Why anime in the west is dying

The president of Bang Zoom! Entertainment recently wrote an article about how anime releases in the western world, specifically North America, are dying. Many others have weighed in on the issue and by and large have come back with bland responses to what is a firebrand and alarmist editorial from a unique position within the release chain. While the president's motives tinge the post with a dubious slant, the core argument is one that has been used before and will no doubt be used again. It's the same argument used by the commercial music and movie sectors, the difference being that instead of companies posting record profits, anime related companies are disappearing, and not simply the upstarts but powerhouses that used to be staples of any release schedule. To summarise the article: fansubs and piracy are killing off the western anime industry. There is no proof offered, no empirical evidence backing up this assumption but it rests upon common wisdom to support the argument. The argument is wrong.

The reason commercial, western anime releases are dying off is because the companies can not offer a competitive, viable alternative to fansubs.

this seems to be the level many anime distributors put their audience at [...] that the president of Bang Zoom! calls all anime fans thieves is testament to this
Fansubs are not a phenomenon that arose with the internet, they existed as a labour of love combining two VCRs with the laser-like concentration of a person timing the subtitles as the episode advanced in real time. Internet distributed fansubs grew up with the advance of broadband and by the start of 2001, several groups dominated most releases with series such as Noir and Argento Soma. At the time the DVD format was well established and anime had begun to creep onto the format with late nineties series such as Serial Experiments Lain and the first round of DVDs for Neon Genesis Evangelion. Broadband penetration within the US rose year on year as did the technology available to home computers; anecdotally this also saw the rise of digital fansubs, available to anybody with a passing knowledge of IRC. The tipping point for fansubs however was BitTorrent which opened up the number of people able to download releases. Add Flash video in 2003 and YouTube's launch in 2005 and the ability to share video via the internet was now painless.

What does this have to do with the decline of commercial anime companies in the west? The thrust of this argument is that companies have been unable to adapt to changing technologies and lifestyle patterns, instead clinging to a single revenue model that has since become outmoded. The children - tech savvy and with an excess of time on their hands - who grew up during the genesis of fansubs and wanted to view the latest series from Japan had the choice of spending money on DVDs or downloading from the internet. At first, in the earlier part of the decade, the choice was unclear as not many shows were being released as fansubs and though the subtitles were good, the video and translation quality of the DVDs was superior - DVDs offered a better product than their alternative. As time progressed however these two variables changed and a third was introduce; video quality got better as codecs like DivX and XviD matured eventually giving way to full MPEG-4 compliant codecs, broadband became faster allowing for larger, higher quality files, and the availability of translators increased leading to more competition and at times, better quality. The third variable was the erection of a community. Beyond the release groups and IRC channels people spoke about anime more and more, sharing words and pictures and music and videos, and to be relevant within that community, one had to keep up with their peers.

The crux

This lead to a commercial problem: their product had been completely undercut by a free alternative. Their DVDs could no longer claim superior video quality or consistently better translation. The release model, still in place today, also doesn't allow for competitive timing which runs the risk of shrewd Japanese anime fans importing the comparatively cheaper English DVDs, and there's the innate matter of production and distribution - DVD mastering and packaging is not an undertaking meant for speed. In order to offer value to the customer then, who is required to buy the DVDs for their business to survive, they have to appeal to something other than quality:

  1. Materialism - the great capitalistic equaliser saying that owning "stuff" and building a collection is a reward in itself
  2. Morality - relying upon the ability to plan and feel: plan because buying now means more potential buying in the future; and feeling, because people need to feed their families

The former is an innate part of a product, especially a series of products and can't be capitalised upon through anything tangible - adverts cannot convincingly proclaim that one must buy the product simply to enjoy the feeling of owning it. Other elements must appeal to this sense such as special features, seductive packaging or bonus paraphernalia such as models or soundtracks. The latter, morality, is the one touted most vocally and is the thrust of the Bang Zoom! president's soliloquy. The argument is sound and the legality is not in question, according to most definitions of intellectual property law fansubs are illegal in that they are a re-purposing of someone else's work (artist, animator, production company, distribution company, TV station) without their consent. The issue is not with the semantics or whether fansubs are "stealing" (lossless copying is a modern invention and doesn't entirely suit the common application of "stealing"); the issue is that the alternatives are not in tune with the lifestyle that grew up around anime.

many structures particular to the distribution of fansubs are now deeply entrenched, meaning that changing them will be all the more difficult
The free availability of anime as video files, like music and MP3s, means that they are individually devalued. People no longer see them as something special, unique or even tangible, they are part of a routine or ritual and the value itself is either in aggregate - the whole series - or in the interactions surrounding it such as the discussion between people or the dissection on a blog or the cosplay at a convention. This isn't a grandiose social revolution, just the simple fact that people like speaking with other people who share similar tastes and hobbies - the community is the value and the anime episodes or series is a facilitator, part of the enjoyment but not its entirety. By comparison, it is an ironic twist that if a DVD is bought by one person, they cannot legally watch it with their friends due to licensing laws prohibiting public showings in many municipalities.

Ways forward?

The problem posed to companies then in the wake of this rubbishing of their primary income, is to find ways of monetising other elements around anime, essentially spreading the income across different media, not just DVDs. Japan has this element down very well and it is brutally commercial: merchandise your series for everything they are worth. DVDs of series rarely recoup costs and it is down to paraphernalia such as t-shirts, figures, CDs, supplementary books, keychains, soft toys, posters, body pillows, mouse mats and all manner of other tat to claw back as much costs as possible. Look at the most popular franchises and the most profitable entities involved and it becomes obvious that those that can offer the full brand, from animation to toy, are the most lucrative. Applying this methodology to western anime companies raises a problem, one which will always be present: is the western anime market big enough to justify this blatant, mercilessly capitalistic approach? Would Evangelion bicycle shorts be worth releasing?

One of the ways which was used successfully in the past to increase the potential audience for anime as a whole was television. Pioneered by television slots such as Adult Swim, or even the sporadic movie on the old UK network Bravo, they epitomised the best of anime, bringing brilliant series such as Furi Kuri or Cowboy Bebop to an audience which appreciated the programming as much as the off-beat humour that interspersed it. It wasn't long before the obvious happened and an entire channel was set up for anime: The Anime Network. Ostensibly a boon to expanding the influence of anime, it operated not only in the twilight years of television for its target audience but also failed to reach enough operators quickly enough. Initially a subsidiary of ADV, it switched to a video-on-demand service but suffers from holding its audience in contempt:

Unfortunately this seems to be the level many anime distributors put their audience at and it is demonstrated time and again with a vitriol that is difficult to ignore, that the president of Bang Zoom! calls all anime fans thieves is testament to this. It's difficult not to imagine bean-counters looking at the seed counts for various torrents and mentally calculating the deficit in DVD sales. So when the free fansub groups prove to be more professional, reliable and enthusiastic than the commercial companies whose livelihoods are dependant upon the anime, what does that say about the companies? Treating the audience, fans of anime, as no better than criminals and no smarter than chimps is no way to engender support for a medium they claim to be failing.

If western anime companies wish to succeed in a niche market, when Japan has shown indifference towards exporting its culture internationally, then finding the balance between commercial viability and pandering to the supremely fickle audience should be accepted as part of the myriad problems facing them. However it should not be for companies to decry that times are hard and that their target audience is in fact causing it to wither, it is up to them to find a way to improve it and to capitalise on it. It's not easy, and anyone in the business chain of distributing anime in the west needs to do their research and ask themselves whether the market is big enough, or crucially whether it can be expanded, to support their enterprise.

Not all doom and gloom

The elephant in the room is of course to forgo physical media and utilise online video - something which trailblazer Crunchyroll has been doing with some success. Indeed this is seeing uptake with the British arm of Manga Entertainment as well and though numbers are unavailable, it's hard not to see this as the most effective method of not only reaching the right audience but combating piracy. After a rocky and litigious start, the utility of CrunchyRoll is beginning to be seen: not only is it reducing the time between the original airing and availability but proving there is benefit in the fostering a community - no matter how basic. The business model is still being tweaked but each season sees more and more series being snapped up for release and, crucially, fewer high quality fansub groups willing to spend time on a product already released - its remaining hurdle lies in its region locks which still proves divisive but are a natural hurdle to this kind of endeavour.

Complementing this paradigm shift has been a series of high profile campaigns which have succeeded in one way or another at advertising the product with belittling it, or the target audience. The most successful of which is undoubtedly the SOS-Brigade which ran in the lead up to the release of Haruhi in the US and involved the fans in both celebrating their latest interest and, as a side effect, advertising the series. Likewise more recently was one of Gonzo's last series, Strike Witches, which is gifted with a superb campaign that pokes fun at itself but in a charming way - quite aside from the lascivious content the show is renowned for. It is efforts such as these which, although undoubtedly commercial, show companies more willing to play to strengths rather than exploit weaknesses.

In closing

Taking shots at piracy and the loose morals of the people who enable it is easy but it's missing the point. One can rage and stomp and shout at the unfairness of it all and still try to peddle their wares with only minor format changes or one can think more tactically and come up with ways of combating piracy better than appealing to morals or strafing sites with cease and desist orders. To a degree, the situation has come about because it has taken so long for a select few companies to change and adapt and many structures particular to the distribution of fansubs are now deeply entrenched, meaning that changing them will be all the more difficult. Agility and innovation are not uniquely beneficial to western anime companies, however with such a focused and thrifty market they are all the more important. Misguided are those who would argue fansubs legality, however it's time they're viewed as a symptom of a problem with the companies not catering to their market, rather than as a death knell.

Responses to “Why anime in the west is dying”

I've never seen this explained so eloquently. Stellar post.

I still buy those outmoded DVDs, but only if I've seen(and liked)the show beforehand. With Firefly, it was the SyFy (sheesh,I hate modernspeak) Network, and with anime, it's fansubs.

In buying DVDs, I'm the exception, according to Eric Sherman, but that's supposedly because I'm an old guy. Hmmm... (old people think a lot, but it's usually about nothing)

As long as there are fansubs, I'll watch 'em. As long as someone brings my favorites stateside, I'll buy them.
@The Japan Girl My apologies, my language was not in any way intended to impugn or imply the shows that you mentioned were "bad" by any definition of the word - I cannot comment specifically on them as I haven't seen them. My intention was to expedite the argument to its logical conclusion being that the licensing of more specialised / niche shows draws closer and closer to the dividing line of opinion and what is "good" and "bad" versus what is popular. Obviously I have offended you and for this I apologise.

You do raise a core point of the argument facing western anime companies however in the disjoint between well thought of and marketable shows. I too have heard of the poor sales of high profile shows such as Gurren Lagann and Lucky Star which is frankly baffling and I can't venture an answer as to why this is beyond the obvious I've already covered: lack of marketing, disinterested audience etc. Again it feeds back into the question a company needs to ask itself before licensing and releasing a product: whether the current available market is capable of making it profitable, and if not, is it possible to expand the market to accommodate it? If the final answer is no, then claiming it's the audience which made that so is rather hypocritical.
If find your language in your response interesting. Does the fact that those shows weren't popular make them "bad" shows?

I'm sure Crunchyroll doesn't license shows with the intent that they'll do poorly. I'm sure they intended the original Cobra series to appeal on a nostalgia level to fans who remember watching the original series in the early days of US anime fandom in the '80s and early '90s. As for Kaa-san, while I agree that's a tough sell based on what the anime demographics are like in America - I'm sure there aren't a lot of kids who want to watch a show about a 30-year-old mangaka balancing her job between caring for her two young children - but I actually like the show. Does that mean I have "bad" taste? Does that mean the US market shouldn't offer anything to people like me who don't want to watch Naruto or Bleach?

That raises the question - should Crunchyroll only license shows that are guarantee hits due to a large, pre-existing fanbase? Based on your argument it seems like it's not worth the risk to take a show they think is good but few people have heard of, hold their breath and hope it'll be the next Durarara.

The other problem with that argument is the same problem plaguing the anime on DVD - how do you know what is or is not a "good" show? How do you predict what shows people will watch and what they won't? If they've already seen it on fansub, will they want to watch it again on DVD or on a legitimate streaming site? Afterall, many of the shows that had Bang Zoom dubs that had fairly large followings, like Lucky Star and Gurren Lagann, didn't sell that well on DVD (before you ask, no, I don't have any figures, this is just based on information gathered from sites like ANN, Japanator and Anime Vice, which employ full-time anime insiders).

So should sites like Crunchyroll not take any chances and only stick to things that are guaranteed hits? Should the people who are fans of those niche titles just have to deal with the fact that they'll never see a legitimate release and have to make due with fansubs?

For that matter, should the Japanese industry stick with their current method and only produce shows that are meant to appeal to Japanese otaku? Should they just give up on the idea of taking a chance on something original and continue making nothing but moe harem shows and gundam series?
@The Japan Girl Playing devil's advocate, so far I've only heard of anecdotal evidence regarding CrunchyRoll and though I have no doubt what was said has truth in it, it's not easy to judge the scale of the implications without even some general figures. One could also say that it's not surprising that the two shows you mentioned as doing poorly did just that - offering up niche shows (in an already niche media) isn't the best way to turn a profit, while Naruto is a proven seller. In short: you shouldn't expect bad shows to do well.

I think it's a bit disingenuous to compare the movie industry and the anime one, despite the similarities in the media being offered, one is an all encompassing monster worth a fantastic amount of cash, whereas the other is marginalised, even in its home country. I'm not claiming that streaming shows is the magic bullet going to save western anime companies, it should however be used judiciously and as part of a larger strategy - spreading the product across the widest possible audience in order to maximise the money to be made and combating piracy.

@omo I think I see what you're saying now. It's definitely a market difference that in some ways can't be bridged - the money making that is done by anime in Japan wouldn't work in the west not only because of the disparity of numbers but also the wildly different markets. Treating anime as an opaque blob is certainly not the way to go about it. The question is then what will work in the west, if anything? So far all we've seen is companies release DVDs and the odd smattering of merchandise for popular series and then rage when it doesn't work.

I think without going into larger differences between the two markets (which is something I want to do) then it's going to be difficult to contain this discussion to why western anime companies are failing. Like you say for Blu-ray, the most popular ones have been anime just like the most popular cinema release have been, it's an ingrained part of their culture which, I guess part of my argument is, that has been hamfistedly (historically at least) exposed in the west.

Am I making sense or have I grabbed completely the wrong end of the stick which is your argument?

@Yumeka Without being glib, beginning your response with the admission that you didn't in fact read my post, and beginning your own with the revelation that you didn't read the original article's comments or anyone else's take on the situation, I'm disinclined to read the rest of yours.
Your post was a bit tl;dr, but from what I skimmed of it, your thoughts are excellent, especially how things have become "individually devalued" thanks to being distributed for free.

Coincidentally, yesterday I wrote my own thoughts about Sherman's article. You can read it on my blog if you'd like.
I didn't want to get into the details, because it would be longer than your post. Let me see if I can keep it short.

1. In Japan, most anime on video is bought by otaku. Licensing the same sort of titles and selling it in America, can licensees expect any different? This is complicated by the fact that there are way more otaku in Japan than in the west. Also Japan charges a lot more money for their home releases. This is a fundamental barrier which separates different kinds of anime. Markets are important because different markets consumes and treat anime (or videos generally) differently.

2. When we talk about industry, it's important to realize that merchandising is how Japan makes its money overseas. This is why Pokemon is profitable. But that is not relevant to either the Bang Zoom! rant or the fansub/digital distro situation. Furthermore, when we look at merchandise for otaku anime titles, it's likely that only the otaku will buy things like dakimakura covers and figures anyways, so while you might make more money doing this, you're looking at a very small market that isn't likely to justify the risk and cost of doing it.

3. On Blu-Ray, it's widely recognized anime DVD sales in Japan has suffered greatly because of this. Majority of anime titles are bought only by otaku, who are Blu-Ray enabled and will largely boycott DVD titles if they think a Blu-Ray title is ever going to happen (which is basically every new show). This is also happening in North America, which is driving BD uptake in the US at the expense of DVD sales. It's a win-win situation if publishers can catch on, since BD has a higher retail price than DVD at this time. Is Blu-Ray sales on fire? Yeah, in Japan I think anime is 5 or 6 out of top 10 best sellers. It's hard to say what the numbers will break down in the west since it hasn't been marketed in that way yet.

4. Bleach and Naruto are tricky things. They make money not so much through anime but through manga. The problem is far majority of viewers of these shows are kids ( < 20yr) and have only so much money, it's hard to expect them to buy 200+ episodes of anime. On the other hand manga is what is driving those franchises, as it's cheaper and more relevant (better). The streaming effort is to capture at least some money by offering the anime at a lower price point for the majority of the anime's audience.
I don't have any financial figures, but based on the various ANNcasts I've listened to where the subject has come up, turning a profit on Crunchyroll depends on people not only buying premium accounts, but watching every show they have on their site and in great numbers. They have to pay to get the broadcast license for these shows, and if people aren't watching them, that's money lost. While they've had success with shows like Naruto Shippuden, they've lost money on shows like the new Cobra and Kaa-san Mom's Life.

Also, in an editorial on the subject written by Brad Rice on Japanator, he included this:

"Think streaming media or any sort of digital distribution will come to save anime? Fat chance -- it's not even a savior in Hollywood. Recently in Variety, one analyst was quoted as saying " digital isn't a big line item at this point for studios. If it doubled every year it still wouldn't be a big number in five years." The reason why all the companies have digital distribution is to try and reach out to those who refuse to buy discs, in order to placate you somehow. But it's not like that is actually going to go far to keep things going."

Given that all this information is coming from people who actually work full time in the anime industry, I would assume they know what they're talking about.
@AstroNer­d­Boy This is something I wanted to touch on (re: Japan's influence on western releases) but I couldn't find anything solid. Anecdotally there is plenty of evidence to suggest that Japanese companies retain a vice like grip on their titles because their income is primarily from Japan. I've heard that the non-Japanese market/money is minuscule in comparison so why bother supporting it?

@Jura This was part of my argument, there is now an infrastructure in place that supports the distribution and consumption of fan subs from start to finish. It's precisely because companies sat on their hands during the formative period of fansubs that it has become so robust and thus much more difficult for companies to "turn the tide" so to speak and offer people paid alternatives.

@omo I'm not sure I fully understand which misconceptions I was perpetrating that you've picked up on. If it's the issue that anime itself has become devalued then I wasn't really aiming for the connection with marketing and was more implying that the valuation of anime as a discrete item is less in comparison with anime that is widely discussed and part of a person's social "fabric" as it were.

My guessing is that you're saying the split between the saleable anime and the "rest" is the same in Japan as it is in the west and the problem is marketability versus consumption patterns? If so, then it's certainly not something I can disagree with, and I did want to point out heavy hitters such as Naruto and Bleach as evidence that it's possible, but that issue is a lot more complex than a throwaway line could cover. The problem of getting exposure for any anime to make it profitable is rife with problems but feeds back into the core of whether a company can sell their product successfully, and that's not for their amorphous audience to decide it's their decision.

Blu-ray has equalised the video quality argument but beyond Japan, anime isn't being released at the same rate DVDs were for myriad reasons and - as far as I can tell - hasn't set the world on fire with its sales. So as an alternative, for example, one can't buy Code Geass on Blu-Ray, only DVD so for many series the quality argument still stands.

And in terms of licensing, it's unfortunately not something I know a great deal about; I mostly wanted to stay within the realm of "these are possible solutions, you guys work out the details" but I have no doubt that it is an utter nightmare trying to get anything licensed for multi-media releases.

@The Japan Girl Do you have any figures to back this up? While VC isn't a measure of success, it's a measure of backing and shows that other companies are stumping up money to support this venture. If you have any financial figures for CrunchyRoll it would be fascinating to see them.
LMAO Finally a voice of reason!

Yeah, I always found the whole, "Piracy hurts the industry" argument to be null and void because I know that if people like something enough, they'll pay just about any price to get it.

I mean to say, if I watch an anime through torrenting and fall in love with it, I'm gonna buy the DVDs just for the sake of having them, of seeing special features, watching it in an alt language, viewing with non-torrent-anime-savvy people, etc.

However, it's a startling discovery for me to find that fansubs (for the more avid fan, at least) can be much more enjoyable for the extra info they give on the cultural refs that are present. OHSHC for example, I haven't seen the DVDs but the fansubs are fantastic; every five seconds I have to pause and read the extra info just to get the joke ROFL but I like it that way because at least I know what's going on (and I love learning more about the culture)! Whereas on DVD you'd just be lost, OR in the English version the joke would have to be modified or the comedy simply completely lost in translation. :/

But a good example of a domestic DVD set worth buying: Princess Tutu. The extra features with the conversations between cast members, and between writers and translators showed me just how much effort was put into the production of that show during all stages; for me it was always clear that it had great writing and animation and all that, but to then hear just how much research the English writer had to do to keep up with all the references! It was incredible; and I never would have known any of that from fansubs, I'm sure.

So, in short, if they want people to buy they have to come up with a product worth buying. Obviously they don't have any control over the Japanese side of things, but if they stumble across a real gem that already has a lot of effort and production put into it, if they continue along those lines and help make the English version into something just as, if not more fantastic, well... it just sort of takes care of itself, doesn't it?
It's not really accurate to say that Crunchyroll's had some success just because they've received some financial backing. They've actually yet to really turn a profit.
I feel compelled to give you some c&c, because it looks like you tried to say something meaningful compared to 90% of the comments on this issue everywhere.

First of all, I think you hit it on the spot in a couple places, mainly in the Crux section.

But the rest of your essay has a lot of commonly-repeated misconceptions and inaccuracies. For example, the nature of anime itself is devalued in Japan; Some anime are little more than a marketing opportunity to sell more toys or manga, while others are legitimate effort to extend the medium and give it credibility. There is little to no difference in the treatment of these titles oversea from the usual licensees, and also little to no awareness within the fan community. The relevance of how Generation Y consume media doesn't go straight towards the problems traditional media suffers in this category as a large portion of the revenue often comes from a small group of fans.

The "quality" game also has changed recently due to Blu-Ray uptake.

The licensing game beyond home video has some serious logistical hurdles that will not likely to be easily overcome, at least in a way that sells enough to supplement what Japan is doing, overseas. In other words, merchandising will not float a video business unless you've got the next Pokemon or DBZ on your hands.

Tracker beading has its flaws, but let's not get into it.

Hm, 4chan huh, erected communities indeed.

The rest maybe later. Probably not.
Why buy something very cheap when you can get it for free with "communities" all over the net that support your ways?
Attacking the customer base is not a way to win new customers, and that's my main problem with the Bang Zoom rant. Further, the anti-fansub arguments use the same anti-download arguments of Big Hollywood and make the false assumption that 100% of downloaders don't buy legal products when that's far from the truth. However, actual numbers are impossible to know because learning the truth goes against the established storyline -- all downloaders are freeloaders.

The root of this problem starts in Japan. The Japanese have their house of cards system of making money on anime. That also impacts what can and can't be done in the U.S.
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