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Being A Member of a Production Committee

by Justin Sevakis,

Hey guys! I have some news to share! As we announced at our Anime Expo panel, Answerman will be changing its format slightly. Starting next week, instead of posting 3 or 4 questions once a week, we'll post one question 3-4 times per week. Same number of answers, same writer, nothing else changes.

We're making this adjustment for a couple of reasons. First, loading multiple questions into the same column makes it very hard to go back and find old ones -- both for you and for us. I can't tell you the number of times I've gotten a question I've gotten before, only to completely fail to find the old answer I gave. Hopefully this will fix that. Secondly, this will allow us to have more relevant names on each column, which will make it far easier for you to figure out if you care to read it in the first place!

So, starting next week, look for Answerman in the main feed throughout the week. Thanks for reading!

Shiroi Hane asks:

Media Blasters are now using a DVD on Demand service (where discs are custom-burned on DVD-R) for at least some of their releases (e.g. Holy Knight and Yosuga no Sora). As someone who has worked with DVD on Demand before and apparently came out of the experience slightly traumatised, how do you feel this is going to go? Have the technologies or the costs changed enough in 10 years that this is something that may be more viable or at least less painful now? It is something we might start to see more of in the future for smaller companies or niche titles?

I would personally never suggest that anybody deal with burn-on-demand discs for a number of reasons. The biggest reason is that limitations with DVD-Rs themselves means that burning dual layer discs is too time consuming and unreliable to be worthwhile -- every disc you produce that way has to be 4.7 GB, which is very limiting, and can affect video quality. I've never had a disc from a reputable manufacturer (like Verbatim or Taiyo Yuden) go bad on me on its own, but if you leave them on a sunny windowsill, they to tend to die.

But the biggest reason is, quite simply cost. Frankly, the biggest cost is printing full color disc labels and inserts. If you're licensing certain technology to burn the discs (and maybe apply your contractually obligated copy protection, as DVD-Rs can't handle the obligatory CSS), that's usually a per-disc fee. It also takes the cost of labor to print those things, burn the discs, and package them up. That adds up, and it usually adds up to far more than the $1 or less per unit that a replicator would charge to run off 1,000.

But if Media Blasters doesn't need 1,000 units, doesn't require dual layer discs, and is dealing in such low volume that their existing staff can burn, print, package and mail all of those discs themselves, then that tells us two things: 1) they are selling a RIDICULOUSLY few number of copies, and 2) it might be better to do print-on-demand.

Do customers like getting DVD-Rs in the mail? I sure don't. But if it's the difference between having a disc and not having a disc, I guess I'll take it.

Cesar asks:

So looking at recent announcement at the recent AX, it's been revealed that Funimation is part of the production committee for the anime 'Dimension W'. What exactly does this mean, and how could this sort of involvement possibly affect business practices in anyway? Is there a likelihood other companies will follow in this sort of thing too?

Production committee members are basically the investors in an anime. From the earliest stages they're putting in money up front to actually make the production, and then get a say in every committee meeting, where every strategic decision about that anime is made, from licensing to casting choices. Every committee member has put in a pretty substantial sum of money to be a part of this, and as part of their participation, they get certain rights to the show. A music company on a committee will definitely have soundtrack rights, and the ability to put their musicians in the show. A toy manufacturer will have toy rights. And Funimation certainly has streaming and distribution rights in English territories.

Being on a production committee is something extremely rare for an American company. Since every member on a committee gets to sign off on nearly every decision made about a show, only the most trusted partners are invited into that inner circle of influencers. It's a huge honor. That's the good news. The bad news is that, the last time this happened, it was a sign that licensing had gotten so insanely expensive and competitive that this was actually a good deal for the Western publishers. Joining these committees was a way to beat their competitors to a new show before the bidding process could actually begin, and the license fees had risen to a rate that being a committee member wasn't THAT much more expensive. Based on what I've heard, it means the same thing today.

This isn't unprecedented. Manga Entertainment was a committee member for the original Ghost in the Shell movie; ADV was on the production committee for Kino's Journey and others, Geneon USA was on the committee for Ergo Proxy and others. To be brutally honest, I am extremely doubtful that any of those investments back then broke even. Throwing money at anime rights was basically a pissing contest. Nobody was making money.

I don't know that nobody is making money today, but I do know that from what I'm hearing, spending is out of control, bidding wars are as intense as ever, and the cost of doing business has gotten outright stupid. I congratulate Funimation on joining a production committee, but as we know nothing about the show or if it'll be any good yet, it's far too early to celebrate. If the show ends up being a dog, it could end up being a very costly disaster.

Jake asks:

I have heard from many different sources that in the last four years, anime conventions as a whole have grown quite a bit. For most they have increased by a few thousand attendees, while in some cases have almost doubled in size. But no one can seem to explain why there has been such a rapid increase in attendance. Is it due to anime getting more exposure from places like Hulu and Netflix? Another theory is other conventions like San Diego Comic Con and Dragon Con have boosted the popularity of similar conventions? Or could the general improving economy has led more people to have more resources to attend conventions.

I think there are a few factors to the ever-increasing attendance at anime conventions. First and foremost, I think the mainstreaming of nerd culture -- from comic book movies to the increasing amount of time every man woman and child spends online -- have made it much more acceptable and even desirable to go to pop culture conventions. There are only a few giant comic cons, and anime cons tend to cater more to the interests of the high school and college set. And since they skew younger and many shows are smaller, they also tend to be seen as more approachable.

Also, if media reports are to be believed, younger generations that saw their parents nearly lose everything in the housing market have become markedly less materialistic than previous generations. This means that they're less likely to spend money on things -- not just otaku merchandise and DVDs, but fancy clothes, car upgrades and the like. They're more likely to spend their money on experiences -- not just a novel way to spend a weekend with friends, but everything that goes into that: their costumes, the hotel rooms, the gas to get there. That trend lines up perfectly with anime conventions.

And it does seem that, thanks to online streaming and recent accessible hits like Attack on Titan and Kill la Kill, fandom seems to be spreading at a fairly good clip. These things are becoming very difficult to measure, but streaming numbers for every type of anime across the board have been going up, and it seems like being into anime is a pretty acceptable and, dare I say, mainstream part of youth culture today.

I have to wonder if we've reached a point where a young fan today is more likely to attend an anime convention than they are to buy a DVD.

Danny asks:

How does Netflix make a worthwhile return in their streaming of "original" anime like Knights of Sidonia? Can they really get that much from the DVD/Blu-ray sales or a bump in Netflix subscriptions? I thought this is what Cartoon Network tried to avoid about 10 years ago - airing fewer shows they didn't own and instead producing their own creations with all the merchandising rights. I'm not complaining, but how does Netflix make a profit on such a deal?

Netflix is a gigantic mystery. They are a publicly traded company, and we know they make a great deal in revenue -- US$5.5 BILLION last year, as a matter of fact. And we also know that almost all of that was paid out as up front license fees for their programming. Programming rights are, in fact, their biggest expense, by far.

But beyond that, we know extremely little. They share viewership data with absolutely no one -- not even the people that produce their original programming. Occasionally we'll hear about a giant deal they made for a big block of movies or TV shows. That's all we have. That's not even enough to have even the vaguest opinion about what they're doing, and whether it's worth it. Clearly they know what they're doing, because they're the market leaders in the online streaming space, by a wide margin.

For that up-front license fee, Netflix takes surprisingly few rights. They don't ask for physical media (DVD/BD) rights at all, but might ask for a short-term hold in releasing them. They ask for the rights to stream in as many places around the world as they can get. But the term of their agreement isn't very long -- three years on average -- and the amount they pay has been characterized to me as "insane." Indie filmmakers who would struggle to release their film and make money back for their investors would usually never see a dime for themselves, but now they're selling to Netflix, paying back their investors, and buying a house.

So, yeah, I don't know what to tell you, other than "huh, they seem pretty smart to me."

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

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 real, strange stories from the anime business, Tales of the Industry.

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