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ANNCast - Divine Ed-ification

I get all that. But wasn't it ALWAYS the case that retailers would buy at $10 if the MSRP was $20. I can understand why they'd want to cut out the middleman and make more money, but I just don't get why this is suddenly a new or necessary idea.

Is it that the retailers are suddenly forcing the distributors to sell them the $20 product at a much lower price than they would have ten years ago? Or is it simply that people like Aniplex have decided their products are going to sell at such low numbers, there's no point in going through the traditional retail chain when they can make just as much money selling through their niche website?

Justin made it sound like online retailers have caused the distributors to make less money by selling their products for next to nothing. But again, what I don't get is, if one store sells a DVD for $30 and another sells the same DVD for $18, what does it matter for the distributor? Both stores would've bought the disc for $15, so how do the razor thin margins of the online store have any effect on the distributor's profit?

merr wrote:

I get all that. But wasn't it ALWAYS the case that retailers would buy at $10 if the MSRP was $20. I can understand why they'd want to cut out the middleman and make more money, but I just don't get why this is suddenly a new or necessary idea. Is it that the retailers are suddenly forcing the distributors to sell them the $20 product at a much lower price than they would have ten years ago? Or is it simply that people like Aniplex have decided their products are going to sell at such low numbers, there's no point in going through the traditional retail chain when they can make just as much money selling through their niche website? Justin made it sound like online retailers have caused the distributors to make less money by selling their products for next to nothing. But again, what I don't get is, if one store sells a DVD for $30 and another sells the same DVD for $18, what does it matter for the distributor? Both stores would've bought the disc for $15, so how do the razor thin margins of the online store have any effect on the distributor's profit?

Ah, I get ya now.

But you just explained it yourself. You have two retailers, paying 15 dollars for a DVD, selling it for 30 and 18 dollars respectfully. The distributor simply cuts them out, and instead of selling 15 dollar DVDs to a third party, they sell 30 dollar DVDs directly to you.

If you sell 10,000 DVDs at 15 dollars a pop, you get 150,000.
If you sell 10,000 DVDs at 30 dollars a pop, you get 300,000.

Yeah, but why do that now? I thought Justin was saying that the current, heavily-discounted online market has made things more difficult, so distributors are resorting to tactics like this in order to make money. But why has the online market made it more difficult for distributors? That's what I don't get.

The Aniplex strategy sounds like it would be just as effective even if there weren't heavy price erosion in the DVD market. In fact, the current market actually makes a model like that seem worse because, like you said, consumers are so used to paying below MSRP for things.

The way I understood it, Justin said the discounted online market SPECIFICALLY is bad for the distributors. But why is that the case? From their perspective, how is the situation any different than it was 10 years ago when everything got sold at MSRP? They still make the same amount of money either way. Why is cutting out the middleman suddenly so much more appealing?

The only thing I can think of is that it's a lot easier to set up an internet store nowadays, but that doesn't have much of anything to do with the online price erosion Justin was talking about.

Well, I don't believe what Justin was saying was that the current retail market is killing distribution companies

Yeah, but why do that now? I thought Justin was saying that the current, heavily-discounted online market has made things more difficult, so distributors are resorting to tactics like this in order to make money. But why has the online market made it more difficult for distributors? That's what I don't get.

At no point does it sound like distributors were forced to lower their prices in order to compete, despite what Justin says around 15:00.

Aniplex wants to make more money by selling their discs directly to the consumer, but it seems like their reasons for doing so have very little to do with the DVD market being screwed up in the way Justin described it. Honestly, it looks more like they just want to milk their hardcore audience at the expense of losing the casual market.

...which should be renamed gobbledy-gook...

Ignoring all the other shenanigans that actually happen, like buying on margin, bulk discounting, sales*, returns** and that stuff, it's because the biggest sales were at B&M stores which will no longer stock your product.
Effectively what you have is this:
-B&M stores can't compete with online stores in terms of price because online stores sell based on bulk volume instead of margin.
-Sales in B&M stores die down because the more hardcore people move online to the cheaper prices.
-B&M stores no longer see a reason to carry anime because the margins are going to the same as regular DVDs (none or loss leader). Anime does not bring in the crowds to justify the shelf space.
-For the anime company, sales now plummet because a good majority of the sales were made through B&M.

...oh, and one more related item on my rant, if you rip the DVDs of American releases of anime, you're not a fansubber either. Anyone who has worked in any of the fan translation fields ought to hold the same level of contempt I do for these people. (And yeah, I worked for about a year on a fansubbing team, hopefully the big project I was involved with, Michiko & Hatchin, will get licensed, it was marvelous, and would be my third MANGLOBE purchase. Most of what I'm grateful for with my time fansubbing was making me realize I'd prefer to be doing this professionally.)