiz is complaining. But if that's the case, why can't the contracts simply be structured as in the latter case? That would significantly lower the risk factor for the licensing companies, while the Japanese companies should still make a lot of money as long as the show ends up selling. |
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jsevakis
Former ANN Editor in Chief
Posts: 1684 Location: Los Angeles, CA |
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Sort of a combination of both. Let me preface this by saying that the following isn't just how anime works, but pretty much every motion picture and TV license. First, there is an up-front change of money, known as the "license fee" or "minimum guarantee". In the case of TV or OAV, this is usually a per-episode amount (though a licensor may insist on dividing longer series up in specified chunks of episodes). There's also likely a charge for materials duplication (as cloning master tapes is expensive). The releasing company then produces whatever DVD product and sells it (and may also have other rights like theatrical, TV, etc...). A certain percentage of those grosses are separated into a separate fund. That fund is used for the following: 1. Recouping any production costs. This includes dubbing, DVD authoring, replication and manufacturing, etc... Once that's all recouped, THEN... 2. Recouping the minimum guarantee. As the "minimum guarantee" implies that this is the guaranteed amount of revenue the licensor will make from the deal, funds are withheld until that amount is actually reached. AFTER THAT POINT... 3. That percentage is paid as royalties to the licensor. Now, that's a lot of money to make back before the licensor sees any residuals. You're probably wondering how many titles actually result in residuals being paid, and the answer is "not many". The minimum guarantee is there so that even if the release tanks, the licensor will have made enough money to call it a day, but OTOH won't lose out if it's an unexpected success. Likewise, since the label takes the majority of the risk, they get to keep the lion's share of the profits, should the release do well. This is how the vast majority of deals are structured, and this system has been around in the entertainment industry for as long as anyone can remember. There are some exceptions, and the minimum guarantee and back-end percentages ("points") vary substantially. Also, sometimes production expenses are recouped before separation into royalty percentages. Does that answer your question? |
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doc-watson42
Encyclopedia Editor
 Posts: 1708 |
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ADV does this to encourage people to buy the initial single releases, as opposed to waiting for the collections, since the purchase of collections tends to cannibalize sales of the discs that are out first and have the highest profit margin, and that therefore do the most to pay for the license.
It does not seem to be—IMDb has no links to it on Amazon (their owner), nor does it show up on Half.com or DVD Price Search. The Wikipedia article has links not only to the episodes on Google Video, but also on the Internet Archive.
Samurai X is from ADV; that title was Sony's fault, not ADV's. |
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inthebiz
Posts: 34 Location: Burbank, CA |
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Actually the average cost from boards thru paint and rendering has increased in real terms only by about 25 - 30%, when you factor in inflation. e.g. The USD conversion cost of producing in the early 90s, was approx. $115,000 - $125,000 per ep. My understanding is the 2006 average per episode cost for anime ranged $150,000 - $160,000.* Both sets of numbers are adjusted, relevant dates, for the Yen FX curve 01/1994 thru 07/2006. Average cost is of course a relative term. e.g. a Mad House production will cost more than some others. This is still less than half of what it costs to produce an episode of "American" animation, and about a third of the cost of producing a major American animated TV series like Spidey. One other thing, I think it may be somewhat foolish for you to assume that anyone else has or has not spoken directly with certain others within this licensor/licensee system.
jsevakis is absolutely right in his description of the average licensing deal. And that is my point, exactly. As more and more individual titles "under perform", licensors are hardballing the MG's, forcing licensors, many of whom do not want to give up (even money-losing) market share, to pay more up-front. We will now also see more split licenses and multiple MG's depending on the licensed right(s). e.g. TV sales and DVD may be "released" by licensee company "A", while licensee company "B" gets merchandising, specific sub-licensing, etc. The end result is that the master licensor group sees two MG's. Although, to be fair, split licenses are also a function of the division of exploitation rights set when the Seisaku Kyoukai (Production Committee) puts the original deal together. So, interestingly enough, as R1 individual title income drops, the licensors are demanding higher MG's to cover the fact that they are less likely to see any significant income down the road. It's not working anymore. Cooperation and a better understanding of territorial markets is the only solution. (*edit: forgot this comparison price when I first posted.) Last edited by inthebiz on Thu Aug 30, 2007 3:06 pm; edited 1 time in total |
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jsevakis
Former ANN Editor in Chief
Posts: 1684 Location: Los Angeles, CA |
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Interesting numbers you share. Apologies for prejudging. If you feel like it, PM me and reveal yourself! 
Good points. However I would also like to point out that what they're expecting now is far less than what they were holding out for in 2004, right around the time of the Musicland crash. From what I've been hearing, the licensors usually understand the problem, but the producers they report to tend to be a little more hard-headed about things. (For countries outside the US, this media market is a fictitious land of milk and honey, regardless of what their product looks like.) They might finally be getting the hint. Putting market share that far ahead of profitability is ultimately detrimental to everyone. The prices might come down a bit more if everyone refused to pay them. |
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Porcupine
Posts: 1033 |
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jsevakis, yes that answers my question quite well, thank you very much for the explanation. It might just be me failing to understand though, but there is one detail in your explanation that confuses me. Just so that I'm clear on your explanation: would you mind clarifying for me what happens in the case where a release fails horribly and does not even come close to making back the minimum guarantee? The minimum guarantee is still paid to the licensor in full, right? So where does that money come from? Does it come out of the licensee's (Geneon USA or ADV Films for example) pockets, therefore forcing the licensee to take a huge loss?
Your explanation confuses me a little because the way I interpret it, it sounds like the licensee still makes a little money for themselves even if they fail to recoup the minimum guarantee (and get past your Stage 2). In which case the licensee only needs to pay back a fraction of the minimum guarantee to the licensor, corresponding to how close the sales got to recouping the MG. But I suspect my interpretation this way is wrong.
About your second paragraph, I understand the problem with the situation you speak of, but I'm not yet convinced that the licensors are really behaving the way you claim, for the reasons you speak of. jsevakis pointed out that the Japanese anime licensors had demanded higher MGs in 2004, and earlier he pointed out other reasons (reverse-importation concerns, increased anime studio production costs) why the MGs may need to be set at a certain level. |
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jsevakis
Former ANN Editor in Chief
Posts: 1684 Location: Los Angeles, CA |
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ALL of the MG is paid up front. Either it's all recouped afterwards (and after that, royalties are paid) or it's not, but the licensor gets the whole thing regardless. If a release completely tanks, the label is in a bad place because they are still out all the money they paid as MG, as well as any production (i.e. dub) expenses they weren't able to recoup. However, if they do moderately well, the amount of revenue they set aside for recouping the MG is pretty low (in the neighborhood of 20%), so they don't necessarily need to get to the point where they're paying royalties to break even on their investment. "Recouping" and "breaking even" are different things, see? All this is to say that if a company is smart, they'll do sales projections on a given title before they license to ensure that they're likely to make money on a title, given the way the costs are structured. If they're routinely missing or ignoring these projections, then there's something very seriously wrong and things need to change. Either more attention needs to be paid to marketing fewer titles better, or certain titles just have no audience here and should not be licensed. But blaming the licensors for setting the prices where they are is just silly, because nobody is holding a gun to the label's head to buy them. (Granted, there are other factors, but marketing often makes a hit as often as quality product.) The whole point of a US distributor is that they're supposed to know the market well enough to be able to make these projections. That vast majority of revenue is the reason why the Japanese studios want to jump into the US market so badly. If they had the know-how, they would cut out the middleman and sell to the US market directly. However, repeated attempts by these Japanese studios prove that the US distributors still know something they don't. |
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Porcupine
Posts: 1033 |
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Thanks. I think I understand it now, that really helped clear things up for me.
So it seems to me like the typical case (for anime) is that the contracts and various percentage numbers in the contracts, and typical final sales figures, are set up such that the majority of the money made by the licensors (on average) are from the MGs, and not royalties. I can see why this could cause friction in the anime industry. As to what the best ways are to resolve that situation, I'll leave it up to you and inthebiz to continue discussing. Thanks again, to the both of you, for taking the time to explain this stuff. |
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starcade
Posts: 204 |
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The great poker game of anime licensing and the like. I see this as a major step toward consolidation to two or maybe three companies with about 95%+ of the non-hentai market.
I think that's what this just about amounts to -- a merger. I mean, Geneon might try for a time to continue, but why would the Japanese want to talk to Geneon when it's clear they're going to be dealing with ADV anyway.
I mean, for me, I have no trouble calling Geneon minor because they are so far behind the Big Three. In fact, as I just said above, I'd be surprised if, in the very near future, there were more than the three companies having meaningful market shares at all. I see this as the first shoe in a consolidation -- ADV wins because they get to market a whole series of new titles which might get them a lot closer to Funi, especially when Geneon just comes into the fold and merges. (Note: When, NOT if...) |
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