The state of anime, great article from ANN

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The state of anime, great article from ANN

Post by Mr March » Tue Nov 27, 2007 12:22 am

This is a really good read from the big cheese at AnimeNewsNetwork.

http://www.animenewsnetwork.com/editorial/2007-11-25
Editorial: An Open Letter to the Industry
by Justin Sevakis, Nov 25 2007

The following editorial is solely the opinion of its writer and does not necessarily reflect the views of Anime News Network or its affiliates.

These are good times to be an anime fan. DVD's have never been cheaper. If you're not into buying DVD's or don't have the money, you can download DVD-quality copies over the internet for free and never have to worry about anything bad ever happening to you, ever.

Consequently, these are downright terrible times for anybody in the anime industry. DVD sales are way down, profits are even lower, and a good number of companies are losing money hand-over-fist. Even in Japan, many productions aren't breaking even. People in both the US and Japan are feeling like it's the apocalypse.

The decline of the anime industry and the influence of fansubs on said decline is probably the most talked-about issue in the scene today. The pros have discussed it worriedly amongst themselves for years, but only recently are they speaking out about its damaging effects. Every time they do, and we post about it here on ANN, there's a firestorm of debate about exactly how bad fans should feel about downloading. Occasionally, industry people will pop in to argue for more guilt.

I understand the panic going on. I've seen the numbers myself. They're terrifying. It's not uncommon now for a DVD to not even make back the cost of the dubbing, let alone the license fee. When only a few years ago it was commonplace for shows to get licensed for $70,000 or more per episode, today a show can be licensed for less than half of that. And they're still not profitable.

Clearly, the business model is failing. People realize this, but nobody's actually doing anything about it. Rather than take decisive action, the industry keeps trying the same things it's been doing for years, and when that inevitably doesn't work, the fans who download are blamed. Which makes sense. After all, they're getting the product but not paying for it. Most people would call that stealing.

Now, if this was something new, perhaps I'd have a little more sympathy when the rights holders cry victim. However, the fansub scene is approaching voting age at this point, and digitally transmitted fansubs started circulating about a decade ago. Every year they've gotten more and more widespread (with the historic popularity of Naruto pushing them into complete prominence). And to date, those rights holders have done very little to stop them. There is now an entire generation of anime fans who have never been forced to pay a single dime to get their anime fix.

I do not blame the fans who download with impunity and don't buy a thing. Their attitudes, while damaging, are simply a reflection of the value of anime, which these days, is about $0.00.

That's right. Anime that has been fansubbed is effectively worthless. It's being given away for free. In terms of supply and demand, there is an infinite supply, and therefore the product is worthless regardless of how many people want it – it's like trying to sell buckets of sea water to people on a beach. The only people who would pay for it are either older fans who are attached to the old ways of consuming media, or worse, are doing so out of charity.

That is the state of this industry. And the companies who depend on anime for their livelihood let this happen.



HOW DID WE GET HERE?

When I was a fansubber back in the VHS days, fansubbers felt lucky if more than a few hundred people saw their fansubs. Copies degraded with every generation, tapes wore out (and never looked great to begin with), and the whole thing was very ephemeral. You had to have connections to get fansubs, or be one of the few that knew how to use the internet to make contact with a distributor. Even if you already had a fansubbed anime when it was licensed, the legal copies were usually far superior in quality.

Digital fansubbing changed everything. Suddenly, an infinite number of very high quality copies could be made. Advances in data compression, computer horsepower and broadband connectivity over the years means that now even the least motivated fan can easily find, in English, whatever new is coming out in Japan merely days after it airs on TV.

The internet, that strange beast that now shapes our modern world, effectively takes distribution out of the hands of the rights holder and puts the consumer in charge. Now, even the smallest release – an airing on a satellite TV channel in a small island country, for example – can be put on the internet and distributed to millions of people, should somebody be motivated enough to upload it. Anime fans, being younger and more technically savvy than most demographics, quickly adopt these new methods. And since the internet is global, so is the fansub market.

That few hundred people from the early days has now become hundreds of thousands of people worldwide. However, fansubs are not like music in that anybody can rip a CD and upload it; they take quite a bit of work (and usually a small group of people) to produce. As those fansub groups have to then upload to everybody else, they should make for an easy legal target.

The domestic distributors, to their credit, have made limited attempts to get shows they've licensed taken offline, but their legal arsenal is limited to a Cease and Desist letter. Many of the more self-serving groups have discovered that these can safely be ignored, and little else will ever happen. Worse, by the time a domestic distributor licenses a show the fansub is likely to have been circulating for months. The damage is already done. With few exceptions, the Japanese side of the industry has not even done this much.

Legal rights, such as copyright to an anime, must be defended if they're to be recognized. Anime has not been defended to any effective degree.

Arthur Smith, president of Gonzo Digital Holdings International, recently compared the downloading of fansubs to breaking into the Apple Store and stealing an iPhone the day before it's released. This is incorrect for several reasons. Debate on physical property versus digital copies aside, if one breaks into an Apple Store, an alarm goes off, the police come, and if you're caught you go to prison. There's also a window and a few locks you'd have to break, and you could injure yourself in the process.

If we're to adjust Smith's statement to be truly factual, downloading a fansub would be something more akin to Apple leaving their entire stock of iPhones on a busy street corner with no locks, no guards, and a big sign that says “iPhone”. If the Apple store manager came in the next day and saw that all of them were stolen, he would file a police report and the police would laugh at him. If he then REFILLED the entire stock, still did not buy any locks or hire any guards (but added a small sign that says “please don't take me”), a couple people might start to feel a little bad, but they're still going to come back for more, and probably bring some friends too. Eventually that Apple store would go out of business, and most people would agree that they deserved to.

The point is this: You can't guilt people into buying something they don't want. If you can't make them want it, you simply don't have a business.


GETTING OUT OF THE RUT

To effectively understand the problem, one must understand two things: why people make fansubs, and why people download fansubs.

People make fansubs for one reason: to share cool new shows they like. (There are other personal reasons, of course, such as improving their Japanese skills and braging rights.) People watch fansubs because the American releases take years to come out (if they come out at all). Once on DVD, they often have to be bought sight-unseen, which sometimes works for movies on DVD but is an unrealistic commitment for TV series. To younger fans, DVD's are also very expensive.

There is currently no legal way for any of these needs to be met. As the anime industry has not given these customers what they want, these freshly empowered consumers are taking it themselves. Therefore, even if massive, expensive lawsuits were filed against fansubbers, the problem would not stop. Stopping current fansubbers would create a market vacuum. Fans would just find another way (and, as Odex recently discovered, they'd be very angry as well).

Before legal action will be effective, fansubs must be replaced. THERE HAS TO BE A LEGAL, INEXPENSIVE WAY TO WATCH NEW ANIME IN ENGLISH. Not necessarily own, but at least watch.

ADV Films and Funimation know this and have both attempted to fill this void with television networks, streaming and download services. However, neither can offer a show newer than a year old.

There are myriad ways of supporting such a venture. A low subscription price. Advertising. But it has to exist, and it has to be easier to use than bittorrent. It has to show new anime DAYS after it airs in Japan. It has to be available to most of the world. It can't lock out Mac or Linux users. All of these are reasons people will use to justify continued piracy.

Only then, after there is no reason for a fansub to exist other than pure greed, can a few choice lawsuits against a few prominent fansubbers scare the rest of the scene into compliance.

DVD sales would also return to their proper place, as the collectable for fans who really liked the show and want to keep their own copy. However, as packaged media declines, media companies must stay light on their feet so they can quickly adjust to new technologies as they start becoming more commonplace.

This is merely step one of a long road to recovery. But it's not a step that can be avoided.


DRAGGING THEIR FEET

This is easier said than done. The Japanese entertainment industry is infamous for being a labyrinthine, Brazil-esque muddle of red tape. Only the very highest executives of the producing companies can cut through the red tape, and to date they have shown little intention of doing so.

I can't name specifics here, as I don't wish to betray my confidences, but so far I've been given two primary reasons for this seemingly obvious solution not being put into action already.

The first is fear of change. Simply, the older companies that made their bones in the publishing business are scared to death of the internet and the threats it makes to their existing business. The logical fallacy here is that the internet has already impacted their existing business, and by not taking advantage of new technology, there's no new revenue to compensate for the lost old revenue.

More than anything, the rights holders are terrified that by allowing internet distribution, they might cut into the domestic Japanese market, upon which the entire industry now depends. This would be a valid fear if it weren't for the fact that everybody in Japan can already download HD-quality raw files (illegally) if they want to. If the otaku are still buying DVD's, an English subtitled stream would not make a difference. And even if they did watch (and weren't blocked), wouldn't many of those viewers want to buy the DVD as well?

The other reason is that these companies seem to be under the mistaken impression that American anime fans and their buying practices are nearly identical to Japanese otaku. Of course, nothing could be further from the truth. American fans are younger, and are usually not nearly the “collectors” that their Japanese brethren are. Few will pay $55 for a half hour OAV, or even two TV episodes. But more importantly, they're not getting the TV airing that allows them to watch the show in the first place.

To make matters worse, as budgets have fallen the producers have compensated by making more shows that appeal to very specific niche audiences. (Moe, anyone?) While these shows will never be big, they're a short-term solution to keeping the all important Japanese otaku market paying the bills. Their audience in the States, while vocal, is even smaller.


LAST CHANCE

No matter how many appeals the industry makes to fandom, nobody is going to stop downloading. If something is free and available, people are going to take it. That's a fact of life, and no amount of guilt and blame will change that.

The industry is now at a crossroads, where the effects of all this is finally causing significant financial problems before new anime even gets made. The jobs of many talented artists and the countless other people that make up the Japanese animation industry are on the line. The current system is broken beyond repair, and to make money again, the entire way things work needs to be rethought from the ground up.

And those in charge can do it now, or watch their companies and a once thriving, fascinating creative landscape slowly die out.

But it has to be now.

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Post by Tachyon » Tue Nov 27, 2007 1:48 pm

An interesting read. I'd like to discuss it but I'm too busy this week to even sit down. I'll be back.
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Post by Tachyon » Tue Nov 27, 2007 3:51 pm

I'd better comment before I forget. I'm definitely one of the "old folks." I prefer watching anime on my 46" TV while sitting on my sofa. I watched the first episode of Orguss on Veoh.com but when I learned that RightStuf Intl. was selling it on DVD I started buying them. I like buying the DVDs because I can watch them subtitled and then set them on the shelf until my boys are old enough to watch them dubbed. Gatchaman, Macross, Z Gundam and Dunbine are waiting for the right time for my youngsters to "discover" them.

But this discussion still pertains to me. This week I'm downloading 15 episodes of Zambot 3 and I got my hands on episode 25 of Harlock (TV 1978). Those 2 shows will probably never be released on DVD in North America. My guilt downloading them is zero. The fansubbers are helping me watch gems of yesteryear that couldn't be profitable on the U.S. market. I'll even download Yamato unedited. Yamato TV shows can be purchased on DVD here in the U.S. -- but they're so heavily edited that I won't buy them. I want the straight poop or no poop at all (forgive the crude expression).

I've sidestepped the issue again! Well, let me confess. I'm downloading Gigantic Formula and that might be released on DVD. It's a gray area for me. I buy very few DVDs. I have 2 children and a single-income family. I can't buy everything I like. So is it ok to steal if I'm poor? No, it isn't. If I couldn't download Gigantic Formula I wouldn't buy the DVDs. I'd just go without it. I only buy DVDs when I know I really like the show and I can't live without it (figuratively speaking).

I would probably rent it from Netflix. Is that bad or good? I don't know. It's legal. Netflix buys DVDs from the official distributors but if fans rent instead of buy the industry is still going to suffer. I rent a lot of anime from Netflix. Kimagure Orange Road is arriving in the mail in 2 days.

Anime cable TV will help the situation but 90% of the stuff they choose to show is stuff I would never watch. Love Hina? Naruto? Full Metal Alchemist? Not interested. Original Getter Robot TV show? I'm there!

So, now that I've bored you all with my thoughts, where do I stand? I guess I'm part of the problem. Not a very big part. I don't download much and most of that is stuff so old it will never make it to DVD. Still, the industry that produces the anime we love seems to be declining and I can't do much to help it.

Maybe we'll see a return to old-school advertising. The Burns and Allen Show, decades ago, had advertising spots right in the show. Carnation condensed milk was paying for part or all of the show. With so many products going direct to DVD, and cutting out the commercials, maybe that's a way for the studios to cover costs.

Maybe a change in how we connect to and pay for Internet usage will change. A new technology could put this whole thing on its head.

I don't know. I have mixed feelings. I'm too selfish to stop myself downloading Harlock episode 26 when it's online. I'll keep buying some anime DVDs when I can afford it. What does everyone else think?
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Post by Mr March » Tue Nov 27, 2007 6:31 pm

Are you part of the problem? I don't think so. I think you're the consumer in a marketplace far different from the traditional one that everyone seems insistent upon staying static and unchanging.

I think a major point in the ANN editorial, which may not have been emphasized as much as it should, is the debate over the window of initial availability . This is not a problem unique to the international anime industry, but it is a case in point. Traditionally, the only way television was available was through television broadcast. Films were only available through the theatre. While home video did have an effect on the market for film and television, it had negligible effect upon the traditional channels through which media became available. However, the internet has changed all this. Now rather than being limited to the television or the theatre, the internet has become a tertiary channel through which distribution of media occurs. Much like Justin Sevakis, I believe the biggest problem with the international anime industry, the Japanese anime industry and other like industries such as the US film industry is a failure time and again to recognize this fundamental change AND to seize advantage of this changing distribution landscape. I'm sure the reasons all these companies have are many, but the simple fact remains that our modern entertainment companies are simply not changing with the times.

I also agree with your point Tachyon that people simply will not invest large sums of money into entire seasons of anime shows if they know next to nothing about them. Anime, by it's very nature as a niche market internationally, works by fan participation and word of mouth. "Ask John" of AnimeNation did a specatular job bringing these facts to light in a recent editorial of his own. Eliminate the way through which anime is mostly advertised and proliferated (Ie, the fans) and you lose the major mechanism through which interest in anime is being maintained.

Personally, if the window of inital availability was a legitimate, company driven distribution via the internet, all this supposed "controversy" and other crap (yes, I'm as upset as you, hehehe) would vanish and cease plaguing the daily headlines with easily solved problems. Of course one can never stop illegal distribution of product, but that would solve the vast majority of the issues. And like you Tachyon, I'd be the first one lining up to pay for anime distributed my way.

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Post by Tachyon » Tue Nov 27, 2007 6:50 pm

You know, I'm embarrassed I didn't think of something like that. If one of the anime studios in Japan set up a new Web site they could probably make a good profit. I picture it like this:
1) Set up a Web site and advertise it.
2) For a monthly subscription and/or pay-per-view fans can download (or watch online) anime by the episode. A section of the Web site would cater to English speakers.
3) Contact some fan sub groups and pick one that does good work and is willing to get payed. The studio pays them to sub its own anime and then loads that up to the subdomain of its site for English speakers. Heck, do it for Spanish too.
4) A forums section would keep fans talking to each other about the anime they're watching.
5) Click advertisements on the site create a little additional revenue.

No license fees for the content fans are watching off of the site would probably make the whole thing do-able.
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Post by Mr March » Tue Nov 27, 2007 7:01 pm

Tachyon for ruler of the Earth! :)

It's sounds fantastic. It'll work brilliantly, and that's why no one is going to do it :(

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Post by Mr March » Sat Dec 08, 2007 1:52 am

Some more relevant news for this discussion, courtesy of ANN:

http://www.animenewsnetwork.com/convent ... whitepaper
The first annual ICv2 Conference on Anime and Manga began with Milton Griepp, the president of the ICv2 retailer information website, presenting a white paper on the current state of the Japanese popular culture industry in the United States. Over the last several years, his company has been collecting statistics about trends affecting anime and manga in America, and has published some of the figures in the Guides to Anime and Manga for retailers, which it annually publishes. This is the first time, however, that these figures have been released to a general audience.

Before introducing the statistical portion of the paper, Griep went over the history of Japanese comics and animation in North America — from the first anime of the 1960s, through such turning points as the proliferation of VHS releases of anime in the late 1990s, Tokyopop's 2002 introduction of "authentic manga," the increase in the number of manga publishers, and finally, the expansion of anime-related games, action figures, apparel, and collectibles.

According to ICv2 research, the market for manga in the United States stood at US$200 million last year, up from US$175 million in 2005 and US$135 million in 2004. In 2002, when ICv2 first began to assemble these figures, the same market was estimated at US$60 million, which jumped to US$100 million the next year.

For the same period, sales of anime DVDs (not box office takes of anime shown in theaters or any revenue from the broadcast of anime on television) actually decreased from US$550 million in 2003 to US$400 million for last year. Sell-through numbers for other years were US$450 million in 2005 and US$500 million in 2004 and 2002.

The trend for the number of anime DVDs released in America per year has followed a similar pattern. This figure rose from 439 in 2001 to 562 (2002), 727 (2003), and 733 (2004), before it crested at 756 in 2005. The next year, it dropped to 617, and for 2007, is estimated at somewhat over five hundred. The effect of Geneon withdrawing from the market was a factor in the decrease, but only one, along with overall consolidation in the industry and reduction of output.

Griepp noted, though, that sales figures for home versions of anime released in theaters have not been following the dynamics of the rest of the anime market, and are actually quite healthy. Similarly, for anime on television, there were five channels that aired a total of 18 anime series in 2002, compared to 11 channels and 38 separate titles this year.

On the manga side of the industry, the pattern has been radically different. ICv2 projects that 1,468 individual volumes of manga will be released by the close of this year, and American manga companies are expecting to publish 1,731 manga volumes in 2008. This number has grown from 1,088 in 2005 and 1,208 last year. Of the manga or manga-style comics published in English, in the first 11 months of the year, 1,086 (82%) originated in Japan, 146 (11%) in Korea, and 88 (7%) in the US or elsewhere in the world. At the same time, the amount of shelf space available for manga at retailers has began to slow down. Potentially, in ICV2's estimation, this will contribute to a situation where some manga will only be distributed via direct sale, bypassing bookstores entirely.

As both the industry and fans look to 2008, Griepp offered some of his thoughts on the immediate future of Japanese popular culture products in America. In his words, anime is now facing a "best and worst of times" kind of situation. Market penetration is excellent, and there are more licensed products being sold for different properties than ever before, but the market for DVD sales is steadily declining. This decline is driven by a contradiction, as fans demand the kind of season-set pricing that is now commonplace for American television series, but the inherent costs of licensing, producing, and dubbing anime make this difficult. How to compete with online downloads of fansubs remains a major question for the industry, and declining sales across the home entertainment market mean that American anime companies often cannot afford to engage in experiments that may not be successful. Griepp also criticized Japanese anime production companies for continuing to insist on pricing many licenses without taking into account the actual potential of these series in the current U.S. environment.

The biggest question that Griepp thinks is currently facing the industry has to do with whether the core of American anime fans will disappear. He does not think so, at least not in the short run, but nonetheless, the current business model of selling anime is being challenged, and will have to change.

The manga market is still expanding. The biggest issue that will have to dealt with is whether manga published in the United States can continue to attract readers in different demographics. He particularly noted the efforts that some of the publishers are now launching to attract adult customers.

At this point, Griepp introduced the next panel, which turned into a spirited discussion between such industry hard-hitters as 4Kids president Al Kahn, FUNimation Entertainment CEO Gen Fukunaga, and ANN's own Chris Macdonald, on how toy, game, videogame, and anime companies can best work to attract the "otaku generation."

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Post by Rubel Colus » Sat Dec 08, 2007 3:17 am

is the infamous Odex saga well-known in America too? =X

Odex was trying to get personal particulars from ISPs and then asking the downloaders to pay from SGD$3000 - $5000+ for 'costs incurred' (including paying the ISPs to get info, etc but not including the damages for copyright, who knows how much they will ask for next? :roll: ) . Alot of nonsense from them, and a lot of dirt dug up on Odex. To think that an anime distributor/subber actually copied the work of fansubs, those not copied might suffer from bad translations (and they blamed it on the media regulating films n censors board lmao) ... well, there's alot more exposed, i'd stop here.

They're public enemy #1 here. One of the reporters writing for a local mainstream (propaganda) newspaper is so biased in his reporting that it might actually affect the general perception of the (local) anime community. He even referred to Anti-odex people as pro-piracy, lmao. There are a ton of reasons why people don't like odex - high cost for the poor quality VCDs (yup they still selling vcds), even the dvd quality was questionable; copied subtitles from fansubs, slow release; poor handling of the recent situation (including many 'lies' exposed). yet the reporter somehow thought that people who dislike odex are 'pro-piracy'... lol. How'd he get that job.... did he buy his degree (assuming he has one)? =X

Ahh well, its not like i'd die if i don't have anime, anyway i seldom watch much anime nowadays even before this odex saga. Without fansubs, i dunno how the anime related products including dvds, models, toys, books, accessories n whatnot will sell, definitely wont sell that well. remember america before all this anime faze?
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Post by Mr March » Sat Dec 08, 2007 3:46 pm

I think everyone heard about the Odex debacle. It was such big news it even got the attention of the major news companies over here. I recall Forbes having an article about it :)

I'd like to believe Odex messed up by suing it's customers, but I fear perhaps their litigation against the consumer might go unpunished. Only time will tell. If Odex starts to lose money in the next year, we know the fallout was real. Still, $2-3k per person is nothing to scoff at and I suppose a lot of parents are going to ensure that nothing Odex ever enters their house again :)

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