Futurama
“Welcome to the woooorld of tomorrow!”

I’ve made it no secret that I think distributing media through physical means is an archaic and rapidly shrinking trade. I sincerely believe that everything that can be digitalized will eventually be digitalized, whether you want it or not. It is a destiny that all media companies have to face and it can be an enormous opportunity for those who adapt fast.

And of course, it’s no different for anime. That’s right, it’s rant time.

Evolution

The theory of evolution has frequently been summed up by the phrase “survival of the fittest”, and indeed it is the perfect phrase to describe business models in our era of rapid technological growth. The “fittest” refers not to the strongest or the best, but the ones who can adapt and evolve to survive the next big change. Many mighty creatures had, over the millennia, fallen victim to the waves of biological revolutions in our planet’s short history, and yet the small and insignificant cockroach, whose ancestors once crawled in the shadows of dinosaurs, survives to this very day.

Today, technology has brought about such sudden but wonderful changes to our world that some of our existing frameworks which have existed for hundreds of years are starting to fail us. There will always be those who do not believe that everything they have held to be sacred truths for their lives is now change, evolving and improving for the better. Every effort will be made to build a dam around this torrent of change. At first they will succeed, but no dam can hold off the force of nature that is the power of technology. Pandora’s Box cannot be closed once it has been opened.

Okay, maybe I am getting a little too abstract here. Let us move back to anime.

Declining DVD sales in Japan

According to this ITmedia article forwarded to me by Soulshift, Japan’s DVD sales are dropping. Heck, I will agree with those people who claim that DVD sales everywhere are on the decline, even if I have yet to see conclusive evidence of it. Because it just makes sense. I for one certainly do not think that DVDs are worth their price tags, even if I do buy them for collecting purposes. I think a lot of people in the younger generations agree with me.

This is not to say that I think all media content should be free and no one should get paid for his/her works. I don’t. But I do think that the old way of doing things will not last for much longer. It has nothing to do with wanting to get things for free. I will pay for it if I have to, but the more important point is that I want it in my way, my format and at my convenience. You can air free anime on TV 24-hours a day and I won’t give a damn because I rather watch the shows I want to watch whenever I feel like watching them. Call it unreasonable if you want, but that is the kind of mindset that young people growing up with the Internet as their main source of entertainment will have. And those are the potential customers in this business.

当社のDVDが売れない最大の理由は作品の力不足だが、業界全体でもアニメDVD販売が不振だ。その原因は1つではないだろう」とGDHの内田康史副社長は言う。HDD＆DVDレコーダーの普及や、YouTubeのような動画共有サイトへの違法アップロードの影響などが、DVD不振の原因として考えられるという。

The ITmedia article interviewed GDH, the parent company of GONZO, and according to them, the main reasons why DVD sales are dropping in Japan are because of the spread of HDD and DVD recorders and the popularity of video streaming sites such as YouTube. You can whine and cry all you want, but that is not going to make technology reverse itself and uninvent things that are inconvenient for your business.

And not everything can be solved through legislation either. Sure, you can waste spend money to hire a bunch of people who sit around and do nothing but send out takedown letters to YouTube, but are you then going to lobby for a law that bans people from recording TV shows with DVD recorders too? It is just not possible. And it should be noted that P2P filesharing is not even a blip on Japan’s radar. I know very few Japanese fans who have heard of, much less utilize, BitTorrent.

Old distribution model, new market paradigm

「当社がアニメDVDを海外展開する場合、字幕や音声、パッケージなどを海外仕様に作り変える時間が必要で、どうしても日本よりも後の発売になってしまう。このタイムラグのせいでビジネスチャンスを逃している面はある」

The same GDH representative goes on to say, “When we release our products overseas, it takes time to translate, dub and repackage, so the releases always end up being slower than in Japan. This time lag often results in many business opportunities being lost.”

I think this is a clear indication that they are slowly realizing the fact that the old system is showing its age. Foreign audiences are no longer contented to get slow and outdated releases. If they cannot get the series they want legally and fast, they will turn to the Internet. Illegal or not, the Internet is there and will always be there. Deal with it. The best way to go about solving this problem is obviously to cater to the global audience right from the start, instead of trying to pretend that regional markets are still clearly defined and segregated like they were twenty years ago.

The blame game

　ただ“犯人探し”に躍起になるだけでは、次のビジネスは生まれない。「時代とともにメディアは移り変わるもの。最も多くの人に視聴してもらえ、お金を払ってもらえる可能性が高いメディアを試し、ビジネスを切り開く必要がある」

The best quote: “Just searching for the ‘criminals’ is not going to do any good. It will not create any new business opportunities. Media has to change with time. There is a need for us to try out formats that bring us the greatest viewership and increase our opportunities to make money. We need to open up our business.” Exactly what I want to say. GDH has created a YouTube channel called “GONZO DOOGA” and is asking YouTube not to remove content that infringes on GONZO’s copyrights as long as they can serve as promotional material.

The same article goes on to say that illegal downloading has, ironically, proven a global demand for anime. What needs to be done is not to destroy this demand by isolating potential customers and calling them pirates. The content owners need to re-examine their business strategies and find out ways to tap into that newly-generated demand using the technology that enabled it all to happen: the Internet. Indeed, the GDH representative acknowledges the fact that illegal sites that charge users monthly fees to download anime are very popular overseas and that GDH sees it as a huge business opportunity waiting to be tapped in its quest to expand globally.

Online distribution

That brings me back to Odex. Some people think that I am against Video-On-Demand. That is not true. I am an fervent supporter of digital media distribution that actually achieves its true intention—being convenient. In fact, when I first suggested VOD to Mr. Peter Go many months ago, he was unreceptive to the idea. I am happy that a small step has now been taken in that direction, but it is really small indeed. And the way Odex has sequenced its actions certainly has not helped to bring about much enthusiasm for the minute change.

I mean, it simply makes no business sense to assume that the tech-savvy downloaders are an insignificant minority, provoke them into a frenzy, and then roll out a service that is targeted right at the very same group of people while pretending nothing happened. But of course the people at Odex know what they are doing because they did their market research, right? I sure hope they do.

Conclusions

It doesn’t matter how good DVD sales were in the past. It doesn’t matter how well the system used to work. I see only the future and I think the future will only get brighter for anime. But not for DVDs. Filesharing will not kill anything that is really important and has real purposes, it is simply a new paradigm that will serve to weed out the unevolved dinosaurs that fed on past inefficiencies in the system and profited disproportionately off the physical bottlenecks of old technology that no longer exist. It may make sense for most people to pay for movies on DVDs today, but a new system replacing it will soon emerge to reward creativity in a new and better way, just as a different incentive system used to exist before the invention of the video cassette.

The ones who get to the new winning formula first will reap the most benefits. And I’m glad to learn that the Japanese studios are at least putting some thought into this. Perhaps one day we will pay $30 a month to download and watch all the anime series we want. A guy can dream…

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