Borders Troubles Hit TokyoPop Hard

I've been talking about this a lot recently in our newsletter and blog posts, and have been doing a lot of speculation as to how the Borders failure would effect the US Manga industry (i.e. how hard the publishers would be hit). I think this is a bigger deal than most people realize, but now I'm wondering if perhaps I've been under estimating the impact.

Today Stuart Levy, the CEO of TokyoPop, made this statement to ICv2:

“The facts are simple. Borders—our biggest customer—went bankrupt, owed us a lot money, which they didn’t pay us, and as a result we are in a very challenging situation, and have had to react quickly to the situation. We did need to let a few people go—and it’s horrible for everyone involved to ever have to let people go. We will continue to do everything we can to evolve the manga business and we very much appreciate the support of our fans, our partners, our creators, and out retail customers.”

Borders, believe it or not, once represented about 40% of total US manga sales, but that share has fallen to around 20% last year. Shojo was one of key demographics that helped move the manga market along in recent years at the bookstore level, but this audience is now aging, and many former shojo fans are not graduating to josei (comics for older women), instead seeking out other forms of entertainment. Also, over the last couple of years, new series have failed to replicate the success of older shounen titles such as Naruto and Bleach.

It looks like several of the key people TokyoPop picked up last summer when CMX closed down have now lost their jobs again, plus a few others. The most disconcerting thing in DJ Milky's statement is "we are in a very challenging situation". That's CEO speak for "things are looking pretty bad". TokyoPop is already having enough problems keeping their back catalog in print as well as keeping their front end output up. Actually, that's an understatement, as they have 'already' pretty much given up keeping their back catalog in print. I imagine they are in a situation that will require further cuts to their current release schedule of only 10-12 new issues a month.

Former powerhouses CMX and Del Rey are now gone from the manga market. Dark Horse has already seriously curtailed their manga genre output, which is down to only 1-2 volumes per month now. They are focusing on more US based series now. And Viz will ultimately find themselves in the same position of having to eliminate any 'marginal' series (that they already haven't) from their release schedule and only focus on the things that are the most profitable. This would explain their sudden cancellation of Inubaka, which has left fans of the series (like me) scratching their heads as to why they would do away with a series only 5 volumes short of the end (not to mention that it sets such a bad precedent). I hope this sudden change in the market does not persuade Kodansha to change their plans about their summer release ramp up either, as they are the only hope for the continuation of many of those former Del Rey licenses that dropped out of print last year.

The reality of Border's troubles is that there will probably be more such cancellations in the coming months as the publishers try to reorientate their business models to adjust to a 20% smaller distribution network. US Manga output has already fallen from 1513 in 2007, to 1115 in 2009, to about 850 last year. The worst part of all this is that we will never know about the great licenses that now get passed on that might have been picked up in a better market. And given the current environment, we might end up down in the range of 500-600 new issues this year. At that rate there will be many more weeks that go by with few or no new manga arrivals here at RACS. That hasn't been the case for at least 8 or 9 years. ~sigh~