Episode 202 – The Death of Physical Media
The Anime Addicts Anonymous discuss the death of physical media as the world slowly makes the transition to digital consumption. How do we feel this shift will affect the anime industry? How has it already?
Digital Music Outsells Physical –
There was a 19.5% increase in Digital Music sales between 2010 and 2011
This is the first time in the Music Industry where digital Media won out
Japanese spent more money on CDs in 2012 than any other country, in fact sales grew by 9%
Physical Media, CDs and DVD made up 80% of all music sales in Japan, compared to 34% in the United States
Video Games –
NPD group reports US Consumers spent $1.59 Billion in digital game content
This Includes full games, add-on content, subscriptions, mobile games, and social network games
US consumers spent $1.37 Billion on physical games
This is in the first Fiscal quarter of 2013
Books –
Digital Book sales grew last year by 43% But this is still considred a slow-down compared to the growth percent of previous years.
Digital Book sales account for about 20% of all book sales
Digital Book sales are up 4456% since 2008
Hardcovers, however, still outsell digital books, 557 million hardcovers versus 457 million e-books
Only 8% of Japanese readers have downloaded an e-book compared to 20% of the US
Tokyo base e-publisher Robin Birtle comments that Japan is at least 5 years behind the West in terms of digitalization
Manga –
Japanese published Kodansha teams with Crunchyroll to distribute 12 current manga titles in English
Japanese publishers are regarded as having a “slow” reaction to the digital movement in getting manga available on digital platforms.
However, American sales in the digital comic and graphic novel are showing signs of improvement and strength
“In Japan, people ignore digital content as meaningless and ephemeral,” Vertical Marketing Director Ed Chavez said. “Digital comics exist, but only the titles the mainstream accept ever get any recognition. Even digital initiatives by major publishers are ignored until those comics are in print, as publishing is treated in very high regard in that country.
“In a strange way, readers on each side of the Pacific view the same digital content from a 180-degree perspective.”
Digital Industry Summary (Based on Aug 2011 PWC report “ Global Entertainment and Media Outlook 2011-2015, http://www.pwc.tw/en_TW/tw/publications/events-and-trends/assets/e250.pdf)
Shift to Digital Marketing spend on the rise
In 2006, only 15.3% of marketing dollasr were spent on digital media
In 2015, this figure to rise to 33.9%
Global Internet Access market (wired and global)
In 2006, market size was $167.4 billion dollars
In 2015, expected to reach $407.9 billion dollars on an 8.6% 2011-2015 CAGR
Anime –
Most of this information was previously reported on in Episode 197, the state of the Anime industry, but it is particularly relevant for this discussion:
DVD industry in the USA peaked in 2006 at $374 million dollars and has sense dropped $197 million in 2012 on the trend of a -10.13% growth rate since 2006. In the last 3 years, DVD sales have stabilized.
Amazon is the highest consumption method for Japanese Animation, it is then followed by Netflix, Hulu and Crunchyroll
FINAL THOUGHTS –
Chiaki
Worldwide physical media sales are declining and digital is rising, the numbers don’t lie. However, traditionalism and a stubborn dedication to keeping business practices as they are in Japan prevents Japan from modernizing with the rest of the world.
An example for me is the iPhone. Japan had almost a 4-5 year delay in really adapting the smartphone style as mainstream. When I personally visited 2 years after the original iPhones release in Japan almost no one had the iPhone, most people still used flip phones.
Japan WILL Modernize. But it will be slower.
As a result, I feel that many Japanese companies are truly sacrificing their Western markets by not rising to meet demands for digital goods as efficiently as their comparable Western media counterparts.
In other words, they don’t care about us.
Mitsugi
No doubt over the next decade, physical media will continue to phase out in favor of digital alternatives. Anime is no different as it comes on the same digital platforms
Anime will move to already widely accepted sources of digital consumption such as Netflix, Hulu, Crunchyroll
Anime Piracy will continue to run rampant and uncontrolled through thousands of internet sites. This piracy will continue to leech money from the global anime media industry.
The Anime industry, especially in the East, will continue the thrive due to the majority of anime related revenue dollars coming from character goods and other non- media sources
The Anime industry in Japan could continue to function well simply through television distribution and character goods alone. (e.g. $0 or close to $0 from physical and digital media sales)
Kram
No way to be accurately prescient about the true future of physical media over digital alternatives
We must be careful to consider availability and access of physical media alternatives for consumers before prematurely announcing that “physical media is dead.” Keep in mind that only 34.3% of the world’s population has internet access (Asia: 27.5%; Europe: 63.2%; N. America: 78.6%), a prerequisite for streaming
Ultimately physical media may move to a “print-on-demand” model; some companies have already experimented with this
Japan’s physical media market continues to thrive with overpriced units aimed at collectors; this could be the future for the West
Media rental is still huge in Japan with no less than three major chains still in operation; consider this in light of Blockbuster finally closing its doors forever this month
Now that we are on the verge of a new HD format (4K), there is little discussion about the difficulties of offering higher quality video over streaming services; this could prove to be so problematic that a post-BD physical format may be necessary to bide the time until ultra high-speed fiber optic internet access is more ubiquitous