Forum - View topic
All About Licensing: Part I


Goto page Previous  1, 2, 3, 4, 5, 6  Next

Note: this is the discussion thread for this article

Anime News Network Forum Index -> Site-related -> Talkback
View previous topic :: View next topic  
Author Message
bglassbrook



Joined: 29 Aug 2006
Posts: 1126
Location: Gaithersburg, MD

PostPosted: Thu Jun 14, 2012 11:22 am Reply with quote
dtm42 wrote:
a company that could have offered decent royalties for years to come.

You've taken the short-sighted view, is what I'm saying.

The problem is long-tails are harder to book, look less apealing, and [by definition] frought with more risk. Consumers are not the only ones suffering from ADHD, business management is frequently right there with them looking for the next new shiny thing to give a bump to current financial returns & earn bonuses. More pragmatically, you don't have to worry about making money in the future if you get it now.
Back to top
View user's profile Send private message My Anime My Manga
Coderjoe



Joined: 18 Nov 2005
Posts: 50

PostPosted: Fri Jun 15, 2012 10:48 pm Reply with quote
LUNI_TUNZ wrote:
I never imagined drunken orgies to be a regular part of negotiations, or that 35 mm film was explosive.

A good comparison of the original Nitrate film stock (in use from 1889 until 1952) and Safety film (in use in all films from 1952 onward) can be found on youtube.
Back to top
View user's profile Send private message
Shiroi Hane
Encyclopedia Editor


Joined: 25 Oct 2003
Posts: 5956
Location: Wales

PostPosted: Sat Jun 16, 2012 7:30 am Reply with quote
This related video that came up demonstrates the dangers preeeety well: http://www.youtube.com/​watch?​v=​SccNL6mfX2Q
Back to top
View user's profile Send private message Visit poster's website AIM Address Yahoo Messenger MSN Messenger ICQ Number My Anime My Manga
dtm42



Joined: 05 Feb 2008
Posts: 12405
Location: NZL

PostPosted: Sat Jun 16, 2012 8:08 am Reply with quote
bglassbrook wrote:
The problem is long-tails are harder to book, look less apealing, and [by definition] frought with more risk. Consumers are not the only ones suffering from ADHD, business management is frequently right there with them looking for the next new shiny thing to give a bump to current financial returns & earn bonuses. More pragmatically, you don't have to worry about making money in the future if you get it now.


Would you rather receive $10 now or a thirty percent chance of getting $100 in five years time? A wise person would take the guaranteed $10 in the hand, but a smart person who actually can do figures would wait and take the chance. Their average return would be $30, which is more money than if the wise person took their ten dollars and invested it in a five-year term deposit.

What I was saying to Mesonoxian Eve was that if it is so critical for the Anime industry to have foreign companies licensing the shows for overseas distribution (takes deep breath), then it is not a good idea to bleed them so badly that they die. Heck, even if the Anime industry doesn't need FUNimation and Sentai and the rest, there's no reason to turn down making extra money.

Now sure, ADV didn't collapse solely because of such high license fees, but they certainly didn't help things either. Healthy foreign companies means a healthier Anime industry back in Japan, which can only be a good thing, right? Well, except for the fact that a healthy industry means lots of titles to buy which leads to much of my hard-earned cash being spent on Anime, but that's a good problem to have.
Back to top
View user's profile Send private message My Anime
yuna49



Joined: 27 Aug 2008
Posts: 1324

PostPosted: Sat Jun 16, 2012 9:15 am Reply with quote
dtm42 wrote:
Would you rather receive $10 now or a thirty percent chance of getting $100 in five years time? A wise person would take the guaranteed $10 in the hand, but a smart person who actually can do figures would wait and take the chance.

Actually the situation you posit constitutes the formal definition of "risk aversion" in the literature on decision theory. Someone is considered "risk averse" if he or she prefers a smaller but certain return compared to a "lottery" over possible future returns whose expected value is greater than the certain amount. In your example the lottery consists of a 70% chance of getting zero and a 30% chance of getting $100, for an expected value of $30.

It's less a question of intelligence and more one of attitudes toward risk.
Back to top
View user's profile Send private message
dtm42



Joined: 05 Feb 2008
Posts: 12405
Location: NZL

PostPosted: Sat Jun 16, 2012 9:46 am Reply with quote
yuna49 wrote:
It's less a question of intelligence and more one of attitudes toward risk.


If you absolutely cannot afford to be without that $10 then you would be risk-averse and accept the smaller, safer payment. And that's fine. But if you are a business that is looking long term and can afford to do so, then going for the larger but riskier payment is preferable. In this example your average reward is $30 as opposed to the $10 of taking the money upfront. Sure, if you choose to be risky then two-thirds of your deals won't make money for you, but the ones that do will more than make up for the others.
Back to top
View user's profile Send private message My Anime
TheAncientOne



Joined: 06 Oct 2010
Posts: 954

PostPosted: Sat Jun 16, 2012 9:53 am Reply with quote
Coderjoe wrote:

A good comparison of the original Nitrate film stock (in use from 1889 until 1952) and Safety film (in use in all films from 1952 onward) can be found on youtube.

I would also like to point out that while many people will view that and think, "Ok, it burns fast, but that isn't explosive", the same is true of black powder...in open air.
Back to top
View user's profile Send private message
Polycell
Thread KillerThread Killer


Joined: 16 Jan 2012
Posts: 3148

PostPosted: Sat Jun 16, 2012 11:58 am Reply with quote
dtm42 wrote:
yuna49 wrote:
It's less a question of intelligence and more one of attitudes toward risk.


If you absolutely cannot afford to be without that $10 then you would be risk-averse and accept the smaller, safer payment. And that's fine. But if you are a business that is looking long term and can afford to do so, then going for the larger but riskier payment is preferable. In this example your average reward is $30 as opposed to the $10 of taking the money upfront. Sure, if you choose to be risky then two-thirds of your deals won't make money for you, but the ones that do will more than make up for the others.
If you've got a 30% chance of success and try four times, you can still not win. People naturally prefer surer victory over riskier and want things sooner instead of later - risk aversion and time preference. The higher they are, the greater the potential reward has to be for the actor to take the gamble and wait; it's clear in this case the licensors considered the risk and the delay to outweigh the premium.

All that, of course, leaves out the element of uncertainty - the exact odds a unique event will or won't happen is something that's only known(or even exists) in the la-la land of word problems.
Back to top
View user's profile Send private message
dtm42



Joined: 05 Feb 2008
Posts: 12405
Location: NZL

PostPosted: Sat Jun 16, 2012 5:17 pm Reply with quote
True, the exact odds cannot be known. But that 30% represents the chance that the North American distributor is still around in five years. Now with Media Blasters on the rocks I realise that the industry is not exactly safe at the moment, but I fully expect FUNimation to still be around. I deliberately chose a pessimistic percentage to show that the Japanese can still make money even when the odds are low, and FUNimation's chance of survival probably hovers around 90%.

I realise my example is a poor analogy, but the core concepts are there. Taking money now is the safe option but not the smart one.

Japanese companies, if they are looking long-term, will realise that lower license fees make Anime more profitable for overseas companies, putting them (the overseas companies) in a more healthier position and therefore increasing the chance that they will be around in five or ten years. And if they are around in ten years, that means an entire decade of overseas money flowing into the Japanese economy in general and the Anime industry in particular. And we have already seen this, with license fees far lower than they once were. With the Anime industry focusing on taking more of a cut of the overseas profits rather than demanding huge sums of money upfront, it means the chance of a title being unprofitable overseas decreases while still making everybody involved at least some money.
Back to top
View user's profile Send private message My Anime
bglassbrook



Joined: 29 Aug 2006
Posts: 1126
Location: Gaithersburg, MD

PostPosted: Sat Jun 16, 2012 6:08 pm Reply with quote
dtm42 wrote:
I realise my example is a poor analogy, but the core concepts are there. Taking money now is the safe option but not the smart one.

It's not that bad, as long as the uncertainty is in that 30% figure (which makes it seem a bit high.) However, it does ignore that, as the executive making the decision, your bonus would be tied to profitability. Are you willing to wait 5-years (or take a reduced benefit from having receipts so far out?) How do you plan to fund new projects without that up-front capital? If there is such a good chance of making a return, why can't your customer get financing from a bank rather than you?

A closer example might be: You need to make at least $10 within 6-years to break-even (and thus be willing to go forward.) Which of the following expected cash-flows would you prefer, given future uncertainty, and ignoring the time-value of money?

A - $5 the first year, and $1/year for the next 5-years ($10)
B - $2/year for all 6-years ($12)

Either gets the job done, but that first option is going to give you a lot more latitude and capital for the future years. Further, the second only becomes beneficial if your estimates hold true for at least 5-years, which is a long time for these purposes.
Back to top
View user's profile Send private message My Anime My Manga
dtm42



Joined: 05 Feb 2008
Posts: 12405
Location: NZL

PostPosted: Sat Jun 16, 2012 7:10 pm Reply with quote
I do accept that money now is useful, but as I've said before, even if you were to invest that money or bank it you are unlikely to get as much money in the long-run than if you accepted a lower payment now but got a higher return in the future. If you threaten the profitability (and therefore health) of overseas companies just to make a quick buck they won't be able to give you as much profit in the long run. Which is what your example shows. I'd just rather personally keep a steady stream of income coming in than have it all at once and then get nothing but a trickle after that.

It seems that the Japanese Anime industry agrees at least in part with that sentiment, since they are now charging lower Minimum Guarantees than before. Now that the boom is over the overseas companies simply cannot afford to pay those sorts of sums up front. Heck, they couldn't afford to pay those sorts of sums even at the height of the boom. It just isn't sustainable.
Back to top
View user's profile Send private message My Anime
Anymouse



Joined: 18 May 2007
Posts: 685

PostPosted: Sat Jun 16, 2012 7:25 pm Reply with quote
There will be another boom, I am sure. This last one seems like just a repeat of the earlier 90's interest in Japanese animation.


Entrepreneur: "Hey, I hear that kids are really getting into this anime stuff and I decided to start a company that will license and translate material and hire a voice acting studio to dub it."

Investor: "SHUT UP AND TAKE MY MONEY!!!"
Back to top
View user's profile Send private message Visit poster's website
LUNI_TUNZ



Joined: 28 Apr 2010
Posts: 677

PostPosted: Sun Jun 17, 2012 4:46 am Reply with quote
Anymouse wrote:
There will be another boom, I am sure. This last one seems like just a repeat of the earlier 90's interest in Japanese animation.


Entrepreneur: "Hey, I hear that kids are really getting into this anime stuff and I decided to start a company that will license and translate material and hire a voice acting studio to dub it."

Investor: "SHUT UP AND TAKE MY MONEY!!!"


Yeah - but streams didn't exist then.
Back to top
View user's profile Send private message
walw6pK4Alo



Joined: 12 Mar 2008
Posts: 7484

PostPosted: Sun Jun 17, 2012 9:47 am Reply with quote
LUNI_TUNZ wrote:
Anymouse wrote:
There will be another boom, I am sure. This last one seems like just a repeat of the earlier 90's interest in Japanese animation.

Entrepreneur: "Hey, I hear that kids are really getting into this anime stuff and I decided to start a company that will license and translate material and hire a voice acting studio to dub it."

Investor: "SHUT UP AND TAKE MY MONEY!!!"


Yeah - but streams didn't exist then.


Nor did instantaneous fansubs that can equal or excel those streams in quality. In the 90s, fansubs were a necessity because a certain show wasn't getting licensed, but now they can be a preferred choice. Either way, the emphasis on "immediate" will dominate.
Back to top
View user's profile Send private message
Polycell
Thread KillerThread Killer


Joined: 16 Jan 2012
Posts: 3148

PostPosted: Sun Jun 17, 2012 11:08 am Reply with quote
dtm42 wrote:
I do accept that money now is useful, but as I've said before, even if you were to invest that money or bank it you are unlikely to get as much money in the long-run than if you accepted a lower payment now but got a higher return in the future. If you threaten the profitability (and therefore health) of overseas companies just to make a quick buck they won't be able to give you as much profit in the long run. Which is what your example shows. I'd just rather personally keep a steady stream of income coming in than have it all at once and then get nothing but a trickle after that.

It seems that the Japanese Anime industry agrees at least in part with that sentiment, since they are now charging lower Minimum Guarantees than before. Now that the boom is over the overseas companies simply cannot afford to pay those sorts of sums up front. Heck, they couldn't afford to pay those sorts of sums even at the height of the boom. It just isn't sustainable.
Again, your example ignores time preference and risk aversion. Even assuming no risk, money now is always worth more than money later. Those lower minimum guarantees are more likely a sign that the licensors have given up on the idea of foreign revenue being more than a nice bonus - it's one of the reasons why reverse importation's such a large concern these days(paying half the bills on a production pretty much puts you above criticism).
Back to top
View user's profile Send private message
Display posts from previous:   
Reply to topic    Anime News Network Forum Index -> Site-related -> Talkback All times are GMT - 5 Hours
Goto page Previous  1, 2, 3, 4, 5, 6  Next
Page 5 of 6

 


Powered by phpBB © 2001, 2005 phpBB Group