Thursday, June 29, 2006

Whither Region 1 Anime Distributors?

Does that sound like a headline from The Economist or what? Well, it's a slow day at work, and between that and the recent clarion call for cold, hard numbers and graphs, I've decided that my trusty assistant, Microsoft Excel-kun, and I, are going to bust out some hard-hitting analysis of the region 1 anime industry. This means a US-Canada centered post, so those of you lucky to live in countries where you get more vacation time than I do (which means just about anywhere else on Earth) might want to skip this or risk falling asleep. In fact, this will be one of my least coherent posts ever, which means it should probably never be read by anyone.

A lot of people have opined (there's a word that doesn't get enough use) about the state of the anime industry in R1 (I'm saying "R1" because it's shorter to type over and over than "the US and Canada"). Is the anime "fad" dying out? Is the golden age of hundreds of DVDs coming out in R1 each year over for good, killed by the twin demons of fickle youth and swashbuckling pirates? Or are all US anime companies run by retarded baboons who are running their companies into the ground licensing (warning: sarcasm) pure anime gold like Divergence Eve?

It seems like there are a few main lines of thought on R1 anime DVD distributors. There are some who would say something along the lines of "who cares, R1 distributors don't CREATE anime anyway--they're just whores who sell it to make a buck. Let them and their shareholders go f**k themselves." There are those who say "who cares, i download animes anyway, since my allowance is th3 sux0r." And there are inevitably those who say "fansubbers are at fault, since they're evil, loli-rubbing bastards who are a nasty, suspicious-looking stain on the glorious face of corporate America". There are some who would say the R1 anime distributors just got greedy, and when the boom in anime flatlined, got caught with their pants down. So who's right?

To start with, we need some pretty-looking charts. Yes, ADV had layoffs, yes, Japanese companies have invested in ADV and Geneon, but what do the numbers say? Let's ask Excel-kun to crunch the number of volumes of anime released in R1 each year, since the dawn of the DVD format. Source for the list of releases is Anime on DVD, chart by Excel-kun.

That doesn't look so bad. I know, this includes releases of collections, but it doesn't look like I'm going to have to start importing region 2 discs and taking a crash course in Japanese anytime soon. No, I have no idea what the odds are 2003 and 2004 would see the exact same number of DVDs released (752), but that has to mean something. Tabun. How does 2006 look? Well, through the end of June, 366 DVDs have been released, and for the same period in 2005 it was 384. That's a 4.7% drop for this year, which--well, it's not exactly the end of the world. Still, you can see from graph #2 below that the rate of growth in DVD releases year-on-year has...well, not fared so well.

In any case, it's clear the "boom" days are over. In baseball terms, we're not "on a pace" to see 5,000 anime DVDs per week by the end of 2010 or anything like that--it's leveling off, although 800 DVDs a year is nothing to shake a stick at.

But, you say, the number of DVD releases is a lagging indicator (yes, I can talk like Alan Greenspan if I have to--that's probably the first and last reference to the Federal Reserve in an anime blog too), so what does the future have in store? For that, let's ask Excel-kun to put Menchi down and look at the AnimeSuki license database, and tell us exactly how many titles have been licensed the last couple years:
That doesn't look good. If you just look at this, you might either be breathing a sign of relief that your wallet won't be violated as hard in the next year or two, or sweating bullets that your favorite series will never see the light of an R1 DVD. 2005 had not just fewer licenses than the year before it, but even fewer than in 2003.

But looking at 2006 so far, things don't look all that bad. So far in 2006, 29 series have been licensed, and in 2005 the total through June 30th was 33. We'll get a better feel after Anime Expo, but the decline seems to be leveling off. I don't read too much into the big investment a Japanese company made in ADV recently, because they might have just thought their shares looked cheap and oversold, but at a minimum it's a sign they're not seen as a sinking ship. And quantity isn't equal to quality anyway, some series that were licensed in 2004 make me wonder if the licensors were licensing under the influence.

Why did the anime boom in R1 level off? I don't think fansubs are to blame--yes, people *could* just keep their fansubs of Haruhi instead of buying the DVDs. But everyone in Japan can just tape Haruhi when it airs on TV, and the DVDs still seem to sell just fine there. Closer to home, you don't see NBC going after people setting their VCRs to tape E.R. because it might hurt DVD sales when people can watch it for free. I think (and I know this is just a guess, Excel-kun's charts notwithstanding) that the real cause of the end of the boom is that any product has a lifecycle, and the DVD format in general has just reached the "mature" stage where it's not going to go up 30-40% in sales a year. It's not just anime distributors having financial difficulty, Hollywood's DVD sales are hitting a wall too. While some will always blame piracy, I think there's a less sinister explanation, which is true for me anyway--most studios have their back catalogs out so they can't milk that for sales anymore, and a lot of people have hundreds of DVDs already and are more selective now about what they add to that. On a personal note, my DVD buying has peaked too, this year so far I've only bought seven.

(Yes, this makes four graphs in one post. Suck on that, Wall Street Journal.)

So far this year I've only bought seven new DVDs, and for the year I'll probably end up around 20-30, so there's a downward trend. With my shelves half-full of anime I feel like I need to be more selective and only buy DVDs that really have rewatch value. A DVD I'm only going to watch once or twice just doesn't make the cut. Plus I've bought a lot of anime from the 80s and 90s--a big chunk of my DVD catalog is made up of all the Urusei Yatsura DVDs, and they aren't making any more UY for me to buy.

So what's in store for R1 anime distributors? While the boom may have subsided, the fact licensing is still going on at about the same pace as last year tells me the worst is over. It's human nature when things are going well to get caught up in the excitement, and it wouldn't surprise me if companies like ADV expanded aggressively during the boom (much like dot-coms did in 1998-99) only to find when things leveled off that they'd paid too much for too many licenses that won't sell all that well. While ADV's star has fallen a little, Funi's seems to have risen, and with more money ADV might be back in there trying to be "the Microsoft of anime" (not surprising they changed their slogan...).

Time for me to go home so that's it for today's ramble. And don't worry, I don't think I'll ever post another graph in this blog again...


jpmeyer said...

Yeah, from what I'd read in things like Variety, the back catalogue sales were basically what were driving DVD sales in Hollywood.

Another thing that people don't bring up as much is shelf space at big box stores. There's only so much space when you have a million new releases coming out each week. I noticed how the anime section at the Best Buy near me kept expanding and expanding, but it reached the point where it couldn't expand any more because there simply wasn't anywhere else for it to go.

Matt said...

Fansubbing is heaven on earth, well atleast its heaven on earth a year or so before heaven comes out on DVD. as i live in australia i am at the back end of the dvd chain. we are closer to Japan (geographically) however we have to wait for the US to license a title then wait for our own meager importers to redo the american DVDs into our format (which basically means at least 10% markup and their logo on the cover jacket)
so when we get a title that we want there is singing and dancing.
However this also means that fansubbing gets here WAY before the DVD release, so how does Madman (the leading importer) make money. Well Haruhi (my favorite example) has been spread around my entire college already (partially thanks to me, and this other guy who uploaded it over the college network) seriously out of all the otaku there one person hasnt seen it yet. out of everybody even those who do not usually pay money for anime titles are awaiting the release, just so they can pick it up and have it sitting in a box all collected like. We all have the titles sitting on our hard drive but we all want to buy it. While i am convinced that NO ADV voice actor will be able to pull off either Haruhi or Kyon(thats why they include the japanese track i guess) I Want This. So in a sense fansubbing acts as genuine advertising for a good series. However if a series totally sucks, no one is going to buy it if they already have it, so i think this is where the argument comes in.
oh well thats my two cents.