The Industry - Costs

[bayoab]

Some interesting numbers came from the Japanese side of things as posted on ANS on friday:

Originally Posted by animenewsservice.com

2-2-07 (4:47PM EST)---- $20K Per Episode Average For TV Series Licenses
According to info out of the recently held Nikkei BP Anime Business Forum in Japan, if you happen to be in the market to localize and distribute your own anime TV series in the USA in 2007, look to spend about $20,000 per episode on average. That baseline figure has grown over the years. Before 1995 you could get even a hit show for a couple thousand dollars per episode. The trend supposedly pierced the $10K per episode milestone in the mid 1990's with Gainax's Neon Genesis Evangelion. Pokemon fetched 40K per episode in the late 90's and in recent years, some of the most popular anime TV properties have fetched $80K or more depending on the contract. On the production side, a figure of 7 million-8 million Yen per episode was quoted for a long time from the 1980's until around the middle of the 1990's. Fom that time period until now, studios can ask anywhere from 10 million-13 million Yen to produce a typical TV series anime episode.

They don't link to the article in question but I believe it might be from the third section of this one. (Beyond page 1 is pay or some sort of register to view). Can anyone confirm this or find the actual article that these numbers came from? (Or get the entire article and find anything else interesting?)

That 10million-13 million yen means that a 26 episode series costs about 2.3million USD to produce. That also means that the licensing fees are getting to be about 1/4 to about over 2/3rds of production costs.

The article also mentions (Japanese speakers please correct me if I read this wrong):
OVAs are estimated to cost around $250000 (20 million to 30million yen). Anime movies cost approximately 1 million-3million USD (100million-300million yen) to produce. In the case of Ghibli and Production IG, it seems that it has cost them around 10-20 million USD to produce a movie in the highest case.

Note: This thread is not for arguing about how expensive DVDs are or any of the typical flamewars on the same categories.

[monir]

Interesting infos. Even though I've always suspected, now I've some form of confirmation to support the hypothesis as to why shows like Air isn't being licensed. Surely an episode of air would cost 25000+. The popularity is a factor also considering Suzumiya Haruhi is now licensed.

[LionsMane]

That is definitly a very interesting piece of info and also probably explains a lot about certain comapny/industry's decisions.

I knew it was expensive but I don't think I ever imagined it to cost that much.

[JKL]

Originally Posted by monir

Interesting infos. Even though I've always suspected, now I've some form of confirmation to support the hypothesis as to why shows like Air isn't being licensed. Surely an episode of air would cost 25000+. The popularity is a factor also considering Suzumiya Haruhi is now licensed.

Yes and pretty much everything with KEY's name on it.

[monir]

Originally Posted by JKL

Yes and pretty much everything with KEY's name on it.

I personally think a name tag like KEY can't automatically influence pricing if the anime adaptation doesn't have much appeal to a wider range of audience. Toei's Kanon shouldn't be that costly and yet no one cares to pick it up for R1 release. Popularity, just as much as the animation quality, always plays a factor when it comes to the pricing for a series. KyoAni's Air was beautifully animated, but personally speaking, (don't crucify me Air-fans) Air was boring to say the least, and uninspiring. The appeal of that show seems to be constricted to a particular group of fans who have enjoyed its content. If Air was a popular series to a wider range of audience, then pricing wouldn't have been an issue for it to be picked up by a R1 licensing company. Suzumiya Haruhi is the best example of that observation.

Then again, the pricing could be an issue for Kanon 2006 even if it is enjoying much more popularity than Air, considering this is a 26-episode series.

[Dagger]

But Suzumiya Haruhi wasn't really picked up by an R1 company per se. It's being put out by the R1 branch of a Japanese company (in conjuntion with Bandai Ent.) which means that extreme licensing fees weren't an issue for it to begin with.

I would be soooo happy if Kadokawa did the same thing for AIR & Kanon that they did for FMP: TSR and Haruhi. I believe that the "JP company opens US branch and/or works with a US-based anime company" model that they've been pioneering will become more and more prevalent, especially for shows that might otherwise be too expensive to license.

[relentlessflame]

Originally Posted by monir

I personally think a name tag like KEY can't automatically influence pricing if the anime adaptation doesn't have much appeal to a wider range of audience. Toei's Kanon shouldn't be that costly and yet no one cares to pick it up for R1 release.

Actually, on the contrary, Key properties (including the Toei anime) have always been reported to fetch huge licensing fees on brand name alone. It's certainly not that "no one cares to pick it up" by any means; many many less popular, less marketable shows have been licensed and released. Of course, you're certainly right that popularity plays a part too -- if the show/property were popular enough, the asking price (whatever it is) would be money well-spent. But the high asking price, combined with insufficient market demand to make up for it, make it unlikely to happen for a while still. If it were available for "cheap", though, you can bet that the licensors would be all over it. I think the popularity of shows like Kanon and Air in Japan is still too hugely disproportionate to U.S. interest at this stage, though, and that factors in the asking price along with the willingness to pay it.

Originally Posted by Magus IX

I would be soooo happy if Kadokawa did the same thing for AIR & Kanon that they did for FMP: TSR and Haruhi. I believe that the "JP company opens US branch and/or works with a US-based anime company" model that they've been pioneering will become more and more prevalent, especially for shows that might otherwise be too expensive to license.

Well, of course those Key properties aren't published by Kadokawa (so they can't be the ones to bring it over in that way), but I'm sure that other companies will follow suit if the model's successful (meaning that the parent companies make more money than the usual bidding war system). Whether or not that increases the odds for the licensing of Key properties in particular, though, I find pretty doubtful. We'll see...

[Dagger]

Oh, Kadokawa wasn't involved with AIR? My bad. I thought I saw their name in my R2s.... but it's been a while since I watched them, so maybe I just retconned my memory.

[relentlessflame]

Originally Posted by Magus IX

Oh, Kadokawa wasn't involved with AIR? My bad. I thought I saw their name in my R2s.... but it's been a while since I watched them, so maybe I just retconned my memory.

Well, they did publish the AIR manga and they're a huge company, so I guess they might have shown up in the credits for some reason, but the anime was published by TBS and Pony Canyon. We've sidetracked a fair bit from the main topic, I guess, but there you have it.

[monir]

Originally Posted by Magus IX

It's being put out by the R1 branch of a Japanese company (in conjuntion with Bandai Ent.) which means that extreme licensing fees weren't an issue for it to begin with.

This is something I didn't know. How exactly does this work? Does the branch company gets most of the profit? What does Bandai get out of this? If I read Relentless right, this licensing procedure involving a branch company from a parent company that originates in Japan, is a fairly new practice. I admit I haven't paid much attention on the subject, so will appreciate any enlightenment thrown in this direction.

Originally Posted by relentlessflame

Actually, on the contrary, Key properties (including the Toei anime) have always been reported to fetch huge licensing fees on brand name alone. It's certainly not that "no one cares to pick it up" by any means; many many less popular, less marketable shows have been licensed and released.

I suppose Key doesn't care if they can sell their products outside of the Japanese market when they are enjoying so much popularity in there? For overall animation quality alone, there is no way Kanon 2002 deserves a high price for the Toei adaptation. Series like Chobits, Saikano, Spiral, GitS:SAC, Heat Guy J.. etc. are few example of much better quality animation-wise that were also produced in the same year, and all of them were better than Kanon. Coincidentally, all of them are licensed, and Kanon 2002 is not.

I would like to think Kanon 2006 is enjoying a lot more popularity due to it's incredible animation work by KyoAni (and Sugita-san ^^), but if Key throws tantrum about the price, then the chances are this title won't be picked up for a R1 distribution either. It kind of annoys me, but if this trend of conjunction between a branch company and an R1 distribiuting company yields satisfactory result for both sides, may be there are hopes yet series like Kanon 2006 and Air will be available in R1 in the not so distant future!?

Btw, you've yet to post those screenshots for the legendary cabbage from your DVD's of Yokae Mae. Thought I would remind you just in case you've forgotten.

[rooboy]

Originally Posted by monir

This is something I didn't know. How exactly does this work? Does the branch company gets most of the profit? What does Bandai get out of this? If I read Relentless right, this licensing procedure involving a branch company from a parent company that originates in Japan, is a fairly new practice. I admit I haven't paid much attention on the subject, so will appreciate any enlightenment thrown in this direction.

Well, from an accounting perspective (which is all this really is, the accounting) whichever company they want to show the profit is the one that shows the profit. There isn't really a hard and fast rule, if they want the subsidiary company to look more profitable they will show the license as being extremely cheap (the Chicago Cubs do this in reverse for the license to broadcast their games to their parent company, WGN), if they want the parent company to look more profitable, they'll make the license extremely expensive. As for Bandai (in the MoSH deal), they're probably getting paid. Most importantly, as I recall they're getting paid for distribution, but they're probably not absorbing much (or any) of the risk of the venture. Risk is a much more significant factor when doing something like this than potential profit. For example, let's say I told you that you could license two titles, one has a 50% chance of making you $1000 and a 50% chance of costing you $1000 and the other has a 100% chance of making you $600. The rational decision is to choose the $600 one. It cannot make as much as the first one, but it cannot lose as much as the first one either. MoSH was going to be an expensive license. While I think most people expect it to do well, it's quite possible that "doing well" wouldn't even be enough to break even. This is particularly true in the R1 anime industry where (supposedly) the market has become very flat. According to most of the reports, the difference between a series that sells well and a series that sells poorly is only a few hundred DVDs (and even the better selling titles only supposedly sell in the one to two thousand range).

Personally I don't think there was much of a "bidding war" to begin with. I think what actually happened is that a couple of companies (my guess would be Geneon, ADV and/or possibly Funi) called about the license, were either turned off by the asking price or offered a much lower figure than they (Kadokawa) were expecting. Kadokawa leaked the news of the "bidding war" hoping to drum up more interest. When they couldn't get an offer that they liked, they decided to assume the risk themselves and that's why they brokered the deal they did. Unfortunately, licensors never discuss things like this, and so the chance of finding out what actually happened is exceptionally low.

As for the why all of this happens, we're in the middle of a market correction. When anime was exploding and everything was getting licensed - most of the licensing fees didn't seem that expensive. Now that the companies know that only the rarest of the rarest shows are going to enjoy the kind of shelf life Evangelion or Cowboy Bebop has in R1, they're less interested in paying tons of money for something that is supposed to be big. Add into that the lack of a direct correlation between something's popularity in Japan and it's popularity in the U.S. and the fact that fansub popularity does not seem to directly correlate with R1 popularity. While the U.S. companies seem to have adjusted to this (note how many mid-tier titles have been licensed in the last couple of years, the Rozen Maidens and the KGNEs), some of the Japanese companies still think that they are going to get whatever they ask for in the licensing deal. When they fail to get it, they look to release it themselves (convinced that the money will be there). Whether or not it will actually be here is another story, but we won't find that out until later. For all we know, they may have a magic touch that can get more disks sold. Even if they can't, they'll make more money than the R1 company would have because they're skipping a step in the chain.

I don't know if original companies licensing stuff to US subsidiaries is a "new" practice exactly, but it's becoming a very popular practice. Viz media (which releases Inuyasha, Naruto and Bleach) is co-owned by Shogakukan and Shueisha (two Japanese publishers). This is one of the reasons why some Viz manga is cheaper than equivalent Tokyopop or Del Rey or whomever manga, it's almost exclusively manga that was published by either Shogakukan and Shueisha. Even if the companies aren't directly subsidiaries of Japanese companies, it's obvious that some production companies are simply more likely to work with particular companies. GONZO stuff has pretty much all been licensed by Funimation, Del Rey has some kind of arrangement with Kodansha, and from a business perspective, this makes a lot of sense. It's easier to work with people that you've worked with before.

Anyway, hopefully my inadequate rambling skills answered whatever questions you might have had. Unfortunately since no one involved in this process usually talks in terms of numbers, I think it's impossible to be definitive on anything. However, I think this covers most of the issues involved in a relatively unbiased fashion (at least, I was trying to be unbiased).

[ZeusIrae]

Add into that the lack of a direct correlation between something's popularity in Japan and it's popularity in the U.S. and the fact that fansub popularity does not seem to directly correlate with R1 popularity.

That's very intresting could you give details on this?

One other related problems that always bother me is why some extremely bad show are sometime licenced.Shows that seems to be considered universally(at least in the english-speaking fanbase)as awful.I don't have an exemple right now but I hope you see what I mean.

[monir]

Originally Posted by ZeusIrae

One other related problems that always bother me is why some extremely bad show are sometime licenced.Shows that seems to be considered universally(at least in the english-speaking fanbase)as awful.I don't have an exemple right now but I hope you see what I mean.

Two part answer: a) It is very cheap to get it, b) what one considers "bad" could be considered "good" by someone else. For example, what if someone considers FS/N to be the most awful show one has ever watched. So naturally, one will be puzzled by it's popularity and it's immediate licensing for region 1.

Originally Posted by rooboy

Anyway, hopefully my inadequate rambling skills answered whatever questions you might have had. Unfortunately since no one involved in this process usually talks in terms of numbers, I think it's impossible to be definitive on anything. However, I think this covers most of the issues involved in a relatively unbiased fashion (at least, I was trying to be unbiased).

There is a reason why you are one of my favorite poster. The only question that arises at the moment, why would a R1 company want to pay hefty amount for a licensing right to begin with? Think twice before answering it, that is, if you want to.

[rooboy]

Because they like anime? With the problems ADV and the market in general seemed to be having, I somewhat doubt it's to make money. People are always willing to make less money to work with things they enjoy.

This is why I would gladly take a pay cut to play wargames all day.

[Asai]

Hmm, that's actually a lot cheaper than I thought it would be. I have dreams about winning the lottery (standard 20-30 million jackpots here in AU) and going to Japan to make an anime series. But hell, if it's only 2-3M for a series... I could either do a single very high quality series, or several average ones.

2-3M (~4ish AUD) is actually pretty reasonable, I think. I seriously expected the average episode to be in the realm of $250-750k. Guess I was way off. Now, to win that lotto...

[Dagger]

Making a series =/= licensing it. I imagine that production costs would be considerably higher, especially for well-animated shows.

[rooboy]

He's talking about this part:

Originally Posted by bayoab

That 10million-13 million yen means that a 26 episode series costs about 2.3million USD to produce. That also means that the licensing fees are getting to be about 1/4 to about over 2/3rds of production costs.

[Dagger]

Oh, gotcha. Of course, there's also stuff like Samurai 7, which cost something like 1 million USD per episode. I wonder how much KyoAni series cost to make...

[bayoab]

Yet more is mentioned...

Originally Posted by Animenewsservice.com

3-1-07 (11:00AM EST)---- Blood+ Licensing Cost Hints
In a current Nikkei BP interview with Production I.G. head Mitsuhisa Ishikawa, he mentions that going from the current USA sales standard of $20-30,000 dollars per licensed episode, Blood+ has fetched 2x or more. These earnings have allowed the latest iterations of the property to become part of the company's "surplus business".

[rooboy]

Wow, Blood+ was a long series too - I'd think that people would have been more wary of licensing it. <-- In reference to the "twice as expensive to license" part - not that it got licensed at all.

Though I guess it's going to be on [adult swim] and that's supposed to help a lot when selling discs.