Robot 6

Greed and giant robots brought down Bandai

The big news in anime and manga circles last week was the announcement that Bandai Entertainment will stop releasing new anime and manga. The current catalog will stay in print, and the company will focus on licensing its products to other companies, but three of its five employees have been laid off.

Like manga, the anime industry in the U.S. has been troubled for a long time, and it’s tempting to blame this on piracy. Indeed, that’s exactly what Charles Maib of Kotaku did. Maib admits he doesn’t follow the anime and manga scene much any more, but that doesn’t stop him from delivering some strong opinions. What Maib does know is what it was like to be an old-time otaku, when you made your own fansubs with love and VHS tapes and chewing gum and chicken wire (which may have been technically illegal but wasn’t harming the industry at all), and also how much work it is to make your own content. Maib himself is a content creator, and he has a long paragraph where he explains all the steps you have to go through to make an animated cartoon.

And nobody seems to care. “Consumers have become selfish monsters who are strangling an industry that is already on its knees,” he says, and he points the finger squarely at fansubbers and other pirates, and those who avail themselves of their services:

We created the beast, and we continue to feed it. We’ve reached the point that it’s not uncommon for major websites to publish links to pirated content. Pirating has gone mainstream, and unless we as consumers have the fortitude to reverse our actions, allow the market to work as it should, and develop the patience to wait for new products to become available in our region, or even not become available, the face of the internet and digital media will change. It’s inevitable.

First of all, this is not true, as those of us who have followed the anime and manga industry are well aware. Piracy has not gone mainstream. It exists, true, but it is not mainstream. In fact, the only major website I have seen that has knowingly published a link to pirated content is Kotaku itself, where another writer posted some scanlations of Skyward Sword—no, I’m not going to link to it—and got scolded it for it in the comments section. People do read scanlations, but as I pointed out a few days ago, they prefer not to, and if they really like the book, they buy it.

Also, I like how Maib thinks fans of a property should “develop the patience for new products to become available in our region.” Sorry, the days of clipper ships are over, and anyone who thinks they can enforce regional controls is a chump. Anime blogger Justin of Organization Anti-Social Geniuses sums up neatly the reality that anime distributors ignore at their peril:

For better or worse, we’ve been moving in a “We must get it now” mode for the past couple years, and the days where we A)patiently wait for titles to come for us and B)buy actual copies of series despite their price are over.

If it’s out there, and people want it, they will get it, from the publishers or from the pirates. Instead of blaming the consumer, publishers should be blaming themselves for not making the material available.

Over at Anime Diet, Michael Olivarez has a radically different take, and one that I think makes a lot more sense: The problem is structural. It’s a long and eloquently written argument, but here’s the gist: Most anime isn’t good enough to justify the cost of distributing it via DVD and Blu-Ray:

Thus comes the fatal flaw in the anime as a hard media commodity scheme. The very idea that we [as] consumers are asked to pony up roughly 4-6 dollars per episode for a show that may not be worth a second viewing comes at odds with the movie collector’s mentality. The people ultimately know what they want, and will pay for it. The problem comes when we are inundated with the latest, and are essentially given no choice in between. When this happens, and our homes are buried with bricks of material that we cannot even give away- it presents a serious problem.

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Olivarez is talking about anime here, but the same is most definitely true of manga. Back in the boom days, there were a lot of titles that simply weren’t worth ten bucks, or the space they take up on the shelf. For a representative sampling, check out all the manga that are selling for a penny on Amazon.

Olivarez also mentions the choice of material, a point amplified by Rob Bricken of Topless Robot, who says that parent company Bandai Japan not only forced Bandai Entertainment to market 20-year-old Gundam anime, they forced BE to pay Cartoon Network to run it. That certainly rings true; much of that penny manga I just mentioned was translated not because the localizers were stupid but because the Japanese licensors forced them to take it—if you want this, then you must take that. Furthermore, the license-holders frowned on not finishing a series, even if it was tanking. One doesn’t hear as much about this any more, so either the licensors aren’t doing it as much or the U.S. publishers, of whom there are fewer now anyway, have stopped complaining about it.

While most manga publishers are independent companies, and can walk away from a license if it has too many conditions, Bandai Entertainment had to take orders from its Japanese parent company, Namco Bandai. Anime News Network interviewed Bandai Entertainment CEO Ken Iyadomi, who was clearly frustrated with the decisions coming from the home office:

“The pricing range for our products kept dropping in Western countries, and people tended only to buy sets with very reasonable prices, which we understand is what fans want, but it lead us to a different strategy than what Japanese licensors wanted,” he remarked. “So we always had a problem [with licensors wanting something different than what consumers wanted].”

What it comes down to is this: It doesn’t matter how much it costs you to make a product; you can only charge what the market will bear. The way out of this is to offer the iffy manga and anime at a low cost, which generally means digitally, and put the premium content onto physical media at a premium price. If people just want to get their weekly fix of some second-rate anime, but don’t want a special edition to treasure forever, well, let them watch it via streaming media, sell some ads, and make some money you wouldn’t have otherwise. This also solves the other structural problem in the anime industry, the delay in getting shows to foreign markets, because digital is obviously faster than physical distribution. Just as water seeks its own level, consumers will find what they want. The only question is whether they get it from publishers or pirates, and publishers have a lot more choice than they realize. Most of the people watching bootleg anime won’t pay $30 for it anyway—that’s not a lost sale. But put it online, throw in some ads, maybe paid memberships for the hard-core fans who want higher quality and fresher content, and now that anime is making money from new viewers.

Smart localizers are catching on. Crunchyroll, a former pirate site that has gone mainstream in the sense of going legit and paying its content providers, seems to be doing quite well with streaming anime. Digital Manga has formed the Digital Manga Guild, which publishes enjoyably trashy yaoi manga digitally for less than the cost of a print volume and keeps prices low by using amateur translators. Viz is making the boldest move of all, putting Shonen Jump magazine online at a relatively low price and posting episodes of the top six series in within two weeks of their Japanese debut. The speed scanners will still beat them to it—for now—but despite what Maib seems to think, manga and anime fans are basically decent and like to support the creators. Given a legitimate, inexpensive alternative, and a bit of education, many if not most will do the right thing.

Go back and look at that Tokyopop Facebook page I linked, and read the comments. There is a lot of tension between digital (by which they all mean bootleg) manga and physical copies. Readers use digital to read manga they can’t afford or that is not available in their country. Often if they like a series, they will buy it in print. This is exactly how people consume media nowadays. They sample, then buy. They don’t buy everything they sample, but if the samples are cut off, they won’t buy any more—and they might buy less. This is the new reality, and all the scoldings in the world won’t bring back the good old days. By ignoring this, and by charging champagne prices for a beer product, anime and manga companies are sinking their own ship, and they don’t need the pirates to do it for them.



Point blank, people will pay for content as long as it’s A) quality product B) affordable C) convenient.

It should be noted that the Gundam example was not unsuccessful. The spinoff Gundam Wing was incredib;y popular and the Gundam series as a whole have been so successful that Bandai Visual now does international distribution of Gundam Unicorn on Blu Ray directly. Mobile Suit Gundam may not have been a huge success on Cartoon Network, but all of the series and movies have been quite lucrative domestically.

Moreover, it is also impossible to overstate what a SciFi, not just anime, powerhouse Gundam is. It is it’s own industry with innumerable series, movies, ova, comics, theme park rides, hell even the 1/1 statue. Mentioning Gundam as part of Bandai’s downfall is kind of odd all things considered.

It’s a shame to see this happen to such a large company though.

It’s becoming incredibly frustrating to be an anime/manga fan in the US because I have watched publishers and anime licensors dropping like flies the last few years and the result is less and less content that I am able to purchase and enjoy. I have no interest in reading manga (legitimately or otherwise) online and I prefer to have my anime in a physical DVD form if possible as well. And what is being released here now has been interesting me less and less because there is an attitude from the licensors of “must get only the newest projects” at the expense of any relatively older show or manga I may want.

I have blamed some of the US companies (*cough*Tokyopop*cough*) for their own demise, but the more I read about the overall situation, the more blame I am beginning to lay on the Japanese licensors who seem to have unrealistic expectations about what foreign audiences want and what we will pay for. I am scared at the emerging business model of Japanese companies like Aniplex releasing the anime here themselves in premium-priced sets because I don’t want to see anime in the US recede into being a market only for the handful of people willing and able to pay $200-300 for 12-13 episode collections. I am very much liking the model that domestic companies like Funimation and Sentai are starting to work toward, which is posting their licenses online for people to view and sample, and then releasing the show in a reasonably priced DVD set later on.

I agree with this article, pretty much. Bandai USA was also wed to the concept of selling anime in 4 episode DVDs, one assumes for maximum profit, rather than moving to the half sets or full sets being released by other publishers.

Absolutely true. Television anime is just that, made for TV. How much does a TV viewer pay for TV content? The cost of a monthly cable plan and ad eyeballs– which translates to a few CENTS per episode, if that. Both in Japan and in America, permanent television media is a collector’s item, something you buy because you liked watching the show in its transient form and want to collect AFTER becoming a fan. Ultimately, this business plan– the idea of only selling transient media as permanent– makes no sense. It’s equivalent to Japan releasing all of its anime on OVA with no manga or anime predecessor, and expecting people to buy it.

So we’ve got another one blaming the fans for running things into the ground? Classy.

DVD and book sales are down all around. Anime and Manga aren’t special on that front.

Trasy yaoi manga? Harsh.

I guess I like the stream then release physically a bit later. They should use it to determine if the series should come out, even if its depressing that something on stream doesnt come out (Sacred Seven…). I feel like I became a anime fan too later, if only I had watched Naruto before late 2009 and fell i love with anime earlier.

Just because a selection of large sites or sites that try to assert themselves as an authority of news don’t link or discuss piracy doesn’t mean it isn’t mainstream. Piracy is deeply entwined in Western anime and manga culture and its community(s). Links and/or discussion can be found all over on many sites including those that are neutral or don’t specifically relate to either buying or piracy.

Preference of how one gets their anime/manga does not indicate if something can be deemed mainstream and the many of people who participate in Tokyopop’s Facebook page are past costumers who bought print.

Much of this is very misleading as it plays on the multiple meanings and usages of the word mainstream.

HCK (Charlie Maib) here. First off, I’d like to say how happy I am that my Kotaku piece has a lot of people talking and thinking. That’s what the article was designed to do.

Many people misconstrue my comments, believing that I place Bandai’s demise squarely at the foot of piracy, and that’s not true. Dealing with various film companies in Japan, I have seen first hand how the business practices of a company that is successful in one market can cause it a great deal of trouble in another. Having negotiated rights for titles released in Japan to be released in America, I understand the mentality of where Bandai was coming from in there pricing schemes, as well as the frustration their American partners must have felt. Many Japanese companies want to be successful in America, but they treat the American market just as if it were the Japanese market; when in reality the two markets differ as much as night and day.

I think one thing the average consumer doesn’t understand is that while the American market tends to price things based on demand, the Japanese market revolves around fixed prices, meaning in Japan it doesn’t matter how much cost went into producing a specific product, the place will be X simply because that price was decided upon by the distributors and the end sellers. Traditionally, Japanese companies don’t put a great deal of faith in their American counterparts, which leads to bottlenecks, frustration, and failure.

I do, however, believe that piracy plays a bigger role in the decision making process than the average person would like to admit. When discussing the prospects of getting a Japanese film product to North American shores, the issue of piracy always comes up. I find myself repeating the same things in these meetings:

1) To sell your product in the US, you’re going to have to lower your price.
2) Americans aren’t going to just rip your DVDs, upload them, and destroy the demand for your product.

See, piracy doesn’t just impact a region… it’s a worldwide thing. Why should the average person pay for a product that they already have, and that they got for free? Why should they repurchase something that cost them nothing? I’m not talking about the core fan here, I’m talking about the average consumer.

Truth be told, we could go around and around for days on this subject. Yes, it’s true that piracy did not bring down Bandai; but it was a factor. Why wouldn’t Baidai point this out themselves? Just take a look at the venom being slung when someone brings up the subject… 43,000+ reads on Kotaku, 740+ comments… the article has been re-tweeted and republished, until it seemingly has a life of its own. All because I said piracy was bad and it was having an impact on the market. Piracy is the elephant in the room for anime and manga.

I’m not going to say I support online piracy. I ‘d rather buy season sets or volumes if possible. However, I think if certain bad decisions have not been made by companies on both sides of the Pacific such as Tokyopop, Geneon, and Bandai, perhaps the anime and manga industry would not be in this position right now.

Looking at the articles on the demise of Bandai Entertainment, I can’t help but wonder: do any of the anime companies support SOPA? The way I see it, any media company who is generally affected by online piracy is willing to find ways to break the Internet because to them it is that or lose more money to online piracy.

Brigid Alverson

January 10, 2012 at 3:08 am

@Karen: Thanks for the insight. I admit, I’m not a big Gundam follower, but I thought that article had some interesting observations about Bandai’s business practices, things the average reader (myself included) would not know.

@NoGoodTuna: I meant the term “trashy” in the most affectionate way—as something you would read once and enjoy, but not want to keep as part of your permanent library.

@Charlie Maib: Thank you for your comment, and for being so gracious about it. Your comments about the Japanese side definitely ring true.

Piracy absolutely exists, and I think the smart company accepts it as a pre-existing condition of the market and finds the right balance of price and convenience to maximize the number of paying customers. People will pay for something they could get for free—they do it all the time with comics and manga, actually. My point about Tokyopop was precisely that, that people read the stories online and then, if they like them, seek out the books. They won’t stop sampling online, though.

Also, most adults know that piracy is wrong, if only because people are always arguing vehemently about it, but I find a lot of teenagers have no clue. They don’t even realize that bootleg manga sites aren’t legit. I think if the companies want to do some education, that’s the group they should focus on.

“Most anime isn’t good enough to justify the cost of distributing it via DVD and Blu-Ray:”

Yes. This. I’ve been a diehard anime fan for, jeez, 17 years now and own enough anime VHS tapes and DVDs to fill a large closet, yet 95% of the anime I watch these days is via Netflix streaming. There’s just so little that I would want to keep and rewatch, although when a series comes out that *is* that good (Haruhi, Spice & Wolf), I have no qualms about paying for a copy to call my own.

@Brigid: And some adults know that some things aren’t black and white in wrong or right. See Ming Choi’s comment, too.

I agree and disagree with a lot of your post. It’s interesting to hear another side of this, but I think economics plays a major factor and, when given the option of free, people go with free instead of paying. I notice you actually to bring in basic economics and I applaude that. One thing I think people don’t recognize often is that Japan’s set up anime is insane. A wake up call is needed for that.

Please note that I am rehashing a lot of arguments about anime series (I’ve reposted comments like this several times over), so a lot of it is probably directed at anime, not manga in specific.

At the same time, the same economics state that the demand for a free product is high. Given knowledge (and slight variations for morality, ease of finding illegal torrents, and more), people will almost always pick free over pricing. This wouldn’t be a concern if people did this, then bought their product if they enjoy it (a common rallying point of the industry). Anecdotal evidence isn’t great, I admit, but I have seen so few examples of anyone, teen, middle-aged man, or lifetime fan, who will stream, then purchase. The common trait seems to be one of free watch and drop…which is something the industry can’t fix and does start to become the onus of the fan.

An interesting thought experiment with your “print vs pixel” debate is the cost. People may enjoy reading books over reading pixels, but is the difference enough to put money and wait time (getting to that later) on. I’m someone who used to pirate (ended about 2 years ago). My personal thought process was one of “Well, I like having DVDs, but it’s not worth X dollars to buy…” and I think that needs to play a part in any analysis. It, in a less quantifyable sense, is the concept of decision making at the margin.

I think a major problem is the changing value of media. An interesting article of appeared recently with a great layman’s statement on this under their “5 ways we ruined the Wall Street Generation” article. People seem to want their product right here, right now. With the ocean’s divide, people decide that the several month (if ever!) wait and straddling the illegal side of the law is worth less than supporting an industry. Given the pulse that seems to eminate on every place I (and a group of about 10 people I’ve been working on this with on about a hundred forums) have visited, it seems to be a common even for almost every user (this was done through private messaging and polling) is happy with not paying and ignoring the series afterwords unless they want to rewatch it. Similarily with manga, people don’t want to wait several months for a book to come out in their area (and for those who don’t read and won’t want to learn Japanese, may never come out in their language) and the value of this has risen to the point (or might have always been there…we really never had a worldwide available method of free distribution before) where the marginal cost of getting a legal, paper copy is worth less than the cost of waiting almost no time, getting illegal fan translation.

Of course, we do need to recognize that Sturgeon’s Law rears its ugly head here. I’m personally a fan of ’90s works myself and really do hate it when I buy some junk books or DVDs worth less than the DVD they’re printed on. I think though that part of it is the loss of ability to sit back and wait. Despite still being a fan of lots of these animes, mangas, and comic books, I’m very inclined to wait and see what the reviews are first before jumping in. An interesting example can be made from the game League of Legends here. People can pay cash (or in-game points, which require a huge amount of time investment) to pay for a new character ASAP or sit back and wait to see what others say about them first before putting in hard earned money or time. Translating this back to manga, if a book or series really calls to them, they’ll be at the front of the line, money in hand. If they’re less inclined, they’ll sit back and let the reviews roll in first. Acquiring information has really never been easier. I’d love to provide better numbers on these as oppose to example and case by case evidence, but I can’t find any studies on this phenomenon.

Granted, like your article says, some companies are the instrument of their own demise. Bandai was not a sustainable model. Some companies, like Funimation, understand the changing landscape and the point that the demand for unpaid streaming will never vanish. They understand that their concepts must adapt. I point out Funimation because of their YouTube channel and how they handle series by giving a sneak preview for a couple months, let fans see what they want (with support from YouTube to help mitigate loses somewhate), and then pull most of the series. However, even they are struggling, having to let go of big name licenses and becoming a smaller company. Whether or not this is temporary adjustment or not is up for debate though.

I digress…I really just wanted to say that this article is a good read. It is a good starting point to understanding the opposite point of view and allows those with less information a good balance of opinions. Knowing both sides of any story is key to making well informed opinions.

The reason why someone would buy something over something free is people in this world still like to have stuff, and will pay for stuff they want to have. Piracy’s effect on the industry is more on the perceptions of decision makers rather than the consumption patterns of the consumer. It’s the black market filling into a space the white market has left out. And as long as it isn’t actively destroying people’s lives, it benefits the industry to expand into this place rather than to shut it out.

The other hard part is having winners and losers, and people don’t like to see winners suddenly lose. Then start attributing to all sorts of external factors to shift the blame.

Really though the morality of the individual is nothing compared to the decisions of the group, and it’s better to think macro instead of micro in situations like this.

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