Forum - View topicANNCast - Shermanator Salvation
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agila61
 Posts: 3213 Location: NE Ohio |
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OK, I mis-stated. What you are mangling here is a concept of elasticity of demand. The impact of a lower price point is not primarily to extend the sales life of a release but to increase the number of units sold at any given point in time. |
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ikillchicken
 Posts: 7272 Location: Vancouver |
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This is the problem though. Giving away anime for free just isn't profitable. Until someone thinks up some way to make it work (which for all anyone knows may never happen) we're stuck with DVDs. So saying DVD is on its death bed is essentially equivalent to saying anime itself is on its death bed. If anime is going to work, we have to make DVDs (or at the very least, some kind of payed content) work. I think it's been proven by Bandai Visual USA that super niche pricing isn't going to work here like it does in Japan. If other companies are hurting too then I think that shows that even the fairly niche, collector pricing we have now isn't working. So what are your remaining options? Pretty much just to try lowering prices to coax some of those people back to buying DVDs.
Is it though? This is the problem in my eyes. Everyone sits back and complains about how impossible it is to make money off these people but has anyone even really tried? Okay, as you mentioned, some game studio tried dropping prices but that's really apples to oranges. I understand that everyone is afraid to take risks but at the same time, isn't it better than just sitting back and waiting as things spiral downward?
Except it doesn't. According to a recent ANNCast, these streaming shows aren't even covering the cost of subtitling them in some cases. It's all fine in theory to say that they should just use streaming video but for something niche like anime the numbers just don't add up.
Perhaps. I do agree that payed downloads might be the direction the industry need to move in. Honestly though, I think we're so far from being there that lower priced DVDs may be your better option at the moment. |
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dragonrider_cody
Posts: 2541 |
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Unfortunately, the DVD market, in fact the entire physical media market, is slowly dying off. The ever decreasing prices are doing nothing to improve sales. There are plenty of anime series now available for $20 or less for the entire show, yet sales are still sliding. Even new shows can be nabbed for less than $40 for an entire season, and yet sales have not improved. The future of anime cannot depend on improving DVD sales, because that just isn't going to happen. They need to focus on a number of revenue streams including physical media (DVD and bluray), online streaming, and digital downloads. The problems facing anime are the same that are facing the entire entertainment industry. Physical media is slowly fading away, no one yet knows how to make money off streaming, and digital downloads don't offer the same level of return as DVDs and blurays. |
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agila61
Posts: 3213 Location: NE Ohio |
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Giving away subtitled animes for free can clearly be a part of a profitable business model for online streaming, if it is possible to continue to grow the audience within the market. What determines the profitability of that market segment will be license terms. One likely model is to essentially hand over a per view royalty that amounts to all of ad revenue net of streaming costs, and rely on subscriptions to cover localization costs ... with the ad-supported streams providing the primary target audience for marketing subscriptions. Whether the market segment will work is more a question of whether Japanese production committees will agree to streaming license terms that will allow it to work. Making DVD's (and by extension Blu-Ray) work over the medium term requires getting the price point down, which means relieving the DVD's of the fixed component of licensing costs and the fixed component of localization. Streaming alone might do that for sub-only released, but won't do that for dubs. How much does it cost to dub a typical anime episode? Because the missing link in relieving DVD's of the dubbing costs is per episode downloads. Again, the critical question is both the mix of fixed and royalty license fees and the level of each, since a $1/episode price point does not seem viable for the market, while a $0.25/episode price point would seem to be rejected by Tokyo production committees as spoiling the market. So the likely price point for a dub download would seem to be $0.50/episode: in a channel that is trying to maintain a $1/download price point, one would offer $1/double-episode. That's the missing link in a production ladder that offloads much of the fixed cost from the DVD sales revenue and allows putting out DVD's at a substantially lower price point. |
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ikillchicken
Posts: 7272 Location: Vancouver |
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I don't know about the rest of the media market but I think you're mistaken about the lower prices. I believe that lowering the price per series by switching from overly expensive singles to three part or half season sets has played a big part in the slight recovery we've seen recently.
What new shows can you get for less than $40 bucks? Not many. Certainly not as a regular price.
No, they're related but far worse due to a number of additional factors. Movies and TV only rely on DVDs as part of their revenue. That's where anime needs to adjust. In the long term they will certainly need to face these same problems as the rest of the industry but in the short term the DVD market is far from dead. Dying perhaps but not dead. They need to adjust to at least get to where the rest of the industry is in which they can still make at least enough off this remaining market to do okay for a while.
So what's your solution? You discard DVDs as dying but admit that neither of these new options really work either. Aren't they better to at least salvage what we can from DVDs if there's no better option? |
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Charred Knight
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That last part is the problem, people constantly claim that physical media is dead, and that it's the fault of the companies for not getting with the time, but at the same time no one has come up with an actual solution of what this new direction is. Streaming should help but unless theirs a mass movement from TV than it's not going to replace DVDs. Digital Downloads are a fraction of the money that DVDs bring in, so unless people really get behind it than that's not going to do it.
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dragonrider_cody
Posts: 2541 |
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[quote="ikillchicken"]
What slight recovery have we seen? DVD sales as a whole continue to slide, with anime sales sliding just as much and often more. The most positive quarter in recent anime sales recorded a 4% drop. That's hardly a recovery. That's not even really bottoming out. It was also recorded during the quarter where Best Buy (NA's largest anime retailer) had a mass fire-sale of titles.
I didn't say anything about MSRP, and I didn't say they were new shows. You can get Kanon at a $30 MSRP, Venus Vesus Virus at $20 MSRP, and many, many more. Several of the new Sentai shows, like You're Under Arrest, To Love Ru, and Clannad have been available for around $20 a set, or just a bit over $40 for an entire season. Also, if you are paying MSRP for any anime release, you are shopping in the wrong place. Even Best Buy and Amazon, which are two of the more expensive places to shop hardly list anything at MSRP. The only retailer left that regularly does so is FYE/TransWorld, and they are hardly relevant anymore.
I never said the DVD market was dead. I said dying. Double digit sales declines year after year is a dying sales model, especially when you are being replaced by new technologies, digital streaming, bluray, downloads, etc. The major studios had depended on DVD sales for years to fuel their growth, much like the anime market. And like the anime market they are struggling to find ways to adjust and to monetize the internet. Many industry vets are even predicting that some of the Hollywood studios will go out of business as a result. DVDs are in the same position that CDs were in a few years ago (and still are). Sales of physical media are declining much faster than digital avenues can make up the difference. The digital sales that are coming in do not carry the same profit margins. Even bluray is not picking up the degree that the industry had hoped, and it's still a few years from taking the sales crown from DVDs. I do agree that the market needs to adapt to the current DVD and Bluray market and continue to make that a focus. However, like I said, they also need to focus on the emerging technologies like downloads, streams, and bluray. However, their ability to do so is largely dependent on what the Japanese rights holders allow them to do.
I've already answered this one, twice in fact. I'm not saying they should abandon physical media entirely. They still need to continue to produce it. But they can't depend on DVD, or even bluray to salvage their businesses. They need to focus on multiple revenue streams, like digital downloads and streaming, merchandise licensing, etc. This also allows the anime companies to avoid becoming overly dependent on one retailer, like Music Land or Best Buy as they had in the past. As we've seen from Central Park and Bandai, this can be a near fatal mistake. Also, I don't think $0.50 is really a reasonable charge for anime downloads. You have to figure at the price, especially if they are doing it through someplace like iTunes or Zune Marketplace, their profit margins are going to be virtually non=existent. Those sites and services aren't hosting those files for free. They take a small percentage of the revenue themselves. If companies like Funimation or Sentai chose to host the sites themselves, that presents even more problems. Not only would that price likely not cover the cost of personnel and server maintenance, but with multiple sites competing with each other, it would be difficult to draw sufficient traffic. However, if the downloads were offered on a preexisting site that already does streaming, that may fair better. But several sites, including CR have already tried this, with little to no success. Not to mention that you could always run into compatibility problems with multiple sites, or even DRM difficulties should the service cease to operate (see Yahoo or Microsoft's previous music services.) Also, some Japanese companies were very reluctant to accept iTunes $1.99 price point. Getting them to cut that by 75% could very difficult, and may ultimately not be profitable. Don't forget the Japanese get a big chunk of whatever revenue those digital downloads bring in as well. Cutting $0.50 three ways, R1 anime distributor, service host, and Japanese rights holder doesn't come out to much, especially when you factor in costs. Finally, in response to the the posts about a complete change in the licensing structure being needed, you are right. To and extent, that is already happening. Both Sentai and Funimation have acquired series with no upfront licensing fees, and only a share of the revenue being required. You've even seen changes in how dubs are produced now. Sentai is dubbing several of it's series because it has international marketing partners, possibly including some of the Japanese rights holders, to help fund them. This is something I see as a good sign, and something I hope we see more of. The Japanese ultimately get the rights the to dub and I believe they should have some responsibility in funding it and assuring it's a success. Not to mention the international distributors like Siren, Manga, Madman, etc. I actually think some of the current business practices of Sentai are probably where the industry as a whole is heading. Not everything can be dubbed, and going forward only select series will be. There should be international support in producing the dubs, especially since the Japanese in the past would gain ultimate rights to them, but wouldn't share any of the burden in producing them. Digital downloading and streaming also will be a big part of the picture. Let's just hope someone can find a way to make them profitable. |
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agila61
Posts: 3213 Location: NE Ohio |
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They'll take a percentage and could well also have a size-based server charge.
This is not an issue for digital downloads. You can have a link to your download store tied to that title everywhere you stream it ... the download server does not have to attract traffic the way that a streaming site does. Hulu, Youtube, Crunchyroll - they all want your streams at their site, because product variety increases your audience share for titles that appear on multiple sites. A link to your download store as part of the agreement to get your material streaming at their sites is a cheap concession on their part, because links have essentially zero marginal cost.
DRM versus digital fingerprinting and sweeping is a key thing to sort out and one big reason its not yet ready for prime time as a core rung on the production ladder.
If there is a per-transaction fee that does not allow total cost to remain under a dime, and the rights holder is receiving a percentage of the gross as a license fee, then that would indeed squeeze the operating surplus that has to repay the dubbing costs. In that case, the price point would have to be hit by selling multiple episodes in a single download. For iTunes at $1.99, that price point would be 4/download (with a conventional 13 episode season, a bonus fifth on the first one to set the hook).
That is excellent news.
Yes, the use of dubbed downloads to share the fixed cost of the dub with the DVD sales seems like a core part of the business model, but the principle is general. Indeed, given an existing stock of dubbed content, the Free/Premium model for streaming could be extended to provide a share of dubbing costs by having a free membership, with a selection of ad-supported streams, a sub back catalog and most of the dubs on expiring releases. Anime membership at a price per month would provide ad-free and higher quality streams. Dubbed Anime membership at an additional price per month would provide earlier access to and a wider back catalog of dubbed streams. Then the incremental dubbed anime subscriptions provides additional revenue base for the finance of dubs, extending the range of series that can be dubbed beyond what the download, DVD and narrowcast model can support alone. |
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P€|\||§_|\/|ast@
 Posts: 3498 Location: IN your nightmares |
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ikillchicken
Posts: 7272 Location: Vancouver |
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Well based on what we're seeing in terms of licensing/dubbing the industry seems to be healthier that in was a half year ago.
Um..yeah. You explicitly did say new. Look at the post you quoted. Although I didn't say MRSP. I said 'regular price'. Obviously nobody pays MRSP and you can get stuff a lot cheaper if you bargain hunt but not everyone is willing to put the time into that or wait for the deals so it's not really meaningful in talking about price. What is meaningful is the regular price that your average store is going to sell it for. That's what the average customer is going to pay. Also, if you're going to use shows that are fourty-some dollars, well then that's hardly a meaningful difference from the $50 we we're discussing earlier.
Okay, but again, steaming has as of yet not proven to generate any significant revenue for most anime. Merchandise really doesn't have anything to do with the R1 companies and is never going to be significant for the vast majority of series. So ultimately, unless we can turn paid downloads into a major revenue stream (and you've explained in your post far better than I could the problems with those) then we're right back to relying primarily on DVDs. You keep insisting that multiple revenue streams are the answer but you yourself recognize that none of these alternate streams work all that well. So how is that a solution? Even with a bit chipped in from a few different sources, it still doesn't seem like it will add up to much. |
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dragonrider_cody
Posts: 2541 |
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[quote="ikillchicken"]
But if you look at it, only one company has really increased their acquisitions, and that is Sentai. Everyone else has pretty much decreased theirs, with perhaps the other exception of Media Blasters. Funimation is licensing less than they were pre-2009. Viz is being as selective as ever. Nozomi is still being picky and niche. We've had one new player enter the market, but their clearly going after the core otaku crowd, so we really have no basis to compare for NIS. An increase in licensing doesn't mean much beyond cheaper licenses if it's not accompanied by an increase in sales. The increase in dubs can also be largely be attributed to lower dubbing costs (dubbing studios have to make money somehow) and international cooperation and funding on some projects.
Actually, I was referring to both new and old shows, and I went on to mention several examples. Blue Drop was only a few weeks old when it popped up on several sales for $24. All four of the Clannad sets have been on sale for less than $25 a piece, as have the half sets of You're Under Arrest, To Love Ru, etc. Anime isn't going to get much cheaper than what it is for new releases. It is one of the smallest segments of the DVD market, and it can't afford to get any less expensive. Lower sales and prices have already forced us to abandon many of the features we use to consider basic standards, such as dubs, chip board boxes, extras, etc. If prices have fallen as dramatically as they have, from $240 for an eight single series, to $50-$80 for an entire release, and that hasn't made an difference. Do you really think that falling much further will help?
I don't how more clearly I can say this. I don't know if you're just not reading what I'm typing or what the problem is. The point I made is this: Anime companies cannot depend on just DVD, bluray, digital downloads, or streaming to fix their problems. They need to be diversified and experiment on all the available streams of revenue in order to stabilize and hopefully grow their businesses. They can't just ignore digital streaming or downloads because they don't reap in huge amounts of cash now. They need to lay the ground work for when these areas are larger and more profitable. True they may never make up what they're loosing from DVDs, but they really have no other choice. Some anime fans seem convinced that all we need is lower DVD prices, and everything will be okay and sales will recover. Well, I think it's pretty clear that is not that case. As we learned during the Geneon podcast, a drop in price didn't usually make a difference in sales level. Not to mention we've seen series fall to a fraction of what they were a couple years ago, and still sales are sliding. Some fans used this same rationale to say that box sets (instead of singles) were going to save everything. As we've seen, that hasn't been the case. Some people seemed convinced that if R1 anime moves to bluray, that will be the great savior. As we've heard from Shawn Kleckner, and as I've seen first hand in retail, bluray sales aren't anywhere near what they need to be, especially in niche markets like anime. It's still estimated that it will 2012-2013 before bluray finally overtakes DVD in sales, and one has to wonder what kind of market we will have left by then. I'm not saying it's a pretty picture. The overall future for anime in North America is fairly bleak. It's not hopeless however. If Sentai can rise from the ashes of ADV, then R1 anime can certainly be saved. But I think the entire business model needs to continue to evolve, much like other posters have stated. I think we will see less dubs in the future, as well as more series being released digitally only. Only bigger series, and those with international cooperation will get dubbed. The Japanese need to get more involved with financing the international releases of their properties and sharing some of the risk. They've also got to stop sacrificing their international markets for sake of the domestic market (i.e gaps between dvd and bluray releases, no Japanese dub on blurays, restricted streaming rights, etc.) There are so many people that seemed convinced that anime companies just need to do this or do that and everything will be fine. That's just not the case. It's a very complicated puzzle that all the R1s are struggling to solve. If they do find a solution, it's not going to happen overnight. |
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LUNI_TUNZ
 Posts: 809 |
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[quote="dragonrider_cody"][quote="ikillchicken"]
I'm officially convinced at this point that people won't stop complaining about the prices, until they're a buck a pop. And even then, it seems likely that people will still complain. |
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Megiddo
 Posts: 8360 Location: IL |
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A whole dollar?
Maybe if they lowered them to 60 cents... |
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ikillchicken
Posts: 7272 Location: Vancouver |
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Really? It seems like Funimation is doing as much as they ever were.
A half season is not a complete series and I already addressed sale prices. You're grasping at straws here. At best you've demonstrated the odd, rare exception.
You're taking for granted that lower prices would mean less total revenue. That just begs the question though. That seems to be the core disagreement here. We both agree that DVDs should still remain at least a source of revenue. Therefore, we should both agree that they should seek to maximize that revenue. We just disagree on whether that would result from a drop in prices. It's not like it contradicts the rest of what you're saying though. I'm not opposed to exploring other methods and there's no reason you couldn't do that and also consider a price adjustment on DVDs.
Absolutely. The unfortunate fact that the industry needs to face is that they are competing with piracy which offers a price of zero dollars. Of course they'll never be able to truly compete with that but at $50+ they're not even in the same ballpark. Maybe if they were at least in that ballpark more people would consider buying.
When and how will they become more profitable though? It seems like nobody actually knows but just assumes that if they 'lay the ground work' as you say it will eventually all fall into place. Let's examine streaming for a minute though. Ad revenue from streaming is worth next to nothing per hit. That's not something that's going to drastically change especially in the case of anime. So unless the number of people watching these streams suddenly increases exponentially, it's never going to be worth much. I get what you're saying. Diversify. But you can diversify all you want, if none of those options particularly work then are you better off? Not really. You just have several revenue streams that generate very little instead of one. Maybe it's three or four times that minor sum but that's still very little.
I never said that. If that's what you're suggesting then you're completely misrepresenting my comments.
That might help encourage companies to take the risk of dubbing but it's still rather secondary. Unless enough money is flowing back to the industry for those risks to mostly be justified then it doesn't matter who was putting up the cash. They're going to stop because it's a bad investment. |
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keikanki
 Posts: 107 |
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This statement raises my eyebrows too. Taking a look at the Video Releases encyclopedia page and pulling that information into Microsoft Excel taken at face value yields the following results: Total # of releases July-December 2009: 288 Total # of releases so far this year (Jan 5-May 1): 125 Total # of releases currently scheduled for later this year: 32 Assuming that the rate of releases we've seen so far this year keeps up (and looking forward that seems generous to say the least) we're looking at about 188 releases in the first 6 mo's of 2010 compared to 288 in the last 6 mo's of 2009; a 35% decline semester to semester. If there's a more opposite meaning of "slight recovery", I can't imagine what it would be. Calling into question my own earlier posting to this thread, maybe the situation is far more dire than Eric makes it out to be, or is aware of? Just look at how sparse ANN's Shelf Life columns have become in 2010. Maybe we've already passed the tipping point, and anime really is dead? (At least as a packaged consumer good.) |
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