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A license is a legal document in which the licensor grants the licensee certain rights and privileges. Licenses often have a specific term during which they are in effect and expire at the end of that term.

The entity (company or individual) that grants a license.

The entity that receives a license.

Licensed Anime
In the anime world Japanese companies grant local distributors the rights to localize and distribute anime in a particular market. For example, Japanese Company A gives North American Company B permission to translate and release Anime B. This anime is then referred to as "Licensed."

In reality, licensing can be, and is often much more complicated than this. There may be multiple Japanese companies involved in the granting of an anime license, the license may pass though an intermediary or master licensee / licensor, and in the case of properties that are released in a market by the original rights owner, there is no license. In some cases, Japanese companies are choosing to release their titles in North America themselves, in these cases there may be no license involved if the Japanese company owns all the worldwide rights to the property in the first place.

Common Usage of the term "Licensed"
Within the Anime News Network Encyclopedia, and the English speaking anime community world-wide, the term "licensed" or "licensed by" (ie: Anime X is licensed in North America), has traditionally been used to point out that a company has acquired a license to release an anime in a particular market. Due to the above mentioned cases where licensing agreements may or may not actually exist, the term is technically inaccurate, but continues to be used in order to specify that there is active intent to release the anime, that the intent to release the anime has been announced, the release has been scheduled, and/or the anime has been released.

Master Licensing
Many different rights and privileges can be granted in a license. A master licensee is a company that acquires all rights available in a particular market, and then has the option to act on these rights on its own, or sub-license them to other companies. When sub-licensing, the master licensee becomes both licensee and licensor. This is often the case where a North American company may obtain all rights to a property via a licensing agreement with a Japanese company, the American company will then chose to release the anime itself, and grant a toy company a license to release toys based on the property.

Intermediary Licensing
An intermediary licensing company is a company that obtains regional licenses with no intent to take advantage of the license other than to re-license the property to another company or companies. Intermediary licensing companies often have a significant catalog of properties for which they have regional licenses, one very well known intermediary licensing company is Enoki Films. Intermediary licensing companies may or may not hold master licenses for the property in question.

Examples of Anime License Privileges
The following are just some of the rights that may or may not be granted in an anime license.
VHS Rights
Laserdisc Rights
DVD Rights
Blu-ray Rights
Global Home Video Rights for all existing and not yet existing media formats
TV Rights
Internet Streaming Rights
Internet Download to Own Rights
Video Game Rights
Merchandising Rights

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