Getting into this issue via a MegaTokyo topic brought me back to making a blog post on this, because I feel strongly on this. I hope you people are prepared for a VERY long blog post.

First of all, Hulu is great. Visit it, and visit it often. Heck, drop by Crunchyroll while you are at it. Sorry Europe, you get the short end of the stick.

Anyway, let me requote all the things I have said on the topic of "Legal Online Distribution".

From Akihabana's comment section:

American anime distributors for a long time now have been trying to tackle the problem without alienating their own customers and have basically failed. Sadly, if Japan decides to finally crack down on fansubbers, the subbers that remain will go deeper underground and the international otaku community at large will eventually die off with it.

If anything, the solution is perhaps the answer that GONZO has come up with in subbing their own anime and putting it online for the community at large in a ad-revenue format.

I don't want to elaborate more because this is a very touchy issue everywhere; I just hope Japan can find a way to make anime and make a profit while doing it so we can get more quality anime.

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That's good to hear that GONZO has done well with the experiment. I hope they continue to do that with ALL their future releases as well.

I'll get into my views of fansubbing, since it's possible that fans in Japan who speak and write English may read this.

I think the big next step for the Japanese Animation industry at large is to move into a "touchless product" formats such as ad-revenue streaming and pay-to-download torrents and begin to embrace the international community. If major studios such as Ghibli, Gainax, Sunrise, and even (and especially) Kyoto Animation begin doing offical subtitled streaming formats like GONZO has, the fansubbers will die off.

The mission of fansubbing back in the VHS (video cassettes) days (1980 - 1999) was meant to spread Anime outside of Japan. The system to receive fansubbed video tapes was archaic and cumbersome, usually having the fansubber ship the tape themselves and then it getting countlessly copied by friends until it was lost.

Fansubbing was never meant to actually make money or siphon off money revenue from the creators themselves. Fansubbing itself only came about because people were interested in Anime and wanted to know what was said and understand what is going on, and naturally with the rise of the Internet, fansubs just became easier to obtain. Many fansubbers are actually "honorable" - they stop subbing if a US Anime distribution company licenses the series. If the anime industry moves online with all their projects, fansubbers will stop subbing because they don't have to anymore. And to be quite honest, I think fansubbers will thank the Japanese for a possible move like that, because being a fansubber is a thankless job and if you are slow in subbing you are hated by the community at large for being slow.

There is a market for Japanese culture in the Internet world. All that needs to be done is to create the pricing models and the release formats to make it actually work.

And for those wondering about Japanese Manga as well as Korean Manhwa, those are doing well regardless of piracy due to the fact many American fans actually wish to hold Manga and Manhwa in their hands and the relatively cheap cost. There could be 10,000 different releases of Negima out there, but the Negima manga when it's printed and released by offical distributer Del Rey Manga will still do well because the product itself in print format is more desirable then a internet image format, and people are actually willing to pay $5-$12 for a book.

Various people around the world (and not of just this American who is writing this) have varying opinions relating to their region, but the Japanese Anime industry are the ones who are truly in control of it's own fate. I hope those who are in that industry read this and see the potential for not just for great success, but the possibility of great failure as well.

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From the above linked MegaTokyo topic:

I see the only way around this is that the Japanese Anime industry buckles up and finally expands itself outside of Japan and cut out the middle man (ie, ADV, Funimation, etc.). At least then, there isn't a issue with who has what license in what country, and can do across the board digital releases of their anime without some company wanting to sue because they have distribution rights.

The whole concept of distribution rights is flawed and stupid - and I hope the Japanese see this and loophole around it by just doing it themselves or finding someone who can do across the board distribution instead of just being able to do it in one country.

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I think the big issue here is that companies want to sell something "tangible", like DVD's, CD's, and what not. The thing is, as time goes on, those markets are shrinking little by little.

Anime fans used to buy DVDs at $35 a pop, but that takes a toll on a wallet. It forces what we see now, where instead of 4-5 episodes a disc, we get entire boxsets of shows now in order to turn a profit.

The reality is that anime fans are not looking to buy DVD's anymore. They're just too expensive to license, sub, dub (if dubbed), print, and distribute, and force higher prices. Not only that, we have fans now who feel that fansubs give better quality then DVDs. So many of these anime distribution companies have been about the DVD for so long, that they just couldn't adapt to a changing market spearheaded by YouTube and BitTorrent. They're trying to rake in that same amount of cash that they got from the beginning from the DVD age, but that's just not there anymore.

Lets not forget that the turnaround time for online distribution can be up to mere hours after airing, compared to a DVD which at best can show up in two months in a US store.

Legal online distribution is the best bet for a lot of these anime companies. It's just too bad they all have cold feet about it, because there is potential to make money off it.

It's better off then filing for Chapter 5 bankruptcy like ADV might soon.

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1. Digital distribution doesn't make much money compared to pretty much every other means of distribution

Sure, it doesn't. Heck, Ad-revenue streams aren't DVDs or what not. Still, it's money worth getting if you can setup a system to do it relatively cheap. Money is money, and money is what helps you make more money.

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2. Selling DVDs and merchandise does make money.

Sure, if it's selling. The thing is, if it's selling. The fact is, currently it is not. It's not moving, and that's bad. Which leads to...

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3. You need local publishers to sell DVDs and merchandise. Think "Best Buy" and "Wal-mart" and "LOL Topic"

No mention of Suncoast? Oh wait, they filed for Chapter 5. Suncoast is just a victim of bad upper management (who put too much eggs in one basket) and a shrinking US anime DVD market. You sell local if people are willing to buy - the thing is, fansubs as they are, are just better products that you can obtain fairly quickly. Thus, product is not moving, and these companies are losing money because no one is buying anymore due to rampant piracy. And we all know what could happen if you go after your own fans...

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4. So when the local publisher wants to do the digital rights, you have to yield (much like how Funi isn't going to license anything that they can't get the digital rights for).

Funimation is smart. They know where the market is headed. It's just sucks because Funimation is being slow about transitioning right now. They understand where they need to go now, it's just sucks that they're slow getting to it somewhat and that only US fans get to benefit. There's money in Europe too (isn't the Euro more then the Dollar?), and apparently the legal work is so bad to get a broad digital license for EU countries that Europe may never get the same services as Americans will from places like Crunchyroll and Hulu. Perhaps that's not Funimations fault, but the European Union's fault for not getting something like that universally squared away yet.

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5. It's also hard to enforce your rights globally without local help

It's hard enough to enforce it with local help. What I would think legal global distribution would do is phase out fansubbers (either by hiring them or C&Ding them). Trying to eliminate fansubbers right now would only bring about more fansubbers, because there is a demand for a particular series. However, if the company decides to sub it themselves, there is no incentive for a fansubber to sub it (less drama, less work, more enjoyability for a fansubber for a series) and if they do, the company can go after them and tout their legal alternative (compared to right now, where there really isn't one.)

I don't think the industry can get the money pull it used to, but at least with online distribution it can survive and turn a profit for when markets are better, and something comes a long that is better then online alternatives that is even cheaper, and better.

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QUOTE (omoikane @ Sep 23 2008, 03:16 PM)
Believe this and you have no credibility.

THe only thing that has much weight as I quoted is that yes, the physical medium market is changing and probably growing smaller by % of population. But that isn't important because the revenue from those sales puts the pissant amount of money companies get from digital distribution to shame.

The bottom line is that until we start paying ~DVD prices for digital downloads, DVDs will always make more money for companies.

The potential to make money in today's market is greatly exaggerated. It will take a large effort (like Hulu, for example) to even begin.

I don't have credibility. The closest I've been to any of these Anime distribution companies is attending their Comic-Con panels in years past. However, this isn't a credibility issue here.

Still, the market is in bad shape right now. Sure, it's a victim of what is turning out to be the biggest financial crisis since the Great Depression. But what is important is not the fact that "DVD's make more money", but the fact of "are we turning a profit with DVD's." Perhaps right now, they are, marginally.

The thing with companies is that you always look to turn a profit. There is money out there for legal online distribution. Sure, it's chump change. Yet, why is major American television companies like NBC, ABC, CBS, and others putting their stuff online in ad-revenue formats? Because there is profit there for them just for people watching.

It's a matter of getting a system up, and being able to turn a profit while at the same time dealing with illegal online piracy with a legal alternative.

Is there a better solution to bad markets and rampant piracy? Maybe. But at least it's a solution.

The mangled mess that is the Anime industry in the global market is marred by archaic rules, regulations, and laws. Why are anime studios or companies not doing legalized digital subs on a quick release format like fansubs are? Like Omoikane (who I have great respect for) said (he provided the questions and the mini-counter point in the quotes), perhaps the funding or the massive amounts of money from DVD's are just not there. What is there, is that there is profit in Legal Online Distribution if you get a system out there that works. Legal Online Distribution helps to do three things - to get companies profit so they can use that profit to make more anime and get more profit, to stop and prevent fansubbing and illegal pirating, and most of all - provide a legal, industry and fan supported system where fans are happy because they pay for a product that everyone gets a cut out of to encourage them to make more product (AKA anime) to consume, in a short amount of time. Legal Online Distribution is not meant to replace DVD's, as probably as I first thought.

However, there is potential there to do great things with Online Distribution - and perhaps with things like Crunchyroll and Hulu, the industry may be on the right track.