John Ledfordby Christopher Macdonald, May 30th 2007
John Ledford is the co-founder and CEO of AD Vision Inc., the parent company of ADV Films, ADV Manga, Newtype USA, and the Anime Network. With a multimedia empire comprised of anime, manga, magazine publication, TV network, production, theatrical distribution, and now online downloads, John Ledford is one of, if not the most powerful men in the North American anime and manga industry. Mr. Ledford sat down with Anime News Network's Christopher Macdonald to discuss the past, present, and future of not only his company, but the industry as a whole. The result is probably his most candid and detailed interview ever published during his 15-year career running AD Vision.
In the last couple of months, ADV has really picked up steam. This was preceded by the Sojitz deal, where Sojitz Corporation invested in A.D. Vision. How much does Sojitz have to do with ADV's rebound?
Sojitz is one of the big key factors. Having done the deal with Sojitz has really enabled the company to move a lot faster than we could ever have done with a non-Japanese partner. The typical American investor would not be nearly as good as having a neutral Japanese party. There were some publishing companies, some other animation studios, [and] general people that were interested in investing in ADV on the Japan side, but I felt that the trading companies were the best overall because they're like Switzerland; they're very neutral.
So with Sojitz's reputation in Japan and with all the men they have on the ground, we have a small army now of people that can go forth and meet with all the licensers in a very rapid manner. Having those guys enabled us to move much more quickly with a lot of plans that we had that were stacking up: things to do, projects to start, titles to license, etc.…. Once Sojitz was on board with us, we're like, “Boom, done!” So that was a big factor.
Also, as I said, there were a whole bunch of projects that were just stacked in the to-do list and you can't do anything until things are looking much greener for everybody. The market was a big mess back in January of 2005 and continued to be so for most of 2006. But it's stable and now, at least there is some consolidation there that gives people [cause] for hope.
So, Sojitz is more a partner than an investor?
They are an investor who's an active partner. They are actively helping us succeed in the business to maximize profits for both ourselves and for themselves.
Right now ADV's picking up a lot, but, right before the market went to hell, ADV had also expanded a lot, possibly at the absolute worst time.
Yes, expansion right before one of your biggest customers [Musicland/Suncoast] falls through the hole.
So a couple of departments were…
Hiatused. Now that ADV's really moving forward, what are we going to see from those departments? (Manga, Merchandise, ADV Pro, etc.….)
ADV Pro has been re-activated, so the projects it had under its wing, specifically Mutineer's Moon, are still proceeding. The dynamics of certain departments have changed because a lot has happened in the market during the last two years. The market's not sustainable in certain areas, particularly with certain start-up divisions, like the toy section. I don't expect toys will exist as a department anymore. More like a segregated area of licensing, under our licensing group. So there will probably be no more toys at this time. It's a very heavy investment-rich environment. It takes a long time to turn around and get your cash back. The market's half the size it was in terms of retail presence. We can't support it.
But as far as how the Anime Network goes, it's just rocking, shooting straight up. I'm very happy with it. So Anime Network is getting our full support; of course ADV Films is our bread and butter. No question there.
ADV manga—the manga market, like anime, is saturated and/or matured, so we're going to be very selective about the manga titles we do in the future. We will continue to buy good manga properties whenever and wherever it makes sense—where there's strategy, whether it's tied to home video, or it's just a good manga. But we're not going to take any B or C titles. Everything has to be A+. It's quality over quantity.
At one point you had a lot of quantity when it came to manga. There's an interview quoting you as saying you had 1000 volumes' worth of quantity.
That was very accurate.
Some of those have gone on to other companies, are you holding on to a lot of them for future releases? Are you looking to get rid of them? Have you gotten rid of them?
Most of the stuff we'd licensed back in 2003 and 2004 [have] already expired. The terms are very short for manga, so it's like a pay or play, publish or lose environment. Where the titles made sense, we published them. When the market didn't support them, or if to release the titles it would put ourselves in the red, it didn't make sense to release it, so better to lose the license than the money. You can publish yourself into bankruptcy, but we don't want to do that.
If there are 400 to 500 really avid fans out there that want volume x of title y, well, sorry, but we can't help you; and I don't think anyone else can either. No one will put a product on the market when it's not sustainable.
One of the interesting things that happened in the North American manga market, is Viz's partnership with Shogakukan and Shueisha, and Del Rey has its partnership with Kodansha. Those are the three biggest manga publishers in Japan. Where does that leave a company like ADV?
There are about 24 other publishers in Japan. You've got Square Enix, you've got Mag Garden, you've got Hakusensha, you've got Akita Shoten…the list goes on and on. There's plenty of people, but that's a lot more legwork to go hunt and fetch out a good title. Whereas before you could go to three companies and get what you needed for a year, now you've got to go to thirty companies, and it may take you 6 months to visit those thirty companies over and over again.
These partnerships proceed at a high level. Either through ownership, in Viz's case, or through a much broader partnership between Random House and Kodansha that was not necessarily driven by manga, but from which manga has benefited. To this day we are still publishing a Kodansha title, one that is very dear to their heart, Cromartie High. Anything is possible, particularly given our anime business, and we're also exploring some very unique and great opportunities with other American licensors to cross-promote product[s] and work with them here. The landscape is changing, but nothing is certain.
I think the market is still evolving and is still organic in nature. The waters that have been rough are calming down. They're not completely calm, but they're calm enough so everyone can see that things are stable. You can still sail your boat, but you still may get hit by squall on the way out.
There are certain things that ADV does extremely well; there are some properties that we're particularly well suited for. I think that's not going to change despite the integration between Eastern and Western companies, we're still in the running for some wonderful series.
Although the public perception is there's a greater consolidation, Viz has always been, in a sense, always owned by Shueisha. Since both those companies (Shueisha and Shogakukan) have control of most of the market in Japan, they've always been able to push their titles toward Viz. Or Viz wanted to take the titles. So from our perspective, there's no loss of titles from those companies. They would never come to us anyway. As far as Kodansha goes, I'm sure that if it's not in Del Rey's interests to publish a certain type of book, it should be available. I don't think everything that's Kodansha's is off the table just because they have this relationship. I suspect Del Rey publishes what they want to and everything else is still available.
ADV Films has been one of the more pro-active companies in the new-media area. You've looked at cell phones. You were the first on video on demand. Where do you see various media options in your company's future?
We're exploring anything and everything. Every possible new media that exists out there, either it's publicly announced or it's already in development. Part of the big deal with Sojitz was that we develop more additional new wireless and new media content. Sojitz has a lot of relationships with new media companies world-wide. This allows us to tap into these new media distribution outlets much quicker than anyone that doesn't own a telecom company, or have some investment in some new media business. So through these back-channel relationships, we're able to move very quickly, precisely, and strategically into these new media. So cell phone deals worldwide, download videos worldwide, all kinds of interesting things coming on our horizon.
Most TV is ad sponsored. Do you think there's any chance for online ad-sponsored anime?
Anything is possible.
A few years ago, you released Grrl Power ahead of the Japanese. It's been mentioned that was quite a headache; in order to do a same-day release, you have to ask Japan to delay their release while you complete yours.
They have to finish the animation and the voice recording. Basically they have to get it “in the can” first. Then they send it to us, then we get to work off of their end product, then from that work product we get our dub, then we send it back to them, and then we say everybody's in sync, and it's “Let's go.” For that particular case we were supposed to do day-and-date globally: same date, same day, same month, everything. However, for whatever reason something happened on their side, and it got delayed. It wasn't intentionally us ahead of them; it was supposed to be simultaneous.
Based on your experience with Grrl Power, and your experience with Le Chevalier D'eon, which is going to be a really close after release, what do you think is a feasible future? Do you think we're going to actually see same day-and-date regularly, or is that just unreasonable?
I'm going to choose my words really carefully here, so don't read too much into this and don't misinterpret this. Because of the proliferation of online illegal file transfers and downloads and whatnot (a lot of the content broadcast in Japan is subtitled and propagated over the internet within 24 hours), license fees are dropping for the Japanese, which means production quality and production budget will be affected in the long term. Because the Japanese companies generally look to the Americas for 20 to 40 percent of their budget, if that budget is not there anymore, they can't sustain quality and scope of production. So in order to fix or help or kind of mend the problem, some of the companies we've talked to are discussing releasing the Japanese version on TV with an American near simultaneous broadcast, in English, subtitled or dubbed. But only broadcast. And that's all I'm going to say.
Do you feel that dealing with fansubs is a lot harder than in other markets where online piracy is online piracy, end of question? In the anime market, fansubs are good or bad, depending on who you talk to.
Personally, not professionally, I like fansubs because they come from the fan community. Professionally, if a fansub is not done with a lot of tender loving care, and it's messy, it can damage the product. In any case, the fansub is not licensor approved, so no one's running the traps with the author or the creator. No one's asked for their blessings, so you know, it's a very delicate situation.
What do you think would be a sustainable price point for future release, online on demand, downloadable video, what kind of price point are we looking at for a few years from now?
No one knows the answer for that question. I wish I could tell you, but we're looking at what Cinema Now is doing, at what Walmart's doing and all these other guys. Nobody knows the answer to that at this moment. Give it a few more months, some more people will get on board with the project or with the technology. I think it will be fine.
Do you think that's a profitable market in the future?
How do you judge profit? I can buy something for a hundred dollars and charge 90 dollars of it over to my film company and charge 10 dollars to my mobile business. It might money at the mobile business but then lose money in the film. You have to balance the whole scope of rights against your overall income.
We're experimenting with pricing now. Currently it's at $4.99 because, frankly, the licensors wouldn't let us go any lower. When we've got titles that are $30 retail for four or five episodes, while in their market two episodes is $78 on DVD, and we're asking them, “Hi guys, we want to do downloads at $1.99, with Apple.” They're like, “No way, are you out of your mind? We get what, 10 cents? No.” ADV loses money with every download? No. We built our own site, we put pricing in place where the Japanese make money, where we make money, all is green, and we can actually move this project forward. Until we see results of a three-to-six month trend-line, it's going to be difficult to make a case that we need to adjust pricing downwards.
Unfortunately, ADV Universe is working too well. It's doing really good, so it's hard to discern price pressure.
Are there any numbers you can actually give me?
I know people are naturally curious about all sorts of things, details of DVD sales numbers, theatrical take, and so-on. Especially with anime, where the fandom is very engaged in the material. However, we work with a lot of different parties to make this happen, and right now the objective is get to a critical mass. It's not helpful to us, in working with some of these business partners, if we talk about our take.