Active Anime did a candid interview with FUNimation Entertainment's CEO Gen Fukunaga about the state of the industry, fan reactions, and about their future properties.
State of the Industry Several domestic anime distributors have voiced their concerns on the state of the North American market and the effect that digital distribution and fansubs have had on DVD sales. What are your thoughts on the current state of the market, and how does FUNimation manage to keep expanding their catalogue even when faced with such challenges? Well, it is true that the DVD market has been dropping in the last couple of years, and we’re not in the best level per SKU as we would like. Fortunately, what we are seeing now is the stabilization of the number at this point of time. The number seems to be stabilizing, and the issue really is not bad content; in the entertainment industry content is king, and the content is still good. It’s really caused by what you said, and we feel the illegal pirating of content occurs in the time frame between when a title is out in Japan and when it can be made available to the U.S. market. And there is always the question of pricing. Some people will argue as to whether or not Bandai (Visual U.S.A) is setting DVD prices that are right for the rest of the market. The good news is the fan base is growing and the content is there. Therefore, it’s just the way we have to monetize differently, and that is all. The DVD sales are not going to account for 95% of your total sales; you have to start making money on your own digital distribution mechanism, your own broadcast mechanism, and other ways to monetize the customer base. Now, the problem is still there that monetization and other methods are not making up the difference against the DVD drop. Right now, we are at a period where we feel there’s a lot of upside opportunity as other methods really catch on, and with the DVD market flattening we kind of see anime with a pretty good growth potential over the next five years. I think the doom and gloom is probably over with, but that is our general feeling about digital piracy and some of the causes of the state of the market right now. Now, why did we make it through? Well, I think part of it is having a couple of the right titles at the right time and having some strong titles help us through the tough times. Though management of our cost and resources made some difference, I think our sales - we were able to beef up the last couple of years through our partnership with our new parent company Navarre - have really helped, as well. It provided us nationwide distribution and better inventory control that kept us in reasonably good financial shape, so we have actually seen increased profits every year for the last several years. FUNimation has been very clear on its stance regarding fansubs of licensed properties, but how do fansubs of unlicensed series affect decisions around acquiring those properties? Are you more likely to shy away from licensing a series if it has already seen a wide distribution via fansubs, or does the overall interest in the series actually serve as a way to gauge the potential market interest? I agree it is a double-edge sword. It would be nice to know which fansubs are more popular than others are and can be safely dubbed into English, but we are finding out that polls out there on fansites are not correlating into sales at all. So, if you are overly dependant on a lot of fansites for titles other the ones that have broken out like Full Metal Alchemist, the ones in the middle, regardless of fansite ratings and polls and the number of downloads, are not correlating into sales. Actually, from our point of view it’d be much better for us if we could stop all the fansubbing. We are definitely less interested in a title if it is out there illegally and free. So yes, it affects our decision. How will industry handle the strain/pressure if any of the other major distributors pull out of the industry? To be honest, I only see two other distributors left in the market: Viz and Bandai. I don’t see any indication whatsoever that there are any problems in those two companies. Those are the two, actually the three (FUNimation), major distributors in the U.S, and nobody else should be considered as a major distribution company outside of we three. It will be a three-market environment I think. I think the biggest question for us is what’s going to happen if anime keeps getting more popular and Warner Brothers decides to jump in and throw a couple hundred million dollars into it.
Fan Reaction How much weight do you place on fan feedback? Does fan input play a direct role when considering which properties to license? We are big on market research at FUNimation, and we are looking at fan reaction in JAPAN as well in America. We are constantly looking at data, and it does have an effect. The tricky part is to get a mathematical type of precision correlation; there’s a lot of subjectivity thrown into that decision as your looking at the data. Fortunately, with our many years of experience in doing this, we figure out how to correlate it through various other ways of modeling the fan feedback which allow us to hone in much better on what titles are going to work and not work. The flip side, which I hate, is that we have to buy titles earlier and earlier before there is any fan feedback. A lot of people (studios) are asking for bids on titles four or six months ahead of their release in Japan, and that kind of defeats the whole purpose. FUNimation is very public in its support of North American anime conventions. How important do you think it is to stay connected to the fan community? What are some of the ways you feel FUNimation outshines some of its competitors in this area? Well, we certainly go to way more conventions than anybody else does. I think the average is four for most of the other folks, while we go to twenty plus conventions a year. We really feel that it is very important, and we send huge team of people to a lot of conventions so that a lot of people in our company can get the feel of the fan, what they’re about, and what they are thinking. We feel it is a very important part of our business. We are trying to expand on those kinds of things not through just conventions. For example we are now working with libraries – where hundred of libraries were trying to sign-up for anime program inside their libraries – to get feedback from showings, so we are trying to go further with this whole thing.
Future Properties Recently, Amazon Japan announced that the majority of their top Top 10 Blu-ray titles sold were anime, and FUNimation is one of the companies that started to distribute titles on Blu-ray. Has your company seen success with the handful number of titles recently released on Blu-ray, and do you plan to move your entire library onto Blu-ray or only a select few titles? Yes, we’ve seen success, and definitely to the point that we’ve already invested in authoring all of our Blu-ray titles in-house. We bought our own equipment over the last few months, hired people, and we are doing everything in house. Yes, our long-term goal is to replace standard def with blu-ray, but that is being hampered by various issues with licensors that are out of our control. We expect to convert all of our strong titles into Blu-ray. Unfortunately, we might not be able to do that on titles that didn’t sell well at all in standard def, but, since most of those titles don’t fall into that lower category, I think a lot of them pretty much make Blu-ray in the next couple of years. Given that we previously touched upon the current state of the industry, how much has FUNimation had to adapt its licensing plans as a result? Does the success of currently licensed properties dictate the types of series you decide to localize, or do you still have the freedom to go "outside the norm" and bring fresh, new series to the North American market? Well we are bringing fresh, new series, but the licensor has to be cooperative by setting a very, very reasonable advance because it such a high risk in today’s market. Unless that advance is near zero …to be honest with you …just for us to dub a show, launch it, and market the launch is a half a million investment. So, I’m already in a project for half a million, and the licensor asking for an additional three-hundred thousand or five-hundred thousand advance on a risky title is way beyond financial reasoning, to be honest. Because of the high cost of dubbing and launching, we are taking a risk. The advance has to be very reasonable, and, so far, most of those risks do not pan out. Given the company’s success with anime, has any thought been given to expanding the FUNimation lineup to include localized manga or video games? No, right now we feel there’s still a lot more opportunities with sticking with the anime phase. The area that we’ve been expanding into is live-action, Japanese live-action movies, but, since not many of those are made, it is not a huge expansion with only a few titles here and there (laughs). But we feel that there is a lot more opportunity in doing some of those other initiatives we’re talking about: the channel, the social networking, the VOD, and other things. We are not really looking at manga or video games. We think video games are a great market, but it’s so expensive to produce, to launch a title, that we would rather sub-license and have a partner do that for us. In the US based manga situation, there’s no indication that you will succeed or not, and that is a pretty risky business. I think eventually, if we need to create our own intellectual properties and our own concepts, then that’s a great idea and a great message to start testing ideas because it is inexpensive compared to making an anime pilot, but still that whole business is too risky considering the other opportunities right now. With the recent acquisitions of titles from both Geneon Entertainment & ADV Films libraries, FUNimation is in a position to take a considerable lead over the other major North American anime distributors. How will holding such a large market share affect future plans for the company? Now that FUNimation, VIZ, and Bandai can cooperate more on industry specific issues (such as anti-piracy for example), I think that helps. We now have a solid group of solid companies working together in this situation. All of us are more long-term focused …actually all three players are more long-term focused kind of companies, I believe, and so having three long term oriented companies helps us to think or to actually cooperate together to make the anime industry stronger. From our position, we really have to step up into a leadership kind of role in a sense where we have to invest money in things that don’t have a short term payoff, and all of this goes back into those things like the FUNimation Channel, which keeps bleeding money year in and year out you know (laughing), or social networking, or any of these initiatives that will actually bleed money for years while we try to get it going. But at some point in time, this market has to have a strong anime channel or some sort of exposure mechanism; that is really needed. It’s the same as social networking and things like that, but it has to be anime centric. Unfortunately, they take lots of investment dollars that don’t payoff at all for years usually, and now we may be in the position to finally to justify this expense versus just having more of a fragmented market that we were all trying to compete for the next dollar (laughing).
Some of the ADV Films titles picked up by FUNimation have already had their first few volumes released. Will FUNimation completely redo the already released volumes (ala One Piece), or will the company simply begin producing the subsequent volumes with the same voice actors?
Our ideal scenario is that we are going to work out a deal with ADV to finish up the production of any unfinished series not only with the same voice actors, but also with the same staffing in general to finish up those series. If they have been partially released, the most likely scenario (if the title is strong enough) is to go ahead and finish the volumes one at a time. But if the TITLES AREN’T STRONG ENOUGH, meaning retailers won’t support more volume of those titles because the first volumes are too weak in sales, then we have no choice but to go to season sets or box sets – the retailers are the ones that will dictate that to be honest with you. And, if we ever do get back into the old volumes, we would probably re-author them and release new volumes of that older catalog, but it is unlikely that it will happen because it will probably go directly into box sets/slimpak. Then, there won’t be a reason to go back to single volumes.
The North American anime industry is very competitive, and several companies are often vying for the same series. Was FUNimation able to use this opportunity to acquire some titles it may have missed out on originally?
Absolutely, absolutely! We missed out on Devil May Cry, we missed out on Hellsing Ultimate, we missed out on Ergo Proxy, and we missed out with Coyote Ragtime. Those are strong titles we missed out on that we are very happy to get. But one of the issues was that the advance got too high on some of these titles, and it created some of the difficulties in the market. We just didn’t bite on those high advances in those cases, and we lost out. Now, in hindsight, we’re actually fortunate that we didn’t bite on those high advances. Gen, thank you very much for your time, and is there something else would you like to say to the fans? Well …first, I know that our fans are chomping at the bit for us to publish the titles that we recently got from ADV and Geneon as fast as possible. That is what we are aiming to do, but we are not going to do a low quality release just to get them out. Hopefully, people will understand that. We are really appreciative of the fans because they are the only reason why we exist obviously (laughing). We really love the enthusiasm of the fans, and hopefully they’ll understand that one of the biggest issues that causes problems in this industry is the watching of illegal downloads. Hopefully, they might help us help the industry. If they could do their part to help the industry by trying to avoid illegal downloads, we will be very appreciative.
Interview conducted by Rommel Salandanan on July 4, 2008 during Anime Expo
Questions by Josh Mohs and Rommel Salandanan
Active Anime would like to thank FUNimation Entertainment for the interview oppurtunity
Only registered users can write comments.
Please login or register. Powered by AkoComment Tweaked Special Edition v.1.4.6
AkoComment © Copyright 2004 by Arthur Konze - www.mamboportal.com
All right reserved
|
