Doing animation will lose money, why invest in animation?

The animator Fukuhara Kyoko answered questions from the audience in the question box. Someone asked why animation companies can’t make money, but there are still sos many animations. Fukuhara explained that this is because some companies can profit from animation, and these companies pay the production fee

Fukuhara gave a hypothetical example:

The cost of an animation, including:

  • Production fee: 15 million × 12 sets = 19 million yen.
  • Promotion fee: 20 million.
  • Fee: 30 million (10 million × 3 months) (the cost of broadcasting the program to the TV station during the rental period).

Total 230 million yen.

Production Committee’s turnover:

  • Europe and America online video rights: 10 million × 12 sets = 12 million yen, assuming the window is drawn. 20% The commission, the income to the production committee is 96 million
  • China Online Video Play Right: 5 million × 12 sets = 60 million yen, assuming the window is drawn. 20% The commission, the income to the production committee is 48 million
  • BD Sales: 8,000 yen × 6 rolls × 3,000 sheets ×. 1 5% =2,1.6 million yen (assuming the committee’s rate of return is 15%).
  • Music sales: 2,000 yen × 2,000 sheets ×. 15% = 600,000 yen (assuming the committee’s rate of return is 15%).
  • Peripheral sales: 1,000 yen × 1,000 ×. 5% = 5 million yen (5% is the price of the surrounding royalty rate).
  • The offline activity turnover: 5,000 yen × 2,000 people – production fee 8 million = 2 million yen.

Total 1 billion 68.25 million yen.

This is already assuming the income of a work that is still okay, but at this point, the production committee as a whole loses money

So, how do you make money from animation?

We now assume that there are 5 companies, each with 1/5 of the money, forming this production committee

Since the total cost is 260 million yen, the cost of each family is 46 million yen

Since the total turnover is 168.25 million yen, the income of each family is 33.65 million yen

At first glance, each company lost 12.35 million yen

However, don’t forget that the companies of the production committee are also the window to take over different rights and benefit from their own business

The turnover of each window:

  • A: Overseas online video playback rights window: 15 million × 12 sets ×. 20% =3,6 million yen.
  • B: BD window: 8,000 yen × 6 rolls × 3,000 sheets ×. 20% =2,8.8 million yen (assuming a yield of 20%).
  • C: Music window: 2,000 yen × 2,000 sheets ×. 20% =80 million yen (assuming a yield of 20%).
  • D: Peripheral window: 1,000 yen × 1,000 ×. 20% =20 million yen (assuming a yield of 20%).
  • E: Offline activity window: 1 million yen.

Then the total profit and loss of each company becomes:

  • A: Online video window: The committee pays dividends of 33.65 million + window turnover of 36 million – production cost 46 million yen = 23.65 million.
  • B: BD window: The committee pays dividends of 33.65 million + window turnover of 28.8 million – production cost 46 million yen = 16.45 million.
  • C: Music window: The committee pays dividends of 33.65 million + window turnover of 800,000 – production cost of 46 million yen = -1, 1.55 million.
  • D: Peripheral window: Committee dividends 33.65 million + window turnover 200,000 – production cost 46 million yen = -1,215 million.
  • E: Offline Activity Window: The Committee pays dividends of 33.65 million + window turnover of 1 million – production cost of 46 million yen = -1,1.51 million.

In reality, the investment rates of the five companies are not as much. The two companies with the most revenues, A and B, will contribute more, and the C, D, and E investment rates will be less. Even a company with a deficit must have other channels for cost recovery (for example, publishers selling books through animation), and will participate in investment animation

So, if a company does not have a window business in the production committee, it is basically a deficit

(This is why many production committees of animation have no production studios to attend.)

In addition, the record company participates in the production committee, which allows artists to play the theme song for many animations, enhance the artist’s popularity, and thus make personal concerts, tours, CDs, and peripheral profits

(https://twitter.com/fukuhara_ystd/status/1184368282347851776).

By the way, rich companies with no relevant business in the business scope, even if they invest in animation, not only do not have window business will lose money, but also violate the Japanese financial commodity trading law. Therefore, it is only necessary to participate in the production committee to be a company with an animation business

(https://twitter.com/fukuhara_ystd/status/1184370136259555328)