Anime Industry - How to Recuperate Costs?
Of late, I've been getting a load of nitty gritty on the industry by working with anime producers like Kadokawa, Ascii Media Works, King Records, Satelight and Production IG.
The anime industry is in a spot of bother where sales of DVD's and Blu-rays are not selling enough to recuperate the initial investment. Many users think that the cost of a blu-ray is 0 yen when its released as they seem to make their way to the Internets.
So why does the anime industry continue to make anime titles? One reason is because occasionally they will produce a hit title like K-ON! Bakemonogatari or Oreimo where the sales of DVD's, Blu-rays,OST CD's and royalties from 3rd parties producing merchandise will not only recuperate costs but also make a profit.
Merchandise royalties typically range from 2% to 5% of retail price but depends on the copyright holder and negotiations.
If you for example buy a Good Smile figure of this Kirino Nendoroid, then Good Smile pays the copyright holder a royalty which then goes to recuperating costs and hopefully a profit too.
Quite a bit of change is needed to make anime titles. Some titles can cost something like 5,000,000 yen for a 20 min title. 8,000,000 yen for better quality. Am currently working with a company who are paying about 2,000,000 yen per minute of animation.
So where does all this cache come from? One thing you may notice is that an anime is produced by a group of companies that get together to form whats known as a Seisaku Iinkai [製作委員会]. This is basically a group of companies that invest cash in producing a TV show or anime. What then happens is that one company may then have the rights over the DVD or Blu-ray titles, one company will profit from the royalties from merchandise and so on.
The expectation is that the anime title will be popular enough to recuperate costs and make a profit.