Friday, July 04, 2008

ADV Implodes, Funimation Picks Up ADV's Former 'ARM' Licenses

Well folks, stuff is going down. And this is supposed to be my day off! :-)

Funimation announced yesterday that they had finalized a deal for many of Geneon's former titles. We knew that was coming. What we didn't expect was this:

Today Fun answered all the questions about what the heck is going on down at ADV. Funimation has now officially signed a deal with ARM corporation for the following former ADV titles:

009-1
Ah! My Goddess: Flights of Fancy
Air Gear
Air movie
Air TV
Blade of the Phantom Master
Comic Party: Revolution
Coyote Ragtime Show
Devil May Cry
Guyver: The Bioboosted Armor TV
Jing, King of Bandits: Seventh Heaven
Jinki:Extend
Kanon
Kyoshiro to Towa no Sora (Shattered Angels)
Le Chevalier D'Eon
Magikano
Moeyo Ken TV
Moonlight Mile
Murder Princess
Nerima Daikon Brothers
Pani Poni Dash!
Project Blue Earth SOS
Pumpkin Scissors
Red Garden
Sgt. Keroro 1st & 2nd
Tokyo Majin
UFO Princess Valkyrie
Utawarerumono
Venus Versus Virus
The Wallflower
Welcome to the NHK
Xenosaga

So we're going to be making a lot of changes to our store catalog over the next few days. Any ADV stock we have on the above titles will become 'limited to stock on hand', and we will await further info from Funimation on how and when they plan to start re-releasing these series. I think we can also assume that the successive volumes of Kanon, NHK, Wallflower, Tokyo Majin, Devil May Cry, and Shattered Angels that ADV failed to release are in fact 100% canceled. I doubt Funimation will be reusing any of ADV's old ADR and will likely re-release these series in the future starting from vol #1 again or more likely as boxed sets.

I feel terrible for everyone who invested in these series in anticipation of ADV finishing them, but unless you have been in denial I think everyone knew ADV has been hanging on by a thread since January - and I have not made any secret of their problems in my weekly newsletters this year. The failure of ADV to finish these shows will hurt us also in terms of lost sales and unsold inventory on the incomplete shows, so the pain will be felt all around.

I read through the threads on ANN and AOD regarding this briefly today, and a lot of fans and wanna be business scholars are speculating on exactly what happened, but I think it's very simple. ADV has been plaged by serious cash flow problems this year. When your business partner becomes unable to make regular royalty payments, you pull the plug and look for another one that can, and Funimation is currently the strongest player in the R1 industry. They currently have 30% of the US Anime market in terms of sales. Genji has always been the smartest guy in the room in this industry, and has Navarre corporate financing backing him up. He's clearly looking to give Fun a 50%+ market share by next year, and in the process do in a few competitors. That's just good business. Personally, I don't see how ADV will survive after this. There is no way they can make it on re-releases for any length of time. Who will give them financing now? How can their revenue stream ever recover? If they do, they don't have much chance to be a significant player in the industry anymore.

I think fans would have more sympathy for ADV had they been more forthcoming about their problems earlier on, but that's not the way they do things. It's been well known in retailer circles for the past 3 months that none of ADV's new releases have sold well as many fans no longer trusted them to finish the shows. Moonlight Mile, Project Blue Earth, and Shattered Angels all came in with abominable initial sales. Kanon did well with the directs like us, but was a disaster in retail chains like Best Buy and Amazon. I have always felt deep down that they have tended to carry a certain hidden contempt for the fan base (and their retail partners) that has been built into their corporate culture. Gary Steinman (he was the former head of NewType) told me once (in 2006) that he felt like the Anime fan base were mostly 'a bunch of whiners' (a comment that shocked me, mostly that he said it to ME), and there was no love lost between me and him when we heard he was out last January. While we have always have excellent relations with Bandai, Funimation, and Viz, our relationship with ADV has had a lot of bumps over the years. They have always found it difficult to work with us whenever a situation would arise when we were more concerned with the fans wants or needs than with just selling whatever priority they had at the time. I have never felt their strategy to dump excess inventory into the marketplace was wise, and we have showed that by not becoming an outlet for their unsold junk like so many other retailers. There are some really good people over at ADV, but the guys in charge have never run that company the way it should have been. We had the a similar experience with Geneon in that once Denstu took over, they became all about 'pump and dump', and never cared too much about the fans concerns. Looking back, it's not hard to see how these companies end up where they are.

I hope everyone has a great July 4th. Jamie and I are heading out this evening to see the fireworks.

UPDATE: For the last couple of years I have heard execs at both Funimation and ADV blame much of the industry's profitability problems by pointing the finger at each other for bidding up licenses too high. It would seem that Funimation is out to finally solve that problem. By consolidating more than half the R1 market into one company they will finally have some pricing power in negotiations with Japan, so I see this as a net positive for the R1 market over the long run. It will also give Funimation a lot more contract flexibility in choosing how titles are released, and when, and will put pressure on the other healthy studios (Viz, Bandai Ent, and Media Blasters) to handle their businesses better.

UPDATE 2: Our local fireworks show has been rained out until tomorrow. ~sigh~

UPDATE 3: Gen Fukunaga's (Funimation) confirmed at his keynote address at AX that they now indeed have all rights to the 30 titles ADV produced in the last 2 years, but he also said that "for the ARM titles, we are in talks with ADV for continued production", so that means they are looking to finish ADV's ADR on the incomplete titles and then probably re-release them with dubs completed by the original ADV voice actors. Why shouldn't they, it would be the quickest and least expensive way to bring these titles back to market and please the fans at the same time. Kudo's to Funimation for this.

UPDATE 4: Ledford's (ADV) keynote address at AX was a prepared speech, and the mood was quite somber. He said this has been a very tough year for ADV, but that they are working on a deal with another Japanese partner for new licenses and additional financial backing. They are going to wait until Otakon to make any announcements about that to "wait for the blood to dry". ADV's characteristic 'tower booth' at AX this year has been replaced by a simple DVD sales table being run by an ADV employee who also owns a local DVD shop. Ledford said their partnership with Sojitz has been very difficult from the beginning because they tended to concentrate "on the spreadsheets", which means they were worried about unit sales and ROI on their titles. It's clear ADV was not producing for them in a satisfactory manner, causing them to pull the plug.

18 comments:

Shiroi Hane said...

I can't say I agree that FUNi will be scrapping ADVs dubs - they use a number of the same VAs and also writers ADR directors (e.g. Monica Rial, in all three cases) anyway, and Gen said something about negotiating with ADV for them to continue work on the incomplete shows.

Stephanie said...

So Does This Mean that any pre-orders that have been made will get their orders cancelled? Or will we still wait in the long run?

Robert said...

So Does This Mean that any pre-orders that have been made will get their orders cancelled? Or will we still wait in the long run?

ADV will not be shipping any of the canceled titles, so we're assuming for now that pre-orders for them will have to be canceled. We're going to wait until we talk to the folks at FUN on Monday to make the final determination.

As for FUN using ADV's dubs, even so, they will certainly repackage all of these shows for re-release. The folks that have the ADV versions of unfinished shows will probably end up having to purchase them over again when the Fun version is released.

Josh said...

Is there a worry that the discs already on hand by yourselves may get recalled and you being told not to sell them?

Robert said...

Danger of a Recall? No, none at all. They won't, and it wouldn't matter if they did. The old rule of thumb on the retail side is that once it's in my warehouse, it's mine. :-) The fact is, ADV has been dumped extra inventory of these shows all over the retailer market for the past few weeks to get them out of their warehouse prior to this becoming public. We thought they were just trying to raise some quick money, but it seems they knew this was coming all along.

We've placed all these titles on 'limited stock' status and we will continue to ship whatever inventory of these shows we have left in our warehouse until it's gone.

Tom said...

I picked up the entire Guyver series a few months ago, t'was fantastic. I vaguely recall that ADV had a hand in it being made, things must be cataclysmic if they're giving it up.

I can't say I feel too sorry for them though, as a british consumer, ADV is not too popular here, regularly selling 3-episode dvd's for £20 (such as King of Bandits Jing).

Josh said...

That's good news, thanks for the response. Hopefully other retailers do the same thing as it will be easier to get hold of the items :D

Ronald said...

"For the last couple of years I have heard execs at both Funimation and ADV blame much of the industry's profitability problems by pointing the finger at each other for bidding up licenses too high. It would seem that Funimation is out to finally solve that problem. By consolidating more than half the R1 market into one company they will finally have some pricing power in negotiations with Japan, so I see this as a net positive for the R1 market over the long run."

This actually worries me. While I understand that this is a good thing for the R1 market (and possibly their retailer partners), wouldn't this be a bad thing for the Japanese industry? Fundamentally speaking, if the Japanese are not getting a fair price for the anime, my act of purchasing a DVD does little more than watching just fansubs. Not that it's up to me, but I'd prefer as much money as possible to flow back to Japan.

Granted, there needs to be balance so that the interests of all parties are met. And certainly, if the license fees are too high, there is an imbalance. On the other hand, they can also be too low. FUNimation's new position makes me wonder if they might go that direction... I'd personally rather more money flow back to Japan than up to Navarre, I guess. Not that my opinion matters in the grand scheme of things.

Rachel said...

I heard form news at the anime expo that ADV is est and divion that they will release titles that were on JP TV that are not dubb on R1 DVD, is ADV still dubbing furtue anime titles (like Sky Grils)?

Chii85 said...

I heard form news at the anime expo that ADV is est a divsion that they will release titles that were on JP TV that are not dubb on R1 DVD, is ADV still dubbing furtue anime titles (like Sky Grils)?

Josh said...

It would be very unwise for FUN to scrap and redub. Why do that when, like Shiroi said, they use the same VA's and what not. It would probably save them some dough along the way. I use to think a lot more highly of ADV. Sad sad stuff. And... I have a question. Is what's happening to ADV similar to what happened to Geneon? If that's the case, wouldn't they see the faults of their competitors and rethink their own? Or are they just retarded? To not confuse. This is a differeent Josh I also can go by T.J.

Robert said...

ADV's and Geneon's situations are completely different, but the fallout is the same. No one in Japan can just pull the plug on ADV in the way that was done with Geneon because ADV is an independent company, not the US division of a Japanese company. The problems that ADV is having with their Japanese partners are entirely different as well, it’s only the results that appear similar.

Robert said...

I heard form news at the anime expo that ADV is est a divsion that they will release titles that were on JP TV that are not dubb on R1 DVD, is ADV still dubbing furtue anime titles (like Sky Grils)?

My understanding is that they are 'working' on a deal, which at this point doesn't mean anything. Let me put it this way, I’m sure Apple is also ‘working’ on $30 iPods, just don’t expect to see any this decade. Whatever ADV is able to do going forward will depend on their financial position once all the dust settles.

Hellsing Royal Knight said...

so after that, is their a possibility fun will also continue Slam Dank and Saint Seiya? thanks.

Robert said...

so after that, is their a possibility fun will also continue Slam Dank and Saint Seiya? thanks.

Either series would be a long shot for re-release. Slam Dunk because of the licensing challenges and Saint Seiya because sales were pretty awful when ADV had it in release.

Starcade said...

Well, color me shocked ADV even made AX -- in fact, I was very public and very loud that ADV would be gone by AX...

It's really sad to say, but it sounds like what is left of ADV is probably going end up in the hands of CrunchyRoll -- or the other way around (CrunchyRoll being in the hands of what is left of ADV.).

It is clear that there is such contempt in ADV's handling of all this that singles will probably become a thing of the past (Heck, if Ouran even gets half-seasons, there isn't anything out there right now which probably justifies singles at this point.), with, realistically, English dubs soon following. (English dubs are just getting way too darned expensive to justify the expense anymore.)

It's almost to the point that I just wish the entire industry would just go under - because that's what's going to happen. You have Funi probably in possession of 60-65% of the present anime market, but Navarre can't be seen as the most stable of companies out there.

Hate to say it, but I think the pirates and thieves won.

Ryokosha said...

What about ones like Kanon which had one volume left? I cannot believe they didn't already have that one dubbed and ready for release?

Isn't it likely that FUNi will release it as is at least for now and hopefully soon? I mean if the work is already done how hard is it for them to just release it under their label now?

Robert said...

>Ryokosha

Ummmmm, please see my July 16th post. :-)