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Bandai Entertainment: A Sign of The Times?

by Esosa Osamwonyi

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I’m sure by now that many of you have heard the news of what has happened to Bandai Entertainment in 2012. This was the branch of the company that they took care of licensing and distribution in the North American territories. Sometime around the first week of January, they announced a huge bombshell: That after the month of February they would no longer distribute any more new DVD, Blu-ray or manga. As a result, many upcoming releases were suddenly cancelled. Of special note was Turn A Gundam, which was finally going to get an English release after all these years and it’s a shame that along with many others, it will never see the light of day. Instead, Bandai Entertainment is refocusing on rebuilding and will continue to license but only in digital distribution, broadcast and merchandising. Personally, I myself am not sure on how to feel about this. One at this point one can only wonder why and how it came to pass.

Why is this happening?

“The physical anime business in North America has shrunk substantially over the last five years, and shows no sign of returning to its former glory. A couple of times we were hit with huge returns, and the financial result were pretty bad. 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,” – Ken Iyadomi

This was from a recent interview Anime News Network had with Bandai Entertainment president and CEO Ken Iyadomi. It’s quite an interesting read and you can check out the full thing here. Well its 2012 and its pretty much safe to say that we are full on into the digital age. We now live in an age where everything is within the grasp of your fingertips. You don’t have to wait long before you find the answer you are looking for. Unlike its contemporaries—music and movies—anime has not quite found where it truly belongs. While the music and movie industry have found some way to adjust, here we are in 2012 still asking anime what it wants to be when it grows up. Now over the years I have observed what Bandai has been doing business wise. Now, Mr. Iyadomi is 100% correct in that the anime business in North America has decreased over the years and will never return to the way things were in the past. It’s a sign of changing trends I’m afraid. However, I do like what Bandai Entertainment was doing over the years as they were on to something. As the years went on, you noticed that the number of anime they were buying, distributing and licensing from for DVD releases were decreasing. What they were doing was still putting out their own products produced in-house (i.e. Gundam, Code Geass, Cowboy Bebop) but for those outside products they were really looking to pick a hand full—titles that would bring some revenue in for them. One would think would a difficult move but when you have a company like Funimation that is licensing and distributing whatever left and right, but it’s not that bad. That way you can focus more on in house distribution for English releases through digital distribution and broadcast and less on in-house anime where more than likely the non in-house products they were aiming to purchase the rights for were picked up by another company such as Funimation.

Another thing Bandai Entertainment doesn’t really get a lot of credit for is their Anime Legends box sets. I myself thought it was a good way for them to remain relevant and competitive when it came to pricing and fan demand. For those not in the know, Anime Legends is very similar to Funimation’s S.A.V.E. box sets except the Legends box sets were more consistent. The original box set would come out with a more fancier and usually more expensive package and after that had run its course, you didn’t really have to wait too long before you got an Anime Legends version. The package was not as nice looking, but it was cheaper and it was a good way of continuing making a profit on an older item. Sure, anime isn’t selling as well in general, but I thought Bandai Entertainment was doing a decent job in staying relevant within industry because of these business decisions. So it didn’t make sense why the stoppage of DVD, Blu-ray and manga distribution was a choice made for the future of the company. Even Mr. Iyadomi agrees with what I’m saying, in that they as a company had more than enough fuel to keep going for years to come. So why the immediate stop? It didn’t really take me long to find the answer I was looking for: “The decision was made in Japan by the contents SBU (Strategic Business Unit).”

Lost in Translation

The fact that this was a decision made by the Japanese branch actually puts a different spin into this tale. Now, usually the usual suspects are “Oh, it’s because no buys anime anymore” and/or “The companies don’t make money and everyone just pirates the titles”. But in this case there is way more to it than just that and honestly, in 2012, companies still shouldn’t be complaining about the state of industry but finding alternative ways to expand the market for people willing to buy anime or support it in new forms. Now, back to the Japan decision—It’s no secret that the Japanese license owners and American distributors don’t necessary see eye-to-eye on many issues. What has been happening in Japan is they will release an anime over there, a few months later an English version will be released in America—but many Japanese anime fans will buy the American version. Why is that you ask? It’s actually quite simple; it’s because the American version is substantially cheaper for Japanese viewers. I mean, sure some of these box sets can be quite pricey, but they do not compare to the prices they go for in Japan. The Japanese companies are seeing what is happening and to prevent “reverse importation”—a practice where viewers from one country buy a title when its released in another country rather than their own—they tell their American distributors to hold back on their release, and the release is subsequently pushed back. However, what they are doing now is that many of these Japanese anime DVDs are coming with English subtitles as a way to encourage those outside Japan to import as a way to combat the longer release dates. One quote in the article by Mr Iyadomi explains the situation perfectly:

“Only one thing is clear: the role of a distributor for anime in North America is changing, and some well-equipped licensors can now cut them out of the process entirely, if they choose. Japanese publishers can now create Blu-rays with English subtitles, ready to import to English speakers worldwide. While those won’t sell as many copies as American-produced discs, the higher price point and lack of middleman can still result in a decent amount of revenue with little additional cost. Bandai Visual Japan recently discovered this for themselves with their release of Gundam Unicorn. They found the results pretty good, and that’s how I think they would like to move forward.”

So in a nutshell it comes down to this. Bandai Entertainment was selling products at various prices and some prices were a hit and some were not. They looked at what prices clicked the most with fans and went with that and tried to provide at or at least close to that range of pricing—basic supply and demand. Meanwhile, Bandai in Japan is simply not interested in that and is focused on one thing: generating profit at the maximum range. A perfect example would be this: Lets say I am a ticket seller. I sell my tickets for $25 a piece. Now, there is another guy about 2 blocks from me that sells the same tickets, but sells them for $10. Now in theory, I’m making more money because after all I sell two tickets, I have $50. With the other seller, it would take 10 people just to make $100. However, what’s going to happen when people start to find out there is someone selling the same tickets as me but at a cheaper price? The market says that more people will flock to him of course. And that’s what happened with some of the potential Japanese buyers. They saw the American version at a cheaper price with more features (English dub and subtitles) and they went with that. However, just because I’m losing potential ticket sales, it doesn’t mean I’m not making a profit. You have to remember that if I want to make $200, I just have to sell 8 tickets as opposed to 20 tickets the other seller has to sell. Sure it will be easier for the second seller to do as, as he sells them at more reasonable pric, a decision that most buyers would approve of. But in the end, I’m still making profit at the maximum range and I don’t really need to sell that much to make a bit of money. That pretty much describes the mind frame of the Japanese company when it comes to anime, as well as other forms of media. So Bandai in Japan did not agree with how Bandai Entertainment was doing things, as they were not seeing profits in the ranges they wanted, so they shut them down despite any form of success they were having. And lets be honest here, Bandai is such a huge company that it’s not exactly in danger of going completely under. It just came down to the big brother telling little brother that his way was simply no good anymore.

What is their way?

Big brother’s way in this case was Bandai in Japan basically saying, “how can we now supply English subtitles in our anime releases? We don’t need you to do it anymore—we can do it ourselves. This way we are making profits at the maximum range. If some people want to import, that’s fine too as it helps because we are still making profit at the maximum allowed range.” Aniplex recently did something like that with the Fate/Zero box sets. There will be no English release but instead the Japanese version will be available for import complete with English subtitles, but at a very hefty $380 price tag. The fact of the matter is that Japan has always been where most of the primary profits are generated and to some companies, the other markets are simply aftermarkets. So what Bandai Japan did was they relieved Bandai Entertainment of distribution and had them focus on others things while they take that portion of operations over. By offering the import version as an English subtitled version, they are not losing too much and are still selling at a high price. Now, I agree that cutting the middleman is a good idea but the way these titles will be sold will definitely limit potential customers, a move in which Bandai in Japan is well aware of. It boils down to three issues:

1. People really, really love their English dubs.

It’s true. It’s more convenient for many viewers to listen to a series/film in their native tongue rather than read subtitles. Most of these imports will now contain English subtitles but no option for English audio. I’m sure the premium series will have English dubs, but those can be far and few in between.

2. The price.

You’re definitely going to be tested on hardcore an anime fan you are with the increased pricing. I admit, some of the US titles pricing has been a little on the high end at times, but it was still relatively purchasable. Now, in this case, changes can be made to the pricing if warranted by the market—this is one aspect of change that remains to be seen.

3. The quality of the subtitles.

Okay, lets say the first two issues don’t really bother you. Let’s bring up a hypothetical situation: Let’s say you buy your product at the increased price and the translation is simply not as high quality as you would’ve hoped. Usually the subtitles are of decent translation but sometimes there are situations where this is definitely not the case and where “Engrish” interferes with one’s viewing enjoyment.

So where do we go from here?

In my opinion, digital distribution for anime is a great thing. Websites such as Crunchyroll, Hulu, and Netflix provide streaming anime and in the case of Crunchyroll and Hulu, they often provide new anime within Japan already subtitled in English. This is a great approach on their part, but I personally don’t think this approach is the future of anime; I see a future in which digital and physical media can co-exist. It doesn’t have to be one over the other—both can benefit from one another. For example, there have been times where I watched a series and after finishing it in my head I say: “I got to own this thing when it comes out on DVD and/or Blu-ray”. There are always going to be people like this. Getting rid of the middleman may be a nice approach at times, but also severely limiting the purchasing access the audience has can also be detrimental. One has to wonder how Bandai Entertainment is adjusting to the field. This is an interesting trend and if it really starts to catch on, the role of the American distributor might truly be on its last legs. It’s very interesting situation and it’s one that one should keep an eye out for. For me personally, I think they jumped the gun on the stoppage of publishing for Bandai Entertainment. I think it was way too early for a move like this and was bit extreme on their part. But business decisions are business decisions and one can only wonder at what could have been.

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Author: Esosa Osamwonyi

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Comments

  • darkkodiak

    I for one agree with you that stopping publishing for Bandai Entertainment was too early. I for one see digital distribution as the future for all digital visual media, however, I do not believe we are at the stage where the profit is satisfactory yet. I think that these companies should try to milk the physical media until it goes the way of vinyls. Who knows, maybe they did it in order to have money for when selling digital visual media is as profitable as music. Granted, the music media did take a big profit hit by going all digital but it is making profit consistently mainly due to the devices that we use today (ex. cellphones). Perhaps the digital visual media needs something like that, where anime is easily accessible changing the mindset that instead of collecting anime in set boxes, you simply have them stored away ready to be watched at your whim.

  • Esosa Osamwonyi

    @darkkodiak To me this companies don’t have a set game plan in moving forward and adapt to earn success. And they are not listening to the consumers so its hard to say but as of now the situation is very bleak.

  • http://thehugeanimefan.blogspot.com/ Cassandra @The Huge Anime Fan

    I see. Hmm its very sad news somehow as an anime fan but I can understand Bandai Japan wanting to sell less of their anime products and making more money rather than selling more but making somewhat the same eventually.

    Its simply a business decision.