How Much Does An Animated Episode Cost
How Much Does It Cost to License Anime Series?
by Christopher Macdonald,
Hint: it's not cheap
Recently there'south been some discussion virtually how much it costs to license an anime serial, particularly in the wake of the recent AnimeTube Kickstarter entrada. There are many factors that bear on the cost of the license, including, but not limited to:
- How popular is the franchise?
- Is this a outset-run / simulcast license?
- Is the license exclusive?
- What rights are being granted?
- What territories are included in the license?
- Is the licensee on the production commission?
- Are there previously existing materials?
- Is there a holdback on the rights in Japan?
The first one is pretty straightforward. Licensing a new entry in a super popular franchise will cost significantly more than than licensing a series that doesn't accept a lot of hype. This impacts the demand for the production, and college demand (from consumers and from competing licensees) drives upward the cost of the license.
Secondly, is this a first-run license? This is very similar to the previous factor in that it affects demand. First run/simulcast licenses are more in demand, and therefore they are much more expensive. Contest amongst simulcasters and the explosive growth of internet streaming has pushed anime licensing prices to heights that have never been seen before.
Almost all first-run/simulcast licenses these days are sectional. An exclusive license is ane that allows no other licensee to acquire the same rights. It'south very rare for licensees like Crunchyroll, Viz, or Funimation to be interested in a non-exclusive simulcast/first-run license. In the rare cases where you run into something simulcasting on two different platforms in the same territory, it is probable that one of those platforms licensed the rights from the other "master" licensee. For example, Funimation sometimes sublicenses to Hulu, and in these cases Hulu is not acquiring the streaming rights from the Japanese licensor. Nigh licensees won't sub-license to direct competitors either, and then you're unlikely to meet Funimation always license to HiDive, or to a startup that seeks to disrupt them.
At that place are a whole slew of rights that can exist licensed, the near important of which are physical media (Blu-rays and DVDs) and digital media (itself often cleaved up into subcategories). Other rights include merchandise, television, or music, for example. These days, most licenses from Japan are for "physical media + streaming." Some companies are simply active in one business area: for instance, Crunchyroll is a streaming service, so they often sublicense physical media rights to another company such as Sentai Filmworks. Likewise, Viz and Discotek are physical media companies, so they ofttimes sublicense streaming rights to other companies.
These days, it'south pretty rare for major anime companies to pick upward rights for just a land or 2. Typically they will have licenses that are something like "World Except Asia" or "English language-Speaking Earth." North American rights are almost e'er the nearly expensive, and N American companies often scoop up rights for many other countries at the same time. For a few years, People's republic of china rights were sometimes college than the North American rights, but due to a number of changes in both markets, this is not the case today.
Sometimes a licensee manages to be invited to be on the production committee for the anime. This ways they are effectively i of the shareholders of the corporation that makes and "owns" the anime. Production committees are a whole topic for one or more than other manufactures, simply right now it's important to understand that if a licensee is on the committee, they will exist asked to brand an investment towards the product budget, and depending on the arrangement, they may also be expected to pay a licensing fee on top of their investment (other times it is included in the investment). Usually licensees who are production committee members volition pay a flake less for the license than they would otherwise exist expected to, however there have been cases of companies paying huge investments to be on the production committee. Normal licenses are for a limited period of fourth dimension, but production committee members regularly get their rights in perpetuity. Foreign companies usually aren't invited to exist on production committees, particularly for the about popular titles. But in some cases the producers are either looking for more investment, or another added benefit that a foreign company tin can bring to the production.
Offset run and simulcast releases generally have limited materials available; no books take been created, the translations oasis't been made withal, etc. But for catalog content, licensees are sometimes willing to pay a bit more than they otherwise would have (or might be expected to pay a bit more) if they want to pick up a pre-existing subtitle script or dub, or whatever other "materials" that they might want to include in their release as extras.
Finally, A "Holdback" is when there is a mandated filibuster betwixt the Japanese release and the foreign release. This is much more mutual for concrete releases than streaming, but originally a lot of streaming licenses were not truly simultaneous, delayed past anywhere from a few hours to a calendar week. For a physical release, getting rid of the holdback requires a higher licensing fee, or may not even be possible, just for simulcasts holdbacks are no longer very common.
All of this affects non only the price, but likewise the structure of the payments. The almost mutual licensing model for new shows is royalty-based with a "minimum guarantee" (MG). The MG is the bare minimum that the licensee guarantees to pay. Sometimes, the MG ends up being the only payment made. Licensors generally wait for an MG that is sufficient to make the bargain "worth it," even if additional royalties are never paid. On the other hand, a flat rate fee is where the licensee pays a fixed amount for the series, and no royalties. Flat rate deals are almost unheard of amidst anime companies such as Funimation and Crunchyroll these days (they were more common in the VHS era), but they are very common with mainstream platforms such as Netflix and Disney. Flat rate deals are simpler because the licensee does not accept to report whatsoever details about operation to the licensor. Even though these mainstream platforms similar apartment fees, licensors don't like them, particularly in relation to A+ shows, and have been known to refuse significant flat fee offers on licenses they believe have the highest earning potential. Keep in mind, many "Netflix Originals," and similar titles on other platforms aren't licensed at all; the US studio simply contracts an anime studio to produce the anime for them.
Historically, flat charge per unit or MG licensing fees may take been paid upfront, but that hasn't been the case in decades. With today's high licensing fees for simulcasts, the flat rate and MGs are usually paid over a schedule, especially in the example of extremely expensive licenses. More powerful and trusted licensees are more likely to exist able to pay over time, typically over 12 to 24 months, but every bit long as 10 years in some rare cases. A 3rd model, "revenue share," is more common with itemize content, smaller markets (ie: not-English speaking), and not-exclusive titles. With a acquirement share understanding, the licensee does not guarantee whatever payment, but instead agrees to share a sure per centum of acquirement (eg: 50%) over the license period. As with a royalty model, the licensee must provide regular reporting on the revenue earned, and make regular (eg: quarterly) payments.
Now, keep in mind, every contract is unique. At that place are no rules to how a licensing bargain should be structured, there are just "near common practices." There are several other less common methods of paying for licenses, and there'south a number of factors (such as recoupables) that go into calculating royalties and rev share.
So, with that, how much does it cost?
A commencement-rate, "triple A," or "A+" simulcast for N America will ready the licensee back an MG or flat rate of hundreds of thousands of dollars per episode. Currently, these titles often go for as much as United states$250,000 MG per episode, merely can become as high every bit $400,000 in some cases. $250,000 per episode roughly covers the full Japanese product upkeep for many series, although higher budget anime sometimes price every bit much as $500,000 an episode to produce. At those rates, other countries and physical media rights are usually included, but they are the lesser part of the fee; the simulcast is the major portion.
A more typical show, or what the industry calls a "B/B+," volition have an MG of between $70,000 and $150,000 if information technology's a new (first run) prove. Finally, the "Cs" will accept simulcast prices in the lower five-figures – per episode, of grade.
Long gone are the days of $500 per episode simulcast licenses.
Not-exclusive catalog titles are much more affordable. A streaming VOD platform could get a lot of titles for a couple thou dollars per episode, possibly even nether $ane,000 per episode if the serial isn't in high demand. More often than not speaking, these rights would still have to be obtained equally sublicenses from the existing local licensees, but in some cases, if the sectional rights haven't been renewed, they could exist acquired direct from Japan. Sometimes non-exclusive licenses, particularly in non-English speaking territories, tin even be acquired as rev-shares (with no MG or upfront payment), which significantly reduces any risk to the licensee.
When it comes to sublicensing, as I mentioned before, streaming platforms such every bit Funimation, Netflix, and Crunchyroll aren't very incentivized to sublicense anything they take to another streaming platform, fifty-fifty for fair market value. In that location has to be a expert reason for them to consider these deals, such as high exposure to a unique market segment, a pregnant MG, or the possibility of a very high revenue share in the long run. Sublicensing of first-run shows is exceptionally rare; virtually sublicensing takes place long after the primary licensee has made the bulk of their money off the prove and are no longer concerned most competing services. These platforms also typically renew virtually of their licenses these days; I've been told that it's very rare for them to let a license lapse.
Simply when it comes to older titles (say pre-2007) and for markets where the big guys aren't active, information technology is possible to get older, non-exclusive licenses directly from Japan, and for relatively cheap with little or no MG required... if you're a well-established company with a history of paying on time. Withal, acquiring cheap catalog rights from Japan poses an entirely unlike claiming. If the evidence is but worth a couple hundred dollars per episode, some licensors won't consider it worth the try to bother with the sale. Acquiring actually old titles poses an even bigger challenge; the older the show is, the harder information technology is to even decide who actually owns the rights for the show and find the materials. For a licensee with the upkeep, acquiring new shows, while more than expensive, is actually much easier than acquiring older shows.
Now that you know roughly how much it costs to acquire a show, and how difficult it tin exist to acquire cheaper shows, let'south talk a bit about risk. Licensees take 2 big risks when acquiring a testify. The first is the MG; regardless of the title'due south functioning, they are obligated to pay the full MG. If the title doesn't earn them every bit much as expected, the licensor does not refund whatsoever portion of the MG, but if the championship does amend than expected, the licensee volition brand "overage" payments to the licensor. Since even catalog shows usually have MGs, this risk applies to almost every anime license. In add-on to the MG, they also have all their other expenses related to localizing, promoting and releasing the anime.
The second big gamble is unique to new shows. Licensees are now being asked to bid on shows as much as a yr or more in advance. At this point production hasn't fifty-fifty started, and all the bidders get to look at are a few production sketches, the outline, and who the expected production squad is. This makes it very difficult to gauge how popular the show will exist (unless it'southward based on an established franchise) so sometimes the licensees pay for a B+ and become a dud. There are besides several famous examples of shows that change significantly between the time when the contract is signed (and the MG paid) and the show being delivered. Imagine paying for a series that is supposed to be a little risqué, merely receiving a bear witness that ends up being borderline pornographic? Fugitive this sort of situation is some other benefit to beingness on a production committee.
So at that place you lot have it: streaming licenses cost anywhere from slightly under a thousand dollars per episode for the cheapest catalog titles, to hundreds of thousands of dollars per episode for simulcasts. But fifty-fifty if you lot have the budget, there's no guarantee that you will be able to secure licenses; licensing anime is decidedly more than complicated than but being able to pay for information technology.
I would like to thank the manufacture professionals and executives that contributed to this commodity.
Want to read more than about Licensing? Our article All Nigh Licensing, by Justin Sevakis, was published in 2012 and is notwithstanding mostly authentic today.
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