AKIRA 4K BLURAY Replacement Program

Funimation has announced it is offering disc replacements for its release of the 4K remaster of the Akira anime film. Owners of the December 22 release of the Blu-ray Disc will receive the HDR (High Dynamic Range) Limited Edition version of the disc releasing in February 2021 free of charge. The December 22 release featured SDR (Standard Dynamic Range).

 

Owners of the older release can email Funimation for a replacement at akira4kreplacement@funimation.com for the United States and Canada and akira4kreplacementUK@funimation.com for the United Kingdom and Ireland with their details and a receipt of their purchase. The company details the method to request a replacement on its website.

Nearly 30 Presumed Dead after Firebombing at Kyoto Animation Building

From the Japan Times ->

A man screaming "You die!" burst into the Kyoto Animation building around 10:30am in Japan yesterday and set it on fire, leaving nearly 30 people confirmed or presumed dead. So far, 20 people were confirmed dead, including 12 on the first and second floors, and eight more on the third floor, Kyoto fire department official Mikihide Daikoku said. Nearly 10 others found on the top floor were presumed dead, he said. Some were found on the stairs, where they apparently collapsed while gasping for air and trying to go out to the roof.

Kyoto police said the suspect was injured and taken to a hospital for treatment. They are investigating the man, who is 41 and not a company employee, on suspicion of arson, police said.

A witness who saw the suspect being approached by police told Japanese networks that the man admitted spreading gasoline and setting a fire with a lighter. She told NHK public television that the man had burns on his arms and legs and that he was angrily complaining that something of his had been "stolen," possibly by the company. NHK footage also showed sharp knives police had collected from the scene, though it was not clear if they belonged to the suspect.

Survivors who saw the attacker said he was not their colleague and that he was screaming "(You) die!" when he dumped the liquid and started the fire, according to Japanese media. They said some of the survivors got splashed with the liquid.

Kyoto Animation, better known as KyoAni, was founded in 1981 as an animation and comic book production studio, and its hits include "Lucky Star," ''K-On!" and "Haruhi Suzumiya." The company does not have a major presence outside Japan, though it was hired to provide secondary animation work on a 1998 "Pokemon" feature that appeared in U.S. theaters and a "Winnie the Pooh" video.

Unbelievable, that someone could have that much hate in their heart. John Ledford over at Sentai Filmworks has setup a GoFund Me to help support the survivors and their families.

Sailor Moon R LE Set #1 DVD/BD Cover Replacement Program Announced By Viz

Many Sailor Moon R customers, including a good number of those who purchased their sets from RACS, have reported that their copy of the Sailor Moon R Set 1 Limited Edition did not include the reversible disc cover that was supposed to be part of the set.

Viz has addressed the reversible cover issue by partnering with their distributor Warner Brothers Home Entertainment to offer replacement covers to any customer who requests them.

If your copy of the Sailor Moon R Set 1 Limited Edition did not include a reversible cover, a replacement cover can be provided to you directly from Warner Brothers Home Entertainment at no charge. Simply call WHV at their toll free number of 1-800-553-6937 and tell them you would like a replacement cover for your Sailor Moon R set. They will ask for your name, mailing address, and telephone number so they can mail you a replacement cover once they are available.

We're not sure how long it will take for your new cover to arrive, but at least Viz has addressed the issue and made new covers available to anyone who asks without a great deal of hassle.

Let us know if you have any questions.

Funimation Consolidating Operations Under New Name Group 1200 Media

Just got the following notice from Funimation:

"Today we are excited to tell you about an important development in the distribution of FUNimation Entertainment and its products. In an effort to emphasize the company's expanding portfolio of entertainment content and products, FUNimation Entertainment will be consolidating its existing divisions under the unified name of Group 1200 Media effective May 18, 2013.

Group 1200 Media is a multifaceted entertainment conglomerate. This production, marketing, and distribution corporation strives tirelessly to accomplish its mission of delivering quality entertainment brands – along with their associated products – across a multitude of genres. Group 1200 Media is committed to continually releasing and developing exciting new properties representative of its diverse background in the entertainment industry."

I talked to our rep down in Houston briefly today. It's a paper reorganization. FUNimation is not being sold and nothing is changing except the name. 'Group 1200 Media' will be the new name for the company and the 'FUNimation' brand will remain as their Anime label. Clearly they have been looking to move beyond just being an Anime company for awhile now, and it's pretty clear they are looking to pursue projects that they did not think would be a fit under the FUNimation brand name

So stand down, it's nothin but a thing. :-)

Bandai Will Stop Shipping Anime to Retailers In November

Ken Iyodomi, who is the president of Bandai Entertainment, sent us over a letter this morning to give us a heads up on what we've known has been coming and just never had a date for.

He writes:

"I am writing to inform you that Bandai Entertainment Inc in discontinuing its home video publishing and distribution business effective March 1, 2013.

As we methodically wind down the business, the last day that Bandai will be accepting any purchase orders is November 15, 2012, with our last shipments occurring on November 30th, 2012.

On Behalf of Bandai Entertainment Inc, I want to express our gratitude for the opportunity we've had to do business with your company, and I thank you in advance for your understanding and assistance during this period."

Well, we all knew this was coming up. While Bandai's remaining catalog of Anime releases will 'officially' go out of print in November, I just want to remind everyone that quite a few of their SKU's have already stocked out and others will probably sell out prior to the Nov cutoff, so if you need to pull the trigger on any of their stuff, don't wait too much longer.

This also means that current backorders for existing products are less likely to be filled, but we will do whatever we can to bring in as much Bandai stock as we can afford to between now and November.

What's Going on With Some of Funimation's BD Releases?

I'm cutting this into the blog from our last weekly newsletter . So many people are asking us about it that this post will give the issue a permanent home here that we can link to. :-)

We've had several people ask us last week about some of Funimation's recent quirkiness towards BD releases (stuff like Heaven's Lost Property Forte, Strike Witches S2, and Panty & Stocking to name a few) and thought I would clarify what's been going on since the beginning of the year. In a nutshell, it seems the folks at Kadokawa have become positively paranoid regarding the threat that international BD releases pose to their indigenous sales in Japan, and have decided to put the kibosh on international BD releases - at least for awhile.

We knew since January that the issue revolved around some bitching from the Japanese about certain BD releases being scheduled in the US a little too soon (in their opinion) after the Japanese BD release, but a couple of weeks ago Humberto Saabedra (who edits some of Crunchyroll's news feeds) posted a scathing editorial regarding Funi's plans to release Panty & Stocking as DVD only (for now) even though they have affirmed that they do have the BD rights as well.

Here's the full text of Mr. Saabedra's post:

"During a Twitter conversation last night, the subject of Funimation's release of Panty & Stocking with Garterbelt came up after preliminary listings for the show may have confirmed that the release would exclude a Blu-Ray version and only be released on DVD, despite the company confirming that the show would indeed be released on Blu-Ray the weekend before during its convention appearances at Anime Boston and Sakura-Con respectively. The discussion then circled around to Kadokawa's apparent new rules on international Blu-Ray releases. Back in February, Funimation Entertainment had finally confirmed that the second season of Sora no Otoshimono in Forte would be released on DVD/Blu-Ray as a combo pack in March after months of delays, only to be forced to announce to retailers that the release would not be released as a Blu-Ray/DVD combo as originally solicited, but would only be released on DVD, with no real explanation on why the Blu-Ray version was excluded only after being solicited to retailers 2 weeks before.

The sudden exclusion of the Blu-Ray version after being announced as such for months came as a surprise to fans of the show and led many to cancel pre-orders due to the lack of a Blu-Ray version. While many were quick to point the finger at Funimation for screwing up the solicitations, the real blame should be placed at the feet of the master licensor of the show in Kadokawa Pictures, which controls international licensing for many of Funimation's most popular shows.

Recently, in statements made by Manga Entertainment UK via Twitter, it was revealed that Kadokawa had issued new mandates on home video releases to its international licensing partners that allude to the requirement that no Blu-Ray releases by international licensors would be allowed this calendar year and to adjust release formats accordingly.

Specific reasons were not given as to why the rule was put into place by the company, but recent activity by Funimation involving home video announcements may have confirmed the veracity of the statements, as The Future Diary was only confirmed for a DVD release later this year while no mention was made of a Blu-Ray version. Kadokawa Pictures controls international licensing rights for the show as Kadokawa Shoten also publishes the manga.

While Funimation also announced Panty and Stocking with Garterbelt as a Blu-Ray/DVD combo release during Anime Boston, the earliest listings for the show are beginning to confirm that Kadokawa is indeed forcing international licensors to drop Blu-Ray releases from release plans and announcements.

Why Kadokawa is doing this now, when some of the most popular shows controlled by the conglomerate will see release on home video this year is unknown, but if I were to make an educated guess, the idea of reverse importation may be too great for the conglomerate to ignore and it appears perfectly willing to lose money on international licenses in order to protect its shrinking home market.

Unfortunately for Kadokawa Pictures, the home video market for anime in the US is moving swiftly away from DVD and rushing towards Blu-Ray as the preferred release method for newer shows, with many making purchasing decisions based on whether the series will have a Blu-Ray version available. For Kadokawa to make such mandates to its international licensor partners is not only short-sighted, but it only hurts those that want to support their favorite shows and the companies that work to license them. If I had the ear of the executives at Kadokawa Pictures, I would strongly suggest they reconsider their stance on international Blu-Ray releases outside Japan, otherwise they face the wrath of a fanbase that is perfectly willing to spend their money elsewhere, or worse, not give them any more money at all and even resort to piracy, which only hurts everyone in the end. I really would like to be proven wrong and see Panty & Stocking get a Blu-Ray release when it gets released later this Summer, but based on the previous release in Sora no Otoshimono Forte, that looks less and less likely and places other Kadokawa Pictures controlled titles in doubt for their own Blu-Ray releases."

This really looks like something I might have written minus the copious swearing. -_^

So it seems Kadokawa Pictures has suspended most or all international Anime BD releases for the time being. Now with the word that the upcoming release of Future Diary will also be DVD-only, this has fired up quite a shit storm around the community. I can attest personally to the massive amount of pre-order cancelations of Heavens Lost Property Forte, as that last minute change in particular caused us about ten thousand headaches and really hurt our sales of this title. So, does anyone out there still have any illusions that Japanese Anime producers care about any market outside of Japan? I think this issue should firmly put that fantasy to rest. Xenophobic levels of protectionism are nothing new to the Japanese, and the recession over the last few years has just made the situation even worse.

I contacted Funimation for comment prior to putting this info into our newsletter - hoping to hear something about how they are trying to get this situation overturned and how they are fighting tooth and nail for their US fans base - but Funi's PR department has been quiet as a mouse and choose instead not to call me back. I can only assume that they would prefer that none of this information be in the public domain, or simply do not want to be critical of their licensing partner, even if that partner is giving the US market the shaft. As for Kadokawa's decision, not only is it stupid, my opinion is that if they are producing a product for Japan that is worth the Japanese market premium, they would have nothing to be concerned about from re-imports. Instead, they want to control the distribution of said product like gangsters in order to artificially inflate it's value in certain markets. This thinking is certainly not unique to Kadokawa - AniPlex does exactly the same thing here in the US. You know - make it available, but also make sure it's unaffordable so it doesn't compete with releases in Japan. I've been in this business for 14 years, and I can attest to the problems that Japanese Anime executives have understanding the US market, but sometimes I have to wonder if they even want to try. Or more likely, they probably really just don't care. ~sigh~

Anyway, now you know what's going on with some of Funi's BD releases (or lack there of) and that's the most important thing.

Quick Update: Good grief, Humberto Saabedra wrote me, via FB of all places (rather than sending me a personal e-mail for some reason - ahhhh you kids and your social networking...) and very nicely requested that if I'm going to use the text of his statement on my blog, he would appreciate a 'proper' citation including a link back to his site. Well, here is your link Humberto. FYI, I'm not much for asking anyone's permission about anything. I did cite you in the article however (twice), and in the future I would suggest that you not worry so much about etiquette of usage when someone is talking you up and giving you a little free publicity. Especially when I do it. Nuff said.

The End of an Era - Bandai Finally Calls it Quits

The folks at Bandai apparently have made their 2012 new years resolution never to publish anymore Anime. I think they waited to make this announcement until today thinking we'd all probably be too hung over to notice.

Hot off the wire:

Bandai Entertainment, the subsidiary of Namco Bandai Holdings (USA) that handles anime and manga in North America, will stop offering new DVD, Blu-ray Disc, and manga releases next month. It will continue to distribute in its existing catalog lineup, but it will no longer produce and distribute new releases as of this February.

Instead, Bandai Entertainment will focus on licensing rights to other companies, particularly in digital distribution, broadcast, and merchandising. The company will be restructured as a result, and most of its contractors and three of its five fulltime staff members will be laid off.

The following releases have been cancelled:

Anime DVD/Blu-ray Disc

Gosick
Nichijō
Turn A Gundam

Manga

Code Geass: Renya (Code Geass: Shikkoku no Renya)
Gurren Lagann volume 7
Kannagi volumes 4-6
Lucky Star Boo Boo Kagaboo (spinoff by Eretto)
Mobile Suit Gundam 00I
Tales of the Abyss: Jade's Secret Memories volumes 1 and 2

Releases in Bandai Entertainment's current catalog will still be available after February, and Bandai Entertainment plans to produce new stock on these existing releases, if needed, until their respective licenses expire.

Bandai Entertainment closed its own online store in December, but other retailers can still order and carry Bandai Entertainment's current releases as before.

Star Driver, Tales of the Abyss, The Girl Who Leapt Through Space and Mobile Suit Gundam (the new release of 0079 with Japanese audio) will all be completed thanks to the timing of the closures. I was just saying in the last newsletter that the best we could probably hope for in 2012 was for Bandai to continue to hang on long enough to get the second season of K-On out. Oh well, so much for that. Hopefully Sentai or Funi will end up with it eventually. Gundam Unicorn won't be completed either. This also means that Turn A Gundam, My Ordinary Life (Nichijo) and Gosick, will not be released.

All I can say is that it's no surprise, and it's been a long time coming. ~sigh~

UPDATE: Ken Iyadomi's sobering explaination here.

Crunchyroll - Pot Sues Kettle

You know, after reading some fan comments over the past few weeks it's clear that over the last few months I've been way too quiet about the little hypocrisies in our industry. Time to change that.

So I was perusing the news blurbs over on the Anime ecomatrix this morning, when I saw this:

"Crunchyroll and TV Tokyo have issued a lawsuit against 13 YouTube uploaders for allegedly illegal distribution of anime episodes, according to a copyright infringement complaint filed on May 11 and served between July and September. Crunchyroll and TV Tokyo are seeking reparation for "great and irreparable injury that cannot fully be compensated or measured in money" because of the defendants' allegedly unauthorized copying, uploading, and distributing via YouTube of multiple Naruto, Naruto Shippūden, and Bleach episodes.

Based on their YouTube subscriber information, the defendants reside in the United States, Japan, Canada, Denmark, and Hungary. Crunchyroll maintains its main offices in California (as does YouTube), so the suit was filed as a U.S. copyright violation in the Northern District Court of California. For the purposes of the lawsuit, TV Tokyo is giving Crunchyroll legal permission to act on its behalf in order to "permanently remove the illegal uploads of infringing parties from file-sharing services and to obtain legal relief against infringers."

I just find it a bit entertaining as, before they went legit, Crunchyroll got it's start and built it's audience streaming unlicensed fansubs captured from torrents. A little history:

"Launched in the summer of 2006, Crunchyroll is a video-streaming site run by Crunchyroll, Inc. that originally grew by serving illegal (unlicensed) content, namely Japanese Animation (anime). The site generated revenue by soliciting donations and through advertising. After failing to be bought out by Viacom in 2007, Crunchyroll secured venture capital funding to the tune of $4 million through Venrock."

Of course, as soon as they got the angel funding from Venrock (and started working up SEC filings so they could privately sell more shares) they had to go legit, but they built their original audience and 'brand' on unlicensed content. So let's not forget that Kun Gao, Vu Nguyen, Sanha Han, Brandon Ooi, James Lin and many others have gotten rich off an enterprise that started deep in the shylocks.

Just something to think about the next time you are watching Anime there. I'm sure there will be outrage from the fan community over their persecution of YouTube users, and if not, I hope the irony does not escape you. :-)

There May Be Hope for Some of TokyoPop's Former Manga Licenses

About Manga is reporting that (per TokyoPop's facebook page) all of former TokyoPop's international manga licenses will immediately revert back to their original owners, rather than being held by the company's remaining media division until the contracts expire. Probably because they have told the license holders that no further royalty payments will be forthcoming for those series.

This will, at the very least, give other interested publishers the opportunity to license series formerly published by TokyoPop without having to wait for TP's licenses to expire.

The status of original indigenous series TokyoPop held is still a little murky. Writers like Becky Cloonan (whose East Coast Rising comic was published through Tokyopop's "Global Manga" program), blogger Johanna Draper-Carlson, and blogger and comic creator Jason Thompson, have expressed concern over the status of their series since TokyoPop technically still owns to rights to them.

Publisher Digital Manga (DMP) has said on thier Twitter account today that they are looking into the possibility of rescuing some of Tokyopop's former titles. DMP publishes mostly Shonen Ai and Yaoi manga here in the North America, and it's not clear if DMP is looking at all of TokyoPop's former licenses, or only the series formerly published under TP's BLU label.

Sentai Picks Up Kobato

Sentai Filmworks (Section 23) announced at its Kawaii Kon panel on Saturday that it acquired the Kobato anime series, and said they plan to have it ready for release in August. The anime ran for 24 episodes from 2009 to 2010.

Kobato
Kobato is a girl who came to earth to fulfill her wish, which is to go to a certain place. To fulfill that wish, she has to find a bottle and fill it with scarred hearts. Together with her "teacher", which is a stuffed animal, she search for the scarred hearts. However she may not fall in love with any person whom she cures the heart of.

Funimation Did Get Some Downloader Settlements

From ICv2 this morning:

"FUNimation pressured some defendants in its One Piece downloading case to settle before the cases were tossed or dropped.

FUNimation's attorney in the case used a controversial technique to file 49 subpoenas with ISPs without the benefit of a judge, according to the report, and some complied by providing the identities of the downloaders. The downloaders were then contacted (the original suit was filed against 'John Does') and $1500 settlements demanded."

So Funi did go after a few specific downloaders who paid a settlement to Funi up to $1,500 each in order for them to drop the case. Hmmm....

TV Tokyo and NAS Force 4Kids To File For Bankruptcy Protection

More news this morning from the Anime Economatrix:

The master licensing and dubbing company 4Kids Entertainment, best known for bringing Pokemon and Yu-Gi-Oh! to the US, filed for Chapter 11 bankruptcy protection (along with 11 affiliated companies) in federal bankruptcy court on Wednesday. The company listed assets of $23,372,000 and liabilities of $16,526,000 and indicated that it expected to have money to disburse to its unsecured creditors.

The company had warned last week that it might have to file Chapter 11 if it was not able to settle litigation with TV Tokyo and NAS, which terminated 4Kids’ rights to Yu-Gi-Oh! and alleged that 4Kids had secretly hidden moneys on which it should have paid the rightsholders royalties. On March 29, 2011 TV Tokyo and Nihon Ad Systems sued 4Kids Entertainment, alleging that the company entered into illegal agreements with other companies, including Funimation Entertainment and Majesco Entertainment, regarding the Yu-Gi-Oh! anime franchise. TV Tokyo claimed that those agreements allowed 4Kids to collect royalties without paying a portion of those royalties to TV Tokyo, which violates their original agreement. The companies are seeking almost $5 million in "underpayments, wrongful deductions, and unmet obligations." As part of the suit, the companies terminated the Yu-Gi-Oh! license from 4Kids.

On March 31, 4Kids Entertainment filed a shareholder report stating that on March 27 they had informed the licensors that their termination letter was "wrongful and devoid of any factual and legal basis," and that they had not given 4Kids 10 days notice as required. 4Kids further revealed that they had made a good-faith payment and agreed to a March 18 meeting in lieu of a lawsuit, which TV Tokyo and NAS nevertheless decided to go ahead with. 4Kids also stated that even if the termination is found to be valid, they are prepared to do whatever it takes to stay in business, and have filed for Chapter 11 bankruptcy protection as of April 6, 2011.

In the bankruptcy filing, 4Kids listed its debts in the filing. The Pokemon Company International was the largest creditr, with $4.7 million owed. Second was Asatsu-DK (parent of NAS), with $4,221,626 owed. Third was CW network, home of 4Kids’ Toonzai programming block on Saturday mornings, with $1,987,000 owed.

4Kids has been loosing money for several years and the New York Stock Exchange delisted 4Kids (NYSE: KDE) stock in June of last year because they could not maintain the minimum capital requirements to trade on the exchange.

Some background on 4Kids controversial 'localization' practices:

The management of 4Kids Entertainment has stated that it seeks to "localize anime so children in English-speaking countries will understand it...", judging that localization is necessary in order for these titles to be profitable. For most titles, the editing 4Kids performs falls into a few broad categories – 4Kids may seek to "Americanize" a program by changing character names, dialog, music, food, or stereotypes which would be unfamiliar or even offensive to an American audience, as in the series, Pokémon, where rice balls are changed into American food such as jelly doughnuts or submarine sandwiches. The company also may remove some materially suggestive objects such as cigarettes or guns with lollipops, water guns, crosses, or content deemed too violent or suggestive for American children. In an interview with Al Kahn, CEO of 4Kids, when asked how the company decides what properties or anime to acquire, his reply was "..if [anime fans] want this programming to come to the United States then they're going to have to accept the fact that it's going to be available in two styles." A March 2006 study by the Parents Television Council on violence in children's television programs said that the 4Kids dub of Shaman King was still too violent for children. L. Brent Bozell also pointed out the 4Kids-dubbed Shaman King in one of his weekly column as an example of children's media he perceived as having undue "cultural landmines".

Gen Fukunaga and Investor Group Buys Back Funimation - for Just $24 Million

HEH. I had noticed that there seemed to be a lot of selling of NAVR stock over the last few days, because something was driving the price down, and now I'm reading this from the Anime Economatrix over my coffee this morning:

The media distributor Navarre Corporation announced on Monday that it has sold its anime company Funimation to a group of investors that includes Gen Fukunaga, who is also Funimation's chief executive officer. The price of the all-cash transaction is US$24 million. Navarre will continue to serve as Funimation's exclusive distributor in the United States, as well as its logistics and fulfillment services provider. The investment group also includes John A. Kuelbs "who was then instrumental in selecting Darwin and Doug Deason to join the team," according to Funimation.

Gen Fukunaga gave this statement:

"We have a great history with Navarre and we thank everyone there for their longstanding support throughout the last five years. It is due to Navarre's logistical expertise and wide distribution network that we were able to grow our company into the Anime industry's market share leader. Though it will no longer be our parent company, Navarre will continue to distribute our product and we look forward to working with them for years to come. We are very excited about our new partners all of whom understand our vision and will help us develop our initiatives in physical product, digital entertainment and other growth areas."

In January 2005, Navarre Corporation announced plans to acquire from a group of private owners that included Fukunaga and the Cocanaour family . The acquisition was completed in May that year. Navarre initially offered $127 million dollars for Funimation ($100.5 million in cash and $26.5 million in Navarre common stock) and $17 million in performance based earnouts, for a total of $142 million. Adjustments to the value of the Navarre stock and cancellation of the earnout payments brought the total price for Funimation down to $114 million, $90 million more than today's announced sale price.

Funimation's 2004 net sales totalled US$72 million, with pre-tax income of US$29.8 million. Earlier this year business reporter Eric Wieffering estimated Funimation's 2010 net sales at US $35 million and pre-tax income at US $10 million (Funimation's 2010 financial year ended on March 31, 2011).

Last year, Navarre announced that it was considering selling Funimation. In September, the company stated that it had six potential buyers, but announced in January that it had received no adequate offer and was considering halting the sales process.

Gen really is the smartest guy in the room in the R1 Anime biz, and is one of the few people who has actually gotten rich from it. He put together this little Anime company with the help of a some private investment money, built it up with the help of his family connections in Japan, and sells it a few years later at the top of the market to Navarre for $142 Million, and then (with the help of a little more private investment money) buy's it back from the same now debt laden company six years later for $24 Million - 17 cents on the dollar - and got to run the thing the whole time. Unreal. In the end, Gen had to round up a group of investors who could easily afford to loose a few million.

So there is really nothing happening here except that Gen is getting richer and Navarre shareholders take a bath. After all, shareholders usually do - it's always those big money private equity guys that come out roses.

Update: Reid Porter, the COO of Navarre says: "This transaction ends a comprehensive sales process undertaken over the last year. As previously discussed, FUNimation's future strategies and associated risks to execute them are not in line with Navarre's strategic direction." In other words, we no longer have to risk loosing more money in a declining R1 Anime industry.

Cary Deacon, and CEO of Navarre says: "Navarre will be able to deploy the funds generated from the sale of FUNimation to build or acquire new businesses and services to diversify our revenue streams that will support our long-term objectives." Cary, it seems, thinks there are better places to deploy their capitol than in the Anime industry.

The folks at Navarre seem to be pretty happy about getting Funi off their books. NAVR shareholders seem less enthused. Stock is trading flat on the announcement. Looks like all the folks 'in the know' got out already over the past few weeks.

UPDATE 2 (Apr 6): Cary Deacon, the CEO of Navarre was fired today by the board of directors. I guess some of the larger shareholders have had enough.

Status of the Fukushima Reactor Accidents

Herschel Smith over at the Captains Journal is posting some excellent updates on the current status and progress of the containment efforts being made at the Fukushima Reactor plant. He is doing a much better job than the main stream media at assessing the situation given the available information.

As he points out: "The Japanese are performing heroically, and the main stream media will catch up in several days (or weeks). The current efforts are focused on radiological source term and thus dose mitigation, not the prevention of core melt events."

UPDATE: A great chart that brings radiation exposure into context.

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~

Borders Store Liquidations Underway / Barnes & Nobel Suspends Dividend

ICv2 reports that the Borders book store liquidations have begun:

"Borders has obtained court approval of its store-closing plans and has begun liquidating inventory at the 200 affected locations. DJM Realty is assisting with the store closings and lease assignments. The store closings are part of the restructuring Borders is undertaking under Chapter 11 bankruptcy protection.

Inventory liquidation on site, if successful, will reduce the amount of inventory publishers, wholesalers, and distributors can expect to get back as returns as Borders closes nearly 1/3 of its stores. Whether that’s good or bad for the individual company varies, depending on whether the receivable risk resides in the various relationships."

The Borders here in Winchester (VA), the only real bookstore in our town of 28,000 residents, is one of the stores that is on the chopping block. It's also the only retail location in our town that had any real selection of manga, so unless we decide to open an RACS retail store* here, manga fans in our area will be relegated to mail order only.

All the manga publishers and distributors are going to take big hits in varying degrees due to the Borders bankrupcy. Word on the street is that they owe Diamond Comics $3.7 Million for the few TP lines they distribute directly to the bookstore trade. Viz and TokyoPop are too small to distribute directly and thus go through middlemen to get their manga into the bookstore market, so it's hard to know the level of financial hit they are going to take, only that they are unlikely to ever see whatever monies Borders owed them at the time of the bankrupcy filing.

Borders isn't the only one having problems keeping the doors open though. The other big bookstore chain, Barnes and Nobel, has suspended the dividend to their shareholders to conserve capital:

"Barnes & Noble announced that it has eliminated its dividend to conserve capital; and will no longer give guidance for the current year, citing Borders’ Chapter 11 filing “and the potential short-term impact that their announced store closures may have in the marketplace.”

The dividend cut will allow the company to conserve capital 'to continue investing into its high growth digital strategies, while simultaneously allowing the company to take advantage of any other market opportunities that may present themselves.'"

You would think that Borders going away could only be a net positive for B&N, but they clearly have their own problems too. No matter how they 'spin' suspending their dividend to the media, that's a huge negative signal that they are not doing well cash flow wise.

Even Best Buy is no longer the shining star of entertainment retailing as can be noted here and here. The bankrupt video rental chain Blockbuster is in the process of auctioning off their worthless assets.

Any way you cut it, being a Brick and Morter retailer in the entertainment business is a tough proposition these days. Online and digital is the future.

*The prospects for an RACS retail store are unlikely. Sorry folks, I already have 2,000 headaches. Anyway, if we ever do open a big Anime retail store, it will be in Grimes, Iowa. -_^

Navarre Says No 'Adequate' Offers for Funimation Yet

From Navarre's earnings report released this evening:

"Discontinued operations includes the results of FUNimation Entertainment. Net income from discontinued operations during the third quarter was $1.8 million, as compared to $928,000 in the prior fiscal year. Strong earnings performance in discontinued operations resulted from solid year-over-year sales growth. Cash flow from discontinued operations contributed strongly to the company's year-over-year debt reduction.

The company has not yet received an adequate offer in connection with its efforts to sell FUNimation Entertainment. Although this sales process continues, if the company does not receive an adequate offer in the fourth quarter, it anticipates that these efforts will be halted."

The full report can be found here.

It's late and I'm tired, but I would add a couple things real quick:

1) Here's my blog entry from the last quarterly report.

2) Navarre's 'third quarter 2011' is actually the forth quarter, 2010 (Oct to Dec 2010). That's the holiday quarter and should be their best performing reporting period of the year.

3) 'Discontinued operations' is just financial lingo to separate out the Funimation business segment. It doesn't mean they are discontinuing Funimation, just that they are trying to sell the division and have to report it's earnings separately. This is required by GAAP if you are a public company.

4) Funi has pulled out every card in the deck over the last two quarters to get their revenue up in anticipation of a possible sale. I'm not sure $1.8 Million in quarterly revenue for the holiday quarter of a company that owns 60% of a national market can really be characterized as 'solid sales growth', but they certainly managed to beat their previous, and truly dismal year over year quarter, in 2009. I'm not knocking them here, 2009 was absolutely terrible for everyone.

5) One of Navarre's stated business objectives is now listed as "expanding our products and services beyond digitally downloadable products". That means they want to sell more stuff that can't be downloaded online. Hey, don't we all!

6) During that period I had made them an offer to swap companies, but apparently Gen's office was already bigger than mine and he doesn't like cold winters, so they didn't go for it. He also said something about "wouldn't give a squirt to be on the retail end right now", or something to that effect, but I probably misunderstood... HEH.

If anyone is interested, Navarre's earnings conference call will be at 11:00 a.m. EST tomorrow (Tuesday, Feb 1). The call can be accessed by dialing (866) 831-6243, and entering pass code "83066830" ten minutes prior to the start time. It will also be webcast live and can be accessed in the "Investors" section of their website here.

Listen in if you can, it might be very revealing. More later, I'm pooped.

FUNimation Shifts Digital Strategy - Sues Downloaders

FUNimation Sues 1,337 Downloaders. From ICv2:

Anime distributor FUNimation Entertainment has filed suit in Texas against 1,337 individuals who it accuses of using BitTorrent sites, including isohunt.com, kickasstorrents.com, and nyaatorrents.org, to download copies of One Piece #481: Ace Rescued! Whitebeard’s Final Order!. The suit identifies the individuals only by the IP address used to download the episode, and seeks to use the discovery process under the suit to find out who was using those IP addresses.

The lawsuit was filed under the U.S. Copyright Act of 1976, and seeks injunctions to prevent further downloading, actual or statutory damages, costs, and attorney’s fees.

Lawsuits against end users have not had great success at slowing downloads in the past. The Recording Industry Association of America sued around 18,000 individuals between 2003 and 2008, when it ended the strategy. Most of the sued parties ended up settling with the RIAA for amounts of a few thousand dollars per person.

Litigation against end users has now shifted to independent film-makers, who began suing thousands of BitTorrent users last year.

Although such litigation affects only a small fraction of the individuals who download copyrighted content, those that bring such suits hope that a deterrent effect will slow downloading by others who hear about the suits.

I really don't have much to say about this that hasn't already been said. This issue is like a shirt that has been through the wash cycle 14 times and is still dirty. Retailers will weakly cheer, paying fans will yawn, and downloaders will be outraged and defiant. Same old, same old. Clearly free legal streams of Anime content hasn't done a thing to deter fans from going to torrents, and has probably only hurt DVD and digital sales.

As the R1 market continues to fall apart, Funi has been trying to sell themselves for nearly a year now with little success. Potential buyers looking to invest in this industry, and trying to peg a valuation on any Anime companies intellectual property, are going to be very concerned about what studios are doing to combat torrent downloaders and how effective those efforts are. They are probably finding out the answers are 'lot's of things' and 'nothing's working'. It's got to be hard to find any group of savvy investors willing to put up serious money to enter an industry where such a huge portion of the potential customer base is unwilling to pay for ANY content and has so many options to view Anime outside any venue that can be monetized by anyone. The phrase "how the hell do you compete with free?" must daily resonate down the halls in the HQ of every company that participates in the US Anime business from studios, to retailers, to digital content providers.

But all that said, torrent users have been getting pretty cocky lately, even going as far as to give paying Anime fans nick names like 'buyfags'. What else is left that anyone in the industry can do to try to protect their market other than start kicking in doors and cracking skulls. That's what Apple does when you fuck with their intellectual property. And it's not like anyone in this industry is some big money corporate son of a bitch like the big music studios were - we've all been living hand to mouth in this business going on 3 years. We only stay because we love it.

Moves like this certainly won't stop torrent downloaders, in fact, they probably won't put a dent in it long term, but maybe it will take them down a notch for a little while - especially the folks that, rather than buy legitimate Anime releases, put hundreds or thousands of dollars into extra computer equipment to seed torrents. I mean they seem to need it, and to date they have gotten off easy. Either way, the studios simply have no where else to go except out of business.

UPDATE: Oh, by the way (Toren brought this up in the comments), 1337 = Leet. That number was not picked at random, it's definitely sending a message to the hard core hackers and torrent geeks. I thought the number looked familiar, but I haven't heard anyone use the term for a LONG time.

Gantz Live Action Movie Coming to US Theaters!

Just FYI, the new Gantz live action movie is going to playing at theaters in January:

NEW PEOPLE and NCM Fathom are bringing the world premiere of GANTZ to movie theaters nationwide for a one night live event on Thursday, January 20th at 8:00 pm ET/ 7:00 pm CT/ 6:00 pm MT/ 8:30 pm PT (tape delayed).This live-action feature, based upon the popular Japanese manga and anime series, is the ultimate survival game. It will be English over-dubbed exclusively for this big screen event.

Following the feature, the two stars, Kazunari Ninomiya and Kenichi Matsuyama will participate in an exclusive live interview that can only be seen at this event.

Showing is for one night only on January 20th. Here is a full list of participating Theaters!

Navarre May End Up Keeping Funimation

Navarre's 3rd quarter (Q2 fiscal) earnings call earlier this week was quite revealing. They reported a quarterly profit of $1.7 million for the FUNimation division (now reported as “'discontinued operations'), vs. $435,000 in the year ago period. Now while that looks pretty good, keep in mind the year over year is up against the truly abysmal Q3 numbers everyone was turning in last year, and that during the 3rd quarter Funi has been doing everything possible, like liquidating a lot of surplus inventory, to help make their short term numbers look better in advance of a potential sale. Still, not too shabby.

Anyway, after going over the numbers, most of the questions asked during the Q&A were about Funi and how things are coming along with the proposed sale. Cary Deacon (CEO of Navarre) when asked about progress, said this:

"Yes we have had offers and indications of interest. We have gone through management presentations with those parties and some of those parties have come back with further rebids. At this point we’re analyzing those rebids and expanding our look at it."

After listening to him, it's clear to me that they are really not too far along with the sales process. Cary went on to say:

"The predesigned strategy that we’ve talked about earlier was to sell that asset and move forward with our distribution expansion strategy. However, we’re analyzing the value of selling that asset and whether that makes sense at this time based on the price levels and the indications of interest that we have. We’re not final in that process but we will very shortly decide whether the indications of interest and the ability to close a transaction is valid or whether we should continue to run FUNimation.

I’m pleased to tell you that (I think you’ve seen in the quarter) FUNimation continues to be run as if we’re going to own it. We’ve said from the get go that nothing is certain in life and we can’t just let FUNimation slide so we’ve done a good job of running FUNimation.

Would we like to sell it? That answer is yes, it’s part of our strategic plan; but we’re going to be very selective in that decision and decide whether it’s best to keep it or to sell it at the current levels of indication."

Cary said that by the end of December there would probably be an indication of whether or not Navarre will (or rather can) sell Funimation .

I don't think they are having much luck finding someone willing to make a big investment in this industry, and I repudiated the whole 'strategic plan' thing last May. The economy is still terrible, and raising money to fund a purchase like this has got to be next to impossible. Taken as part of the whole, Funi has gained truly impressive market share carving out about a 50% slice of the US Anime market. If you count only dubs, Funi is probably 85% of that market. But the days of the DVD business are waning, and when you ask someone in the industry how they plan to monetize their licensed content digitally - in a way that will show similar results to former DVD sales - well, no one has a clue. There are some bright ideas about how it 'might' be done, but it's going to cost a lot of money testing markets and delivery methods in order to figure it out. In fact, a lot of us (including me) are rather doubtful that it can ever be done. Right now, everyone's digital strategy seems to be to give the content away for free, hoping that the audience they are building will someday be converted into paying customers. Don't count on it.

So unless they find themselves willing to give Funimation away for a song, I think Navarre is going to be stuck with them, whether it plays into their 'strategic objectives' or not. Frankly, I still question to original premise for trying to separate the company. Rates are at 50 years lows, so Navarre should be able to refi it's debt through the market and let Funi keep adding to the bottom line.

And as a final thought, if they do end up keeping Funi, I want to just thank Cary for creating an incredible atmosphere of uncertainty in our business. As Funi goes, so goes the industry. We have been keenly aware of that more than ever in recent months, and so has the fan base.