Ask John: Why Is the American Industry Using Niche Marketing Strategy?

Question:
Why is the niche market business model no longer treated as viable in the anime industry? The niche model of the 90’s proved to be highly lucrative and successful for many companies. Yet as we continue on, corporations seem to be avoiding the idea of anime as a niche market like the plague.

Instead we see companies dropping features considered basic a decade ago, such as dubs. At the same time we see companies like Geneon preferring to pursue a broad market to the point of bankruptcy without scaling back; even companies that have always been niche such as Animeigo seem to no longer think the market can be sustained in such a way and have moved onto different projects.

Answer:
You’ve actually answered your own question. Current trends in the domestic anime distribution industry are specifically a result of anime being a contemporary niche commodity. The niche market business model is more prevalent in America’s anime distribution industry now than it has been since the mid 1990s. The few remaining American anime distributors are taking the steps necessary to ensure their sustenance. The business practices typical of the early 2000s’ American anime boom are no longer viable (although arguably Viz is trying to disprove that notion).

The earliest American anime industry imports during the 1990s from distributors including AnimEigo, AD Vision, Central Park Media, Japan Hero, Star Anime Enterprises, and US Renditions were subtitled only and marketed to the tiny niche market of underground anime fans in America that obtained anime from comic shops, independent video game stores, sci-fi conventions, and other individual fans. English dubbing was, and always has been, a marketing strategy to attract viewers that otherwise wouldn’t watch and purchase foreign film. Dubbing arose in America’s anime industry as a conscious effort to make imported Japanese anime accessible and appealing to Americans who otherwise would never have considered watching Japanese cartoons. Dubbing was a risky investment that paid off, so it continued until American consumers became so used to bilingual releases that dubbing was perceived as an equal and alternate foreign equivalent to original Japanese language anime instead of being a bluntly imposed marketing tactic. I don’t expect or insist that anyone agree with my perspective, but my own perspective is that dubs are training wheels that introduce viewers to authentic, unaltered Japanese anime, not a substitute or preferable alternative produced by American marketing professionals who had little or no involvement with the original creation of the anime. Excuse my tirade, as it’s not my purpose here to criticize dubbing.

Investing in the expensive production of English dubs, fancy packaging, and extensive original supplemental features is justified when those investments boost sales, revenue, and the exposure of anime in America. But the demise of Geneon USA and the drastic scaling back of dubbing and “collector’s edition” DVD releases has proven that those extra expenses are no longer justified. In light of the current minimal domestic market for anime, those extra expenses are merely extra expenses that won’t be recovered. The argument may be made that bilingual releases and high end, limited edition packaging will generate increased sales, but reality has proven that argument untrue. If bilingual releases, extensive special features, and collector’s boxes sustained sales, companies like AD Vision and Geneon would still be the most prominent anime distributors in America. In reality, the current American anime distribution industry is working on a niche market business model. Distributors including AnimEigo, Bandai, FUNimation, Media Blasters, Nozomi Entertainment, and Section23 are giving hardcore fans affordable half-season or complete series sets and concentrating their licensing efforts on niche market titles like Spice & Wolf, Lyrical Nanoha, Aira, Maria-sama ga Miteru, Doujin Work, Ikkitousen, Sola, true tears, Kannagi, Blue Drop, Polyphonica, Antique Bakery, and Junjo Romantica. None of those aforementioned titles are ever going to get mainstream American TV exposure. None of those titles are going to become the next Bleach, Inuyasha, Dragon Ball, or Naruto. But if they’re localized inexpensively and sold to hardcore fans at an attractive price, they sell just enough copies to generate a sustainable income. That’s the very definition of niche audience marketing.

I did mention Viz Media being an exception. Viz is adhering the unavoidable contemporary niche market trend by releasing Nana and Hone & Clover in inexpensive multi-disc sets, although they will be bilingual. However, following the highly successful release of its multi-disc uncut Naruto boxed sets, Viz has announced plans to initially release Naruto Shippuden in the form of single, monthly DVDs. Most of America’s anime industry has abandoned the individual release format because mainstream retailers like Best Buy are unwilling to stock and display lengthy individual DVD volume series, and the current American consumer market for anime has largely come to expect inexpensive multi-disc releases. Viz is either setting up is domestic Naruto Shippuden DVD release for failure, or is hoping to use the release to point the way out of the domestic industry’s current niche market philosophy. Subtitled only releases, releases available mainly or exclusively through specialty retailers (like Kannagi and later volumes of series including Baccano & Darker Than Black), and complete series releases with no prior official American market exposure (like Gakuen Alice, true tears, and ADV’s two volume Princess Resurrection) are the epitome of marketing to a niche consumer audience. Bilingual serial releases like Viz’s upcoming Naruto Shippuden represent efforts at major mainstream distribution methods.

I can assure you that America’s anime industry hasn’t reverted to niche market strategies by design. Viz Media and Bandai are still distributing some high profile bilingual DVD releases because they have the financial backing from their Japanese parent companies to do so. FUNimation continues to routinely dub all of its releases because wise acquisition strategies, profitable tentpole titles, and strong relationships with Japanese licensors have given FUNi the financial flexibility to continue dubbing. But the smaller independent American anime distributors, ADV Films (now AEsir & Sentai), AnimEigo, Manga, Media Blasters, and Nozomi have been forced to scale back as a result of declining consumer support. Consumers aren’t buying anime DVDs, so distributors don’t have income to invest in dubbing. You can say that it costs money to make money, and that domestic anime DVDs would sell better if they included dubs, bonus features, and fancy packaging, but history has already proven that dubs, bonus features, and limited edition packaging has only a minimal impact on sales volume. I’m aware that it’s contrary to presumed business practice to blame the consumer, but in this case it’s true. You get what you pay for. And when consumers demand rock bottom anime DVD prices over a sustained period of years, the result is companies including CPM, Geneon, and Synch-Point leaving the industry and the remaining players cutting costs to meet consumer demands for cheap DVDs.