Anime Expo 2009

Keynote, Day Two: Shawne Kleckner on the state of the Anime Industry

Shawne Kleckner, CEO of The Right Stuf International, started by mentioned that the average consumer is having trouble keeping up with anime releases, since there is a wealth of product and buying everything would be beyond the budget of the average fans. Furthermore, fans are impatient and waiting for releases is not something most anime consumers are willing to do. "Anime fans are early adopters," said Kleckner, in reference to anime's younger fanbase accustomed to downloading and viewing anime for free. Furthermore, the issues with licensors putting restrictions on anime releases and charging high license fees were also cited as reasons the industry in North America is struggling.

The sales of DVDs were mentioned as the main platform by which anime is profitable. Kleckner mentioned that although online distribution of anime has helped, online subscription services still require credit cards that younger consumers do not have access to. He also stressed that some fans aren't going to become consumers at all: "We need to acknowledge that we will have a core constituency that will pay for anime, and there will always be fans that won't pay no matter what." As a result, DVD is still the main method by which to make a profit from an increasingly diverse customer base.

To set things right, Kleckner mentioned three driving factors that affect the anime industry. The first of these was the speed by which anime becomes available. Kleckner described the labyrinthine production committee system in Japan as one of the factors that has kept anime from getting to the North American market faster. To fix this issue, he said that it is important that the Japanese creators and North American licensees work together from the earliest stage possible to facilitate its move to the worldwide market. This should also be done so that more time can be invested in deciding how to develop revenue for a title.

The second factor mentioned was cost. "The single DVD sales model is dead," said Kleckner, citing the "box set" format for releases of American TV shows as the main reason anime has also switched to a box set format for new releases. As a result, the cost of dubbing a series - especially a niche market title - isn't always viable. Additionally, replication costs and license fees can be high, so companies must "remain lean" to turn a profit. License fees were a big focus of Kleckner's speech, and he was frank that some licenses are still priced at a total that reflects market conditions that have since deteriorated, saying, "something has to give" in the relationship between Japanese production companies and licensees.

The third factor Kleckner touched upon was quality. "People want value for their money, but they want it to be cool as well," said Kleckner, who called for more education of fans as to what their getting. "Anime companies often go back and improve the quality of an anime before the DVD gets released, so using that master for a North American release means the consumer gets a more high quality product," said Kleckner. He also suggested that doing "value adds" to releases, such as toys, booklets, and DVD extras, can also help sales.

To fix the problems in the industry, said Kleckner, "we need to change the business model as a whole." American license holders need to be a partner in the anime production process so that both they and the Japanese production companies can repair the damage that the industry has sustained. Although online streaming of anime is one way to replicate the effect of TV broadcast in Japan, "content cannot be left online indefinitely" because of the damage it would do to DVD sales. In closing, Kleckner suggested a return to the small market-oriented business model that anime companies used in the early 1990s, and made perfectly clear that the industry must "adapt or die" if it is to survive.