This is the first entry of my coverage ICv2 conference held at New York Anime Festival. You can listen to the un-edited audio I recorded of the panel here. I hope to clean up the levels later for my podcast. On with the coverage:

ICv2: White Paper

Anime (in the DVD market) may have peaked in 2005. The number of DVD titles released in the U.S. each year increased up until 2005 and then started declining, according to statistics from the DVD Release Report. The anime market was worth $500 million in 2005, but in 2006 that number was down to $400 million. Where 2003 saw a 10% increase in the market size, the following year it went down 9%, and then -10% in 2005, and -11% in 2006.

Moderator Milton Griepp described anime as being in a “Best of times, worst of times” scenario. Awareness of anime and market penetration is at its highest ever, but as later ICv2 panels would elaborate on, the anime DVD market is in crisis, and faces collapse in three years.

Demand for anime on TV is growing while DVD sales are declining. In 2002, there were 18 anime series on TV, on five different channels. In 2007 there were 38 series on TV across 11 channels. (These statistics do not include video on demand.) There is more anime on TV than ever before, but sales continue to drop.

Anime did very well when DVDs started catching on in 2000, but Griepp pointed out that anime DVDs now compete with a lot more DVD content in the marketplace. Lots of American TV shows are currently available on DVD, and at a much lower price point.

Griepp said the main issue facing the anime industry is a “Pricing Quandary”:

“Consumers want season set pricing. That’s what they’ve become used to buying American television shows on DVD. The old model of anime on DVD was to put 3 or 4 episodes on a DVD and sell them one at a time, at the end maybe put out a box set. People don’t want to wait, and they don’t want to pay those prices.”

Further complicating the pricing quandary, DVDs must compete with the abundant free downloads on the internet. Licensing and dubbing is expensive. The declining sales numbers only compound the problem.

Griepp added that stand-alone feature anime films sell quite well, because “the dynamics of season set pricing do not apply.” The anime feature business is doing well.

The manga industry continues to grow. 1,208 individual volumes of manga were published in 2006, up 120 volumes from the previous year. 1,469 volumes were released in 2007 and 1,731 volumes are set to come out next year. Of the manga numbers, 11% of titles are from Korea, 1% are from China, and 7% are OEL or global manga.

When asked if manga is eating away at the anime industry, Griepp said no – and this is a point that came up again and again all weekend: Downloaders of scanslations like to buy books because they then own the product. Downloaders of anime have the product in its entirety and do not tend to buy the physical product.

The question facing the anime industry is: Will the core audience disappear? The question facing the manga industry is: Will the demographic expand?

A few publishers like Aurora are starting to publish josei manga, and publishers like Dark Horse continue to pick up seinen titles for older men.

One member of the audience suggested that international anime co-productions could lessen the burden of anime license pricing and close the window on release dates between the Japanese air dates and U.S. DVDs; Griepp agreed that this is happening, and the window is being closed even by companies who are not co-producing.