This isn’t a new development, but the events got traction today thanks to a statement by CDJapan on the matter going viral. Our friend megax is here to explain the business decision that likely lead to this.

While most of the content on this site will relate to the actual animation process, we’d be amiss to ignore the finances that make such process happen. As such, I like to pop in from time to time to talk about the various business-related events that affect the anime industry. One said event occurred this week as an international retailer who sells Japanese-made products internationally sent out an e-mail that caused a big ruckus in the international anime community. As this affects us more than the domestic audience, I felt the need to discuss this and to correct some misconceptions.

The big news was that products that are distributed by Avex Pictures/Music will not be allowed to be sold internationally directly from online stores like Amazon Japan, HMV Japan, CD Japan, AmiAmi, and such. Avex Pictures has been a constant producer of anime titles like Wake Up Girls, Mr. Osomatsu, and Initial D to name a few. This restraint prevents international fans from buying the Japanese home video releases or music related to those productions now. However, some retailers had already began restricting sales of Avex products internationally since mid January. Reports of Amazon cancelling/restricting idol-related CD purchases made the rounds on Twitter forcing fans to buy Avex products elsewhere.

Some fans (and even some former industry reps) have started to assume that this restraint was due to international rights for anime. Their theory goes as such: the international rights sales depend on people buying the releases sold in those territories. If the audience is buying the Japanese releases instead, then the amount that’s paid to Avex will be lower as the buyer isn’t getting enough revenue from their own market. While that’s a valid possibility and one we have to consider, the way to rule this out is by looking at who owns the international rights for shows produced by Avex. The two biggest international hits for Avex in the past two years were Mr. Osomatsu and Yuri!! On Ice. If any title would be reflective of international buyers hurting domestic sales, those would be the most likely culprits. However, they don’t own the international rights to either of those shows. TV Tokyo sold the international rights to Mr. Osomatsu (which were bought by Crunchyroll for every nation outside of Asia) and TV Asahi sold the rights to Yuri!! On Ice (which were bought by Crunchyroll for every nation except Japan/China). Avex may get some of that revenue depending on how the contracts were written for those production committees, but they wouldn’t be directly impacted by foreign buyers as they don’t sell the rights to those shows. A simple glance at the publisher page on Crunchyroll shows only one title (in the US) that Avex sold internationally: Charger Girl Ju-den Chan. Therefore, it’s unlikely that anime sales were the cause of this decision.

I’ll give a warning that we’re about to head outside of anime entirely in this next part, but it’s a more likely cause for this restriction on anime sales for Avex-produced series. Avex has two main subsidiaries which work in North America and south-east Asia respectively.  While Avex International Inc, located in the US, does exist, it’s only been around since last June and thus hasn’t had any big positives or negatives. The bigger fish here is Avex Asia (housing Avex Taiwan, Avex Shanghai, and Avex Hawaii among other subgroups compiled into it). Avex Asia has been expanding and selling music-related products in Taiwan much like how the parent company in Japan sells music groups like J Soul Brothers, E-girls, Johnny’s (Kis-My-Ft2 specifically), and even the anime-inspired Wake Up Girls!. Due to the short distance from Japan, Avex even tours in SE Asia to promote the local sales of their artists.

While Avex doesn’t sell much anime rights internationally, they do sell a ton of music rights, especially to their subsidiaries like Avex Asia that then sells CDs and such to local customers. If those customers decide to import the Japanese releases (for things like retailer-exclusive photos of idols), then the parent branch is financially hurting the international branch; the former is a much more stable enterprise, so they choose to protect the latter. While home video releases in Japan are more expensive than equivalent title releases in SE Asia, the same can’t be said for music releases, especially for groups Avex is trying to sell to that area. If the customers are importing those releases from Japan instead of buying the domestic ones, then Avex Asia is losing money. The next theory behind this exporting restriction, and the one I personally subscribe to, is that Avex (Japan) placed it to prevent people from importing these CDs instead of buying the domestic releases from Avex Asia (and perhaps Avex International in North America eventually). Due to how Japanese online retailers classify things (see the many examples of Amazon Japan placing Aniplex movie tickets as DVDs instead of merchandise), Avex likely had to issue a ban on everything to everywhere instead of localizing it to SE Asia. They likely could have been more thorough with the targeting by putting in some extra work, but this blanket ban of all media is a simpler solution. As a result, they affect more than their desired area of international focus: SE Asia.

Edit: With more news forthcoming after the publication of this post, it’s apparent that this second theory is no longer valid either. Non-Amazon retailers are allowing international shipments of music CDs from Avex’s “Avex trax” label. Side-note: Amazon Japan classifies everything from one publisher as a certain good, so they’ve just banned shipments of anything Avex even if it could be shipped internationally. If we were to assume that this was to prevent the SE Asian market from buying CDs, this gap in the blockade would not exist, therefore I can’t argue for the validity of this theory anymore.

Avex’s focus in future years is to utilize the North American market as a hub for selling products internationally through Avex International. While they don’t own international rights for anime productions now, that may also change in the future as they see the anime market as a potential growth area for their business. The combination of these two goals and the existing company in the SE Asian market means that they’re going to push people to support their branches rather than the parent company as a whole. On one side, this allows for more localized support in areas like the United States, where companies like Aniplex have done well in targeting their audience. On another side, this adds a layer of middlemen between the customer and the product’s origins. Evidently Avex feels the international audience is an area of growth and will be targeting us rather than the domestic one.

Edit: With the previous two theories refuted, there are two remaining theories I have left. The first theory looks at the future of what Avex wants to do. Avex lists a desire to obtain international rights for anime on slide 11 in the previous business plans, so one possibility is that they wish to use North America as a way to sell home video releases like Aniplex of America and PonyCan USA. This would explain the blockade for home video releases while allowing the export of the cheaper CD releases (which haven’t performed well in the North American market previously).

The second theory I have is that of self-governance mentioned by Justin in the latest Answerman column. Basically, Avex noted a lot of international sales (because those are reported to the distributor, not to Oricon) and realized that their titles are only for use in Japan. The reasoning behind it (“foreigners aren’t supposed to be buying our releases!”, “we don’t know if the content is allowed in those regions”, “we don’t want to hurt our partner on the committee in that region”) is easily up for debate and may simply be a combination of all of those possibilities.

So, while this doesn’t solve the problem itself nor does it provide a solution to this situation, I hope this post explains the likely reason why Avex Japan would place such a restriction on preventing people in the West from buying anime Blu-rays and DVDs like Yuri!! On Ice. The situation still stinks for international fans, who now have to use proxies, middleman, etc to buy things, but I hope we can all begin to understand how/why this came about.

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