Josh’s Anime Blog

Today, ICv2 posted an interview with Funimation CEO Gen Fukunaga, and it have some interesting and revealing things in it, I thought. I’ll quote some things from the interview and comment my thoughts on them.

The great news is that the consumer base continues to grow, meaning that more people are viewing anime and more people are interested in anime. They’re watching on TV more, and more titles are going on the airwaves because the networks do see that they are getting viewers from anime. People are watching it on the Internet, as the downloads are dramatically increasing; but, that leads to the problem that a lot of it is illegal.

The way to monetize that growing fan base is shifting away slightly from the DVD market. DVD sales are going down, per SKU, probably because of illegal downloads and also pricing. Anime has always been priced at a premium in the DVD market, and it probably has to come back in line with the rest of Hollywood now. Illegal downloads probably triggered that too, because it gave an easy alternative for the fan to get it if they thought the price was too high. I think illegal downloads are definitely an issue, and therefore the main mode of monetization of the customer is definitely suffering.

While I’m sure there will be some knee-jerk reaction from some people that fansubbing has nothing to do with falling sales, the people making those claims are probably the very people who don’t buy the DVDs because they download fansubs. While there are plenty of people like me who buy the DVDs after watching shows that I like fansubbed, unfortunately many people don’t, and I think Fukunaga’s assessment is probably about right.

Of course, one of the arguments that people make for downloading fansubs, as Fukunaga points out, is that anime DVDs are more expensive, per disc, than hollywood DVDs, and I’m sure it is welcome news to people’s ears that Fukunaga believes that the anime industry will have to start pricing down their DVDs more in line of hollywood movies. That means we could be looking at $15 to $20 per disc instead of $25 to $30 per disc in the reasonably near future.

Fukunaga also answers why the anime industry has been slow responding to things like piracy:

The big Hollywood studios have the power, and they’re going to set the standard on how protection is going to be enforced. We’re going to be more followers with whatever Hollywood does, so we’ve been watching what they’re doing and certainly we feel the anime industry must do a lot more anti-piracy work.

I suppose that makes sense: the anime distributors are pretty small, and don’t have a lot of money to spare, so it’ll be easier to piggy back on whatever hollywood does. Of course, that has the drawback of, if hollywood does something which is ineffective or dumb, then the anime companies are stuck with it, whether they want to be or not.

So what does Fukunaga think is the biggest reason for fansub downloading of anime?

The biggest problem is being caused by the timing gap, being that the illegal stuff comes out as it’s being broadcast in Japan and the stuff doesn’t get licensed for the U.S. for many months later. That gap is what’s creating a thorny problem for the U.S. market and the U.S. distributors. So if we can find a way to get rid of the gap or get rid of the fansubs themselves before they license it, that would make a huge difference. I think there are methods and techniques out there that would work if people are willing to invest the time, effort, and money to do it.

This sounds rather optimistic, as it follows in line with both what Justin Sevakis wrote at ANN, and what I wrote on this blog back in November. As for whether he thinks progress like that may really happen, especially since much of the resistence comes from the Japanese themselves:

From hearing what the Japanese feel, now that they’ve seen the huge difficulties some of our competitors are having, they’ve suddenly woken up in Tokyo.

Which is, of course, good news as well if you want your anime faster and better. As for legal downloading, Fukunaga says that Funimation plans to release as many series as they can on services such as the XBox 360 service and itunes, but that the biggest limitation to that is those services can only convert so many titles into downloadable form per month.

Then Fukunaga came up with this interesting tid bit (the question asked is in bold):

There has been a lot of talk about the three or four episode single-disc format and whether that’s a doomed format and everything’s going to go to season sets. What’s your feeling about that?

I think that’s exactly what will happen.

What is FUNimation going to do in that regard?

We’re going to follow that model as well.

So, Fukunaga thinks that the anime industry will need to both match prices of hollywood DVDs, but also thinks that single-DVD releases are doomed, and most likely series will be released as entire seasons. There are two mays to calculate this math, however. Just looking online at Amazon, the retail price for most TV series in boxes is something around $60. However, if he’s calculating it on a disc-by-disc basis with hollywood movies, it would be more like $15 - $20 per disc x 6 discs, or more like $90 to $120.

That’s a pretty big range to play with. My initial guess would be more the $90 to $120 calculation, given that $60 is usually more like the discount box set price for series after they’ve been out for a while, so I doubt that’s the price they’d go for to start out with.

There are, of course, pluses and minuses to all of this. One plus is that people can buy an entire series without having to wait half a year or a year for all the discs to be released, and anime companies don’t necessarily have to charge less for a season as a whole as they would for each disc individually.

The minus to this is that they may very well have to take a hit price wise for series to sell, and some people may be even more unwilling to buy up a series. If they’re hesitant to buy a single disc for $25 because they don’t know what the series is about, then they’re probably not going to buy an entire series for $100 for the same reason.

This suggests that anime companies may have to come up with a better way of allowing customers to preview a series before they buy it. One thought of mine is that, if they sell a series all together in a box, they could conceivably give away copies of the first disc as a way to allow people to preview the series.

Continuing with the interview, Fukunaga notes this, which is also an interesting prospect:

Another thing we’ve been seeing is releasing new anime series in a subbed-only format at a slightly lower per episode price, so you don’t have to create the English language track. Is that something that FUNimation is doing?

We are going to be doing that in the download-to-own area, digitally, because historically, those don’t turn enough to get it on retail shelves. The cost of the inventory and producing them and getting them out to retail hasn’t panned out because of the lower turns. With download, you don’t have those side issues, so we’re definitely going to do it in download.

That’s a very fascinating possibility to me: releasing sub-only releases as download-only releases. Of course, to please most anime fans, those would need to be DRM-free, or at least have a DRM that allows burning onto DVDs to be playable on DVD players.

As Fukunaga notes, having them be download only takes away the cost of packing, printing, and distribution sans server cost. That would make such shows quite cheap (relatively) to make, thus making them even less expensive to sell. That could allow many series that wouldn’t normally get licensed in the US to get distributed in the US, and that’s always a plus.

There is a lot more there in the interview, but I thought this was the most interesting stuff. Check it out. The good thing is that I think that Fukunaga has a good head on his shoulders on both what the current status of anime in America is, as well as ways to address the issues (and even many of their causes).