
The Economics of Anime - michaelpinto
http://www.animenewsnetwork.com/feature/2012-03-05
======
patio11
A corollary to this is that resources are eventually going to get diverted to
produce the kinds of things which appeal to hyperconsuming outliers who
actually spend money on anime rather than e.g. a broader demographic which
prefers to steal their anime. That is a large portion of the reason why the
Akihabara crowd gets what they want in Japan -- they actually plunk down $X00
for a boxed set of Young Geek Improbably Surrounded By Beautiful Women Who
Suffer Wardrobe Malfunctions Around Him with some degree of regularity, though
that market appears to be drying up in recent years. (For obvious reasons I
don't follow it, I just hear things on the IP grapevine.)

More mainstream audiences can't get things done for them without e.g. a cross-
subsidy from Nintendo who can afford to treat the anime as a loss leader for
the video game or collectible tie-in.

This is a shame for folks who care about distributional access, by the way.
For example, there exist people who think that shoujo manga is a Good Thing
(TM) for the U.S. comic books industry because it provides young girls with
stories they can relate to and helps counteract the insanely rampant
hypersexualization and misogyny of the US comic industry. Unfortunately,
shoujo manga has fairly few crossover hits and hasn't had a commercialization
success in the US comparable to e.g. Disney's line of princess products, which
means that the industry is largely a) not willing to devote marketing muscle
to promoting it as much as Bleach / Naruto / Pokemon / etc and b) some would
argue that the old guard justify their marginalization of the genre and its
fans by saying that (because of their marginalization!) it failed to sell
well.

n.b. I'm neither a fan of shoujo manga nor a great lover of women's studies
but someone who was both had veto power on my degree, so you can bet I at
least listened for the more credible claims.

~~~
Kuiper
I think that a lot of westerners fail to realize the impact of the "otaku as
superconsumer" effect on the Japanese media industry, in part due to the way
that anime is priced in western territories. In Japan, anime blu-ray volumes
are tremendously expensive; right now the latest volume of Madoka is selling
for over ¥9,000 (>$100), and that's a fairly typical price for a single volume
containing three 25-minute episodes. In the west, $300-400 will get you
several hundred 45-minute episodes of Deep Space 9 on DVD. In Japan, $300-400
is the amount that a hardcore fan can be expected to spend on the blu-rays for
a dozen 25-minute episodes. On top of this, there is merchandising galore; CDs
for OP/ED, insert songs, character CDs, along with physical goods like
figures.

On top of this, sometimes hardcore fans will buy _multiple_ copies of their
favorites to inflate sales numbers. For an extreme example, see this man who
bought 5500 copies of a single AKB48 CD:
<http://blog.esuteru.com/archives/3347822.html>

To put things into perspective, the Bakemonogatari blu-rays sold around 50,000
copies per volume during the release window, which catapulted it to the status
of "most commercially-successful anime since Evangelion." Based on this, it's
not hard to see how a base of several thousand really dedicated fans could be
enough to justify an anime production.

~~~
yardie
I've seen the inside of a typical Tokyo apartment, I gotta ask, honestly,
where do they keep all this stuff?

~~~
w1ntermute
The inside of an otaku's apartment is anything but typical:
[http://www.google.co.jp/search?q=%E3%82%AA%E3%82%BF%E3%82%AF...](http://www.google.co.jp/search?q=%E3%82%AA%E3%82%BF%E3%82%AF%E3%81%AE%E9%83%A8%E5%B1%8B&hl=ja&tbm=isch)

Here's a nice example: [http://www.wolfheinrich.com/wp-
content/uploads/2009/02/dsc00...](http://www.wolfheinrich.com/wp-
content/uploads/2009/02/dsc00307.jpg)

------
marshray
I went to our regional Anime/Manga conference with my kids last month.

One of the more interesting panel discussions was with an American voice
actress. The economics for such a profession are discouraging of course, and
she couldn't hold back the opinion that watching anime from the net was
"stealing".

But you look around the audience and clearly the great majority of the fans
are too young to have real jobs. Still, many of these young people have put
untold hours of work into making these incredible costumes.

Then you go to the vendors (or anywhere) to look at a licensed DVD for a
season or two of a popular anime: $60 !

1\. It's outrageously priced.

And the hardcore fans don't even like the product as much as the "fan subs"
available online. E.g.:

2\. It's usually overdubbed instead of subtitled.

3\. Often it's edited down for more commercial slots for US cable TV.

4\. Where there are subtitles for the opening and ending songs they don't have
phonetic Japanese (romaji) or karaoke effects (words exploding into pink
flowers are hugely important to a certain set of customers).

5\. The translation is often not accurate, all the Japanese idiosyncracies are
ironed out to make completely bland English. (Was said to be usually at the
insistence of the Japanese studio).

EDIT: Of course I forgot the most important parts:

6\. The video quality of the fansubs is often much better at 720p.

7\. The fansubs are often more available, sometimes within hours of something
appearing on TV in .jp. Official DVDs may drag out for years of on-again off-
again rumors.

8\. The fansubs of course have no DRM. They're just files that play on your
computer and can be shared among fans. (Though sometimes they require codec
downloads from sketchy looking sites).

~~~
kalleboo
The way I've had it explained to me is that the pricing is high because the
Japanese market will bear it, and so lowering the prices on the Japanese
market would hurt profits. When they've experimented with selling U.S. DVDs
cheaper, Japanese fans have imported them at the lower price, killing sales of
the more profitable Japanese region version. One way they've attempted to
mitigate this is to make the DVDs unattractive to Japanese buyers using the
methods you describe such as having dubbed audio with no Japanese sound
option, or delaying the release.

edit: the japanese market's willingness to pay high media prices is explained
on page 2 of the article

~~~
ZeroGravitas
This is part of a general pattern where producers actively choose the level of
piracy that maximises their profits, then complain about it in the hope of
further increasing profits via politics and social engineering.

------
michaelpinto
I submitted this story because there's been a great deal of talk from tech
companies on how to disrupt Hollywood — and I think while anime is a niche (my
favorite niche!) that this article gives a very good insight into just how
hard that might be to pull off. It a very expensive and high risk market to
play in — and this article gives the numbers to back it up...

~~~
gwillis13
:D I already have some ideas for this, especially with the current state of
the anime industry and subbing. Bandai Namco closing their U.S. Distribution
for anime was an additional amplifier for a need to disrupt it.

The main issue is licensing, and showing the "old guard" the new ways to
capitalize on the market instead of relying on the current traditions.

Also wanted to add the "current traditions" are similar to the music and movie
industry. More so in the vein of music, with the evolution of how fans can
acquire anime. So they see no real need to pay for something that comes out
months to a year later.

~~~
mikelbring
I came into the development world via anime (years ago). Would you want to
talk about some of your ideas? I have always had a heart in this niche.

mikelbring [at] gmail.com

~~~
xSwag
As a matter of fact, so did I, how interesting! I started web development a
few years back running a little site providing anime, however, I had to close
it down because it got too popular and there were a lot of DMCA complaints and
such, I was one of the main competitors of Crunchyroll, but I guess Shinji
took the legal initiative before I did.

------
jonnathanson
_"The hope is that the remaining 30% that will never make back their budgets
will get paid for by the successes. This is a gamble, but it's the most
essential one of every entertainment industry: a few huge hits that subsidize
tons of losers."_

If this figure is accurate, then it represents a far better hit rate than what
the US movie and TV industries usually achieve. (The rule of thumb in the US
entertainment industry is that less than 25% of TV pilots makes it to the
airwaves, and of those, a very small percentage last a full season; an even
smaller percentage of those last more than a full season; a fraction of those,
still, last enough seasons to become financially successful. I can't recall
the film industry hit rate off the top of my head, but I believe the going
theory is that 4 in 5 films will fail, and the remaining 1 must subsidize
those failures).

In fact, I think the US entertainment businesses will need to learn a lot from
the anime business. As distribution techology becomes more sophisticated,
we're going to enter a world where two things happen: 1) opinion leaders
within a certain genre (superfans, otaku, loyalists, diehards...whatever we
want to call them) will discover new content via collaborative filtering as
seen on Netflix, iTunes via the Genius algo, etc.; and 2) those folks will, in
turn, share their discoveries with linkminded friends via social networks.
These distribution patterns will be less than kind to the mass-market,
"shotgun" approach as it's been practiced by Hollywood firms for nearly a
century. Conversely, they'll be much kinder to niche-portfolio production and
marketing. To patio11's point, this will mean resources being devoted to
product differentiation: basic stuff for the casual fans, and more limited-
edition, souped-up stuff for the _otaku_ (where the real money gets made).
It'll also mean that entertainment firms will need to get _very_ serious about
high-involvement CRM with their otaku bases, as video game companies currently
do. (To some extent, this has already been happening in recent years, i.e.,
with everyone in Hollywood's annually bending knee to the kingmakers at
ComicCon).

------
roryokane
If you finish reading this article and want more, don't forget to go back up
to the top and click on the links to Part 2 and Part 3.

~~~
ginsweater
Especially of interest to HN readers is Part 3, which is about the economics
of streaming anime - the ad-revenue numbers they present are shockingly low.

------
cinquemb
This was a interesting read! Thanks for sharing! I wonder if there is
something like this that speaks to manga.

------
chrischen
How does Anime make money from the US? It seems everyone I know in the US who
watches it does so illegally.

~~~
naner
I always found Anime piracy kind of impressive since they not only have to rip
the material, they have to provide English subtitles, too. Which requires
special expertise and is extremely tedious. And people do this work for free.

~~~
chii
I find them amazing too - the tools (last i looked) weren't all that
impressive, so a lot of manual work is involved.

in my eyes, these fan sub groups aren't classified as pirate (nor are the
peopel downloading them), because as far as i m concerned, the anime is
recorded off free to air tv, and thus is meant to be freely available to
watch. Add to that the fansubbing + cute karaoke, its a product it itself. The
american distributors barely make the mark when it comes to anime
distribution, and so no one i know buys anime dvds, and only ever watch
fansubs.

~~~
rmc
_in my eyes, these fan sub groups aren't classified as pirate (nor are the
peopel downloading them), because as far as i m concerned, the anime is
recorded off free to air tv, and thus is meant to be freely available to
watch_

Most legal systems come to a different decision from you about whether or not
this is copyright infringement.

