Tuesday, May 26, 2009

Is Paris Burning? The departure of Central Park Media

The departure of CPM and the new “anime” world order (no, not those three).

So CPM exit stage-whatever can come as not really a surprise, since if you just look at their sales and acquisitions, and combine that with the fact that they were a home media company, and not a media-media company (I’ve written about that set of cosmic rules too many times already). I am actually surprised that this took as long as it did. Next on the block, I’d put Media Blasters, since they’re already being sued by Color West Inc, in what I can only assume is going to be a growing list of bills that don’t get paid. Rather than imploding, I see them moving to a much cheaper city/state, and dropping a lot of anime in favor of live action cult schlock. That scenario is no guarantee though, and they very well might go the way of the dodo within a year. Is this “early retirement” for CMP’s master and commander? It could be… but after talking to the JOD himself at this year’s TAF, there might be something to come from this yet. Time will tell, and the market will either be there or it won’t.

Next on the agenda is this thing. I can’t say anything about it… I want to care, I really do, but after the crap that was BGC 2040, and the swine flu celluloid abortions of both Dragon Ball and The Legend of Chun Li, I just can’t get excited about this project at all, no matter how much I love BGC. This live action project has some things going for it, and some things against it. So far, Hollywood isn’t involved, but this is a neutral aspect, since if they are going for a combined Western/Asian cast, you’ll probably want to have actors that can actually act… and if you’ve ever seen a Japanese or Korean movie with gaijin actors in it before, you know that it all too often looks like they just grabbed someone off the street. So if they want good actors, a Hollywood Studio might work its way into the project, and then the story, designs, and everything good about the concept will die right there as they demand changes for the post 9/11 American consumerist SUV driving movie theater audience that somehow manages to pump money into pieces of pure cinematic shit like Ghost Rider or Wanted. Seriously, who pays money to watch these things? Well as time goes by, we’ll see if this is even real (remember in 1999 there was all that “live action Ninja Scroll” talk… still waiting on that one).

So the holdouts are running out of ammo, and the Russian winter is closing in on the anime market as we know it. Some big boys will still be left, but most things are going to fundamentally change. It is the rebuilding of the decimated landscape and the form it will take which is going to have far reaching effects for years to come. In the absence of any kind of Martial Plan for the new way of doing things, there will be a few major directions we can see from our very early vantage point;
A new, old-world-order, where properties are rarely licensed and domestic productions continue to follow the American dumbed down style with few notable exceptions like Avatar and Teen Titans and so on. Previously, this kind of thing was spoon-fed to a captive audience, when fansubs were available to only an intrepid few who knew how many VHS tapes could fit in a Tyvec priority envelope. With fansubbers out there now doing their best to devalue a license the moment a show hits the air and take money away from the creators and rightful owners, it will be interesting to see if that ongoing will effect the popularity or potential of domestic American animation (once it pulls its head out of it’s ass and stops making pure shit). Or will we have a new version of media delivery which allows anime producers to circumvent the losses they currently incur with fansubbers devaluing their licenses, which will allow them to make more money to make better titles, and also actually take the American market into account. It is interesting to hear American otaku audiences complain about a lack of input and effect on the Japanese production companies, when it is this same otaku audience that is blatantly consuming the product while at the same time pumping exactly $0 back into the system. It’s a big market, but an unprofitable one, so why should producers cater to it?

There are a few factions that are racing to get their version of the next step in Anime market evolution across the finish line first. With dubbing into English now seen as more of an option rather than a requirement when courting a large enough American audience, the rules of the game have definitely changed. That’s why I would watch what Crunnchyroll (and other services like it that may pop up) does pretty closely. They have a shot at something, but it’s no slam dunk.

Quick trip to FUKUOKA... it's a happenin' place.


Mark said...

Good to see you're back in action.

"Or will we have a new version of media delivery which allows anime producers to circumvent the losses they currently incur"

Funimation's ad-supported streaming service shows potential in this category. I like that Funi is using it not just as an advert channel to promote their latest acquisitions, but also putting up older series' like Fist of the North Star and Galaxy Express 999 up in their entirety. I dunno if such a system could be the future of all anime in the States, but I definitely think it is the future for niche shows like Air Master and Kaiji along with older (anything that's been around more than a decade, I guess) to service that long tail of the small, not-so-vocal minority of anime fans whose stomachs grow sick and distended in a famine of those kinds of shows on the U.S. market (possibly the only way we will ever see CPM licenses like Patlabor and Votoms officially in the U.S. ever again). I like collecting physical media as much as the next nerd, but with the state of the anime business now compounded with the recession and the long-overdue mass reevaluation of spending habits in America, I've been using streaming services more than ever. I don't see myself throwing down $40-$60 for a DVD box set of anything any time soon.

I write all of the above with a wry smile on my face though. I'm just a novice -- I have no clue whether the ad revenue generated by streaming is enough to even let publishers break even with a show. The opacity of publishers' books doesn't exactly help with that, but that's tangential. I smile because I'm in that other convulsing publishing industry, newspapers, whose only reaction to the advent of the Internet seems to be to commit suicide. Our problem in newspapers is almost the exact opposite: the publishers vastly undervaluing their product and throwing premium content produced by their editorial staffs up on the Internet for free, with virtually no business model attached. The online ad revenue simply is not enough to keep a paper of any decent capacity going (unless reporters are willing to work for free, which some, in a stunning act of mass First World retardism, are). The ad men I talk say selling online ad space is infinitely more difficult; "Our site made made 75,000 hits last month, good chance you'll get exposure" is an infinitely shittier sales pitch (define a "hit") than "we have 35,000 people in the county paying good money to have this publication delivered to them every day, guaranteed exposure." Perhaps it's the same case with anime, do you know?

Another tangential question: what do you think of Viz's announcement that it's be bringing Ikki of all things to America as an "online magazine." This is much more of a bald marketing scheme than Funi's streaming, I think. The content looks to be stripped down, focusing entirely on the manga titles, and content placed online will coincide with its publishing as a physical Viz Signature volume the proceeding month. I mean, only Viz, right? The fact that they're pretty much a shell operation for Shogakukan to move its hand in American waters has to be the only explanation for such a seemingly unorthodox move, right? (Shojo Beat just croaked, after all). Our pop theory at CD is that the reason Viz Signature and this Ikki deal still continue at all is because someone with more heart than business sense in the upper echelons of Shogakukan/Viz enjoys these titles and believes American manga readers need their "spinach," even if they're voting with their dollars. They figure the revenue from their SJ properties more than covers the loss they incur on Viz Signature. If it's true, then God bless the man/woman making that happen. Speaking as a member of the "nonexistent" seinen manga fanbase in America, Viz Signature fills a gap to which the only other addressees are Dark Horse and maybe Vertical (who isn't doing too hot, but they never are). For once pigheaded Japanese business mentality works in our favor!

It's an "interesting" time to be working in publishing. Woo.

The Angry Otaku said...

Although revenue from advertising now seems to be the only thing that will save the American market’s ability to contribute , as opposed to that from packaged media sales/paid downloads or licensing fees, the level it is going to be at for the rest of this year is going to be lacking by a factor of 100 or so. As crappy American TV has shown us, the actual merits of the program itself comprise only about one third (if that) of what would be called success, with the other two thirds being time-slot and hype. If (just as an example) Inu Yasha had been less interesting and had worse dubbing, it still would have done a lot better if it had 2 things happen differently: 1) a better time slot. 2) simultaneous release. That there is the heard part, and until that happens, the ability any Japanese animation title to make money in America will never be able to be even remotely realized, thanks to the fact that fansubbers get a boner from getting out badly translated subtitled digital files into the U.S. as soon as they possibly can. This destroys the ability of the title to make money on TV, or as a license for some other media delivery system. TV makes money from advertisers, stations give a reasonable guarantee that a certain amount of people will be watching a certain program. If the core audience has already downloaded it, and the title is already proliferated, then the ability to guarantee any amount of viewers high enough to earn even a modicum of what it would take to even slightly help finance production of new material is gone. Digital fansubs actually destroy much more of an anime title’s earning potential than straight up bootlegging does.

The older stuff actually has more to gain from things like digital sales i-tunes style. Working professionals who were young then and now have a nostalgic desire to pick up all of the original Gatchaman, City Hunter, or Dirty Pair, are now the exact people who don’t want to fuck around with bit-torrent and will just buy the damn show when they finally feel like it. $40-$60 isn’t much for an old guy like me to drop a few times a year for Shin-Chan or Azumanga or all of Evangellion. I’d consider spending the same on a digital version of a show with 100+ episodes as long as the compression didn’t make it look like shit when I watch it via HDMI on my Sony Bravia.

The problem is that most companied that had licenses to properties to titles like that (all licenses of anime in the U.S.A. have a fixed term, and will one day expire and often do), never even had digital sale or streaming rights to begin with, and making money specifically on older properties is almost impossible since licensing, adaptation, translation/dubbing (though dubbing has become optional almost) and all the other stuff the goes along with that, won’t even get you enough money to cover your servers for a month. Having these things out there might be great, but it won’t make anyone any money, and so it’s not going to happen.

Well there are a few things that when you travel through the publishing looking glass you mention, that may turn bizzaro. With the exception of the AP and maybe a few others, papers don’t produce content only, but then manufacture and sell that content and in the cases of the bigger kids on the block, also own their distribution. What killed anime was not an overvaluation of the product (people love to complain about how $30 is too much for 5 episodes of Ranma 1/2,) when you look at the steps involved, the sales just aren’t there to justify a lower cost to a DVD label that makes 50% of the SRP per unit sold-through, has to pay its employees, licensing fees, manufacturing bills, translators, electric bills, shipping, printing, absorb the dreaded returns, drop another 20% to their distributor, and still try to have a CookiePuss or Fudgy the whale delivered once a year for the friggin x-mass party.

The Angry Otaku said...

So lets say a DVD company pulls off a miracle and ships off 50,000 units of “Title A” which each have 4 episodes of that show on it. It will sell at retail for $19.95, and be shipped to a major a retail store because a store ordered them. Well does that mean that company grosses 50,000 x $19.95? No the label sells at 50-60% OFF of the SRP, so let’s call it $10. So do they make 50,000 x $10? No, again. The store only sold 25,000 units and they’ll be sending the 25,000 unsold units back, and now that company is only going to gross 25,000 x 10. That’s gross… now comes the fun part:
Start: Gross: $250,000
Manufacture of 50,000 DVD units that were originally ordered (amray case, DVD replication, 4 color cover and 4 color insert, packaging, etc): $1.60 per unit x 50,000 = -$80,000 (say it with me, eighty-thousand).

Mastering (conversion from a D-beta or DLT to glass master for replication, inserting the DVD menu, chapter stops, all that). Let’s be kind and say -$5,000

Shipping of materials (the shipping of the paper products to the DVD manufacturing plant, masters here and there, and of course, the boxes of units themselves). If you’re lucky, it’s Best Buy who ordered this stuff and you only have to send it to their distribution centers. Lets be kind and say $2,000 when all is said and done.

Best Buy: If you’re un-lucky it’s Best Buy, who charges a “privilege for being sold at Best Buy” fee of $1 per unit (no really, they do – and that’s pretty much what they call it). So -$50,000… but let’s say that only half went to BB. So -$25,000 instead.

Returns: ah, 25,000 DVDs no one wants any more. You’ll be warehousing them at your own expense for a while (3 months at the least… but it ends up being more like years). -$100

Distributor’s fee: Anime labels don’t have their own distribution network. They Don’t. Viz is still with Ventura I think, Media Blasters and ADV more or less pretend to be their own distro company but it’s not as simple as that, AnimEigo is with Koch-Lorber, Crash was with SONY RED, CPM was with WEA (Warner/Elektra/Atlantic Corp ...), and so on. So there goes 20% of units SHIPPED. 50,000 x half SRP of $19.95 = $100,000 charge. They don’t care about returns, you owe them for what was ordered.

A side note here, is that in the last 2 years of the home media bubble (2005-2006) retailers abused the “returns” system to the fullest, often ordering twice as many titles as they needed with the full intention of never unboxing any of them and sending them back so they could have a floating credit. They did this to stay alive, because DVDs have a high ration of replacibility to consumers (meaning that if the majority are a low price, the niche ones have to come down in price simply because enough people won’t buy the niche title and will buy something else… I think “General Beefy’s” voicemail in AWO episode 62 exemplifies this perfectly where he mentions buying a cheaper DVD in the same genre simply because it’s cheaper, even though it wasn’t the one he originally wanted. Retailers were stretched thin, and the one group they could get away with fucking over were small independent labels with 20-40 employees who couldn’t fight back.

The Angry Otaku said...

So let’s see where we are after a 50,000 piece order with 50% sell through:
Gross: $250,000


Why is it “SECOND GROSS” and not Net? Because the DVD label hasn’t paid it’s licensing fee yet… back in the bubble again, licensing fees were usually about $1300-$2000 per EPIDOSE. $2000 x 4 = $8,000. So now we are looking at $29,000. Now comes paying salaries, the endless chargebacks that distributors bite off, like ads in booklets, placement in their database, all that shit, marketing (maybe an ad in Newtype? Will cost you $5000). And so on.

As you can see, with anime DVDs usually selling way below 25,000 units most of the time, this is no way to run a business.

Why did I mention all of that? Because as a Home Media Product, anime wasn’t over-valuated… not in the least.

To get back on point, digital distribution and internet delivery may generate enough money to keep a very small company going, legally, and properly, but in no way will it generate any kind of revenue near what it would take for the American market to even make Japanese producers blink in it’s general direction when it comes to choosing what types of anime to produce. When Sazie-san and Deoremon still draw audiences in the US that the Simpsons can only dream of, and the youth market is steeped in Japanese history of people like Musashi, Shonagon, Soseki (and other people who’s faces are on Japanese money) then that’s what their gonna make anime about.

Ah yes, enter the one company that so far, is not fitting under the banner of “you’re doing it wrong.” And OOOOH what I could say about Vertical but I’d get someone fired …All I’ll say is that Vertical will be big soon, you watch. As far as Ikki goes, I hate to say it, but it’s content and style almost had nothing to do with the decision to bring it to American audiences by VIZ. The two criteria were 1) THEY OWN IT, top to bottom, and 2) Because of #1, they can have it out faster than any of the scanlators that would steal the content and destroy VIZ’s ability to reasonably guarantee reader figures to potential advertisers. That’s it… It may as well been nothing but pages and pages of lolcats.

Unless a company achieves the vertical integration across markets as VIZ is slowly making progress towards, anime, manga, and Japanese pop-culture will never see a reason to be treated with respect in America.

The Japanese business mentality isn’t pig-headed in this case, it’s just very quid pro quo. The American market isn’t making them a dime and won’t be doing so any time soon, so they can fuck off.

It is, it is indeed an interesting time to be in publishing. Also, if you’re looking for a Tokyo correspondent about culture, food, sports, you name it… I’m here and I have a folio.