Forum - View topicAnswerman - What Is A "Minimum Guarantee?"
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relyat08
 Posts: 4125 Location: Northern Virginia |
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I'm very interested in how streaming functions now. Especially in regards to catalog titles. Crunchyroll has a number of titles that seem unlikely to bring in many eyeballs at all, but I can see how it would be worth it to post them if there is no upfront fee, and all they have to worry about is sending back a percentage to the owner/licensor, or whoever is posting them every month or quarter.
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Hoppy800
 Posts: 3331 |
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Yeah, Hollywood Accounting sucks and is ridiculous at times and the MG does sound like it comes from Hollywood Accounting.
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samuelp
Industry Insider
Posts: 2231 Location: San Antonio, USA |
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MG is also important from the Japanese side because of how Japanese businesses do accounting.
If you do a no MG, royalties only contract, then the amount the Japanese company will get is basically a big question mark. And as far as Japanese business accountants go, a random number from 0 to 1 million is equal to 0  .
So for those international window salespeople trying desperately to meet their sales quotas for the quarter, signing a deal for no money up front doesn't look good on paper for their department at all because it's not guaranteed money, and they aren't able to even budget approximately for what the future royalties are. Usually they assume in their budget that the MG is all they'll ever get and whatever royalties they do get are happy bonuses but not budgeted for. However, there are cases where no MG deals are made in Japan; usually for renewals of long terms deals where they have a very accurate estimation of the royalty income. This can happen with perennial series that are constant sellers. |
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RoverTX
 Posts: 424 |
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This isn't just a Japanese thing. At work we end up asking for an advance upfront for every international project. See if an international client refuses to pay, because they are out of country, it is far harder to collect or to report them to a credit agency. Thus to offset the inherent risk in the transaction we usually have a surcharge and some part of the deal is upfront. |
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AnimeLordLuis
 Posts: 1626 Location: The Borderlands of Pandora |
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A MG upfront does seem like a good idea especially since you have no idea whether the title in question is going to be a big hit or not overseas. However with the Anime industry the way it is today I feel that there are some drastic changes in how business deals go down nowadays.
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Carlooo
Posts: 58 |
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Interesting. Seems like a good system for the Japanese company, while also being acceptable to the overseas company. Bit of a hassle to go through maybe, but considering the amount of money we're speaking of, it's understandable.
Thank you very much for the answer, Justin! |
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PMDR
Posts: 140 |
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A side topic to this is who, exactly, is selling the license in the first place.
Fans seem to get hung up which anime studio or company makes something but in reality those companies may not actually own the rights to international sales. And sometimes studios pack up a bunch of titles and a third party license company takes that and tries to sell it. If they succeed, the third party license company is who is getting paid, and presumably they have some other additional deal to pay whoever they got the license from. Macross TV is one other example where Tatsunoko was hired to animate the show and their payment for doing that work was the international sales rights to a show they didn't otherwise have any ownership involvement. |
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Buzz201
Posts: 266 |
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This is a common rule of accounting, and is not just Japanese. It appears in the widely accepted International Financial Reporting Standards. This is significantly simplified, but Revenues and Expenses must be accounted for in the period incurred. Future revenues have not yet been incurred, so cannot be accounted for in the financial statements. Therefore in any territory where the IFRS are enforced, you can't include future revenue in your public-facing financial statements. (I'd note that whilst most listed Japanese companies are permitted to use IFRS, they're not obliged to do so and only 25% of eligible companies in Japan are. This was just intended as more general global context.) I don't know about the American GAAP system, but I would assume there are similar rules, given the obvious problems of allowing companies to include revenue they haven't earned, and may or may not go on to do so, in their public-facing financial statements. |
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rinkwolf10
Posts: 750 |
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I wonder how much the publishers of Kenichi the Mightiest Disciple made. Seeing as it sold the best by far for it's receptive year for Funimation.
However, since it was a kinda old license, I believe the series was about 4-6 years old when Funimation offered to license it, the contract was probably low in expectations on potential sleeper hit in the U.S. It would be really interesting to know where that whole scenario went. |
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relyat08
Posts: 4125 Location: Northern Virginia |
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Funimation licensed it sometime around May 2008, about a year after it aired. |
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leafy sea dragon
 Posts: 7163 Location: Another Kingdom |
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I've seen cases of small companies completely falling apart or failing to report anything when they get their hands on a license, so I assume there must be something to cover that. |
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