Robot 6 on Why Anime Companies Have Been Dropping Like Flies

Yoinked from: Robot 6

Admittedly I’m not really an “otaku” or into much Japanese media besides anime but thankfully a few people I know or follow on twitter are, so it’s a shout out to Faith Erin Hicks for the tip on this article.

Posted on the Robot 6 blog over on Comic Book Resources is a surprisingly balanced analysis of exactly why things in the anime industry are in a state of flux at the moment. The entire post is definitely worth a few minutes of your time, even if you’re not really into anime or manga.

The gist of it is that thanks to the internet, so-called fansubs of anime series’ are being made available (through illicit means) well before established companies or even the rights holders can do the same.

The post takes a good look at this and why certain companies (such as ADV and Tokyopop) have gone south in recent years, namely being forced to market content that otherwise wouldn’t be economically viable as well as being restricted in terms of adapting to new delivery systems.

What it comes down to is this: It doesn’t matter how much it costs you to make a product; you can only charge what the market will bear. The way out of this is to offer the iffy manga and anime at a low cost, which generally means digitally, and put the premium content onto physical media at a premium price. If people just want to get their weekly fix of some second-rate anime, but don’t want a special edition to treasure forever, well, let them watch it via streaming media, sell some ads, and make some money you wouldn’t have otherwise. This also solves the other structural problem in the anime industry, the delay in getting shows to foreign markets, because digital is obviously faster than physical distribution. Just as water seeks its own level, consumers will find what they want. The only question is whether they get it from publishers or pirates, and publishers have a lot more choice than they realize. Most of the people watching bootleg anime won’t pay $30 for it anyway—that’s not a lost sale. But put it online, throw in some ads, maybe paid memberships for the hard-core fans who want higher quality and fresher content, and now that anime is making money from new viewers.

This is the crux of the issue. The reluctance of studios and networks to adapt to the market in order to better serve consumers is the real reason people are becoming “pirates”.

The important lesson is that consumers will do what they want. You can educate them, coerce them and entice them. But at the end of the day, if they can get something that you are either unwilling or unable to provide, they will look to other means, even if it means becoming a “pirate”.

This scenario contains lessons for the American animation industry. Being as expensive and complicated as it is to produce, is it wise to stick to the old, established ways and watch as your customers leave you behind? Why are shows like My Life as a Teenage Robot only coming out on DVD now? Why are they still not online (in the legitimate sense)?

These are all questions that studios and animators should be asking themselves. Are you catering to the changing market, or are you clinging to the old ways? Is that downloaded short film a lost sale? Or is it a sign of an under-served consumer?

The anime industry is just one of many that is undergoing similar issues, they are not unique. What is interesting though, has been what anime companies that have responded have done.

Smart localizers are catching on. Crunchyroll, a former pirate site that has gone mainstream in the sense of going legit and paying its content providers, seems to be doing quite well with streaming anime. Digital Manga has formed the Digital Manga Guild, which publishes enjoyably trashy yaoi manga digitally for less than the cost of a print volume and keeps prices low by using amateur translators. Viz is making the boldest move of all, putting Shonen Jump magazine online at a relatively low price and posting episodes of the top six series in within two weeks of their Japanese debut.

This ultimately means that:

The speed scanners will still beat them to it—for now—but…..manga and anime fans are basically decent and like to support the creators. Given a legitimate, inexpensive alternative, and a bit of education, many if not most will do the right thing.

This is true of any consumer. They are all for the most part, decent. if they weren’t, we would have seen at least on major studio go bankrupt by now. Be nice to them and they will reward you in return.

The Robot 6 post concludes with this great quote:

….by charging champagne prices for a beer product, anime and manga companies are sinking their own ship, and they don’t need the pirates to do it for them.

American studios take note.

Four Signs We’re Possibly in an Animation Bubble Right Now

I’ll be honest, this post was not used as an excuse to post a picture of Bubbles.

Over the past number of years, we’ve slowly seen animation come in from the cold as it were. Yes, Disney has had critical and commercial successes for years, but only within the last 10-15 has anyone else actually stood up and taken notice at just how profitable an animated film is. Not only does it rake in the dollars at the box office, they also tend to have some very long legs. Just look at the Lion King, 17 years old and still going strong.

Which leads to today’s post. With the obvious success of the technique, are we in the midst of an economic bubble in terms of animation? I mean, there is a difference between strong economic growth and unsustainable expansion. The question is are we in one or the other. Here’s 4 reasons for the latter point of view.

1. Revenues aren’t rising as fast as costs

Revenues for animated features have been rising at a relatively steady rate, but they have not risen at the same rate as costs. Naturally this is partly to do with the greater use of technology than in the past. CGI isn’t as cheap to implement as traditional animation, which could be shipped off to Asia for the real labour-intensive work. CGI on the other hand requires a very large upfront investment followed by the costs of the labour to utilise it.

Revenues are not rising at the same rate and the result is squeeze somewhere along the production line that will eventually reach a crunch point.

2. The Number of Players in the Market is Rapidly Growing

It’s elementary economics that once someone discovers a way to make money, at least one other person will attempt to emulate their success. Animation is no different. Today, there are no less than 4 large players (Disney, DreamWorks, Sony, Illumination) in the market and more are being added all the time.

When this becomes a bubble is when you see players who attempt to over-extend themselves into the market. We’re seeing this right now with various one-man bands and VFX studios that have figured they can have a go too. Of course, this is nothing new and has been happening since day dot. The difference is that the rate at which we’re seeing new entrants has substantially increased over the last couple of years. This leads us nicely to….

3. Competition is Becoming Intense

With more players in the market, this leads to increased competition in just about all aspects of the business, from artists, to technology to studio space to release windows. More competition is always welcome as it keeps everyone on their toes and ensures a more efficient use of resources. the only downside is that it also tends to weed out the smaller or inefficient guys.

Why would more competition signal a developing bubble? Well, with an increased demand and scarcer resources, costs for those resources tend to rise. Since competition is increasing at a faster rate than the market is growing, that is indicative of a bubble.

4. The Market is Limited And Changing To Boot

Right now, the market in North America is limited. The market is mature and it’s not getting bigger in the grand scheme of things. The growth markets right now are in Eastern Europe and Asia. the only problem is that those markets tend to have quite distinct cultures, and as a result, aren’t as open to Western films as the rest of the world.

Negating the fact that DreamWorks recently announced that they’re building a studio in China to capitalise on the local market, it’s clear that Western studios face a market with increased competition but not an larger space in which to grow. The result is that we’ll either see reduced revenues or studios being forced to reduce costs. Mark my words, $300 million movies are not sustainable in the long run, at least not right now.

Coupled to this, the changes in the market in general, thanks to the internet, mean that the industry as we know it may be vastly different in a few years time. The rise of streaming, the decline of traditional TV, and the new revenue streams that go along with them means that studios will have to adopt a different tune. Whether they are proactive or not in this regard will surely determine whether we’ll see the bubble burst.

Do You Think Internationally When Developing A Series?

Sam Register discussing Warner Bros. animation at MIP Jr. 2011

 Via: MIPBlog

Do you think you should?

If not, why not?

Going on right now, MIPCOM is pretty much the convention/expo/gathering when it comes to selling shows to international buyers. Thousands come from all over the world to Cannes to see, hear, meet and schmooze about TV programmes. It’s also preceded each year by MIPJr. a similar event for kids shows that is ostensibly the same format as it’s big brother.

MIPCOM is an important part of the global TV ecosystem because it allows content producers to sell that content to others. It’s much cheaper (and easier) to simply sell the rights to a local player and have them handle re-dubbing, marketing, scheduling, etc. Essentially what you get is money for your show with relatively little effort.

So should you develop your show with this event in mind?

Or rather, should you have an international mindset when developing a TV show or film?

The answer is you probably should, not to the extent that you design your entire show around the international market, but you should be aware that certain things don’t play too well in the foreign markets, such as:

  • Westerns – The only place with a wild west is America, most other countries have nothing comparable so they aren’t nearly as interested
  • Military – DreamWorks discovered that as half-decent a film as Monsters Vs. Aliens is, it did relatively poorly internationally because of the heavy military theme didn’t resonate as loudly with foreigners as it did with Americans.
  • You get the picture

The important point is that if a show skews too heavily towards American culture, it might be a difficult sell abroad, resulting in the network being more reluctant to buy it given that international sales are normally necessary to make money.

Of course the opposite is true too. You shouldn’t base you’re entire show around what the international market wants but you should at least be aware that your show will likely be sold abroad at some point and adjust your development accordingly.

The most popular TV shows out there are so for a reason, and that is that they have universal appeal regardless of the culture you live in. The simple reason this is so is because they make culture irrelevant. Think of SpongeBob, where you live has nothing to do with the show, Bikini Bottom could be anywhere in the world!

Just keep an open mind, that’s all!

PS. Dave Levy wrote a great book on pitching and developing TV shows

PSS. Don’t forget to read Steve Schnier’s informative The Pitch Bible Blog

Five Reasons Why The Animated Film Market Isn’t Saturated

With the recent failure of Mars Needs Moms, there has been some speculation that the market has become saturated as everyone seeks a slice of the the lucrative pie that is animation (the link is behind the New York Times subscription wall so nuts to them) . While it would certainly appear this way, I doubt that that is the case. Here are the reasons why.

1. On Average, less than one animated film a week comes out

Sometimes there appears to be a deluge, but for the most part, oftentimes animated films have it all to themselves when they are released. They are more likely to have to compete against a live-action film aimed at their audience than another animated one.

2. The market is tightly controlled

The cinematic market for films is tightly controlled by both the large studios and the large cinema chains. They are the gatekeepers in terms of what can be shown and when. While competition between the studios is good, there is often agreement when it comes to when films are shown, to avoid clashes that end up splitting both films audiences.

3. The big boys have a schedule

The two most prolific animated studios, Disney and DreamWorks, have a set schedule that they do not tend to differ from. Disney has one Pixar film a year with normally at least one Disney-branded one as well. DreamWorks had hoped to to about 2.5 films a year (that’s 3 in five) but that has since been pulled back to something more manageable for Jeffrey Katzenburg’s studio. The point is that both studios don’t really differ in the amount of films they offer.

4. Standards are being raised

Arguably, ever since Pixar burst on the scene in 1995, the standard for animated films has been raised spectacularly, and I’m not talking visually here. Storytelling, character and direction have all fallen under the Pixar influence. Nowadays the audience fully expects to see films as complete and complex as what John Lasseter and Co. put out and they have become merciless if they feel disappointed. Witness the recent failure of Delgo (Elliot Cowan’s favourite film) or the relatively poor performance of Battle for Terra. The list can go on, although no studio should be under the illusion at this point that the audience will accept anything.

5. The Core Audience Isn’t Changing

Unlike the customers for other forms of films, the core market for animated films isn’t really moving. Kids that are watching these films generally aren’t the ones downloading them from the internet. That may change someday, but for now, the vast majority of parents are more than willing to take their kids to the cinema. Unlike say, an R rated film, whose potential audience may just decide to download the film from the internet before it is even released and skip themselves a heck of a lot of hassle. The point is, the market is actually growing (slowly) so until we see a rapid upswing in the number of animated films, it is highly unlikely that the market is saturated.