ANN CEO Chris Macdonald sat down with Viz Media‘s Senior Vice President of Animation, Brian Ige, to talk about Viz‘s strategy with regards to anime licensing and cross-promotion, possible shifts in anime licensing prices, and the future of the U.S. anime market.
CHRIS MACDONALD: Can you tell us a bit about your background working at Viz?
BRIAN IGE: I have been now at Viz for a little over 17 years. I started as a sales manager for manga and anime; then, at a certain point a few years into my career, I had an opportunity to kind of figure out which side of the business I wanted to focus on, and the anime part of the business seemed to kind of fit well with my background – prior to Viz, I was in home video sales.
MACDONALD: As Senior Vice President of Animation, what is your day-to-day like? What are your core responsibilities?
IGE: I oversee the animation business, which I know is a very general term, but that includes content acquisition, production – which encompasses localization, video production, digital production – and sales, and under that sales umbrella is home video, EST, streaming sales, merchandise, and consumer products.
MACDONALD: Remind me what EST stands for?
IGE: Electronic Sell-Through. Like iTunes – you know, download-to-own type content.
MACDONALD: I know both Viz Manga and the streaming business are doing exceptionally well, which is a silver lining to the pandemic. How has home video been doing for you?
IGE: So when we talk about home video in general, I think of it as both [digital and physical]. Are you referring to just buying video digitally or-
MACDONALD: Physical, primarily, but address both separately.
IGE: Physical has had some headwinds, but that’s no surprise – that was happening even prior to the pandemic. I think we were seeing double-digit declines overall as an industry year after year.
However, for anime, there was a little bit of a bright spot; that business, from where we sat, was pretty flat, so we didn’t see as much of a decline as we did versus the rest of the industry. As streaming continues to grow and digital becomes a larger part of normal consumer behavior, I think you’re starting to see a little more of the decline on the home video side of things. A lot of that is also driven by retail: we’ve seen retail start to consolidate space on the home video side. But anime still remains a bright spot. We have placement in all major retail stores, with Walmart and Amazon being our two biggest retail partners in the space, and then we also have specialized retail like Right Stuf, which has also been a bright spot for our industry when it comes to anime, manga, and consumer products.
Overall, I think it’s been…challenging is probably the best way for me to put it. But in the eyes of the retailers, we’re still a category that has been performing above the rest of the industry. So I’m really happy about that.
MACDONALD: A lot of companies have told me that Amazon and Right Stuf are their two biggest sales channels for home videos. Is that the same for you guys?
IGE: I would throw Walmart in there as well.
MACDONALD: Right now the market is changing a lot, and you’ve got a lot of consolidation among your competitors. Viz has always been corporate-owned by Japanese companies, but we’ve also got Section23 that’s joined the AMC network. What is Viz Media‘s home video department doing to remain competitive?
IGE: First and foremost, we’re a publishing company, right? We were established – we were brought over here established 35 years ago, owned by two of the largest publishers in Japan. So we’ve been brought here primarily as a publishing company. When I first started, anime was always a supplement, a way to help amplify what we’re seeing on the manga side of things. That was pre-streaming, and streaming obviously exploded, and there was this huge content acquisition bubble which really drove up pricing. That’s when Viz started to look at new opportunities, to stray outside of just anime tied to our core publishing business. Historically, we’ve always tried to acquire anime content that would help support our publishing business. But with that boom in streaming and that rush to acquire content, we started looking at other opportunities. Sailor Moon, for example, was a big one for us where we don’t have the publishing but we went out and got the animation. We’ve started looking at content from Netflix as well to be competitive and continue to fill our content pipeline.
But now with all of the consolidation that’s happening, I think we are starting to refocus on our initial strategy at Viz, which was to find content that helps support our publishing business. It’s a sort of 360 degree product approach, where we start with the manga, then launch simulcast anime that helps support that manga, and then build consumer products off of that. So I think ultimately that’s where we want to be. When streaming started to become what it is now, we pivoted a little and tried to be opportunistic around content that we felt made sense and that the audiences here wanted, but there’s just so much anime flowing into the domestic market now. Viz has always been very strategic about what we pick up – we’ve never really gone out and acquired content in volume. We’re very strategic and specific; whether it was tied to publishing or whether it was the type of property that we felt could work in the mass market channels, we’ve really refocused on trying to tie everything together with our publishing business. So I think you’ll start to see more come out from us that are going to be tied to our publishing versus what you’ve seen in the past.
MACDONALD: The next question is actually right on that. In terms of licensing content that Viz is already the publisher, how much of an edge does that give Viz in terms of just being able to get that license?
IGE: Not much, if I’m being honest. I mean, it’s still a business, right? And our parent companies are not necessarily the ones that are licensing the animation rights – it’s usually through other third parties. So we go through the traditional bidding process like everyone else. I think the one thing that could potentially give us an advantage is if we do have publishing, we can help support the franchise in a bigger way. We also can sell home video products, EST, and consumer products. So if we’re competing against the streaming-only platforms, we can add value in other ways by being able to sell merchandise and products.
We don’t have our own streaming service, so that’s another way that we try to position ourselves to licensors. We try to find the best possible match for the content and the platform.
MACDONALD: Are you interested in taking on exclusive streaming licenses, or do you expect to continue working with streaming partners? Is there any possibility of Shueisha or Shogakukan launching a streaming platform in the future?
IGE: I’ll start with the latter. I can’t speak on behalf of Shueisha – I don’t know what their plans are in terms of launches. I do know that their manga service has been doing really well, and we also have a piece of that in the US.
But in terms of streaming, I don’t know. We’ve seen several attempts in the past of companies from Japan trying to start streaming services and they haven’t had much success. And our parent company is primarily a publisher, so it’s hard for me to imagine that they would go down that route, but again, I’m not privy to a lot of what they’re doing behind the scenes so I can’t speak to that. But in terms of the exclusive license part of things, I think that’s always going to be our preference, you know, to have full exclusivity around a brand and franchise so that we can really help dictate how that brand is exploited in the marketplace and to find the best landing spot for that piece of content.
MACDONALD: Related to that, Viz used to embed anime on its website, but that’s gone, so I’m kind of curious about what brought that about.
IIGE: That was part of a partnership that we had with Hulu. That wasn’t a Viz-only streaming service. We’re working in connection with them, and that was when Hulu had content in front of a paywall that’s since gone away. And so we were kind of the last legacy piece that they held onto for that, but now all of it is behind a paywall. So there’s nothing strategic about that – just a business decision on their part and we followed suit.
MACDONALD: And then going back to something you mentioned a while ago – about tying in the anime that you license with the manga that you already have so that you can cross promote – what is the strategy for that cross-promotion?
IGE: For us, the strategy is, again, if we have all of the different product categories, we can basically talk about a brand for almost two to three years non-stop. You know, we have ongoing publishing that kicks everything off, and then maybe about a year into that or 18 months into that – hopefully there will be a simulcast that’s supporting that anime which will typically go anywhere from three to six months, and depending on who the partner is, whether they do a simulcast or not – we go into our consumer products piece, and then from there we can hopefully extend the brand for another couple of years.
So I think that’s really the benefit to us being able to work with our partners in that way, in that it’s not just about that one product. It’s not just about speaking to that one particular audience. When we have all of these different product categories, we can speak to all kinds of different audiences, but tie it all into the same brand which in turn helps grow that pie across all of the different audiences.
Obviously we know that people who watch anime don’t necessarily read manga and vice versa. There’s crossover, but that’s not always the case. So it’s good to be able to reach multiple audiences. Different touchpoints for the brand, which is what we always hope to accomplish.
MACDONALD: Do you ever invest in product anime production?
IGE: So we did Seis Manos, remember that? Co-production is something that we have been exploring and looking into, and hopefully there’ll be something that we can share shortly with some of that.
But we’re always trying to find different ways to acquire content, whether it’s through traditional licensing, partnerships, investments, or co-productions. I think a lot of this started when the bubble happened, when acquisition costs were to the point where it’s more expensive to license it than it was to make it. And so I think that really kind of drove companies like ours to look into investments and co-productions because it just makes more sense for us to be able to do that. I don’t know if it was run on your site, but we recently hired Sae Whan Song from Crunchyroll who was part of their co-production and development team, so you can see that we’re kind of making some moves in that space. And like I said, hopefully there’ll be some things that we can share once we have a better sense of projects that we can move forward with.
MACDONALD: You were saying that you’re probably not going to be doing newer titles that aren’t tied directly to your manga, but one of the biggest titles that you picked up recently that really wasn’t tied to your brand, your company, or to your publishing parents at all was Netflix‘s Castlevania. How did that come about? Like, what inspired you guys to grab that?
IGE: I’ll be honest: it kind of came about through somebody on our staff who’s no longer at Viz, but had relationships with people at Netflix. So yeah, it kind of came about through internal networking and external partnerships. But that was largely driven by an internal employee who had relationships with studios and different production companies that do stuff for Netflix.
MACDONALD: You were talking about the bubble – and I’m always curious what the reactions were to that article I wrote about a year ago when I detailed the prices for, say, licensing a triple A title – so the question I did want to ask was, has that bubble contracted at all? Have prices come back to something a little bit more reasonable than they were 18 months ago?
IGE: We haven’t acquired anything in a really long time (laughs) – our bids were never accepted – so it’s hard for me to tell you what that ceiling price was. But I will say that, with the consolidation of Funimation and Crunchyroll, by default prices are going to be driven down, because you’re just removing one competitor from the scene who was helping to drive prices up. So now it’s them, Viz but we don’t acquire a lot, Sentai, and Netflix. There aren’t a lot of players that are doing volume. Both Crunchyroll and Funimation did a lot of volume, and so I think that’s what’s gonna be missing, which in turn is gonna drive down pricing.
But again, I think the bubble is gonna drive down pricing as well. A lot of that is being driven largely by platforms like Netflix, Hulu, and Amazon Japan to a certain extent, and we’re seeing some of the impact in the press recently with Netflix – it’s impacted several people that we know. It’s unclear how that’s gonna impact pricing, because they were one of the largest drivers of the bubble.
MACDONALD: Time for some conjecture: where do you see the anime market, particularly in the United States, going in the next 10 years?
IGE: I think I’m gonna kind of turn it back to manga, because that’s what we’re focused on. I still continue to see growth on that side of things, and I think that is going to be one of the critical drivers to anime continuing to be developed. In Japan, that’s the model, right? It’s successful manga leads to anime.
So as long as the manga market continues to thrive, I think you’re going to see more anime coming out, and that production pipeline is going to remain solid. So I’ll start there by saying that based on that and what I’ve been seeing on the market side of things, I think that the anime industry has a very bright future.
In terms of consumer behavior and how all of this plays out with the different platforms, to be honest, that’s still to be determined – I’m not really sure where it’s headed. I do know that players like Netflix and Hulu were key drivers in helping to get the content to more audiences than ever before.
Obviously anime has global reach, so there’s always been demand. I remember, back in pre-streaming days, we did this survey on piracy. When it comes to the most pirated content globally, number one was Game of Thrones, and number two was Naruto. So the demand has always been there – there’s just never been a way to connect audiences with that content until streaming came about. I do think you’re starting to see it hit a little bit of a ceiling with anime on streaming platforms; there’s just too much coming out and it’s not being curated properly. And so that’s gonna be the biggest challenge kind of facing the industry now: really being selective about what we bring over, making sure it finds its audience here, and that things don’t get lost.
Because there’s just so much content in general – not just anime – that the question becomes “how do you keep people focused on what you’re trying to do?” That’s the question I can’t answer just yet. So for me, the touchpoints that I talked about – being able to reach audiences through manga, anime, consumer products, merchandise, video games – is what I feel like the best way for us to continue to support the brands and reach different audiences and kind of tie it all together.
MACDONALD: We were talking about manga being where a lot of the anime comes from. Over the last decade, a lot of anime has also come from light novels. Viz is not really a huge light novel publisher, but I’m kind of curious if you see the influence of light novels on anime continuing steady, growing, or diminishing from an anime perspective?
IGE: That’s a good question. To be honest, I don’t really have an opinion on that at this point. I would say it’s steady. With all the content that’s come over, I think we’ve really started to identify what’s been working and what hasn’t. There have been some surprise sleepers that have come out recently that are outside of that sort of action category, you know?
MACDONALD: What’s been your biggest surprise recently?
IGE: Komi Can’t Communicate – that’s a big one. That’s something I think sits outside of what you’d think would normally be popular, you know? So, that one was kind of a surprise. I mean, we see the manga sales, so we saw that it was doing well there, but when the anime launches you never know, right? If it was an action title and the manga was doing well, I would be surprised if the anime didn’t do well, but for that specific genre within anime I was actually surprised that Komi has seen the type of success that it has.
But everything else kind of falls within the norm of what you would think is popular and going to be popular. So no other real surprises for me in particular.
MACDONALD: Last question: Yashahime is one of your biggest titles in recent years. From your perspective, has the series been successful at topping the InuYasha nostalgia?
IGE: I think it adds to it. I don’t think it will top InuYasha; in terms of that world, I think the original InuYasha series is always gonna be king. That’s what kind of started everything, then there was InuYasha: The Final Act, and then Yashahime – it’s kind of similar to Boruto in that regard. It skews a little younger. When I talked about content that makes sense domestically versus internationally, there are differences. The younger-skewing content tends to do better in Japan as spinoffs from the original series, which is why they continue to follow that model.
Here, what we’re seeing is a tendency for the content to skew up, to become a little more mature, teen+, R-rated, darker. And I think that’s what seems to resonate well with audiences here. From the original source material, you start to see it age up a little bit versus age down.
Again, it’s a little mixed for Yashahime. I think fans of the original series are always gonna gravitate towards the spinoffs, and we’ve seen success through the different services that we’ve placed Yashahime, but it’s not like going from Naruto to Naruto Shippūden if you know what I mean. So I think that’s where the biggest difference is – the age target for Yashahime seems to target a younger demographic from the original series.
MACDONALD: That’s it for the questions. All of the additional questions I had were answered as you were discussing, so that’s actually really good, and I really appreciate all your candor.