The Retailer Focus, BD and New Media
While my heart goes out to the panning of the rant of a retailer, speaking as a buying customer (though I never shopped at RACS) I have to say there is a very agreeable point to what Robert (Bob?) is saying.
Let me see if I can pin it in fewer words and less “quit ruining my business!” bias:
- DVD sales declined partly due to Blu-Ray Disc adaptation, across the whole industry (let alone Japan, who is really taking the lead in anime BD sales).
- BD sales is the next cycle in the home video industry, or at least a part of it. So without BD uptake, the home video sales will suffer.
- BD uptake in anime licensing in America is currently throttled by licensing trepidation, lack of a better word, from Japan. Reverse importation may be the primary source of fear but who really knows? There is no data to support it, one way or the other.
- R1 companies should focus their efforts and resources in securing BD licenses and produce better products, because that’s where the money is in the near future. (I’d also add on my own that before BD prices drop across the board, now is the time to cash in on high margin SKUs.)
Also just for footnote, remember that the US anime industry (if one could be said that there is one, as commonly known) has its roots in the home video business. Pretty much everybody’s core business model is to sell actual, physical products (with one notable exception). It just happens what they sold had to be licensed from Japan. This business came from a tradition of pushing hardware, not software. So things like home video sales trend is key to their survival, including their downstream affiliates.
A proper rebuttal of Rob’s fears (perhaps better put as soothing and reassuring his worries, for the less confrontational) goes like this. In short:
- We don’t know for sure how the BD market is going to turn out in this space. Yet.
- Blu-Ray Disc market has yet to stabilize especially in America, considering the nature of the format still waffles between budding home-theater owners, trend-conscious consumers, and hardcore collectors.
- We don’t know how BD-buying anime fans fit between those categories.
- And there are a lot of other things that we don’t know (most importantly: pricing trends in specifics).
- And once we do know for sure, Japan will much more likely cooperate.
- (Old argument:) The internet piracy market doesn’t overlap with the BD-buying market anyways! All that online stuff is to add revenue stream through the people who won’t buy the physical media in the first place, and the data is good on cannibalization (as in, not enough to worry about).
- Most hardcore collectors either don’t give a flying damn about Funimation’s crap BDs, or lament about it (By the way, this is hawt.). [By the way #2, we also don’t care about some torrent of some 720p material upscaled (by manufacturer) to 1080 then downscaled (by encoder) to 720. WTH guys.]
The way I see it, when Viz, Funimation and others branch into online media stuff, they’re trying to secure as many revenue streams as their budget can allow. I mean, that’s what every media licensing company in America (and elsewhere!) is doing. Even if they don’t make money through it, it’s a great way to advertise. Take Viz for example, I think they suck when it comes to the internet in general, even compared to Funimation (maybe that is because they are now a Japanese company and invariably that sort of lack-of-business-savvy comes like a D&D racial penalty), but even then, they know they have to go there because the is money there, because the next generation of buyers are there. You have to be visible in that space.
If anything, Crunchyroll has shown Japan that there is money in the cloud. It’s a separate question as to if CR can stay afloat, but that’s a different inquiry. Ultimately there’s very little people like Robert can do, so his frustration with the whole shebang of ills throughout the system/process is sympathetic, if a tad misdirected.
I also have one more note from the blog comments–
Who has a BD strategy? I know Funimation does, as their 5-man dedicated in-house mastering folks…exist. They also have dedicated marketing folks that post blog posts and screw around on Twitter. I already mentioned before that these sorts of people are almost luxuries–how many anime licensing companies in the US can afford that? Viz comes to mind, and Crunchyroll? It isn’t like BD mastering is a simple and inexpensive process either. And even today, the only good anime on BD, in the US, come from Honneamise and Sony. That’s it folks! In reality Bandai Visual and Funimation are obviously two players with a BD strategy; one just gets hated on for no good reason (BDs being too expensive is no reason to hate IMO) and jumped ship, the other is in the process of making less-crappy BD releases and wrangling over licensing problems.
In short, BD is still too expensive for small fries, too corporate-paranoid for the big guys (except Bandai), and behind the curve for everyone else (see Funi’s backlog).
Personally, I would love to be able to buy BD of all the anime I want to buy. But a honest look at the landscape of the market would tell me that even if I have a lot of spending money and live in Japan, not all the title I want is even available in BD. Where is my Simoun? Where’s my Futakoi Alternative? Where’s my Kara no Kyoukai? If anything that is the “moral” of the True Tears box story. So, I think it is a little unreasonable to ask a foreign licensee that sort of thing, at this junction.
One thing I do agree with him: Funimation should quit pussy-footing around and make a strong statement in their BD releases; even if it is at the expense of spending more money there and spending less money elsewhere, BD ought to be/will be a core business product. Being the default anime industry leader in the US, they need to be able to put out a quality BD product. Absolutely have to. Why? If anything, so it quells my fear that they can’t even if they wanted to. As I see it, they’re really just trying to scrape by as cheaply as they can, and that just makes the HD-whore in me sad. Worse, it gives me an incentive to wait for something better, like a Japanese release.
And lastly, two more notes:
Japan is paranoid about reverse importation of BDs and they make people jump hoops about their Region A releases. Still, I think there is good sense to change your release methods to avoid making the “ultimate” SKU that will end up siphoning all the richest/most desperate buyers. It is the opposite approach of the Honneamise/BV strategy. For example, we have Disney’s Ponyo, which is tailored to the American audience for their US release, and tailored to the Asian audience in their Japanese release. I think it’s quite clever that the Japanese release carries just a 2.0 English track where as the US release carries a 5.1 Japanese (but lower bitrate than the Japanese one) track. I think that’s really tailoring it to the right audience. Of course, this strategy doesn’t apply so well on titles where volume of sales that don’t tier, or are just really low. And yeah, it rubs those perfectionist collectors the wrong way, but they could always just buy both copies :3
(Oh wait, that makes THREE studios with concerted BD strategy. Let’s remember the margin Disney makes on these babies in their Japanese release. Ahem.)
The other note being–do people care? I mean it sort of goes under my bullet up there about “overlapping.” Poor suckers like me probably would double- and triple-dip on BD/DVD/VHS/LD or whatever as long as you give us a compelling reason we will buy SKU from our favorite shows. I think that’s the basic operational mentality from the consumer side of things in the anime industry. In that sense, when Funimation releases Samurai Champloo BD, I bought it, mainly because it would be my only archival copy–that is the same as buying the DVDs of the thing, since the quality is about on par (if not worse). Still, I bought the damned thing. I can see why people might not buy it as an upgrade to their library, but it’s one example where the BD SKU can fit a role that a budget re-release DVD does for a title that already has a first or second pressing. I think Funimation understands this and knows that’s possibly where the money is!
TL;DR: It is a game of incentives. Funimation (and everyone) stands to gain from playing ball in the various markets, both because there is something to gain and because it is relatively cheap. Before we cry about bulking up core businesses we have to rationally examine the potential gain versus the cost, even if it contradicts with what I said up there…
At least your post addresses all the different aspects of what the original post was about, rather than just homing in on the “you just don’t get that your business model is dead!” aspect. So even independent of everything else, that’s a plus.
I think that the reluctance of Japanese licensing groups to allow BD releases at “typical North American pricing” is actually the single largest hurdle the R1 industry faces on that front. I don’t think Funimation is just being “cheap”; I really think their hands are tied. None of the shows you casually threw out there were released on Blu-Ray in Japan yet, so there’s no way in hell they’re going to allow Funimation or any American company to put out a “cheap set”, no matter how “forceful” Funimation tries to be. Even if you take away the “reverse importing” argument, there’s still a sort of pride — that the international market shouldn’t have a better release than what their own home market has had, since that’d be unfair to their own core audience of fans.
The main challenge the R1 industry has is to provide significant value in an “era” where the “perceived” value of anime is basically “free”. Not having Blu-Ray in a world where HD streams are freely available is part of the problem. Not offering dubs is part of the problem (for some). Barebones releases are part of the problem in a sense. Being months or years after the show’s air date certainly doesn’t help. The question is “When I can already watch this show streaming (or downloaded) in HD whenever I want, why should I buy the DVD?” The customer has to agree that the product is worth the asking price. So just having BD isn’t necessarily what saves them, but *not* having it is just another reason for someone to say “meh, what I already have for free is better”. That’s really the big problem to be solved.
The shows I casually threw out are shows I want to buy on Blu-Ray from Japan (or America). If that wasn’t clear I’m sorry. In fact I think you might have missed a major point I was making if you didn’t understand that. Something I take for granted is that I am speaking as someone who owns more BD from Japan than from the US. So importing is no big deal on my end; it’s the same marketplace.
Some of my points are similar to yours, but I wouldn’t say the price difference is the single largest hurdle. It’s one way to look at the same situation however. More realistically, I just don’t believe reverse importation is so serious when it comes to the top selling titles. It’s more serious when it comes to a title that sells well in the west but poorly in Japan.
I know Funimation has their hands tied, but to use my example of Samurai Champloo, the video quality problem is no way caused by some licensing clause saying they can’t make the video better than the DVD that was already released D: D: D:
Hopefully Eva 1.11 will relieve some of the concerns I have.
I think you don’t stress the cost of BD authoring enough — the equipment is expensive enough that few US anime companies have a market large enough to justify the purchase. I suspect that contract-BD-authoring may also be pretty expensive. If you have to be able to ship (say) 20,000 disks before the break-even point, no anime title (other than Dragonball or Fullmetal Alchemist) will ever make money on BD.
I think there’s a fair amount of justice in the “your business model is dead”. I tend to lag behind consumer-electronics innovations by eight to ten years anyway (that’s how long it took for me to buy a CD player). I don’t expect I’ll ever buy a BD player or a BD disk, because, by the time I’m ready to do so, the next format will have come along, and I wouldn’t be surprised if that format were some sort of download-to-own format.
I don’t have a BD spindle in this house, not in a computer, not in a PS3, not anywhere. But my cable easily pulls more than a megabyte per second. Maybe two.
I’m not even convinced that there is going to be a BD market at all, long term. It’s been around for a while now and uptake is pretty slow still. You’ve got to think it’s going to end up being transitional technology to bridge the gap while the real next generation for anime is going to be HD content distributed entirely online.
You guys can’t be serious about it and only preach to the choir. Plus you guys are just not convincing.
It doesn’t help that I already know everything you have to say on this, but what makes it worse is when I talk to guys like Chris B., who doesn’t review a title like Xam’d because he can’t bring himself to support a format like that, despite it being:
1. high definition from the get go (both video and audio, not a lame upscale)
2. press-and-forget software and hardware solution (beats the pants off of streaming or messing with media boxes etc)…
3. exclusive, USA GETS IT BEFORE JAPAN.
Yet he’s fine with stuff on Crunchyroll that he gets for free or for a low fee.
In essence, these three things are what really matters–access, quality, convenience. If they can’t charge money according to those benefits as conferred to the user, then what kind of a business makes rational sense?
I’m sure in due time, digital delivery will be done in a way that satisfies people on both sides of the ideological divide, but I really don’t give a damn about “the future” as much as “why can’t I get Simoun/Rakkyo/FutaAlt on high def?” And if people are hung up on stupid notion of what the future ought to be or what their bottom line should be rather than the long-term sustainability of the industry or rather than the value of delivering the content, then they can go DIAF. Who has to die, and what titles have to fade into obscurity, NegativeZero, while we wait to bridge this gap? I think it’s retarded.
If they can create a product that satisfies my requirements, I will buy it. And why should I base my requirements on stuff like “the real next generation for anime”? It seems killing the goose for the egg.
As a note for dm, mastering a high-definition video doesn’t have a whole lot to do with blu-ray. To most collectors, blu-ray just the short hand for the software/hardware system where high-def video/audio is a requirement. If Funimation can’t do it right on a physical disc, it doesn’t bode well for any other delivery method that requires a similar kind of encoding requirement. I mean, after all, dolby 5.1 sound is dolby 5.1 sound. H264 is H264. That doesn’t change if you call it DVD or Blu-Ray or whatever.
There is already a BD market today. To question its long term life is like questioning the long term life of DVDs. Of course at some point both DVDs and BDs will be completely superseded. As for uptake rate, it’s fairly fast given the format war that it had to go through. DVDs were around 3 years before the uptake really went through the roof, for comparison.
>> the equipment is expensive enough that few US anime companies have a market large enough to justify the purchase.
Few meaning one, you mean. But it’s beyond that.
>> I don’t have a BD spindle in this house, not in a computer, not in a PS3, not anywhere. But my cable easily pulls more than a megabyte per second. Maybe two.
So what? Just because you have a car doesn’t mean you are unable to walk or take the train? The problem is in the end-to-end delivery and monetizing business model. If it exists, we haven’t found it yet. More importantly I just think people are not going to pay for it the same way we are paying for media traditionally, and as such it gives very little incentive for businesses to offer their products that way. At least, it wouldn’t be mutually competitive.
Throwing stuff on so many internet services doesn’t tap in on those markets, FUNi is probably losing money or wasting resources by doing that. No, their goal is to secure an early ticket for when–and if–those services go big. I mean iTunes big, where trends sell your shit, not the bottom line or ignorance (YouTube rentals LOL).
Isn’t that the same as “tap” in?
Could be, but nothing comes out. Not worth tapping.
it might come out in the future…?
Miha:
“Throwing stuff on so many internet services doesn’t tap in on those markets, FUNi is probably losing money or wasting resources by doing that. No, their goal is to secure an early ticket for when–and if–those services go big. I mean iTunes big, where trends sell your shit, not the bottom line or ignorance (YouTube rentals LOL).”
You’re thinking like an anime fan. Funimation doesn’t want to depend solely on the fanbase anymore judging by the massive ad campaign taken out across the Gawker Media network last year.
Funimation is doing what every other content provider does and offering options for viewing its product across different customer demographics. The profit/loss ratio is irrelevant as its made up by the amount of exposure the content receives across all of the platforms it participates in, whether it be DTO, iTunes, streaming, VOD or DVD/Blu-Ray and TV.
According to Sheehan last year during a panel, there were two shows on Funimation Video that actually made them money in terms of ad revenue per viewer and they weren’t the tentpole franchises either.
As far as the raw costs of authoring on Blu-Ray, it is more expensive and it usually has to do with the cost of AACS licensing and the higher cost of media per 1000 units compared to DVD. The actual authoring jobs can also vary in cost depending on the level of experience with the equipment.
I wouldn’t say that exactly, but you’re obviously right. The retail term is “organic growth.” In other words, they want to make more anime fans (and ergo more paying customers) and to do that is to show anime to non-anime fans! Making access easy through online methods is a good start.