Monday, December 5, 2016

Who's Suin' Who: The "Hideaki Anno sues Gainax" non-story.

There’s a buzz buzz buzz about the recent legal action filed by the firm Khara Inc, filed against Gainax to the tune of 100million yen.  But like the buzzing of a bee, is it causing an unnecessarily overly energetic reaction to those it otherwise doesn’t pose a real danger to.  Are people making this out to be more than it is?  Cries of “Anno sues Gainax!” have already bee echoing through the interweb tubes and people are reacting like it’s the goddam Cuban Missile Crisis.  But let us not forget that 100,000,000 yen is (at the time of publication) the equivalent of US $879,275.06 which could be described the high-end of ass-wipe money in the grand scheme of things.  So even if Gainax can’t pay a single yen, Khara Inc may not necessarily come away with a tremendously significant ownership stake in the company (hell, with the price of wagyu the way it is, they’ll probably just end up getting ownership of a steak).

Notice how the legal action does not include outstanding royalties, just the loan principal (doesn’t even mention interest, of which there may not have been any).  Outstanding royalties could easily be more than 100 million yen, depending on how long they’ve been outstanding.  This development could mean anything from the genesis of a real animosity between Khara and Gainax/Anno and Yamaga, to something like a side-step deal where Anno can take control of some of Evangelion IP assets in a way that keeps existing creditors and other debt issues out of the picture.  With Gainax showing very unhealthy income (in the article it is not mentioned if it is gross-adjusted or anything), their past failure to produce significant revenue since Evangelion may indeed invite the crows to pick the eagle sooner rather than later.  Although the beating of a dead horse may yet create gains if tenderized horse meat is what you have to sell, there need to be people willing to buy, and even then that only works once.  What I mean by that is; bringing back Evangelion again and again most likely is not going to be a successful survival strategy, you're going to lose out on the opportunity cost end.  The question then becomes, is there even any potential survival strategy that’s worth implementing?  Sometimes the answer is no.  While I hate to think about something like that for Gainax, when your best friend has to sue you for repayment of a (probably) zero interest loan, it doesn’t send a message of confidence to any other potential sources of financing regarding future projects. 
Without actually taking a look at the books and other accounting, the situation is very difficult to gauge in terms of the general temperament of the parties involved, as well as being able to know how much Gainax has gone the way of the cicada husk, presenting a rigid exterior while having been hollow inside for a long time now.  Maybe it’s exactly that, or maybe it’s not even close.  Regarding this kind of symptom, and based on how Japanese companies do things in general, I think Gainax may indeed be past the event horizon. 

I'm sure there's an easy solution.

So is this some sort of major event?  Well maybe not, since it involves less than $900,000 which for a company like Gainax shouldn’t be too hard to manage.  But it isn’t nothing either, it made the news, since not being able to just “handle it” is the position that Gainax seems to find itself in.  So it’s news. 

This mystery is going to make itself evident in the next year, possibly even before that.  Perhaps Anno really needs that money for his Dragon’s Dentist, or maybe this is a way for his good friend to get the best silverware off Titanic and into the right lifeboat before the thing finally starts going down.  That way Anno can keep his baby before insolvency ties it up and parcels it out.  That might be a good thing, but not for the reason you think.  Anno and Khara Inc might take Evangelion to Hollywood.  No one wants to do the same thing forever, and if a Hollywood Eva movie means that Khara can get financing for other projects as well, we might see something genuinely and creatively new, so why not tap that well...?  Anno is kind of a weirdo though so this could be well outside something he’d be willing to do.  But if a live action shit-stain of an Evangelian movie creates an opportunity for a Portal animated series (it won’t, but something equally awesome might be on the table), then it’s worth it. 

To truly understand what this situation might be, go watch U-571.  Remember that part where they put budget Ralph Maccio in the torpedo tube after that Nazi bastard killed him?  It was so that when his dead body and the rest of the junk floated to the top, the destroyer chasing them would think that they had sunk the thing?  Eventually that plan buys enough time to line up another plan (one that ends in ka-boom), and get out with the objective intact which was actually an Enigma machine and code book.  The bad news?  Despite once being state of the art, the battered U-571 ends up sinking.  Gainax may itself be a sinking ship, but the nexus of creativity can be kept alive and brought to where it can flourish, all by using the dead corpse of Evangelion to buy time (seriously people, stick a fork in it, just come to terms with the fact it was fun while it lasted). 

 You mustn’t run away.

As previously mentioned, the situation is far too vague for me to call that a lock in terms of what is going to happen.  This whole thing could just as easily turn some kind of ugly, and the vultures will pull everything apart in a terrible and damaging gut-splattered frenzy.   But I don’t mind engaging in a bit of wishful or nostalgic thinking every now and then.

20 year old coffee in a can anyone?
These are for sale if anyone wants them, as we try to raise funds to get new software for Pinky Mixology. Only $879,275.06! (Nah, but they are really for sale.  1997 edition, un-opened.  Message me or something).

Either way, one major problem no matter which direction this develops, is that it can be very difficult and quite tricky (some may even say impossible), to appraise or assign an explicit value to intellectual properties.  They are considered intangible assets, and so unlike financial instruments, they can not truly possess a net present value or be factored into the kinds of ratios that go into all that business stuff your roommate studied in college while you were wasting your time with Japanese Language 102.   Creditors and financial entities are going to have a very difficult time valuing Gainax for this reason.  It is not easily foretold how much revenue an entertainment property will produce.  Even companies like Disney and Fox have a hard time actually saying how much their flagships are worth in terms of actual real money on any given day, and they have entire rooms foll of math-people who's job is to do exactly that.  So while equations do exist for putting a monetary figure on entertainment IP (as opposed to patent IP... very different thing but IP none the less), they often aren't really allowed to sit down at the grown-ups table when it comes down to finalizing things, the same way polygraphs are used by law enforcement, but aren't admissible in actual court.  So if insolvency is a real possibility, then assigning a value to assets is going to be a guessing game at best and a cluster-fuck at worst.  Especially if more than one person is holding the leash to Evangelion.  This in and of itself may be an impetus for such a preemptive move to get Eva off the sinking ship sooner rather than later if that is in fact what is happening.  Much like electrons in the dual slit experiment, monetary value in entertainment properties only manifests as real when people look at them.  Finicky things these intangible assets are.  So we may be witnessing a great escape style egress of Evangelion, but pulled off out in the open for everyone to see.

Then again... all this might just be an epic disaster in the making.  Watching the company that fucked you over slowly go down in flames is always satisfying.