This Week in Anime Business #2

This Week in Anime Business #2

Welcome back to another compilation of recent – although not strictly within the last 7 days, title be damned – anime industry developments that we felt were worth highlighting, brought to you by the reliable megax. We plan to keep this infrequent column around whenever interesting pieces of info arise and seem to go by unnoticed. Appearing this time: movie budgets, idols, international business, and distribution methods. Let’s jump to our first piece of business!

Your Name’s budget and plans for recoupment

This was published last year, but it has resurfaced given the hype surrounding its home video release plans, and I figured it would be nice to talk about the budget Toho planned for Your Name. Toho expected that it would earn 1.5 billion yen at the box office after all screenings had ended. Japanese theatres take half of the box office (750 million yen in this case), so that left another 750 million for production. Marketing for the film cost 300 million, so 450 million was to be destined to produce the animation, vocal track (cast/recording time & equipment/personnel), music, and mastering. An insider said that they estimate/speculate that the amount going to the director would be about 5% of the budget, bringing Shinkai’s take at 20 million yen for working on the film (for 2 years). This amount was lower than a lot of Toho’s other projects, but they’re around normal for anime film budgets, which shows just how relatively cheap anime production is. According to our sources, your average anime film nowadays is on par with high-profile theatrical OVAs and costs around 200 million for production alone. Your Name costing slightly over twice of that fits its nature, and still puts it well below the rare exceptions by massive companies like Ghibli that can go over one billion. Either way, the film earned way above their expectations, smashing records and arriving at nearly 25 billion yen at the box office – over 16 times of their best estimate and much more than right about any anime movie. Something keeps a great record of box office records for anime films, so you can see how much they tend to earn at the box office.

This lets us talk about the price of a ticket and how much goes where. I’m going to use a concrete example: I paid 1800 yen to see Sound! Euphonium ~Welcome to the Kitauji Concert Band~ last year, which is on the higher side of ticket prices. Here’s one general example of how that money would be divided.

  • 900 yen: Movix Kyoto (theatre)
  • 810 yen – 630 yen: Hibike Partners (Kyoto Animation/Pony Canyon/Lantis/Rakuonsha – in that order but exact split not given, depends on distribution fee)
  • 90 yen – 270 yen: Shochiku (distributor – depends on the fee charged for distribution)

There may be separate situations for small run films (purchasing screentime rather than officially distributing, or a change in how much each step gets), but this is a general example of how the mainstream film industry splits the amount that you would pay at the door for a film in Japan. However, I should also point out that most of the big movie studios also tend to own a lot of their own theatres. Toho, which not only distributed Your Name but led the committee for it, owns 64 cinemas throughout Japan through the Toho Cinemas subsidiary. People going to watch it in those locations gave a massive amount of that money to the Toho group through all parts of the tickets (theatre/distributor/top of committee). For my Euphonium example above, Movix is owned by Shochiku, so most of my ticket likely went there as well. As they’re not on the committee however, their slice would be comparatively much smaller to Toho’s extreme case with Your Name.


Comments from Lantis’s Producer/executive Shigeru Saito:

Saito went on a podcast with one of the composers of Lantis songs (notably Hare Hare Yukai) and shared some insight into the anime song industry. Let’s sum it up.

First off, the boundary between international anime business and Japanese markets is changing; proposals target not just the domestic audience at first, but also international viewers. The rule of thumb for the industry used to be that “if it sold this many discs, then it’d work out,” but now the process has changed so that they’re able to recoup funds from streaming rights (with a great focus on China) and broadcast rights, even if discs don’t sell much in particular. This doesn’t just affect streaming there; if a committee determines that “this work will be profitable even if it has to be recouped internationally,” then there’s an inclination to sell it in box sets instead. We’re seeing nearly every publisher in Japan switch to offering box sets of varying sizes for certain shows (4-episodes, 5-episodes, even 6-episode boxes), so that’s a result of not needing to sell as many singles or copies due to international right sales.

The anime music industry’s profile has also been rising over the past ten years. Before, the atmosphere was that everyone would support the giant hits like “everyone cheer on Nana Mizuki!” but now the floor has risen to make up for the insane hits dropping some. Lantis is financially supported by [email protected] and Love Live, but they’re waiting for the next big opportunity to come while continuing to work with those franchises. Live events with seiyuu are also packed with lots of customers. And most importantly, the industry is also moving to develop the international market more. There’s going to be foreign concerts and goods sold there. Saito calls this the “final adventure” for the anime music industry. We’ve already seen Lantis support the AniUta program, which will offer unlimited streaming of songs from Universal, Media Factory, Toho, Victor Entertainment, VAP, Marvelous, Pony Canyon, Flying Dog, Bushiroad, Warner Music Japan, and Lantis’s catalogs. This is expected to launch internationally later this year and will be a big way to support the music industry without having to buy CDs/mp3s.


 In This Corner of the World begins digital distribution ahead of disc distribution

As mentioned earlier, most big movie studios in Japan run their own theatre chains. Those companies also often happen to publish/distribute their films on home video. That means that they have vested interests in keeping things going from theatre to home video with a digital distribution later, as a lesser priority or even a slight inconvenience. However, we do have an interesting exception this week with In This Corner of the World. Its committee wasn’t led by a big movie company, not was it headed by a video publisher. Instead, it was as follows:

  • Mainichi Shinbun (Newspaper)
  • AT-X (TV station)
  • Cygames (Video game company/mobile game & app developer/animation studio)
  • TBS Radio (Radio station in Tokyo)
  • Tokyo Color Photo Wings (Designer/Publisher/Printer)
  • Tokyo Theatres (Theatrical distributor)
  • Tohokushinsha (Movie Studio)
  • Bandai Visual (Video publisher)
  • Futabasha Publishers (Publisher of original manga)
  • Mac (Publicity/design/website company)
  • MAPPA (Animation producer)
  • Genco (Producing company; brought everyone together to make the film)

As the top interests weren’t beholden to prioritize theatrical access or home video sales, the committee could take the risk in selling it digitally prior to any home video release now that most of the theatres have stopped playing it. The committee also represents the troubled financing that this film went through; instead of a big company like Toho, Toei, or even Aniplex/Bandai, Genco’s producer Maki had to find a variety of companies that would contribute a little bit and even they had to be coerced via a huge crowdsourcing amount just to get the film off the drawing board (figuratively). The success it’s had in the Japanese box office is remarkable due to those difficulties.

I mention this as an exception to the ordinary categories. Most Japanese live action films are made by the big movie studios who want the theatre box office and home video sales. Most anime films prioritize the movie merchandise and home video sale revenue streams. This just happened to be a film that did neither and so it was able to be streamed much earlier than usual. Most films are available for streaming at a later date once theatre runs/home video sales have slowed down, so it’s not like these don’t happen – this case simply happens to be much earlier than usual.

In other words, don’t expect this to be the start of a trend; it’s just a another neat story that occurred in anime business this week. Until next time!


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21 Comments on "This Week in Anime Business #2"

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NatSamui
Guest

Thanks a lot, super interesting!
Do you know approximate prices for international (Europe, America) distribution? Or maybe you could add some words about how Japanese companies decide their international policy?

Though not all anime has distribution around the world, some of them (Your Name, Miss Hokusai?) were still released.

Tombeet
Guest

I’m super interested on the international distribution as well. I originally thought that since Anime titles are more expensive than luve-action series, a lot of the money would go for distribution companies to pay for the license. To my surprise though when I came to Japan last time the boxsets are expensive as well. So that was not the case at all.

Also can I aks about the difference between licensing a show and distributing a show?

ultimatemegax
Guest
Anime is made cheaper than live-action and it always has been. Home video prices in Japan have been high, similar to how it was previously in the West. DVDs were really the first big format to try and lower prices of movies and TV shows in the West for people to watch. Before that, it was either pray it aired on TV and tape it with a VCR or rent it. That’s what a lot of Japanese people did, but streaming is eating heavily into the rental market now. When we talk about licensing a show, we mean that a… Read more »
ultimatemegax
Guest
I think you may have combined a couple of things. Companies sell international rights to licensing companies who distribute works in other regions. For example, Toho held international rights to “Your Name,” but it was Anime Limited who distributed it (and financed the dub) in the United Kingdom. International rights prices vary depending on the region and title. If it’s very successful like in China or SE Asia, they’ll be more expensive than other regions like Australia. If the company thinks the title is going to be a hit, it’ll cost more than something not expected to do as well.… Read more »
NatSamui
Guest

Thanks a lot!
So you wrote how international distribution works and its conditions.
Do you know something about festivals participation? I don’t talk about premium festivals (Cannes, etc.), but about other (Europeans, US). What is their decision based on? I thought about prices, but can’t imagine how much they ask for several screenings on the festivals…

ultimatemegax
Guest

I don’t know a lot about film festivals. I assume they operate differently as I recall someone at Scotland Loves Anime saying they got the festival rights to show A Silent Voice with “My Generation” but that it may not be on the version in theatres in the UK (it was eventually cleared).

Festivals try to get a variety of films and it depends on their selection committee; there may be some marketing from international licensors, there may not be. I honestly don’t know.

Tombeet
Guest
I do know a bit about film festivals. Usually it’s the filmmakers themselves who submit their works to a specific film festivals (with smaller ones, they even have to pay an entry film). Usually it was like 2, 3 screenings for each title. For big festivals like Cannes or Berlin though, there is a film market that run parallel with the festival, and studios try to sell their movies there. There will be private screenigs for potential buyers. In short, the festival don’t have to pay for the permission of screening for the movie, it’s the films themselves who have… Read more »
Tombeet
Guest

*an entry fee. My bad

zrnzle500
Guest

I imagine the digital distribution bit only applies to the domestic market, right? While In This Corner of the World is already going to be released theatrically outside Japan and it will probably be in theaters near me, digital distribution would be good for those who don’t have theaters nearby, but I guess that will not happen soon if at all, given the distributors are video publishers, unlike the production committee.

ultimatemegax
Guest
Right, this digital distribution is only for Japan. It doesn’t have any subtitles, so foreigners are out of luck as well. Sadly, from what I’ve heard, digital distribution for anime films isn’t quite up to the level it needs to be for a company to profit on them. Take Crunchyroll for example. They could’ve streamed the Kabaneri films, but instead they screened them in theatres. If there were enough viewers/money going to films, then i could see that being another avenue to view them in the West, especially in the fragmented US area. The problem is trying to monetize them… Read more »
omo
Guest

Isn’t Blame digital distribution happening along side with theatrical distribution, and that’s because Netflix is its partner. Don’t you think this actually will result in a trend where digital distribution will predate home video on discs?

omo
Guest

Hit post too quickly. Also want to just posit the question if Mai Mai Miracle’s crowdfunding had an impact on all of this, as that particular group of animation producers have some experience with crowdfunding and the less orthodox methods of distribution.

ultimatemegax
Guest

If it’s had an impact, it’s been very small. Yamakan’s production relied on crowdfunding as did “In This Corner,” so there are examples where it’s been used. It could be that these titles that aren’t beholden to standard companies may allow for weird distribution methods, but we have such a small sample size to state anything for. It’s more examples at the moment than evidence.

ultimatemegax
Guest
Blame is an interesting case. It’s a 2 week limited screening event before it’ll go on digital distribution. The Kabaneri films were also 2 week limited screening events, but I’ve not seen it go on digital distribution first. It more depends on who makes the film. The big movie studios want the standard Theatre->home video->digital distribution method and so do video publishers like Aniplex. We’ll have these rare cases like Blame where digital distribution is a main goal, but I don’t see it being a shift. The box office in Japan has been very good in recent years, so they’re… Read more »
omo
Guest

It’s not so much of a binary “switch” or anything, but assuming Blame achieves the business goals Netflix set out to do, it makes sense to expect that more movies in the future will be done in the same way. I think it does make sense to do both limited screening and online streaming personally, especially for the kind of movie we’re interested in (not the ones that gets 300+ theaters domestically). .

ultimatemegax
Guest
I don’t see that happening very often though. Blame worked because of the contacts for Netflix with the international rightsholder (as with LWA); Netflix likely wasn’t on the committee (though it appeared to have been shuffled from Sidonia). Most of the companies making anime movies, even the small-runs, want the proceeds from the JP box office as it also gets people by a store selling merchandise. It makes sense if you’re just doing a limited screening, but even those are selling “theatrical version” discs more often than not as well. Barring a Netflix take-over/connection with every single company, I don’t… Read more »
relyat08
Guest
So, do you think the hold up with Koe no Katachi, as far as a US release, at least, is due to a price thing? Considering it got releases in a number of other companies including Mexico, that was my first thought. But it also seemed like there was a chance of this being a Pony Canyon release, and something they were just not ready to/or allowed to announce yet. I see them listed as the Studio on Amazon JP, and as far as I know none of the other companies on the committee handle international licensing, though I get… Read more »
ultimatemegax
Guest
A Silent Voice’s international rights are held by ABC Animation, as they’ve also held rights for Free!, High Speed!, Myriad Colors Phantom World, and Miss Kobayashi’s Dragon Maid. Amazon JP lists the “distributor” of the home video release; it’s actually published by Kyoto Animation/ASV committee. PonyCan USA is highly unlikely to have it. The holdup in the US is simply economics. Kyoto Animation or Naoko Yamada isn’t a big enough name to get people to see something on their own, so they’d have to market it. The film itself isn’t a happy film unlike Your Name, so it’s a tough… Read more »
relyat08
Guest
I know Aniplex is an entirely different beast, and maybe Okada is a bigger name than I give her credit for, but Anthem of the Heart seemed like a reasonably comparable film and that got a pretty decent theatrical release here. Which also happened to sell out at both of the showings in my local theater(I’m in an area where most anime films do that though). Maybe my social bubble is too skewed to be valuable, but it seems like Naoko Yamada is a fairly well known name. And A Silent Voice is talked about constantly among my friends as… Read more »
ultimatemegax
Guest
It’s as you said “Aniplex is an entirely different beast.” There’s something to be said when you’re able to get films early from a licensor and be able to put them in theatres before JP disc releases. They’re also able to cater to a niche crowd, but even that’s barely 30 theatres for those releases; they’ll depend on disc sales for the rest. We do live in bubbles that reinforce our perception of things. I tend to look outside Anitwitter for marks of popularity as that tends to blind us. While the manga for A Silent Voice may sell well,… Read more »
relyat08
Guest

Do you think there are stipulations for a larger theatrical release that is holding potential publishers back as well? I feel like this would probably work with a very limited release, something like 30 theaters might actually be feasible, but if they are required to put it in a larger number than that, I can see why they would want to wait. Hopefully this is a case of, “we’ll get it in a year” rather than, “we may never get it”. 🙁
I bought the JP set myself in case the latter is the case.

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