Perhaps, you’re interested in developing a career in anime licensing. Unlike licensing any other kind of media, the process of licensing an anime series is a time-honored process that’s typically not an easy subject to discuss. There are MANY moving parts, variables, committees, individuals, opinions, and even data involved when involving licensing an anime title. (Even non-anime titles in the United States!) This is mostly due to the non-disclosure agreements and clauses that typically accompany most contracts. Therefore, I can’t discuss in full detail how licensing works exactly, but I can provide a brief overview!
A license is an agreement between the copyright owner and a user. It details the legal ownership of the video for the intended use (Halkyard, 2021). In most cases, a written contract is required before a license is granted to allow the use of a video. This agreement can specify a price, limit the duration, and the intended audience for the video.
For new distributors, attending a convention is a must-do if you want to get into the content business. It’s also a great place to meet influential producers and peers. There’s a long process of “shopping around” the title, generating buzz and interest. Let’s say there’s a mutual interest to license an anime title. This is the time to discuss terms and it’s time to draft up a deal and handle potential contracts.
I can’t discuss what exactly is listed in these contracts but topics such as territory rights, license duration, if there are holdbacks and etc are outlined. Territory rights define where the distributor can stream the anime. When it comes to anime, most of the time the territories are “worldwide” excluding Asia. Of course, each title is unique. License duration refers to how long the distributor will hold onto the license of a title. They can range from 2 years, 5 years, even 10 or 15 years depending on the title. Lastly, a holdback is a term used when a title is being shared or sublicensed between streaming services. This means that one service may have priority or “first dibs” on new episodes while the other service may have a fixed duration before being able to stream that same episode.
How much does it cost to license anime?
Depending on the title and the number of episodes each season may have, one episode can cost over $250,000 PER episode. And remember, a distributor typically purchases the entire season. If it’s a lower-tier title or a brand new series that doesn’t exactly have a track record yet, the costs are significantly lower. In addition, it also depends if the anime is exclusive to a streaming service or not. Non-exclusive catalog titles are usually cheaper than exclusive ones. A streaming platform could pay approximately $1,000 per episode depending on the series’ demand.
Royalty amount and minimum guarantees are also discussed in contracts when it comes to licensing. Minimum guarantees are when a licensee agrees to a minimum revenue for the rights holder. If the content does not perform, the licensee may pay additional fees. On some AVOD platforms, like the streaming service, Hulu, the licensee pays a fixed amount to the content owner per view but then the distributor makes money from advertising.
Some contracts require that the licensor provide the publisher/distributor with all of the materials they need, while others only allow the publisher to use what they give them. Some limitations also apply (like how the finished product can be used). Since the anime content is used to generate revenue, then the rights holder and the licensee will each receive a share of the transactions as agreed in the agreement. Then the process repeats when and if it’s time to renew the license for a title (Halkyard, 2021).
Sometimes, a licensee can be on the production committee for an anime. This means that they are effectively a part of the corporation that makes the anime. As a result, they are expected to make an investment in the production budget. Usually, members of the production committee get a lower price for a license than they would be expected to pay, though they still get the same rights and privileges as everyone else. Most of the time, foreign companies are not invited to join production committees for popular titles. This is because producers may be looking for more investment or other added benefits (McDonlad, 2021).
Risks involved
One of the trickiest things in the anime licensing world is not being able to see a completed product. What many streaming services may experience is that they may have to rely on the manga version of a story to get insight before the production is complete and then translated for screenings. Prospective buyers are asked to bid in advance for shows that will be ready for production sometime in the future. Basically, they are bidding before seeing the “pilot” or preview of a title. That’s why it’s so important to use social listening tools, read fan feedback and be familiar with the manga of a story to stay up to date and make practical decisions. Even more, riskier, sometimes the prospective buyers have no idea who the production team will be, and how popular they will be. Sometimes the process involves going in blind and just hoping for the best!
Licensing anime is super tricky, I work in the industry and sometimes I don’t even fully understand it. Each title is treated differently and has its own special conditions and limitations. It also depends if it’s a new anime title or part of an ongoing series or franchise. A new franchise entry costs significantly more than licensing a non-super popular series. This is because the demand for the product is higher than the supply. It’s even more costly as we’re currently experiencing “streaming wars” from a consumer aspect.
Licensing anime is also the reason in one of my previous blogs, that streaming anime legally is important. Distributors and streaming companies typically have agreements to share viewership data to help quantify and evaluate different IPs. This also provides licensors to make data-driven decisions on whether or not an anime will receive an additional season or certain merchandise. What many fans may not realize, is that studios such as Funimation, Sentai, Viz Media, and Crunchyroll do NOT create anime nor do they have the authority to make a decision on whether or not an anime receives an additional season.
As mentioned, a lot of details of what happens in this process were omitted from this blog. Getting a contract to license an anime or sublicense is a bit challenging, but it’s worth it. After all, it’s a necessary step in making sure that the rights are protected for all parties involved. Most of the points discussed apply to streaming, don’t even get me started on theatrical releases! More contracts and specifics are handled in a very time-sensitive manner! So if you love dealing with contracts or you’re studying law and want to work in the anime industry, licensing may be for you!
References
Halkyard, T. (2021, July 15). Understanding video licensing – imagen enterprise video platform. Imagen. Retrieved September 27, 2021, from https://imagen.io/blog/video-licensing/.
McDonlad, C. (2021, August 2). How much does it cost to license anime series? Anime News Network. Retrieved September 27, 2021, from https://www.animenewsnetwork.com/feature/2021-08-02/how-much-does-it-cost-to-license-anime-series/.175579.