Friday, January 30, 2009

Are the Wall Closing In on TokyoPop?

Slowly but surely, the walls seem to be closing in on TokyoPop. We've continued to watch the restocking situation on catalog (older) TokyoPop volumes deteriorate over the last 3 or 4 months, and in some cases we've been forced to take some volumes down off the site (which we absolutely hate to do).

The situation with Aria Vol 4 (which seemed to be short pressed and not followed up even though there is plenty of demand), has caused a lot of folks to start looking closer at the company's health.

Now we are seeing that Diamond Comics has listed a number of upcoming TokyoPop volumes "canceled by publisher".

This is not the first time TokyoPop has canceled or delayed the release of a substantial block of previously announced volumes, but this list is disturbing in that (unlike previous announcements) these are some of their best selling titles (at least at our store). And some of the titles are high sequence volumes from series that have been in release for a long time (like Initial D, Tactics, King of Hell, and Moon Phase) and represent substantial investments by fans that have been following these titles. It's hard to believe TokyoPop would leave fans hanging on a series after collecting 33 volumes, even if sales of those later volumes are a little soft.

Here's the list that Diamond is showing canceled:

Aria Vol #5 TP
Cause of My Teacher TP
Demon Flowers Vol #5 TP
Demon Sacred Vol #1 TP
Hack//Sign Special Edition Novel
Elemental Gelade Vol #11 TP
Get Backers Infinity Fortress Vol #3 TP
Initial D Vol #34 TP
Jyu Oh Sei Vol #3 TP
King of Hell Vol #23 TP
Love Hurts Aishiatteru Futari TP
Speed Grapher Vol #3 TP
Tactics Vol #8 TP
This Ugly Yet Beautiful World Vol #1 TP
Tsukuyomi Moon Phase Vol #13 TP
VB Rose Vol #6 TP

In regards to the cancellations, the folks at MangaBlog contacted the always helpful Marco Pavia (TokyoPop's Marketing Director) who claimed Aria 4 sold out "mainly because orders came in much higher than projected", but then he was non committal regarding if TokyoPop will reprint the issue saying "It all depends on demand...". First he says demand was overwhelming, and then in the same breath said demand may not justify a reprint. Huh??? I think things are a lot worse over there than they are letting on, and I also think they would buy a lot more fan capital by being more upfront about their problems and especially, their future plans. We'd like to know more than "we're watching the market and will let you know". I've said it before, but no one seems to be listening.

UPDATE: The folks over at ICv2 are reporting that they have contacted Marco Pavia regarding the reported cancellations, and he has stated that these volumes are just 'delayed' as part of their plan to cut 2009 output by an additional 50%, so they are just getting reshuffled in the schedule. TokyoPop is still handling PR on a 'damage control' basis, and this update is not much of a comfort to fans that are waiting for these volumes to come out. I would like to note that TokyoPop cut their output by around 50% last summer, and this additional cut will probably bring the total number of new volumes they are publishing to maybe 10-15 per month, way down from the 40-50 per month they were putting out a year ago. As far as 'reshuffling' the schedule, we'll see...

Wednesday, January 28, 2009

Snow (Ice) Day / Macro Economics

We needed to close the warehouse today due to the snow / ice storm that come through the Washington area over the last two days. Most of us managed to get in and take care of business yesterday in the snow, but the ice that followed today pretty much closed everything down. If you have an e-mail inquiry in and haven't heard back yet, don't worry, Jamie and I will be working on them later this evening here at home and all morning tomorrow to get caught up. We'll have quite a few orders to catch up on tomorrow.

OK, so I'm spending a rare afternoon not working, reading the news, and wondering back to my Macro Economic days in college 16 years ago. The thing that strikes me in all the economic headlines is how difficult it is to figure out what the data means. For instance, home sales apparently turned around a bit in December, and inventory was down - BUT - 45% of those sales were banks dumping foreclosed properties for whatever they could get, accounting for a huge drop in median home price levels. The MSM will spin it however they want, but is that a good thing, or a bad thing? The proposed 825 Billion so called 'stimulus' is so large the number seems to loose all meaning to the masses, and will be financed strictly through more borrowing. This is in addition to the 750 Billion TARP funds, which is in addition to the existing budget deficit, whatever that is (it seems to change from week to week). I have to wonder just how much debt our government can really afford to take on. In other words, how much annual tax revenue, which is a direct reflection of our national productive capacity, will have to be consumed making interest payments on our dept, and were is the tipping point when we have to increase deficit spending just to pay the debt interest.

It’s just mind boggling to me, and I don’t claim to be able to understand it all, and I suspect most people and commentators can’t either which is why everyone seems to try to boil the problems down to some common denominator that probably misses the big picture. Is this just another negative blip in our history (which is what we want it to be), or will it be the perfect storm, the 500 year flood that will alter our way of life forever. I have no idea, but it does seem to suggest a Black Swan when you see something like this:

I had seen this scary fed borrowing graph highlighted here a few days ago, and now someone has made a movie (above) out of it that demonstrates how the current economic situation is an order of power higher in scale than anything we’ve ever seen before. What does it mean when the Fed borrows more money in one month than in the previous 70 years? I have no idea, but you get a gut feeling that it can’t be good. Those huge borrowing numbers over the last 14 months are purportedly funds drawn by banks and financial institution at the Fed’s open discount window under the emergency rules that allow them to use assets of questionable value and quality as collateral for Federal Reserve loans, and that money is being drawn to keep up the government required capital ratios up to par at thousands of financial institutions as they have to write down the value of commercial paper assets that have gone bad. Since lending is still stalled, I can only assume that this money is currently sitting on Bank balance sheets waiting for better times. What happens if the government decides to nationalize the banks? – something to me that has implications far more reaching than just trying to stabilize the economy. Do these people really know what they are doing, or are they doing things because they simply have no other choice?

And here again, I have no answers. Where do these trillions of new dollars come from? Do they borrow it? Do they print it? What happens if that new money gets turned loose on the economy in general? Will people’s habits change? Will they start saving more than they spend? Will this lead to a period of terrible deflation like in Japan during the nineties? Or will all this new money lead to a period of hyper inflation that will devalue the US dollar and deflate the US debt, and along with it destroy the net worth of every asset holding household in America? The latter seems to be the only way the government can deal with it’s massive debt long term, as there seems to be no chance what so ever that debt will ever be paid off, and just making the interest payments will become the biggest budgetary challenge in coming years. How will entitlement programs possibly be able to remain solvent in the near future? How will business owners like me have any opportunity to continue to create value under such conditions?

As you can see, I have no answers to these questions. Maybe some of you guys and gals out there who are a lot smarter than me can give me some reassurance that my concerns about our economic future as a nation are – well – unfounded?

On the Anime front, Funimation's parent Navarre will release Q4 earnings on February 6th. If anyone is interested in sitting in on Cary Deacon's conference call, there is info here. I'm keeping my fingers crossed that Funi will report relatively strong numbers.

Note: No political commentary or political finger pointing in your comments please. That would be subject of an entirely different conversation.

Sunday, January 11, 2009

Perhaps Sales Are Down So Much at Retailers Like Best Buy Because...

Best Buy, like so many other B&M retailers, reported dismal December sales numbers Friday, with same stores sales down 6.5%. I mentioned in Friday's e-newsletter that any R1 Anime studio relying heavy on Best Buy for their sales volume (cough - ADV - cough) is going to be finding themselves in a tenuous situation going forward, but that's a discussion for another post. Perhaps I should say it like this 'If you are an Anime studio and the majority of your revenue stream is coming from Best Buy and not independent dealers, then you already have one foot in the grave...'

The only industry that seems to be doing very well right now is the gun business. In the post presidential election period, I begin to wonder just how much money has been funneled from casual spending on things like consumer electronics and cars into people buying (for whatever reasons) firearms and ammunition. While it's being grossly under reported in the MSM, the fact is that over the last 60 days guns sales have gone up exponentially. In fact SO MANY guns are apparently being sold, that the ATF recently put out this bulletin informing dealers that they are running out of form 4473, which is the form you have to fill out every time you purchase a weapon from a licensed gun dealer. The ATF authorized, for the first time in my memory, that they will now allow dealers to use photo copies of the form. It's seems that people are forgoing flat screen TV purchases to get a couple extra FN-FAL's, a SIG 556, another Romanian SAR2, maybe that pre-ban HK94 they always wanted, or that Mossburg 'Roadblocker' that you were thinking of buying but could never pony up the scratch until it became a priority.

As I travel in gun circles a little bit (hey, I read Xavier's blog), I can report that the experience of visiting any of the local Gun stores in the Winchester VA or Martinsburg WV area in November and December was akin to getting into a life boat during the sinking of the Titanic. Stores were mobbed, and inventory of guns and ammo were mostly sold out. I was told one major manufacturer of AR type rifles has booked a 2 year backlog in just two months. Ammunition is being bought up in record levels as well, and surplus stocks have vanished from all of the major Internet ammo dealers. Prices are going up very fast as well as people make 5 or 10 years worth of gun and ammunition purchases in a period of 60-90 days. And these purchases are not cheap either, with people happily laying out two or three grand to get their hands on whatever is available to take home today. Here's a good example - try finding a Barrett M82 in stock anywhere - and they sell for $9,000 each and are severely back ordered - also the ammo which sells for $4 bucks a round is also sold out just about everywhere unless you are willing to pay a handsome premium. Gun industry retailers, of course, have capitalized on this by fanning the flames whenever possible. Just look at the blurb (highlighted in Yellow) posted on the front page of the popular gun accessory store Cheaper Than Dirt.

It sorta reminds me of how the Anime business was in 2004. -_^ Ahhh, nostalgia...

Anyway, since the gun industry is made up mostly of small independent dealers and privately held distributors and manufacturers (much like the Anime industry) it's really hard to estimate what sort of dollars are being diverted to the gun industry right now, but my guess would be that it's a lot more than most people think. And it would be interesting to speculate on how much of the sales declines that regular stores saw in November and December could be attributed to this.

Even in this terrible economy, people are spending copious amounts of money on something, and this is what it is. I wonder why this is being so under reported by the MSM? Perhaps it's not exactly in line with the message they are looking to get across?

UPDATE: Now that we've had regime change, the MSM is finally starting to report on this. I'm seeing more and more stories about it, and even Katie Couric's getting in on the action.

Monday, January 05, 2009

Happy NewYear Everyone!

Akemashite Omedeto Gozaimasu everyone!

Just a quick note. We're back from vacation (and oh my God it was heaven!) and will be working hard over the next couple of days to catch up on orders, requests, and e-mails. Also, since I had the audacity to actually take some vacation time for the holidays I did not send out newsletters for the past two Fridays. Gosh, there were even a couple of days there where I didn't touch a computer. WOW! My regular weekly newsletter will resume this Friday Jan 9th, and I'll have a lot to tell...

OK, back to work! :-)