The Anime Blog - We Go Beyond Anime!

Recently there has been unrest in the US anime industry. Why is this? Not surprisingly, one big reason is money.

First, for comparison, here are some figures for the sale and rental of DVDs for the first half of 2007 (Jan. thru June) in Japan…from a report (pdf) released by the Japan Video Software Association (JVA) and translation provided by ANN:

• Estimated total profit from video (including DVDs) sales and rentals is 147.8 billion yen (about $1.28 billion US)
• From that amount, animation sales and rentals make up around 45 billion yen (about $390 million US)
• Video rentals accounted for 13.9 billion yen (about $121 million US)…this is down from the first half of 2006 figures which was 16.7 billion yen (about $145 million US)
• Sales accounted for 31.2 billion yen (about $271 million US)…this is up slightly from the first half of 2006 which was 31.1 billion yen (about $270 million US)

Additionally, the report had the following projection:

“Since an overwhelming majority of the anime sold commercially is geared towards an older audience, it is highly likely that franchises popular with anime fans were a significant contributor to the increase in sales. Growth of profits is continuing at a pace similar to the increase from last year, indicating a steady progression towards greater profits from anime sales.”

So it looks like the anime industry in Japan, while not in great shape, is doing okay.

How about the US? Unfortunately, data gathering here is not one-stop…unless you’re willing to pay for it. So I’ve cobbled together some figures from a couple of sources. First the big picture according to an article by Video Business:

• Home entertainment spending during the first half of 2007 dropped by 4.8% to $10 billion (which would put last year’s figure between $10.5 billion and $10.6 billion)
• Rentals were off by 3.3% at $3.8 billion (last year’s figure would be a little above $4 billion)
• Sales were off by 6.5% at $6.2 billion (last year’s figure would be a little above $6.6 billion)

There was one interesting observation and conclusion in the Video Business article:

“Blu-ray Disc and HD DVD sales, meanwhile, overtook VHS, which has dragged down the business in previous years.

Sliding DVD sales are putting more pressure on studios to develop the high-def market in the fourth quarter.

‘What is likely to happen as the business starts to flatten or trend downward, is it becomes less exciting for retail and they dedicate less space to it,’ SPHE (Sony Pictures Home Entertainment) worldwide president David Bishop said. ‘The best way to create new excitement is with Blu-ray,’ he added.”

For anime specific numbers, the pop culture retailer site, ICv2 analyzed the figures in the DVD Release Report (a weekly entertainment industry tipsheet):

• Anime releases fell by 23% in the first half of 2007…they had already fallen by 19% in 2006
• Sales have dropped by at least 10% in the first half of 2007

Their projection for the second half of 2007 is not rosy, but not bleak either:

“While the highly successful first week debut of the Witchblade anime on DVD provides some hope that the market will bounce back during the second half of 2007, the outlook for the rest of 2007 remains mixed at best.”

How have some of the US companies dealt with this increasingly rough environment?

As those of us who have been following this story, Geneon USA has had a whirlwind of activity since late August.

• August 24 - ICv2 breaks the news that ADV would be taking over sales, marketing, and distribution of all Geneon products
• September 7 - Geneon USA lays off members of its sales team
• September 20 - ANN breaks the news that the deal between ADV and Geneon has been cancelled…confirmed by Dentsu and ADV the following day…this also created difficulties for Bandai Visual USA whose DVDs were distributed by Geneon USA
• September 28 - Geneon USA ceased “the sales of DVDs and all related distribution and marketing operations as of 5 p.m. on Friday, September 28, 2007.”
• October 5 - Geneon USA announced that the Geneon Spot fan club would be closing and released a message (pdf) from the President and CEO, Eiji Orii, which thanked their customers and provided a bit of hope for the future.

The collapse of the Geneon USA - ADV deal left Bandai Visual USA in a lurch since Geneon had been distributing their titles. Luckily, they had a Plan B. They had recently (July 2007) launched an online store called dot-anime.us, which is a North American version of the successful Japanese site, www.dot-anime.com. They were able to use this site an interim store for their products until they could work out an alternate distribution plan.

ANN has reported that an ADV representative had told them of the recent layoffs of 13 staff members:

“In October, ADV has laid off a number of positions, pretty much across the board. During the same period, we’ve also hired several new people. The changes in our staff levels and the allocation of staff across departments is a reflection of our priorities for the coming year.”

Very few specifics were given about any change in priorities. The representative only mentioned that “the company remains committed, in particular, to home media and digital media”.

Earlier this year, ICv2 had announced that FUNimation had laid off around 10% (unconfirmed) of its staff…the most visible of which was the staff of AnimeOnline.

ANN (via ICv2) has also reported that two senior members of FUNimation were leaving the company:

• Ward Thomas, FUNimation’s Chief Operating Officer, “is leaving the company to pursue other opportunities. Ward is returning to the software industry, but he will stay at FUNimation through mid-November to ensure a smooth transition.”
• Senior Vice President of Marketing Debra Kennedy had left the company earlier. She is “a Harvard Business School MBA, (and) had previously worked for Blockbuster, where she had been in charge of videogame marketing, and for Nokia Mobile Phones North America.”

Japanese & US Data Sources:
Half-Year Anime DVD Sales Figures for Japan Released (Anime News Network)
‘Naruto’ Salvo Hits the Mark Anime Releases Plunge (October 17, 2007) (ICv2)
ADV Cuts 13 In the Wake of the Collapse of Geneon Deal (October 12, 2007) (ICv2)
Home entertainment down at the half (Video Business)