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The Anime Economy - Part 1: Let's Make An Anime!


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sburstall



Joined: 02 Nov 2007
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Location: Ohio, USA
PostPosted: Mon Mar 05, 2012 12:24 pm Reply with quote
This is true for movies also. Making a movie is a crap shoot and one hopes their movie makes money.
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kufirst



Joined: 08 Oct 2010
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Location: Kansas
PostPosted: Mon Mar 05, 2012 12:31 pm Reply with quote
Great write-up. It sounds more or less how I thought the process would go. Obvious emphasis on making income, with lots of roadblocks waiting to derail EVERYTHING!
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Lord Geo



Joined: 18 Sep 2005
Posts: 2008
Location: North Brunswick, New Jersey
PostPosted: Mon Mar 05, 2012 12:48 pm Reply with quote
Quote:
Very few shows are runaway successes. Initial sales are a good indicator of whether a show will make back the Production Committee's investment, but in truth, most shows take several years to break even. One longtime anime executive estimated that, given enough time, a good 70% of all anime eventually turn a profit. This happens over years of TV reruns, back catalog DVD sales, and re-releases internationally. The process is seldom rewarded quickly.


The funny thing is that the R1 anime industry doesn't want to seemingly wait. Naturally, most companies don't have TV reruns & international sales to rely on, not to mention potentially paying too much for a title, but most anime licensors in North America seem to hope that a title can make back its money as soon as possible, because if it doesn't within a certain amount of time (let's say a year just for argument's sake) or some other issue comes up (not necessarily licensing issues), then the title is a failure in their eyes.

For example, John Sirabella admitted that Media Blasters did end up making their money back from licensing GaoGaiGar within a year after releasing the second half of the show for the first time. True, they had to drop the excellent English dub for the second half, but they still made their money back, so the later litebox collections GaoGaiGar received had to give them nothing but profit in the end. The fact that profit seemed to have been made should mean it was a successful release to some effect, yet MB never licensed GaoGaiGar FINAL, seemingly only because the dub was dropped from the TV series, so therefore it was a failure of a release in Sirabella's eyes.

In another example, sometimes FUNimation will give a series they licensed a S.A.V.E. boxset release without ever giving it a regular complete boxset release, such as Big Windup! (these immediate S.A.V.E. releases is likely where the "S.A.V.E. is only for failed releases" mantra originally came from). I'm not saying that Big Windup! would have been able to make it's money back if it wasn't given the S.A.V.E. release right away, but who knows if there were a couple other series that FUNi could have made their money back over time, but instead FUNi decided to cut their losses as soon as possible and just go for the S.A.V.E. boxset.

Quote:
The hope is that the remaining 30% that will never make back their budgets will get paid for by the successes. This is a gamble, but it's the most essential one of every entertainment industry: a few huge hits that subsidize tons of losers.


This part, as indicated, is true, though. Who knows how many of FUNi's bombed licenses were paid for by DBZ...
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gwern



Joined: 05 Nov 2009
Posts: 67
PostPosted: Mon Mar 05, 2012 1:00 pm Reply with quote
Quote:

Some of those companies are easier to deal with than others. As one could imagine, having the power to approve literally everything related to a show can breed its share of difficult people. Some have odd requests for the property, ranging from the quite reasonable (Shuiesha insists that none of Naruto's hair spikes ever be even slightly cropped off) to the frustrating (such as insisting on a terrible or outright wrong translation), to the outright bizarre (the manga artist must be invited to the Oscars if this gets an American release).


Wait, that's 'quite reasonable'? This is hilarious - is there anywhere I can read more about these requests?
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Divineking



Joined: 03 Jul 2010
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PostPosted: Mon Mar 05, 2012 1:05 pm Reply with quote
This is some pretty interesting info. Was kinda surprised that the percentage of shows that actually break even in the end was so high, but it makes sense since if it was low, we obviously wouldn't be getting the amount of shows each season that we have now.

Also kinda interesting to learn how recap episodes work out...and it's kinda sad now knowing how many anime directors don't have all that much knowledge on the subject but I guess that's also something that becomes apparent when you watch enough shows.
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configspace



Joined: 16 Aug 2008
Posts: 3717
PostPosted: Mon Mar 05, 2012 1:05 pm Reply with quote
Divineking wrote:
This is some pretty interesting info. Was kinda surprised that the percentage of shows that actually break even in the end was so high, but it makes sense since if it was low, we obviously wouldn't be getting the amount of shows each season that we have now.

I think the big caveat is that like Justin mention, very few are big hits. Most are in the red. That one executive mentioned that "eventually" over many years he expects many to make a profit (re-runs, merch, etc). The question is just how long is that ROI

Quote:
This is a gamble, but it's the most essential one of every entertainment industry: a few huge hits that subsidize tons of losers.

Certainly, this is a crucial advantage of being run by a production committee. I have heard some complain about rights. I suppose that's the tradeoff, else self-financed studios or productions financed by the individual creators would go broke[1] I'd like to know how much this applies to US publishers though.

For example, we know from Funi that Big Windup, Higurashi and Shana were big losers.

[1]The exceptions are the indies who do become successful like Makoto Shinkai. An interesting comparison of a few anime movie budgets:
http://anime.nickistre.net/blog/anime/2008/10/13/makoto-shinkais-movie-budget

http://anime.nickistre.net/sites/anime.nickistre.net/files/images/AnimeMovieBudgets1.png
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Zac
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PostPosted: Mon Mar 05, 2012 1:11 pm Reply with quote
Lord Geo wrote:


The funny thing is that the R1 anime industry doesn't want to seemingly wait.


How many businesses do you know of that are super comfortable taking a loss on a product for years after release?
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superdry



Joined: 07 Jan 2012
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PostPosted: Mon Mar 05, 2012 1:12 pm Reply with quote
Divineking wrote:
This is some pretty interesting info. Was kinda surprised that the percentage of shows that actually break even in the end was so high, but it makes sense since if it was low, we obviously wouldn't be getting the amount of shows each season that we have now.


There is the "Manabi Line" regarding sales of a late-night anime that would break even. Whether that's true now is a different story, but at least it gives a baseline to look at. So, I'm not entirely surprised that 70% of shows eventually break even - between licensing deals of all sorts and home media sales.

I do wonder if some time production committees go in to produce a show knowing that the anime might not make a profit, but it's there to help boost sales or recognition of the original material (assuming adaptation).
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configspace



Joined: 16 Aug 2008
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PostPosted: Mon Mar 05, 2012 1:24 pm Reply with quote
superdry wrote:
There is the "Manabi Line" regarding sales of a late-night anime that would break even. Whether that's true now is a different story, but at least it gives a baseline to look at.

That manabi line of 2,000 copies/vol (at the standard singles pricing in Japan) turns out to be false. It might have started as a joke on 2chan or maybe a false assumption, perhaps not taking into account other costs, but we know that for the most part, it's got to be at least twice that much. Just from the sales figures for the releases for the first year for most titles and the production costs, we can see for ourselves most don't break even, at least from video sales alone initially.

For example:
animenewsnetwork.com/interest/2011-10-01/animator-shunji-suzuki-confirms-nichijo-r-15-itsuten-low-sales
talks about how Nichijou and R-15 bombed. Nichijou's first week sales in June 2011 was 3,544 / vol. Since that was only for its first week, we can round it up to at least 4,000 by end of July, a month later, which might be a bit conservative. Still he mentioned:
Quote:
"did not come close to meeting the break-even line"
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clipeuh



Joined: 05 Nov 2010
Posts: 117
PostPosted: Mon Mar 05, 2012 1:26 pm Reply with quote
Interesting. When is the next part coming out ? Smile
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Shenl742



Joined: 11 Feb 2010
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PostPosted: Mon Mar 05, 2012 1:26 pm Reply with quote
Wow! Great column Justin! Lots of really nice info there.

Looking forward to future installments. How many do you have planned?
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Zac
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PostPosted: Mon Mar 05, 2012 1:30 pm Reply with quote
Three parts. Part II publishes Wednesday, part III on Friday.
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Shiroi Hane
Encyclopedia Editor


Joined: 25 Oct 2003
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PostPosted: Mon Mar 05, 2012 1:33 pm Reply with quote
Looks like this will be interesting and informative.

Quote:
But more often than not, the director just blows his deadlines, causing the entire production to run late.

..or just air painfully obviously unfinished (looking at you Shinbo).

Quote:
There have been incidents where the final master tape shows up at the TV studio only hours before it airs!

Coincidentally, I recently watched Paranoia Agent...

I'm struggling to remember a story of a production that went horribly wrong from the Schoolgirl Milky Crisis book. Lacking that, I have a recent article that is also relevant:
Curse of the Blue Duck
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NonoAsumy



Joined: 29 Apr 2011
Posts: 90
PostPosted: Mon Mar 05, 2012 1:39 pm Reply with quote
configspace wrote:
superdry wrote:
There is the "Manabi Line" regarding sales of a late-night anime that would break even. Whether that's true now is a different story, but at least it gives a baseline to look at.

That manabi line of 2,000 copies/vol (at the standard singles pricing in Japan) turns out to be false. It might have started as a joke on 2chan or maybe a false assumption, perhaps not taking into account other costs, but we know that for the most part, it's got to be at least twice that much. Just from the sales figures for the releases for the first year for most titles and the production costs, we can see for ourselves most don't break even, at least from video sales alone initially.

For example:
animenewsnetwork.com/interest/2011-10-01/animator-shunji-suzuki-confirms-nichijo-r-15-itsuten-low-sales
talks about how Nichijou and R-15 bombed. Nichijou's first week sales in June 2011 was 3,544 / vol. Since that was only for its first week, we can round it up to at least 4,000 by end of July, a month later, which might be a bit conservative. Still he mentioned:
Quote:
"did not come close to meeting the break-even line"


I have no numbers on this. But Nichijou obviously had much higher production costs than an average anime.
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jsevakis
ANN Director of New Media


Joined: 28 Jul 2003
Posts: 1680
Location: Los Angeles, CA
PostPosted: Mon Mar 05, 2012 2:02 pm Reply with quote
Glad everyone's into this article. Very rewarding. It took a very long time. Smile

Part 2, which will post Wednesday, will get VERY deep into the R2 DVD market, with numbers. And yes, I can tell you the Manabi line is ludicrously low.
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