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Anime Taking Some Punches

15 Jul, 2005 By: Chris Tribbey

Fans found lots to smile about at the Anime Expo.

ANAHEIM, Calif. — If the thousands of fans at the recent Anime Expo here looked like they were dragging their feet toward the end, there are a few hundred reasons why.

More than 100 events, from manga and DVD industry panels, to art shows and dance lessons, to video games and voice acting classes, were crammed into four days. And that doesn't include the screening of more than 200 anime movies and series, the early morning dance party, the 24-hour manga library or the convention floor where more than 100 booths were set up, vying for the consumer dollar.

Organized by the Society for the Promotion of Japanese Animation, the Anime Expo is the largest anime U.S. trade show, the hotbed of new license announcements and the place to be seen if you're an anime Cosplayer (think of Halloween dress-up, every day of the year). In its 14th year, the expo attracted a record paid crowd of nearly 28,000 to the Anaheim Convention Center, according to show organizers. In the words of SPJA convention chair Darold Higa, “We have built an anime city.”

Challenges to Continued Growth
While it's a great time to be an anime fan — a dozen new titles to choose from each Tuesday, with a growing presence of the genre on TV — industry representatives are feeling the pressures of an industry that's seen tremendous growth the past few years but is starting to level off.

Every year since 2001, more than 30 new titles were announced for DVD by the studios at Anime Expo. In 2005, about half that number of new anime titles were announced. ADV Films has constantly announced a dozen new titles at the expo, until this year, when it announced just one. According to the weekly DVD Release Report, 2004 was the first year fewer anime DVDs were released into the market compared to the year before. This year, only powerhouse Geneon is on target to release more titles than it did last year.

“The marketplace is saturated,” said David Williams, DVD producer with ADV Films. “We don't want to flood the marketplace and put out more anime than the fans can buy. The retailers just can't shelve it all. We need to go back and rethink our release schedule.”

In addition to oversaturation, other issues weigh on the minds of industry representatives: Bootlegs are too easy to get via the Internet, and the price to license Japanese anime has ballooned.

Anime DVDs are competing with all things mainstream, and more than one company rep said they've received far too many returns from retailers this year. ADV Films laid off dozens of employees earlier this year, and media giant Navarre saw its stock plummet after purchasing Funimation, and just last week lost its CFO, who resigned.

“It's a crazy, crazy time in the anime industry,” said Jerry Chu, marketing manager for Bandai Entertainment. “For what it is, it's still a niche market.”

In fact, anime DVDs account for less than 7 percent of the releases in the market since the format's inception, according to The DVD Release Report.

The price to license even ‘B-' and ‘C'-list titles is proving too prohibitive for some. Titles that screened in theaters — Geneon's Appleseed and Dreamworks' Innocence stand out — and big-name works — Manga and Bandai's “Ghost in the Shell” TV series and anything done by director Hayao Miyazaki — sell well. But lesser-known works aren't flying off store shelves like they once did, or at least not well enough for suppliers to make a profit.

“A title that cost $2,500 an episode a couple years ago would now cost $20,000 or $25,000 an episode,” said one industry head. That's pricing some companies out of the domestic anime business.

“Now, when it gets to be a bidding war for a title, we can't compete,” said Tokyopop spokesman Matt Nixon.

“The pie wasn't as big as we thought it was,” said Funimation senior brand manager Lance Heiskell. “The more the price per episode goes up, the more you need to make to break even. Add on to that the competition for shelf space, and now you have to be a little more careful [with what you license].”

Quality over quantity was a recurring theme among industry representatives.

Piracy An Issue
Even when companies land a hot property, studios find themselves dealing with Internet piracy.

“You can get an episode of a show that aired in Japan, subtitled, on BitTorrent two days after it airs,” said Shawne Kleckner, CEO and president of The Right Stuf International. “Now, when I release the DVD, how am I supposed to sell it?”

The companies are finding ways to fight bootlegs by offering items with DVDs you can't download. English dubs, high-quality script books, action figurines, DVD extras beyond previews, T-shirts, soundtracks and art boxes that fit the entire collection of a TV series are now almost expected items with any ‘A'-list anime title.

Perhaps the biggest problem anime companies are facing is the relative stagnant growth of the fan base. The genre is waiting for another “Pok?mon” to reel in more American fans beyond those already hooked.

“We need to reach out to more than just these core fans,” Bandai's Chu said. “A lot of companies aren't doing that right now.”

Nobody at Anime Expo predicted the demise of the domestic anime industry. But industry executives did predict more than one company will bow out of the business.

“Anime as a genre will be around; it's not going anywhere,” Kleckner said, gesturing at the thousands of fans at the convention. “But in the next year or two, there will be some struggles.”

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