Forum - View topicThe Anime Economy - Part 1: Let's Make An Anime!
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Annf
Posts: 578 |
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Yeaaah...that's the thing. When I heard about this upcoming article, I had a generic worry that it might be too focused on kids' shows to be useful to most of ANN's forumers, or worse, conflate kids' shows and late-night shows, because those are common things that happen in these kinds of articles (I guess because it's easier to get data on the big-business kids' shows, especially in regards to the money they make outside Japan). Because right now, if you look at the titles mentioned in part 1 of that article: Yu-Gi-Oh! Kodocha Superbook Secret World of Arrietty Naruto Fruits Basket Welcome to the Space Show They're all kids shows (two movies). Nothing late night. Part 1 did mention the idea of OVAs, but only in the context of rental, not purchase, and in the same breath with the idea of making money from TV comercials, making the topic clearly mass-market mainstream shows (i.e. children's). So while the article didn't specify, those things give the impression that it's primarily talking about kids' shows. (Although the production committee system iteself basically works the same way for daytime and late-night shows, so that info is universally relevant.) I'm hoping this was more of an intro to basic ideas and part 2 will make a distinction between the children's and late-night markets (both within Japan and their respective overseas licensing/markets). Last edited by Annf on Mon Mar 05, 2012 5:50 pm; edited 1 time in total |
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HeeroTX
Posts: 2046 Location: Austin, TX |
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While you are more than likely right, this would depend entirely on the terms of the contract. In fact, if contracts had been written with a requirement of return in yen, it would explain the timing of a lot of American anime company issues pretty neatly. I wouldn't be surprised if Bandai gave up on their US operation in part due to profits dropping substantially with the exchange rate. A DVD selling for $30US looks substantially worse when the dollar is worth less than 80 yen. 
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agila61
 Posts: 3213 Location: NE Ohio |
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Local Cable TV companies in the early 80's? Of course those were losses of a capital intensive business directly caused by rapid growth that in turn seemed to be strong insurance that when they finally hit profit they would be strong and steady, so lots of US investors were happy to buy into US companies losing money quarter after quarter in the early 80's. Amazon? Uhhm ... I would have said Hulu, but during the years working toward break-even there were constant rumors of pressure from the Murdoch side of the joint venture to get to break even faster. Actually, under Hollywood Accounting, movie studios are constantly waiting years to make a profit, but that is of course the paper profit from which net points are computed as opposed to actual profits, so its not really the same thing. |
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HitokiriShadow
 Posts: 6251 |
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Exactly. Most of the things covered in this part would be true regardless of whether a show is a late-night otaku show or a mainstream anime. There were only a few lines where the distinction would matter at all (like the re-runs part; that wouldn't really apply to late-night otaku anime) and nothing that would significantly change his points. DVD/BD sales don't really matter for the mainstream stuff, so I think its safe to say the next part will be more specific and make the necessary distinctions and qualifications.
That would insulate them from short term drops, but I would expect the long term drops to still hurt them. When the exchange rate shifts dramatically (and the dollar to yen rate has dropped by about 30% in the last ~6 years), the Japanese are still going to feel that, because it will at some point force them to drop the amount of yen they're asking for. This isn't just the anime industry, the strong yen has been hurting Japan's export industry in general. |
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configspace
Posts: 3717 |
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Well, in that same article he mentions that in addition to Nichijou, R-15 and Itsuten (Itsuka Tenma no Kuro Usagi) also did not break even. R-15 vol.2 sold 1,451 (bd+dvd) copies, seems about its average as well. Itsuten vol.1 sold 1,343 (bd+dvd) copies, vol.2 sold 425 dvds (no data on bds)... basically both also did very badly WRT to the titles that are not big hits, and the one exec's opinion that 70% "eventually" makes a profit, after some number of years.. and that 30% never do, we can look at it this way: they ALL loose money until some unknown point in the future 
Like the Gundam 00 example where: "So a loss of at least -46,940 to be made up in toys and merch for season one." I think you also have to take into account all the merchandise (figure, games, cds) which is an order of magnitude larger than anime sales, since it isn't just the studio. The animation studios are paid to cover their costs, all the while the production committee is bearing the brunt of the losses. I think the same applies to Ikkitousen franchise, perhaps breaking even -- but breaking even is hardly a way to stay in business. It's the figures that are sold in volumes to help make it profitable. |
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HitokiriShadow
Posts: 6251 |
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Yeah, I almost said something about merchandise, I just couldn't quite figure out how to word things or exactly what I wanted to say, so I removed it. But I guess now I'll need to figure it out and address it in some way. Part of it is that that's the area that we know the least about (so it would be nice if Justin's articles could shed some light on how those factor in). Unlike DVD/BDs, we can't get any information on how any of that stuff does. We don't see any sales numbers for figures or body pillows or pencil boxes, etc. Most shows have separate OP/ED CDs to sell, but some shows get character CDs and others don't, and only a select few shows have huge numbers of CDs of any sort (and naturally, its usually a musically oriented property like K-On). Furthermore, the amount of merchandise varies considerably. A lot of shows don't seem to get that much merchandise. It seems like its the better selling shows that tend to get a lot of figures and other merchandise. I don't see a lot of upcoming C3 or R-15 figures for example. And for some of the better selling shows that do get a good number, it takes a while for the figure production to ramp up (such as OreImo and Madoka Magica, I think only about 4 figures (excluding Nendoroids) came out for either of them last year, but now there's a lot coming up this year. And we have no idea how sales of those things factor into the overall property, though I thought that someone in the know, at some point, somewhere, indicated that a relatively small portion of the sales really contribute to the anime's bottom line, but I could be wrong on that. This probably contributes to the "eventually" thing and obviously shows are counting on merchandise sales in some way, but it seems like merchandise success generally correlates to how successful a show was in BD/DVD sales and that home video sales are the main thing that matters, which I believe even this article indicated. Also, Gundam is... unusual. You really can't use its business model and merchandise statistics to say anything about late-night otaku shows, as its essentially a hold over from the 80s, business model wise. The TV series have always been a toy commercial first and foremost. Selling toys and model kits is their primary concern. It's business model is much more comparable to Naruto and Pretty Cure's than any late otaku show like OreImo, Haganai, Shakugan no Shana, etc. Last edited by HitokiriShadow on Mon Mar 05, 2012 6:19 pm; edited 2 times in total |
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nursemcquade
 Posts: 26 Location: NY |
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A very interesting and informative article. I can't wait for the rest of the series.
One thing I have a question about is:
What third world countries? I know a lot of work is outsourced to South Korea. However SK is far from third world. Thanks for the great read! |
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Lord Geo
Posts: 2545 Location: North Brunswick, New Jersey |
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This is likely the reason why Europe, and even Australia, have animes released there but not in North America; stuff like Gundoh Musashi, Kaiba, Tatami Galaxy, and even back in the 90s by UK-based companies, like Salamander, Slow Step, The Enemy's the Pirates!, etc. European/Australian licensors seemingly are willing to pick up more niche shows probably because they feel that, in the long run, they will eventually make their money back. |
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ABCBTom
 Posts: 183 |
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American companies have always been absolutely paranoid about the short term quarter. When Funimation was owned by Navarre and publicly traded, I'm sure their ability to take risks on titles like Big Windup was hindered. At an ADV panel I attended long ago, the PR person said ADV wasn't selling any shares because they wanted to keep the control in the founders' hands, so they could take more risks. Perhaps Funimation's willingness to go BD with Princess Jellyfish is due to the fact that Fukunaga owns them again. The more corporate a US company is, or if they're staffed by executives and managers who cut their teeth in the corporate world, they're just tuned to getting quarterly results in quick. There's no time to take a short term loss on a long term investment. And if any CEO or board of directors was stupid enough to try, their stock would all get sold off at the first sign of a loss. Japanese companies that belong to corporate groups or keiretsu have long-term partners they can be patient with. They're willing to accept losses because of the overall relationship. In the US it's all about money up front. |
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_V_
 Posts: 619 |
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"Bandai would turn a profit if only they'd stop using the Japanese market model!" -- Hitler is informed that Bandai and Media Blasters are shutting down their anime releases
http://www.youtube.com/watch?v=jvDsz0rPgdw . |
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agila61
Posts: 3213 Location: NE Ohio |
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And because of the US tax law pretending that stock options are risk sharing, this quarter's stock price is directly connected to this quarter's pay packet for the top executives. If only 5yr+ options were allowed to be treated as risk sharing and stock options under 5yrs were treated as regular pay, suddenly the focus would shift to the 5yr time frame. |
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Megiddo
 Posts: 8360 Location: IL |
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Wow, this is so awesome Justin. Really enjoyed this simple yet detailed article on the beginning steps of production and the parties involved, but one of my current passions is following the trends in the R2 home video market, so I can't wait for the next part. |
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agila61
Posts: 3213 Location: NE Ohio |
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Yes, merch and other character rights would be one reason why the return on anime will take time to come in. Second BD/DVD releases would be another. Also when a manga publisher is part of the committee, the increased sales of manga serials carrying that series and tankoubon of that series are going to be a slower burn than the sales of first release DVD's. In the end, it doesn't make much sense to say what level of first release DVD sales are required for a general "breakeven" for the series rights as a whole without knowing both (1) the production budget and (2) what share of costs the DVD sales have to cover. That's why isolated pieces of industry insider information can easily be misleading ~ if series "X" sold so many thousand and broke even, that does not tell us as much as we would wish it to unless we also know if its production costs were at, above or below industry averages and whether its flow of revenues other than DVD royalties were at, above or below industry averages. |
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CKSqua
Posts: 38 |
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The work can go all over the place. I know Toei has their own facilities in the Philippines. However, in anime credits, I've also seen work sourced to places in China and Vietnam. Another thing to note is that sourcing work to a Japanese or South Korean company doesn't necessarily mean that it'll be done within those countries. For instance, work can be outsourced to a South Korean company, who in turn outsources it to people in another country through their own connections (regarding American productions, there was some controversy over South Korean contractors outsourcing animation to North Korea). |
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shukero
 Posts: 493 Location: Michigan |
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Very informative and a great read! Thanks!
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