Can catgirls save the troubled US anime industry?

Drastic declines in DVD sales - from $550 million to $350 million in 4 years - mean trouble for the US anime industry.

One major distributor has collapsed, another is showing stress fractures, and the industry blames its fans for piracy.

Vampires battle mutants that feast on human blood, a star-crossed maid in 19th century London falls in love with a nobleman, and a boy named Simon and his giant robot save the world. These are a few of the new anime series coming to the U.S. early this year.

If only Simon and his giant robot could save the day for the anime industry itself. Anime, or Japanese animation, has attracted millions of fans in the United States with hit TV series like Yu-Gi-Oh!, Naruto, and the ubiquitous Pokemon. In 2003 the anime film “Spirited Away” beat out “Ice Age” for an Academy Award. But drastic declines in DVD sales and an explosion in illegal downloading appear to be undermining the industry's financial health.

“It’s the worst of times and the best of times for anime,” said Milton Griepp, the president of ICv2, a pop culture monitoring group. “The audience for anime is the best it’s ever been. The number of shows on TV is up pretty dramatically, and the sale of licensed products based on anime is very healthy.”

Indeed, the miniseries “Afro Samurai,” featuring the voice of Samuel L. Jackson, had 1.66 million viewers when the first episode aired on the cable network Spike on Jan. 4 last year. There are currently 38 anime shows on 11 American TV networks, up from 18 shows on five networks in 2002, according to ICv2’s “Guide to Anime.” The U.S. anime market is the largest outside Japan, said Arthur Smith, president of the international division of the Japanese media company GDH, the creators of “Afro Samurai.”

But series shown on television make up a small portion of the anime market compared to the hundreds of series available on DVD. And DVD sales have dropped dramatically, the ICv2 guide said, to $350 million in 2007 from a record $550 million in 2003.

bbb_promo01 copy.jpg

The anime series "Black Blood Brothers" stars a pair of 'old-blood' vampires who defend the human race from an evil mutant vampire sect. The episodes will be available to purchase online when the series is released on Feb 26. (Courtesy of FUNimation Entertain)

emma_cap_01.jpg

In "Emma: A Victorian Romance", a poor young maid in 19th-century London falls in love with a man far out of her reach, a wealthy nobleman named William. "Emma" is being released with subtitles only to reduce the cost and delay of dubbing. (Courtesy of Right Stuf, Inc.)

emma_cap_02.jpg

In "Emma: A Victorian Romance", a poor young maid in 19th-century London falls in love with a man far out of her reach, a wealthy nobleman named William. "Emma" is being released with subtitles only to reduce the cost and delay of dubbing. (Courtesy of Right Stuf, Inc.)

“There’s no way to sugarcoat the fact that 2007 was a truly brutal year for anime in North America,” the report stated.

“The anime industry, or what’s left of it, is in a dire state,” said Justin Sevakis, the founder of the popular Anime News Network. “The average anime release sells only a few thousand units, not enough to break even with the costs of dubbing.”

The reasons for its troubles have been a topic of considerable debate, with “open letters” and op-eds flying back and forth between the industry and fans. Most in the anime business blame the illegal downloading of “fansubs,” anime episodes translated and subtitled by fans, for the decline.

“Fansubs are killing the market,” said Shawne Kleckner, chief executive of Right Stuf, the largest online anime retailer. In fact, a recent study commissioned by Central Park Media, an anime distributor based in New York City, estimates the number of illegal anime downloads at more than six million each week.

But Sevakis, who has worked in the industry for 10 years, saID the industry has only itself to blame for the piracy problem: anime releases typically take a year or more to make their way from Japan to the United States. “Gurren Lagann,” featuring Simon and his giant robot, originally aired in Japan nine months ago, while the vampiric “Black Blood Brothers” is more than a year old and “Emma: A Victorian Romance” aired in 2005.

“This is a problem for the industry to solve,” he said. “If you’re a business and nobody wants to buy your product, you clearly don’t have a business model.”

Sevakis freely admits to downloading fansubs for his job. “It’s the only way to stay current,” he said. “But I still buy the DVDs when they come out, otherwise I’d be a hypocrite.” He doesn’t credit most of anime’s target audience, 15-year-old boys, with the same finely tuned ethics, scoffing at industry appeals to fans to stop downloading illegally.

The industry’s troubles became obvious late last year. In September, Geneon Entertainment, the fourth-largest U.S. anime distributor, laid off many of its employees, asked retailers to return all unsold DVDs and announced that it would no longer sell, produce or distribute its anime - leaving the fate of a number of highly anticipated releases in question.

And if 2007 was brutal, 2008 may be no better. In January, the third-largest distributor, ADV Films, reduced the programming on its Anime Network television channel, scrapped its monthly anime magazine and removed many of the current and upcoming titles, including “Gurren Lagann,” from its Web site. The company said it plans to continue its releases despite “short-term challenges,” but a spokesman would not elaborate.

If ADV joins Geneon and stops producing new series, 45 percent of the American anime industry, based on market share, will suddenly vanish, estimated Sevakis, dealing a devastating blow from which it might not recover.

The anime industry is trying some experimental strategies to bring costs down, reduce the release-date delays, and lure customers back from fansubs. A number of companies are starting to let fans download (and pay for) episodes straight from their Web sites. “Black Blood Brothers” will be available for $1.99 an episode from FUNimation, and Smith, of GDH, said that his company will soon make subtitled episodes available for download a day after they air in Japan. “We have to close that window of opportunity for the pirates by eliminating the delay in release,” he said. And Kleckner’s Right Stuf is eliminating the cost and time of dubbing by releasing “Emma” with subtitles only.

“I’m a great believer in the concept of adapt or die,” said Kleckner. “And the industry has to adapt.”