Answerman

How Is This Bubble Different From The Last One?

Branko asks:

There has been a lot of talk about the anime industry being in another bubble, which inevitably leads to the question: how is this one like or unlike the last one? How is this one similar and different from the last anime bubble and what might happen down the line? I know this is only speculation, but any insight would be noteworthy regardless of how wrong it ends up being.

While virtually every major figure in the anime industry today is in agreement that we're definitely in a market bubble, the landscape today looks vastly, vastly different than it was the last time we had to deal with the collapse of such a bubble in the anime world, back in 2007. And the good news is, a repeat of the apocalyptic conditions the business faced back then seems almost impossible to reproduce today.

What happened in 2006 and 2007 was a confluence of multiple terrible things happening all at once to create a perfect storm. We had the decline of the physical DVD market, which anime was still 100% dependant on. We had the bankruptcy of Musicland Group (Sam Goody, Suncoast, Media Play), which was sitting on an unimaginable amount of anime inventory and owed all of the publishers a ton of cash. We had massive, massive retail returns from virtually every major retail channel. We had the collapse of the American economy at large, and we had a gigantic piracy problem. AND license fees were out of control. All of that happened AT THE SAME TIME.

Today, there are only a handful of retailers that even stock anime DVDs, and in nowhere near the numbers they once did. This means that if those retailers stop paying their bills or return a bunch of product, it won't hurt the publishers too badly. Consumers have already transitioned to a "watch it online, collect it on discs" method of consumption, and the publishers are getting their revenue from a ton of different ways of distributing their shows. It's simply a lot harder to hurt an anime publisher today for those reasons: there's not as much risk when money is coming from many different directions. There is no regular cycle of the publishers being owed a ton of money for things they already paid to make, like there was in the DVD era.

Two things that are the same, however, are that license fees are once again out of control, and if the greater economy took a nosedive, our market would definitely be affected. If Hulu or Netflix made the unlikely decision to get out of the anime business, that would shut off some big money for a while, but the fans would eventually go elsewhere, and the money would find a new way to get to the publishers.

The worst that could happen, honestly, is that if the economy tanks and subscriptions drop and advertising revenues run dry for a while, the anime publishers won't make as much money. They'll no longer be able to afford the ridiculous license fees they're currently paying for anime, and for a couple of seasons we won't see quite as many shows simulcast as we did before. Then the licensors will lower their prices, and things will likely go back to normal. In Japan, we will likely see fewer shows being made (and possibly a shift back to "safer", otaku-friendly genres), but aside from that, the difference will be hard to notice for consumers.

So for that reason, I'm not particularly worried this time about a major market disaster. There are any number of weird things that could happen to the anime business, but a repeat of what happened 8 years ago is exceedingly unlikely.

Justin Sevakis is the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap, and check out his bi-weekly column on real, strange stories from the anime business, Tales of the Industry.