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Where Do We Go From Here?

OB special reporter Joshua Kaplowitz brings us a special report from Anime Expo on the future of the industry in America. At an industry roundtable discussion, representatives from industry heavyweights such as ADV and Bandai discussed a wide-ranging set of topics including treatrical distribution, fansubs, and more.

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Anime’s Top Executives Sit Down And Discuss The Future Of Anime In America

By Joshua Kaplowitz

In the rapidly expanding, constantly changing and increasingly diverse industry of Japanese animation, there is the ever-present question of, “What next?” What will be the next big hit? How do you market to such a diverse audience? How do you compete with the expansion of technology and piracy?

For the first time ever, Anime Expo offered a forum for members of the press and industry to pick the brains of some of the biggest players in the U.S. arm of the anime juggernaut. A panel of CEOs, CFOs, founders and marketing gurus from across the board ran the gauntlet in a discussion on the future of Japanese animation in America.

Featuring representatives from Viz, Right Stuff, Bandai, the Society for the Promotion of Japanese Animation (SPJA), Gonzo, TokyoPop, FUNimation, ADV, Digital Manga, Bang Zoom!, Urban Vision, Go! Media Entertainment and Geneon, the panel was a strong insight into the future of one of the hottest trends to hit America in ages.

Starting with a brief introduction to the discussion by moderator and writer Charles Solomon, the panel began with the obvious question on the status of the industry.

“It’s quickly diversifying,” said Matt Greenfield, Co-Founder and VP of Creative Development for ADV Films. “I don’t see it so much as a genre, but a medium. It’s exploding in ways that don’t include just shows, going everywhere from home video to theatrical releases and television.”

Anthony Jiwa, director of marketing for Viz, LLC also pointed out, “The manga industry is growing as well. With the increase in availability however, it’s causing the fan base to fragment. While sales are increasing, it tends toward only certain properties and series. The hits are selling more while smaller, more niche-oriented series are struggling. The biggest hurdle to overcome is finding the audience for a series and getting it to them.”

As with all forms of entertainment in America, there is such a diverse market for more and more specified programming. This causes a market glut and many lesser-known series become lost in the shuffle or ignored completely.

“The flip side of diversity,” points out Jiwa, “is that there are so many items in the market that it’s hard to find a niche. The challenge as a publisher is to figure if you should aim for a target demographic or try for direct marketing campaigns.”

Jamie Wise, CEO of Go! Media Entertainment pointed out, “Only 2% of our anime sell over 10,000 copies; this is even less so in manga.”

Another challenge to the growing industry has been the change in key demographic. While in the late 80s, 90s and early 2000s the largest buyers of Japanese animation and manga were college-age, post teen or adult; recently, the fan base has taken a large shift to younger audiences.

“The anime bidding wars are fierce,” said Greenfield. “With the advent of downloading and fan-subbing, this has caused a change in our key market. There are not a lot of college students who can afford to pay the higher prices of DVDs, but it’s so easy and cheap to download a series on the Internet.”

Fan-subbing, the act of taking a series in its original language, be it Japanese, Chinese or Korean and inserting translated subtitles and then offering the fixed show for public distribution is a loaded topic right now. While illegal in most countries, the laws for copyright differ enough from Japan to America that many fan-subbers can get away on technicalities so long as creators don’t actively pursue them.

“Regulations differ from country to country,” said Bandai Visual CEO Tatsunori Konno. “We need more world-wide regulations to combat piracy. With increasing technologies creating increasing budgets, it makes it much harder to make back the money spent on a major series. This makes it harder to fund smaller, niche series which develop cult followings.”

This brought up the question of how the online market effects the anime industry. How does a company manipulate this media to their benefit?

“The market is becoming much broader,” said SPJA CFO Trulee Karahashi. “The attendance base for Anime Expo this year was over 50% female. This is helped along by access to more female-oriented series online. People can now download anime episodes on iTunes and even their cell phones.

“The U.S. market has many more avenues for potential growth than the Asian. The Internet is a huge market and allows for better niche distribution.”

Bringing up the increased technology for video screens on cell phones also brought up the question of portability in the market. Do people really want to watch a full episode of an anime series on a small, 2-inch screen?

“You have to realize,” said Gonzo VP of Creative Affairs, Eric Calderon, “that this is a generation that grew up on the Game Boy and iPod, each having small screens. Portability is huge in the market right now because it’s not dependant on location.”

Jumping back to the concept of anime piracy, the question was brought up on methods to combat creative theft.

“We’re working on a partnership for broadcasting free online services,” said Jiwa. “By offering a solution, it makes it easier to combat the problem. If you embrace the media and use it, it makes it harder to be taken advantage of.”

“We’ve actually been going after the entities, as opposed to merely individuals,” said Geneon VP of Sales, Jim Yardley. “We feel that it’s necessary to protect our name and brand. There is currently a demand for electronic distribution and we need to find an alternative way to provide this that allows for more secure transfers of goods.”

Urban Vision takes a more apathetic approach. “We haven’t felt the need to go after these people,” said Robyn Mukai, Marketing Manager. “If you think about it, the people who download a series as opposed to buying are less likely to buy it anyway, whether it is because they don’t have the money or they don’t care enough to purchase. However, it’s the people that really like the series that will download and then go out and actually buy the DVDs that we’re after. We try to focus on the fans by offering them incentives to go out and buy our product. Special features on DVDs and options to make them want to buy an item as opposed to just buying to own.”

“Content mainstreaming is the way to go,” said Calderon. “Gonzo’s solution: Afro Samurai. It’s going to be one of the most expensive TV series ever made—we’re spending over $1 million per episode. It’s being released simultaneously in the U.S. and Asia; we’re combining companies within various industries and giving it a massive marketing blitz. There will be a simultaneous release of CDs, videogames, toys, the TV show and a media blitz.

“We’re not going to give people the chance to not buy our product. The answer is to give them something they’re going to want so bad that they can’t help but buy it and everything related to it.”

The idea of direct marketing campaigns to sell TV shows brought the thought of why anime seems to be regulated to only television and home video in America. Why is there not a stronger push for anime movies to receive a wide theatrical release?

“It’s hard to pitch a movie to companies,” said Ken Iyadomi, president and CEO of Bandai Entertainment. “It takes much fewer people to make a movie a hit on DVD than in a theatre. For a movie to succeed, you need massive ticket sales, and anime has such a concentrated audience that it just couldn’t make back the money it would take to market it and put it out in theatres. However, with the increase in digital projectors, it cuts down on cost to distribute.”

“Marketing is what racks up most of the costs for movies,” said Greenfield. “We just don’t have the money and connections that the Hollywood marketing giant wields. The marketing for a movie can sometimes end up costing more than the movie itself. Movie theatres just aren’t a strong enough media for anime. One failure can kill the industry and the high cost of failure can undermine the retail value of a franchise.”

Mention was made of Hayao Miyazaki’s films topping charts in Japan while making little more than a ripple in the theatrical markets in America. This was attributed to poor marketing and difficult distribution.

By the end of the discussion, no definite positions were reached and no definitive ideas agreed upon, but there was a general consensus that the anime industry is enormous, growing and constantly evolving, and in order to continue to nurture it as a form of entertainment and medium, new ideas and innovations will be heavily sought after.

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