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New York Anime Festival and ICv2 Conference on Anime and Manga
ICv2 Conference on Anime and Manga - Marketing to the Otaku Generation

by Mikhail Koulikov,

As the second panel of the conference opened, Griep was joined by his co-moderator, Chris Annicelli, editor of Playthings Magazine, and the six speakers: Viz Media senior vice president Liza Coppola, FUNimation Entertainment CEO Gen Fukunaga; Rich Johnson, Co-Publishing Director of Yen Press (one of America's newest manga publishers); 4Kids Chief Executive Officer Al Kahn; Christopher Macdonald, Anime News Network's editor-in-chief; and Larry Neves, Editorial Director, Pokémon USA.

The first question each of the speakers approached was regarding the role of the Internet in promoting awareness of new anime shows. In Al Kahn's view, fans monitor the success or failure of shows in Japan very carefully, but American marketers have to remember how particular properties relate to specific age groups in the United States. For example, popular as it was with vocal fans, 4Kids had a very hard time localizing One Piece in a way that would satisfy fans on one side, and advertisers and television company executives on the other. Approaching that series, his company found itself between a rock and a hard place, and Kahn said it learned the valuable lesson that popularity in Japan is only one of the factors that governs how well any given title will perform in America. To Fukunaga, the proliferation of illegal downloads of licensed anime is an obvious problem, but he was also cognizant of the fact that it is how most fans become aware of new series.

Manga publisher Johnson also acknowledged that distribution of scanlations of manga "feeds fervor" for new series, but to him, that is not actually a major issue, since what Yen Press and other manga companies sell is not just content, but actual physical products. Chris Macdonald perceived the period between when an anime series first appears online as a fansub and when it is actually licensed and released in the US as a potential learning opportunity for both fans and marketers. Finally, Pokémon USA's Larry Neves does not use the Internet to introduce any new products, but recognized how useful the medium is for keeping in touch with Pokémon's core fans.

The discussion then moved into talking about what kind of shows work in Japan versus what is popular in America, and how the industry can best learn to recognize differences.

In Neves' experience, American companies that release Japanese popular culture products in the U.S. have to consider the much different geography of the U.S. — in particular, the issue of regional differences. Something that may be considered perfectly innocuous when aired in New York or Los Angeles may cause significant problems for a Midwestern television station with a large rural viewership. FCC rules are also significantly stricter than Japanese broadcasting standards. Ultimately, for Pokémon, if something is funny in the Japanese game, it has to either translate well to the U.S. version, or it sill be cut. At the same time, there are also different expectations and different latitudes between what is acceptable in the Pokémon television series, the videogames, and the collectible card game. Primarily, this is because the three kinds of products sport audiences of different ages, from youngest to oldest.

Macdonald's take on this was to remind all American anime companies that success with a small core English-language audience does not necessarily mean that the same level of success will hold for the broader market. When thinking about cracking down on fansubs, companies also have to consider that they will be losing an easy way to gauge potential popularity and may then have to invest more into market research.

Answering the same question, Rich Johnson called it the "duty" of manga publishers to push the boundaries of what American audiences are comfortable with. His expectation is that the manga market will continue to mature and that there will be more and more books out that expand the boundaries of manga.

Gen Fukunaga, on the other hand, thought that there is a fairly high degree of correlation between the kinds of shows that are popular in Japan and what is going to be effective in America. However, there are some caveats and exceptions. One factor is whether a Japanese property is popular not in of itself, but because it is a part of a long-standing and well-established franchise. He also argued that some genres will flat-out not work because of a vast cultural difference. He thought that moe shows like Lucky Star are one such example, and there is simply not enough demand in the American DVD market to justify bringing them over.

The Japanese television industry across the board, not only for anime, is slowing down, said Kahn. As advertisers pull out their funding, even the number of half-hours available for original television programming is decreasing. Japanese television studios are actively looking for co-production partners. However, since these studios were frequently not interested in welcoming outside partnerships when the market was still doing well, many of the potential partners are now themselves not interested in again working with them.

At the same time, in his opinion, much of what is being produced is too derivative of major successes. According to Kahn, there is little coming out of the Japanese anime studios that is truly innovative, and the most creative new animation is now coming out of South Korea and other countries in the region. "I think it's over in Japan," said the 4Kids executive, and he added that the problem is on a systemic level, as publishers and creators do not care about actual user demand. For its part, 4Kids itself is not interested in Japanese products, with the exception of Dinosaur King, nearly to the extent that it was at one point.

At this point, Viz's Coppola threw out her own opinion that ultimately, viewers are interested in content, not origin, and that viewers will buy and watch whatever "makes sense", regardless of where it was produced. Johnson then chimed in with a critique of Kahn's analysis of the Japanese market. Rather than any kind of deep structural crisis, he thought that much as the American comic book market, the anime and manga industry in Japan are cyclical, and will recover as new products and new ways of marketing them are developed.

The next question the panelists tackled dealt with the relationship between the merchandising impact of a series and the decision to release it in English.

Kahn said that the original anime hits, including Pokémon, Yugioh and Dragon Ball Z are all still sustaining sales, but since then, there has not been any Japanese import that has been as successful. There is a significant amount of anime available in America, but there is little in the way of broad overall acceptance. For 4Kids, if there is little probability that the toys and other merchandise for a given series will sell well, there is no point in releasing the series itself, since DVD sales alone are not likely to ever recoup costs.

Gen Fukunaga noted at this point that a company on the scale like his own or Yen, one that is primarily oriented at the fan market, has a completely different way of thinking than an entity like 4Kids. He thinks that at some point, the niche market will plateau as well, but it will still take some time before any such plateau is reached. Several of the panelists then agreed with the idea that generally, Japanese rights-holders themselves have offered American licensees little in the way of marketing help, while the success of Pokémon and the other few shows that were highly successful has led them to expect entirely unreasonable levels of success for further Japanese properties. Nonetheless, in Fukunaga's opinion, merchandising is not going to be a viable business for anime companies, again because the market is composed of a small number of big brands and a vast amount of titles that will not achieve any kind of commercial success because of the overall fragmentation of media markets. Concluding this discussion, Macdonald brought forth the idea that different titles should be treated as stand-alone products that demand unique marketing approaches. An example he cited involved the holder of a major license who is actually not interfering with the distribution of illegal fansubs of that series because in that company's view, the real money will still come from the sale of merchandise related to the series, not the series DVDs themselves.

Talking about the current state of the retail market for Japanese entertainment products, Viz has taken the approach of "making its own" shelf space by introducing promotional display/shelf units into stores. At the same time, major booksellers like Borders are expanding from carrying books only to also offering merchandise and even DVDs. Johnson agreed, but also mentioned that there is more competition than ever to get quality products onto store shelves. The same view is held by Fukunaga, who said that frequently, store buyers are already "pre-educated" about different anime products. Al Kahn, however, again was not as optimistic, and cautioned that frequently, buyers are now looking not only at a particular toy's immediate sales potential, but also at its staying power on the shelves. Many only want to stick to only buying products that they are already familiar with, and are not wiling to experiment or expand into new areas.

As the panel wound down, the moderators brought up the inevitable question of the risk that illegal downloads present to the American anime industry and the challenge that is posed by the often-lengthy delay between when an anime is licensed and when it is available for purchase. For 4Kids, this is actually largely a non-issue. Most of its target audience does not have access to high-speed Internet connections, while the company's business model itself is based around extensive localization, rather than just speedy release. Pokémon USA is also comfortable with several months of delay. For this company, it can take up to six months to establish the marketing support for a new series, videogame or card game.

Of the speakers on the panel, Funimation's Fukunaga was the one whose company is most affected by online distribution of fansubs. He argues that simultaneous Japan and US launches of new series would be the most ideal way to deal with this issue. However, the only way Japanese companies can be forced into accepting this strategy would be via co-production. Aggressively pursuing action against digital fansub distribution groups is the other viable solution to this issue.

As a media representative, Macdonald again was able to bring a different perspective to talking about this question. He argued that the only real way to stop piracy is to make it unnecessary by providing fans with quick access to free and accurately-translated anime. Even simultaneous releases will not entirely defeat bootlegs because the "core" fans of anime in the U.S. are now into split into one group that is interested in actually collecting physical products (DVDs), and another — which is actually the majority — that looks only to watch anime at the lowest possible price, and if at all feasible, for free.

Al Kahn reminded all those assembled for the session that publishing does not have to be about transferring physical objects, but that the entire anime industry has not yet figured out the best way to monetize digital content and embrace the technology of online distribution. To him, one of the greatest contributions of the popularity of anime in the West has been the fact that as Western animators and producers have been learning new techniques and honing their skills, Japan may be less and less relevant to the most cutting-edge popular culture products throughout the world.

The final question the panelists answered was on the latitude given to them by Japanese rights-holders to actually exercise licensing rights. The license-holders with which Viz usually works have requested that it strategically analyzes the potential of any further licensing, and to make sure that the brand is not diluted. In the case of Pokémon, the basic attitude of Pokémon Japan regarding further licensing of consumer products is "go forth and multiply", but Pokémon USA is still expected to exercise caution, avoid negative publicity, and maintain the status of the global Pokémon brand.

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