Bandai’s Change of Heart

So the list of my anime pet peeves might not be that large, but they are topics I’m really critical of and have spent way too much time writting about on this website and twitter:

1) DRM
2) Fansubs
3) Crunchyroll
4) Bandai Entertianment Inc. (BEI)

Now it would seem like the last point just doesn’t match with the other three, but on the contrary, they all boil down to one thing -

What’s wrong with anime on the internet in America and why it is not getting better.

Bandai first made it onto the list on the last day of the New York Anime Festival. As I wrote in that article, BEI’s Ken Iyadomi had dismissed the impact of the internet community in growing the popularity of the shows The Melancholy of Haruhi Suzumiya and Lucky Star, despite the fact that the entire audience there that day was there because of the internet. Later in the day, he made a ridiculous comment regarding Bandai holding off on switching over to high definition media formats due to the lack of “region locking” protection on them. He was also blasted by Chris Beveridge of the former AnimeOnDVD.com over that comment. It really wasn’t a good day for the company from the eyes of many anime commentators.

And then upon further investigation after the NYAF, I had read more information on Bandai’s venture into the legitimate download market when they created an online store to sell episode of their Eureka 7 series. It was a service similar to one already in Japan. However, the episodes were very expensive and were all covered with Windows-only DRM – number one on the aforementioned list of pet peeves. Not surprisingly, the service was a failure, and Iyadomi had also commented at NYAF on how Bandai was not planning on pursuing that distribution method any more after that.

Why was I singling out Bandai and Iyadomi in particular when it came to this attitude towards internet distrobution? It is because Bandai is one of the big three companies left in the American market right now, standing alongside only FUNimaition and VIZ media. Living off of a number of mainstream series – many of which that begin with a G and rhyme with “dundum” – they have manage to stay alive while two other giants have fallen in just the past year.

But unlike those other remaining big three, they have a strong partnership with the Japanese division of their brand name, and so they have a slightly higher power and influence to turn things around in this struggling time of fansubs. In order to save the American side of the market, the Japanese would have to change their policy on their side of the Pacific, something that the Japanese are quite hesitant in doing. A company like Bandai is in the best position to pressure this change over there.

However, it appeared that instead of bringing American changes to the Japanese side of the business, Iyadomi was bringing that Japanese hesitation over to America. That is why BEI had earned a place on that list of mine.

And so I come to the subject of Bandai Visual USA. This company took this Japanese ideology to new heights when they entered the market. Their strategy was “if it works in Japan, it will also work in America,” and believe me, it was a disaster! Unlike in America, where a bilingual DVD of 4 episodes sells for under $30, BV USA sold at the Japanese standard of a 2 episode DVD for $50 each. To further add to the ridiculously, these titles were all very niche in the market (such as the Galaxy Angel Rune series) and didn’t even include a dub track for such a high premium.

It was an insult to the fans who really wanted to buy these series, and almost every review site out there advised their readers to either rent these titles over Netflix or skip them all together. No American should have to put up with this.

BV USA was a sister company to Iyadomi’s BEI, and while they did share the same unique brand name, they were not directly connected to each other. So as much as I wanted to include the absurdity of Bandai Visual’s DVD releases in my laundry list against Bandai Entertainment, I just couldn’t.

So it wasn’t a big surprise that Bandai Visual USA fell completely within a couple of years of it’s inception. The remains of this pathetic company were absorbed into its big sister, Bandai Entertainment.

However, a big surprise actually came out of this whole mess, and it finally hit me at Otakon. The failure of Bandai Visual USA was probably the catalyst that Bandai Entertainment needed to finally get their act together and begin changing the American market.

At their first industry panel on Saturday morning at Otakon, Iyadomi and his crew spent a good amount of time talking about the new BV USA, which was now going under the branding the “Honneamise” after the series Wings of Honneamise. The slide they presented about this branding was so jaw dropping that I had to snap a picture of it.

To clarify what’s in the picture, here are the four big changes BEI has made as a result of BV USA:

1) Series being released simultaneously in the US and Japan.
2) Packaging used in the Japanese release will be used in US
3) Lower price in the US than in Japan, keeping within their standard market price
4) Dub track included in some titles

The first, second, and fourth point demonstrate a new “global release” ideal and strategy. If you have been following my site for the past few months, then you will know that I believe the ultimate solution to the fansub problem is going to be global release strategy. So to hear this idea being thrown around by Bandai was a very nice surprise for this commentator.

Now, my global release plan comes in two stages. First, there needs to be a “global TV broadcast” of the series. This involves a show being on Japanese TV while an English subtitle version is either streamed online or offered as a paid download at the same time, like what GDH is currently doing. When i asked about this aspect of a global release at the Otakon panel, Iyadomi responded that this was not part of the plan for the immediate future. But he also did not indicate to me that this idea was entirely impossible either.

However, after a global broadcast, you need to begin releasing DVDs in both markets at the same time. With the current model, a DVD release is produced, packaged, and marketed to only the Japanese market first, and then it is passed off to an American distributor to repeat the same process for the overseas audience. Because of this, American DVDs usually end up being released years after the Japanese release.

The problem that the market now faces because of fansubs is that both the Japanese and American audience end up watching a new show at the exact same time. When the Japanese DVD becomes available, the show has a lot of buzz surrounding it, but when the Americans get a chance to buy it, it has become yesterday’s news. This is why it is critical that the Japanese try to sell to that American market as soon as they can. Otherwise, they will lose those DVD sales and their primary source of revenue.

For the most part, Bandai has been trying to reduce the turn-around time recently. Three of their most popular titles, The Melancholy of Haruhi Suzumiya, Lucky Star, and Gurren Lagann, all ended up on American store shelves within a year of their original TV broadcast. However, it wasn’t even reviled that these shows would appear in America until after the series had finished airing on Japanese TV. By that point, the American audience had already moved on to other new shows online, thus killing whatever buzz was going for them at that point.

By Bandai preparing to globally release a few of their “Honneamise” branded series, they are setting the foundation of what I feel needs to be the next evolution in the anime market. The fact that the US and Japan now fall under the same region for Blu-ray makes it a lot easier to create just one disc to be sold in multiple markets, and my impression is that Bandai is going to do just that. They are creating just one type of packaging for each series (point #2), producing all the desired features needed, like an English dub (point #4), and then releasing that one product to both sides of the Pacific at the same time (point #1). That is brilliant plan, and every anime company should be doing this.

But I think that point #3 is possibly the biggest shock of them all, because after all, nothing is more important in marketing and business as the all mighty dollar… or yen in this case. The price difference between the two anime markets is what killed BV USA and was what sparked Iyadomi’s controversial statement at the New York Anime Festival. You cannot sell DVDs in America at Japanese prices, but at the same time, you run the risk of Japanese importing American DVDs at a cheaper price instead of purchasing the DVD domestically.

So doing a global release while still maintain regional pricing is a big risk on Bandai, and trust me, they are well aware of it. They brought up the “we’re selling the same disc cheaper in America” point many times through out their panel, and even underlined specific price differences in their PowerPoint presentation.

This is completely unprecedented and if you would have told me that I’d hear such a thing coming out of Bandai, I would have said you were crazy. And now there are other folks inside of the industry are also saying that it’s a bad idea. In their own panel on Sunday morning at Otakon, ADV’s Mike Greenfield echoed Iyadomi’s NYAF comments when asked about ADV going Blu-ray. Greenfield even mocked the Sony corporation for putting the US and Japan in the same region.

But this is no laughing matter. What Bandai is doing might be crazy, but it is the right thing to do. When you combine this information with the amazing panel Bandai held later that night (which Japanator’s Dick McVengeance wrote about earlier this week), it is safe to say that Bandai goes down as my winner of Otakon 2008. No other company even came close to the impact BEI made on me that weekend.

Not only has Bandai been crossed out of my list of anime pet peeves, I’m going to say that they are the company to watch right now. By taking into account all the criticisms and failures they have experienced in the past, they are going in amazing new directions. I can only hope we continue to hear good news from them in the future.

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