The Kyoto International Manga Anime Fair was graced with a Yamato 2199 presence for the third time in 2014. (Read about it here.) In a unique behind-the-scenes seminar, the curtain was lifted for an inside view of the anime business with 2199 as a focal point. The presentation was given by series producer Mikio Gunji and was covered by two online news sources.

In the interest of expanding awareness of anime production challenges to the English-speaking world, here are translations of both reports.

Understanding of the Space Battleship Yamato 2199 business model

deepens at a Kyoto 2014 business seminar

Published at Anime Anime, October 1 2014

In order to deepen understanding of Yamato 2199‘s business model, a business seminar was held at Kyoto International Manga Anime Fair 2014 as a good example of the event along with various others. This year, a seminar titled The Business Side View of Space Battleship Yamato 2199 was presented by Mikio Gunji, Corporate Executive Officer of the Production IG planning office.

Production IG is the leader of the Production Committee, and Producer Gunji’s position is in charge of general business. Yamato 2199 is a remake of Space Battleship Yamato, which was broadcast in 1974, and Mr. Gunji explained in detail the changes in the environment surrounding Yamato.

In 1974, during the golden age of TV, anime could achieve a 30% audience rating. As a result, it was a time when big companies (national clients) first began to sponsor animation broadcasts.

Differences in the 1970s business model of Space Battleship Yamato and current anime

In the case of a single company that sponsors an entire program, Mr. Gunji said what they care about is reach and frequency. Frequency refers to how many times a viewer sees a commercial. This is an important factor because viewers unknowingly choose a product for which they have an affinity after seeing it several times in a commercial. That’s why a national client desires to sponsor a program with high ratings.

However, it is difficult for anime programs to obtain high ratings because of the variety of available entertainment. According to the latest statistics, the average overall audience rating for anime is said to be 2.8% (according to a media study by Dentsu Communications). In these conditions, works that achieve ratings over 10% are mainstream family programs such as Sazae-san, Doraemon, Detective Conan, and One Piece. It is difficult to raise ratings for any animation besides those made for family viewing. Producer Gunji revealed that it is the same for 2199, which did not achieve the nationwide TV ratings of a family anime.



Production IG’s booth at the Kyoto Manga Anime Fair

Recovery by Blu-ray and DVD is the current business premise of anime

So, how do you raise profit? To illustrate this point, Producer Gunji explained the production committee method that has now become mainstream in anime production. This system is a method by which multiple companies each invest in an anime, and the anime production company itself also contributes finances.

Producer Gunji said that the general mass-media view that animators are hurt when sponsorship funding from big companies is spent on advertising rather than production is in fact a misunderstanding. The main characteristic of the production committee method is to take on both the burden (investment) of production cost and the purchase (sponsorship) of airtime. In other words, he explained, a production committee carries the dual risks of investment and sponsorship when producing an anime.

Producer Gunji quotes the words of his predecessors in the anime business: “It’s like roasting potatoes with money.” The business risk is very high when an anime production begins, and can blow through 100-200 million yen ($1-2 million) very quickly. In other words, making anime is a gamble of hundreds of millions of yen with each work, and if profits do not appear, “you can lose big money if it doesn’t become a hit,” he explained.

In such a high-risk business, the high profitability of DVD and Blu-ray sales supports an anime, and the first profits are made when you purchase these expensive products. Although the opinion on the internet is that “DVD and Blu-ray prices are too high,” it was explained that anime production costs are recovered by the high unit price. Therefore, he specifically emphasized that, “Many anime broadcasts on TV are advertising for DVD and Blu-ray sales.”

According to Producer Gunji, it is said within the industry that there are about 30,000 heavy buyers of Blu-rays and DVDs across the country. Therefore, even if a creator hopes to make an anime for children, the project does not materialize in many cases because it is difficult to recover profits from DVDs and Blu-rays of child-friendly works. Instead, the condition is to adopt projects that appeal to the audience that buys DVDs and Blu-rays.

What are the special points of Yamato 2199?

As mentioned above, the current flow of anime business is to carry out a TV broadcast first, promote DVD and Blu-ray sales, then if popularity takes off an anime can be released theatrically.

The unique point of 2199 was to do the exact opposite, which Producer Gunji explained in detail. 2199 carried out event screenings in various parts of Japan and sold Blu-rays at the theater. Afterward, both Blu-rays and DVDs were sold in stores, and then it finally went to nationwide TV broadcasts on MBS and TBS.

“A variety of chances made this happen,” said Producer Gunji. “Although TV broadcasts tend to be the rail you run beforehand, this time TV broadcasting was undecided at the start.”

As a result, the TV broadcast of 2199 succeeded, and some stations recorded their highest viewer ratings. It is estimated that four million people watched it. In addition, video and plamodel sales were also a hit with about 500,000 pieces, and Mr. Gunji said this amounted to an economic scale of about 10 billion yen (about $100 million). The effect of the TV broadcast was vivid, with sudden increases in plamodel sales. Moreover, though it was initially thought that the main audience would be traditional Yamato fans, it was revealed that more children were watching that expected.

The TV broadcast could be realized this time because favorable conditions became clear in Blu-ray and DVD sales during the screening events, and “Recovery of the production costs, which was the first risk I mentioned, came into view,” Mr. Gunji said. Since a forecast of earnings was clear, members of the production committee made the decision that they could pay the sponsorship expenses needed for a TV broadcast.

Incidentally, it was said that Production IG, a production company, became a sponsor of the nationwide TV broadcast. There were no commercials in the beginning, but some were seriously considered for the pizzeria Musashino Campus, located on the first floor of IG. (In fact, commercials for this pizzeria were not made, and instead commercials were broadcast for IG’s independent production Kick Heart.) Producer Gunji summarized that the ideal outcome of a successful anime broadcast is to go nationwide and recover its production costs.

Based on this, “There is a cost price in anime together with sales like any other industry,” Mr. Gunji said. “If the work doesn’t make a profit, it will disappear. Consumers are surprisingly unaware of this fact,” he stressed. When the work was initially deployed, although he wanted to make great use of mass media for the event screenings, after evaluating profitability, a strategy was adopted to do as much pinpoint advertising as possible.



Yamato 2199 display at Kyoto Manga Anime Fair

When a nationwide TV broadcast was considered part of that pinpoint strategy, it became possible to sponsor the broadcast from the height of profitability, and that’s what lead to the TV broadcast being realized.

Some fans have said they want 2199 to be more heavily advertised, and it was explained that costs are multiplied by advertising, and cannot be recovered unless profits are at least three times the cost of promotion. Mr. Gunji stressed that the work could not continue if business decisions are not made with a keen awareness of cost recovery.

Concerning the cast of a large-scale anime movie project, in many cases film actors are given major roles rather than voice actors. This is done with awareness that it will increase the visibility of the work. In the case of TV anime, since the TV broadcast itself is advertising, it is extremely rare to cast anyone other than a voice actor, but when it comes to anime movies there are many such examples.

Among anime fans, there is opposition to casting anyone other than a voice actor. Mr. Gunji explained that the simple reason for daring to do this is “because it’s important to have it catch on on TV.” An anime movie could be produced only with voice actors, but how it catches on in the mass media is vital when it comes to promotion, including on TV. Mother Theresa’s famous quote was, “The opposite of love is not hate, but indifference.” Mr. Gunji’s supplement is, “First of all, you must be known. Nobody goes to a theater to see something they don’t know about.”

In addition, a special characteristic of the 2199 project was that while there were many in the media who were hoping to turn it into articles talking up “the demise of TV,” making statements like, “TV isn’t needed, no one watches TV any more,” it turned into a reiteration of the clout that TV media still has, saying “the truth is that everyone watches TV for one reason or another. TV is still a medium that has enormous recognition, and an anime film that couldn’t deal with TV couldn’t become a hit.”

The lecture was concluded when Mr. Gunji addressed the attendees who participate in various industries by saying, “Let’s work together in the anime business! If more people participate, the anime industry will grow. With that, various businesses will get interested in anime, so please become an anime sponsor!”

It can be said that 2199 was a work that escaped from the conventional anime business model and demonstrated a new direction of anime business development.

In fact, a special Yamato 2199 compilation movie titled A Voyage to Remember will open October 11 before a completely new movie titled Ark of the Stars premieres nationwide on December 6. Even the development of theatrical works creates new trials. That is reason alone to keep an eye on future development.