Are We Just Gravy? The Importance of American Market to the Japanese

Japanator’s Dick McVengeance issued a challenge in the comments of his response to my fansub controversy. He wanted to know if the American DVD sales of anime actually meant anything to the Japanese. Was the American market really important to the global anime economy, or were we all just gravy to them, just the icing on the cake?

It was a valid question, and one that I had been dealing with ever since I first said, “buy a damn DVD” all those years ago. Why did we have to worry about supporting the “industry” in America when all we wanted was the product coming out of Japan?

Well, being the industry fanboy that I am, of course my answer was going to be that we weren’t just gravy to the Japanese. I believed that America anime market was actually a critical part of their business over there.

My Take on Gravy

While it might seem like a bit of narcissism from myself about my homelands, this theory is based on the story ADV tells whenever they are asked the question, “Why didn’t you guys release the Evangelion movies?” ADV rep David Williams explains that studio Gainax was demanding a high price for the movies, a price ADV was not willing to pay. So Gainax gave the rights to the movies to Manga Entertainment, a move that Williams claims Manga has yet to financially recover from.

Why would Gainax demand so much money from the American company if they did not see American market as being very profitable? What would give them the gall to say, “No, we’re going to have to ask for a little more from you guys,” and risk losing the sale if America meant nothing to them?

And now take a look at the current situation with ADV. With their sales dramatically underperformed, we see Japanese companies actually revoking licenses for the American company even with series in mid-production or mid-release over here.  Clearly the American market and sales mean something to the Japanese, otherwise why would they proactively interfere with our business?

I believe that we grossly underestimate our value in the global anime economy.

However, even though I believe we are important to the Japanese, I do also acknowledge that Japanese have taken a very hands-off approach to our market and do not even think about us when they are creating new shows. My guess is that this was rooted back in the early days of anime, when the Japanese would just hand us the raw material for Astro Boy and Speed Racer, and we’d Americanize it to the point of becoming a part of our mainstream pop culture.

Even in today’s world, the Japanese would just hand over their raw material to an American company to handle everything after that. What did it matter if Funimation tried to stay as “pure” to the original story with their English adaptions or 4Kids “butchers” the show to sell more merchandise to the kids? For the Japanese, it all meant one thing in the long run – a big fat paycheck. It didn’t matter how those American elves were able to create it, the magical American money will come in and continue to fund the Japanese industry.

But now that the American DVD sales are dwindling, the Japanese are finally taking action in our market. I feel that we can see this within the past few months with the recent actions of Gonzo to combat fansubs and ADV’s aforementioned drama with their licenses.

But a theory is just a theory, and sure enough, my reasoning is contested by every other armchair economist out there in the blogosphere. So instead of just using my observations and logic to answer the gravy question, I used my press badge at Otakon to ask those with actual insight into the business. And while their answers were not exactly those I were looking for, I did learn some things that were still important to my case.

My Investigation

Do American DVD sales mean nothing to the Japanese?

“That is absolutely not true,” explains Robert Napton, marking director of Bandai Entertainment,  “The overseas sales is very important to the Japanese, and they do pay attention to it.”

How much of the money goes back to Japan? Well, Mr. Napton was not really able to tell me, mostly because the deals really range from title to title. But Lance Heiskell of Funimation was a little more dramatic at Otakon over this fact. While I didn’t have enough time to ask the question to Lance directly, he did say that “a majority of the DVD profits go right back to Japan” during several panels through out the convention.

But one thing that did seem certain to me was that there is a set amount of royalties that go into every single DVD sale, so according to Mr. Napton, “when you don’t buy a DVD, that is lost revenue for the Japanese.” And that’s something that the Japanese will pay attention to when it stops coming in.

Good, good stuff. Our DVD sales actually mean something to the Japanese. Now for the kicker:

Can the Japanese survive without the US market?

“Oh sure,” he tells me without hesitation. “They still have their domestic market to fall back on. The American revenue is not nearly as big as the Japanese.”

You’re not really helping me here, Rob… (^^;)

But of course, speaking to representatives from Bandai and listening to statements from Funimation was only giving me the perspective from the American side of the equation. These people faced the same bias and attitude to the current fansub situation as I do. So I spoke to someone with a different background but still very knowledgeable in this area – Ms. Chiyako Tasai of Kadokawa Pictures USA.

Ms. Tasai serves as somewhat of a liaison between Japan and America. Her company “licenses” shows from Japan, but then teams up with a traditional American distributor to handle every other aspect of the overseas production. This was the case with The Melancholy of Haruhi Suzumiya and Lucky Star. While Bandai served as the official distributor of these shows, you will still see the Kadokawa USA label on every disc.

She came to Otakon to give the American fans an exclusive look on such “new” shows out of Japan, such as H2O – Footprints in the Sand, Spice and Wolf, and Rental Magika. While none of these titles have yet to be picked up by an American distributor, she wanted to give the fans a “sneak peak” at these shows to raise awareness and interest in them.

Unfortunately, she was slightly unaware of the current situation with fansubs in America. At one point in the panel, she asks the audience in genuine disbelief, “You know about this show already? How?” So while it is her job to bring titles to the US, I feel that her views don’t come with the same bias as all the others.

So according to Ms. Tasai, just how important is the American market to the Japanese?

“The American market is big,” she informs me. “It is the second largest anime market in the world, second only to Japan.”

This fact shouldn’t be that shocking, but think about it a little more. While anime has been around for decades in the US and there has always been a small fan community surrounding it, the medium didn’t really “take off” over here until the Adult Swim Revolution eight years ago. Other countries like Germany and France had established their otaku community many years prior to our big awakening.

And yet we have somehow come out as the top overseas market for the Japanese in a relatively short amount of time. That’s pretty impressive.

But even with America being the second largest market for the Japanese, can their anime business still survive without us?

“Yes,” she predicts, again, much to my disappoint. “We’d still be able to produce the big series like Haruhi Suzumiya with just the Japanese market alone. But without that overseas revenue, we would have to cut out all the smaller shows. Series like Spice and Wolf will just disappear.”

And without even realizing it, Ms. Tasai brought to my attention the biggest Catch 22 we face as American otaku. One of the biggest reasons why fans turn to the internet for their anime is to download the smaller shows like Spice and Wolf. Their justification for doing so is that “it will never come out in America.”

But the reason why it won’t come out in America is because shows like that do not sell. The rare instances that such a show does get license, like ADV’s recent release of Air and Kanon, they bomb in America. When I first told Gia about my love of moé shows and how I write about its fandom, she told me, “well, moé doesn’t sell in America.” And she’s right. As much as the internet community loves smaller niche titles and downloads them, they rarely buy the DVD when the time comes.

And as a result, when the American anime DVD market collapses, these niche shows will be the first to disappear in Japan.

My Conclusion

So like I said, these answers weren’t exactly those I were looking for, but I do believe that I had found a very interesting insight into the importance of America in the global anime scene.

Are we just gravy to the Japanese?

Yes. Yes we are.

However, a good piece of the anime industry is only gravy as well.

There is the “meat and potatoes” of the core business that is mostly funded domestically. These are the mainstream titles that pay the bills and keeps the industry going.

And then there is the gravy, the fun “extras” that is funded by the additional revenue they receive from overseas. These niche shows might not bring in the big bucks, but they sure make a small part of the vast otaku fandom really happy.

Our money might not mean everything to the Japanese, but it does mean something. Because a part of every American sale will eventual go back across the Pacific, it is up to us, the second largest anime market in the world, to determine just how much gravy we’d like in our meal.

And I sure as hell don’t want to eat my turkey dry. ;-)

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