Answerman
How Will Netflix Producing Anime Change the Industry?

by Justin Sevakis,

Jacob asked:

Recently there was an announcement that Netflix was making an aggressive push for creating new, original content for 2018. What shocked me was that they were planning on funding and getting exclusive rights to over 30 anime series over the next year. Anime would represent about a quarter of their new content. I know over the last few years the non-anime focused streaming services like Amazon, Hulu, and Netflix among others have picked up a small peppering of exclusive anime titles with most of their catalog being popular titles that can easily be found on multiple platforms. Considering there are about 200 anime titles that come out a year, Netflix will control about 15% of the market for 2018. It has me wondering why Netflix is pursuing anime this heavily? Will other big streaming services like Amazon's Anime Strike follow suit? What does this mean for Funimation and Crunchyroll who as of now pretty much control the bulk of anime streaming? Will Netflix continue to license this heavily moving forward?

The latest news from Netflix is, potentially, very very big. The Hollywood Reporter ran a story wondering if Netflix's huge budgets -- easily besting what normally gets spent on anime production -- would finally mean relief for anime production companies and the animators they employ, both of which have been squeezed hard by the production committee system. While Netflix is likely including some buyouts of shows already in production, it's suggested that Netflix plans on bypassing the production committees entirely. Rather than losing money on new productions, as anime studios often do, it's estimated that these shows may make the studios a decent profit.

The US side of the anime business today is virtually unrecognizable from five years ago. Since then, Funimation has been bought by Sony Pictures Television, Crunchyroll has investment from AT&T and Chernin Group. Amazon has stepped in to acquire content from Japan in a major way for its Anime Strike service. Major Chinese telecommunications firms are paying top dollar for streaming rights and co-productions to a territory once thought lost to piracy. And now, this.

We are so far off the beaten path, I don't even know where the path is anymore. I can't think of another established subculture that's been so quietly absorbed into the large, multinational media companies. In fact, the only other example I can think of where that's happened at all is with American comics (i.e. Marvel, now owned by Disney), but that was a much louder, more obvious grasp for mainstream-able content ideas, not a courting of existing fans. While there is still a small army of producers in Hollywood looking to Japan for stuff to remake, that's not what this is. This is large multinational corporations investing heavily in the existing anime market. Even in the 90s anime boom, this would've been unthinkable.

This is all coming at a time when traditional entertainment is going through a pretty rough period. "Cord cutters" are dropping their cable subscriptions at a record pace. Broadcast TV ratings are at historic lows. The motion picture business is also struggling, with box office down 5% year-over-year after a lackluster summer and an even worse October. And that's to say nothing of the sexual harassment and assault controversies that have lit up the town like wildfire and threaten to derail the day-to-day of the business even further. (Not that it's a bad thing that these things are coming to light -- far from it -- but there will be significant business fallout for a while.)

Amidst all that chaos, anime and its fandom has been quietly, steadily growing. Its Blu-ray sales are still good, it's streaming numbers are very impressive. And given how splintered the rest of the market is, the viewership generated by shows like Seven Deadly Sins isn't dwarfed by mainstream shows on mainstream TV outlets anymore. With all other sectors struggling, it's no wonder that anime is finally being taken seriously. At the same time, Japanese anime producers are extremely mindful that, with a shrinking domestic population, anime HAS to go more global if it's going to thrive in the future.

To try and predict where things go from here, we can't really look for other examples, because there aren't any. What we can look at is how the companies involved operate, and how they differ from what we're used to.

With Netflix, a growing number of its big anime titles will be genuine originals produced by Netflix, and not simply exclusive content branded "Netflix Originals". This means that they will be put up a season at a time, exclusively on Netflix, worldwide -- even in Japan. Beyond that, there's no telling what will happen. Those titles might end up on discs published by another company, or not. Netflix never releases their viewership numbers to anybody, so we'll never know how well these shows did. We'll just have to wait and see if they make more.

Amazon recently fired most of the executives in charge of content for their Amazon Prime service after spending a ton of money on original productions with little success to show for it. But far from retreating, the company is planning on pushing back hard against Netflix and Hulu. What this means for Anime Strike is anybody's guess -- we don't know how well that service is doing compared with their expectations for it. But Amazon also has a giant pile of money, so if they're serious about anime, they'll likely be throwing a lot of money at getting whatever they can.

The Sony-ized Funimation, as has been stated by Sony executives, will likely be integrated eventually with Aniplex, Animax, Crackle and other Sony properties, although at this point we have no idea when or what that will look like. The stated goal was to involve Funimation -- the prime distributor of anime to English territories -- in anime production from an early stage, and to align it with those other anime-related parts of Sony to make one big, vertically integrated worldwide anime company. This means that less attention will be paid to the Japanese otaku market, and more towards brands that can "go global."

I don't expect any of these companies to be anywhere near as responsive to fans as the anime publishers we know. Being an anime fan is or was part of the DNA of companies like Funimation, Sentai, Viz and Crunchyroll. There is none of that from Netflix or Amazon or Sony. The one-on-one interactions at conventions and online are probably not something that any of these companies are able or willing to engage in. The ways of doing business in the broader entertainment industry simply don't involve that sort of interaction with end consumers (for better or worse.)

But how aggressively these companies push anime towards the general public remains to be seen. The impact could be relatively small, like when Random House and Kodansha joined forces for manga publishing, and the end result was simply more books being published in English faster. Or we could end up seeing ads for new series on bus stops and billboards in the middle of shopping malls all over America. The small town of anime fandom is becoming a city. And as a city guy I can only say one thing for certain: things are gonna get weird.


Do YOU have a question for the Answerman?

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Justin Sevakis has worked in the anime business for nearly 20 years. He's the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap.


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