Uncertain Futures

by Justin Sevakis,

We're all back at work, and I'm back to being busy as heck, so let's get to it.

Craig asks:

With the recent release of Cowboy Bebop from Funimation, being offered in a standard release (Blu-Ray/DVD only) Funimation Exclusive and an Amazon exclusive, does the R1 distributor (Funimation in this case) have to buy all those extras in order to release the LE/Exclusive editions? Do they make a much higher profit with these over a standard release? Is there a wider profit margin or is it even thinner with the added material costs to them?

I'm not sure what you mean by "buy all the extras" -- certainly some of them, Funimation made themselves (the bonus disc with all of the new interviews with the original voice cast, for example). Some of them just come with the show. There may have been a few premium items for which the licensor demanded extra money, but most extra features just "come with" the license to a show, so long as the US publisher remembered to ask for them (and get it in the contract). There can be major exceptions to this, particularly if the licensor doesn't own the extra in question. For example, Toho is the licensor for Grave of the Fireflies, while Studio Ghibli owns the storyboards. Including the storyboards on the DVD or Blu-ray releases required those to be licensed separately.

There are extra costs involved too. That Amazon exclusive version of Cowboy Bebop required an extra chipboard box, and the printing and inventory of two different softcover artbooks -- one of which was in full color. Most of that probably gets outsourced to China these days, but even so, printing it isn't cheap. (Also, the long lead time and huge minimum orders required in getting those parts of the package makes them very hard to reorder, which is why those fancy artbook limited editions are typically limited to a single pressing.) The material cost per unit goes from around $5 (for a standard 2-disc, 13-episode BD release) to as high as $20 and up. When the product is that expensive to manufacture, it really only makes sense to do so as a limited edition. You want to be able to sell as many as you made, because every box of unsold inventory means that all the money you spent on manufacturing went to waste.

But the prices on the fancy limited editions are higher, so there's a good chance that, if the LE version is successful, the publisher will make just as much money, perhaps more. Plus, the extra excitement around the package can lead to more pre-orders. This strategy doesn't work for every show, but only for the really hotly anticipated releases like Cowboy Bebop. But making an LE version can be a very expensive gamble, so you can bet that the publisher carefully accounted for every expense and strategized carefully. Often, it works. Sometimes, not so much. (Lucky Star, anyone?)

John asks:

With all of the talk in the past months about Studio Ghibli announcing they will cease operations to restructure their business do you believe there will be more studios following suit? And if so do you think American/Western investment into these ailing studios can solve there issues?

I think there's a fundamental misunderstanding of what's going on at Studio Ghibli. Which isn't surprising, given how nobody really seems to know what's going on at Studio Ghibli. But from what we do know, it seems like Ghibli is actually transforming itself to act more like all of the other anime studios out there.

Most anime studios only have a handful of full-time, regular, permanent employees. Almost everybody there, from directors to most of the animation staff, are freelancers, and are working on a project-by-project basis. Sure, they might be regulars and get hired back to the same studio again and again, but they're only getting paid when they're working on something. It's how nearly every anime company works, and it's efficient and cost-effective.

Studio Ghibli did NOT work this way. Everybody who worked there was a regular, full-time employee, taking home a normal salary. This was great for the artists, and was a rare luxury in an industry that's normally quite turbulent. However, with both of the great masters of Ghibli, Miyazaki and Takahata, now retired, the studio is facing an uncertain future, and right now there's no film in active production that we know of. And so, the studio can't just keep everyone there employed, doing nothing. There are no more surefire hits for the studio without Miyazaki around, and without that income, keeping a full-time staff around would quickly bankrupt the company.

And so, yes, the salaried animation staff was cut loose, and if and when the studio churns to life again to create a new feature film, they will hire artists once again. Hopefully, many of the same ones will return. But this time, they'll be hired on a project-by-project basis, as they are at every other anime studio. It's a little sad, but it's the responsible way to keep the company going.

Julian asks:

What's going on with Pony Canyon in the U.S? Are they going to be like Funimation and Aniplex and put out DVDs? on their website they mention that they put out hit's like Attack on Titan, Free and Clannad do they now have the rights to those shows in the U.S?

Well, yes. In case you missed it yesterday, Pony Canyon's new US division, "PONYCAN," inked an exclusive distribution agreement with Right Stuf. This means that Right Stuf will sell the discs of course, but also that they'll make the discs available to other retailers (although just how far they'll go in that direction remains to be seen -- I somehow doubt their discs will show up at Best Buy, for example).

However, I think their US materials are a little bit misleading to fans who don't really know who Pony Canyon is. Pony Canyon is one of Japan's biggest media publishers. They distribute a lot of movies in Japan, both for domestic live action and anime, as well as American and other foreign films. Since home video release is such a major part of the business of anime, Pony Canyon quite often finds themselves on anime Production Committees, and as a result of that, they handle the Japanese disc releases. And they release a significant chunk of the anime on the market in Japan.

However, they are not the producers of these shows, they do not own these shows outright, and often they're not even the licensor of these shows. All they do is release them in Japan, the way the American publishers release them here. They may have handled the Japanese releases of Attack on Titan and Free!, but they will have nothing to do with those shows' releases on this side of the Pacific. They ARE likely part of the production committee for most, if not all of the shows they list on their site, however, and they're listing them to let American fans know who they are, and how important they are to the anime ecosystem. And they're just the latest Japanese publisher to dip their toe into American waters, after the success of Aniplex USA (and the failure of Bandai Visual USA and Toei Animation's own label).

Right now, PONYCAN has announced 3 shows, all of which are new simulcasts on Crunchyroll this season: Cute High Earth Defense Club LOVE!, Yuki Yuna is a Hero, and Denki-Gai no Honya-san. They are promising physical releases of all but the first of those shows so far, but haven't announced prices, packaging, disc count, or any other details. I guess we'll just have to wait and see what materializes.

Mason asks:

There's something that I've been curious about for a while. Why do manga companies, like Kodansha USA or Viz, still have to pay licensing fees to companies like Kodansha or Shueisha when they're pretty much owned by them already; they pretty much ARE them. It seems counter-intuitive to me.

Counter-intuitive, yes, but there are good reasons why this is the case. Those American publishers, while being owned partially or entirely by their Japanese overlords, are legally separate companies. Whenever a manga or a book or an anime gets transferred to another company, several people, and usually several different companies, need to get paid. When they get paid, they get a percentage or an amount based on, whatever the license fee was. These people include the author and their agent or estate for manga. For anime, we can also add every other company on the Production Committee, the head writer (series composition), some voice actors, and often music composers and publishers.

All of those people and organizations have an interest in making sure they get their money, and some of them are powerful enough to nix a deal if they don't like what's happening. In order to sell the product overseas, these guys are all expecting the rights to be sold, and for a fair amount of money that reflects its value. If their original publisher decided, "eh, forget all that money changing hands. I'm just gonna give the rights to my US division for nothing," they would be pretty unhappy. In fact, it would be a breach of many of the underlying contracts that produced the work in the first place.

So that's why, even when a publisher in the US is owned by the Japanese, they still have to pay for the rights to publish something from their parent company. They may be the only company that has access to the property, but it is certainly not something they can get for free.

And that's all for this week! Got questions for me? Send them in! The e-mail address, as always, is answerman (at!)

Justin Sevakis is the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap, and check out his bi-weekly column on obscure old stuff, Pile of Shame.

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