Firstly my apologies for the delay in replying to this, it's a big question so while busy I didn't want to just slam together a speedy reply
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melonpan said:
Hi Andrew,
I've been thinking recently about whether or not it is best for companies like yourself to distribute your products through high-street shops.
It seems that there are three options for you to sell products:
- Through high-street shops, Internet retailers and your dedicated Bandai Internet site.
- Through Internet retailers and your dedicated Bandai Internet site.
- Through only your dedicated Bandai Internet site.
The first option is how things are currently. But are there really enough casual buyers who will walk into a high-street shop and pick a random anime DVD off the shelf (out of the hundreds of DVDs already there, how boggling for this poor anime-ignorant person!)?
How much does it cost to provide a wholesaler who will then provide high-street shops and Internet retailers with your product? Are there any Internet only wholesalers who could be cheaper?
Taking this part first, in reality there are only two real options for selling products (physical ones anyway, digi only is of course a whole new kettle of fish):
- Through high-street, internet and dedicated shop (optional for the last one)
- Through a dedicated online shop only or primarily.
Basically the amount of work taken to get anime to the retailers like Play.com etc is the same as that of high street shops like HMV. In our case we use a dedicated sales team at Pinnacle, the cheaper alternative would theoretically to be handling sales ourselves (an INCREDIBLE extra weight of work especially building a good working relationship up, which can take upward of 5-10 years) and dealing with a smaller volume of them such as just play.com, HMV.co.uk etc.
The answer to the question of Joe Average buying anime on the street - theoretically the answer is yes. People are exposed to anime sometimes without knowing so as kids so when they hit their teenage years and have enough disposable income for DVDs or such every so often - they may pick one up as it catches their eye (due to exposure in the past etc). That's at least the theory - maybe it's more true for the original UK Pokemon generation exposed to anime on channels like ITV more than others though. Sales figures will probably answer that though as a new generation reach the age they may buy DVDs etc.
melonpan said:
The UK community always complain about prices, and so they should, but are the prices really necessary when a lot of it will come down to retailers. Would it really knock a lot of your profit off by solely selling your product from the Bandai website, at a much cheaper price?
Definitely - unlike the TRSI model or BV USA one, who's website sales were already prominent or pushed as their primary distribution channels - we have worked with Play.com, HMV, Amazon, Zavvi etc. That would mean a massive campaign to raise awareness of the Bandai site, one that may well not pay out in the end as you lose even remote potential for people to pick up titles casually in the streets. While the more vocal fans such as yourselves may find it - what of fans who may buy their anime from Forbidden Planet, HMV or such but are not particularly into the community scene? There would inevitably be a drop in buyers just due to it not being as widely available anymore.
In effect, you'd be cutting new fans not up on the whole fandom out of the loop possibly. While this does not seem a big thing keep in mind what often makes money is only done by getting a lot of units out to retailers so you have as wide a net as possible. There's always going to be returns of X% (say 30%) of returned stock from every retailer, that still means 70% stuck and was either sold or kept. Reduce it to a model that uses only your own site then you need extremely high unit sales to make back any kind of profit on a title, even if the release came at the same RRP you got in the high street.
The downside to running both models in parallel is if you run a massive PR campaign about how cheap your dedicated site is for your titles - other retailers will take notice and understandably refuse to take as many units from you, if any, as effectively you're interfering with their sales then to an extent. It's a rather prickly game of swings and roundabouts ±_±!
melonpan said:
I think the only real way to justify selling your products in high-street retailers is to advertise on TV. Magazines might help slightly, but I've only ever seen anime adverts in anime related magazines, so that's out the window.
Has this business model been tested already, or will it have to be put in place at some point in the future when the UK market becomes oversaturated (even more than it is right now) and takes a turn for the worst (like the US market, but more so because the UK market is smaller)?
The evidence for selling through your own website being a good thing, and something that is encouraged is because of Bandai Visual US, who have their dot.anime website, who put extra special items out via the website only, which shows that indeed that's a better option for the distributor.
Regarding TV advertising, while an ad in a magazine like SFX for example may cost upward of £1000 for an A4 page, imagine the cost for TV! You're into big figures, almost as much as production costs. While it may boost awareness, you almost certainly would make a loss on it unless done in collaboration with a game tie-in or such.
While it is true BVUSA has not done a bad job of running their online shop (barring gripes from many about prices) by offering a 100% authentic Japanese release - the US market is much larger so you can guarantee that even a small wedge will be happy to buy the BVUSA releases (especially those who know the cost would be about the same to import it from Japan without subtitles or shiny extras). In the UK you may have that but very very much smaller, look at how many people complain if you release a title with 4 episodes at 19.99, imagine if that was 2 episodes and you got a flag, or artcards with it vs those who'd buy it!
I do respect the BVUSA model a lot for what has been done as it's a shining example of at the very least, without getting everyone bogged down in a price argument, it is well designed, has company blogs and offers extra incentives to buy on almost every title! I'd be insane to say I didn't think it would be nice to have that kind of style site open for business in the UK at standard UK price rates ^^;. Sadly it goes back to what was said above really, sales to other companies almost has to take precedence as they are often willing to take more units total by far than we could guarantee in sales via a dedicated site!
melonpan said:
EDIT: As it seems to me that the best thing to do would be to treat the market as purely a collectors market (which is really what it is), do you think it would be best to sell some super-duper collectors item for a huge price, but ultimately make as much profit as you would through several normal anime series? I mean, every anime fan wants some shiney big fat box of anime goodness, i.e a model inside, a wooden case/metal case/hard chipboard case, artbooks, etc etc. You're doing that already with the awesome collections, but there's always room for more I think.
That's a nice idea again, though at present the UK market really isn't strong enough to support such a style to be honest. It works when there is a title that fans recognize and adore, that you can guarantee at least 2000 units sell through, If you look at
the release of City Hunter complete in France for example. All 140 episodes, over 21 DVDs or so, with a massive art book and amazing case to boot (got one sitting here on my shelf from work) - that retailed for circa €379. In France that shifted considerably more than 2000 units, but say we took an imaginary series of similar length and for argument's sake popularity to the UK, did similar with a £300 price tag. How many would pay that for it to make it profitable?
It's a difficult one again and it's my hope that eventually such a style is possible - but treating the market as exclusively that would be a bit harsh to the fans who enjoy the anime but don't want an expensive++ release too! In many ways best to always offer a cheap alternative too so the collectors can get the limited release, whilst those not so fussed don't have to feel pressured into getting it.
melonpan said:
Did the Patlabor limited edition products on the Honneamise (sp?) label actually sell well? If not, would it be wise to produce less of them, but maybe raise the price a bit more but add even more limited edition items to the set?
Last I checked our warehouse we had a few left of each - they haven't done greatly but not badly either. But the thing is it's not a matter of price on that title - what it does have to do with is that Manga released a dirt cheap double pack of the films before their license ran out! So a lot of the UK who wanted it bought it already, any higher price than it was already set at would likely have scared off fans looking for the LE release even sadly.
That being said, sales were encouraging enough for me want to try another title in such a release fashion in future if the chance came up!
melonpan said:
Limited edition sells (when done properly), as clearly shown by the Japanese market, and more recently I've been reading about some bands who've marketed their music through the Internet only. For example Nine-Inch-Nails sold a $300 "Ultra Deluxe Limited Edition" set of signed goodies and music, etc, which all sold out in a few days. Likewise with Radiohead who put out a super limited edition set (though I don't know how well that did). Those examples aren't entirely relevant here as the music business is huge compared to the anime market. But it has been shown that limited editions in the anime market sell well. Taking a look at Viz' Naruto manga boxset, that sold out super-fast. Likewise with their Bleach anime boxset (which wasn't really that special, but due to popularity, so it doesn't count I guess). The Haruhi limited editions aren't sold out, but that's because Bandai made what - 100,000 of them or something, but either way, that went well.
I completely agree that LE sales do well - although as you say the music examples really don't correlate to anime sales (as much as every marketer in the field wishes they would!!) Done well a LE release can do exceptionally well, for us Haruhi LE's will almost guarantee a sell out as we're testing the water each release will be limited to 500 at present to test the waters. Personally I'd like to work on more LE's in future though and build up our experience on releasing such works though - so watch this space
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melonpan said:
What I'm getting at is that this is a collectors market, and I don't really see that many products specifically aimed at collectors!
We have to be considered collectors though, don't we, seeing as most who will be reading this would have bought hundreds if not thousands of pounds worth of anime/manga, and if £15 a volume anime can sell, over many volumes, then it shows we have the money.
In the end I think that comes down to the concern that while there are undeniably people who fit into the category of collectors in the UK - there's not enough willing to pay at the necessary price point to make back costs of production etc for any sufficiently collectors edition release. That may well change in the near future and the sales of titles like Patlabor LE have certainly not discouraged me from considering options for titles in future, take the Haruhi releases as an example!
melonpan said:
EDIT: Another argument for Internet only distribution is the fact that the target audience of your products are an Internet crazed bunch. Viral marketing can have a huge impact on things (as a talked about in my post in the ADV comment thread). Not only viral marketing though, I'm sure it's a hell of a lot cheaper to advertise online than it is on TV. If you put an advert onto MySpace/Facebook/whatever else there is to advertise - that'd be great.
Very much so, viral is very much the way to go in future to an extent provided you are engineering enough! Watch this space for more on it, but just look at the effect one Neo advert had on the internet when no company's name was stamped on it for example
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Hope this helps a bit anyway - a lot could work there, such as collectors releases become far more collector's - but sadly it may be a while off evolving that way yet ^^;!