1. Mr. Smith, thank you very much for taking the time for this interview. Before we start asking questions about the hotly debated topic of piracy, could you tell us a bit about yourself, and how long have you had been in the industry.

I have worked in the Japanese anime industry since the start of 2000.  I joined GDH just after Gonzo and Digimation studios merged and I set up the international operations for GDH.  I have made every international sale GDH has ever done – to TV, DVD and merchandise companies; I am also the initiator of the Afro Samurai project and Witchblade.

2. FUNimation Entertainment recently sent out a cease and desist letter on your company's behalf to stop the illegal subbing of Romeo X Juliet by a fansubbing group. What made your company decide to confront this issue and can we expect to see similar action with future titles?

Internet piracy is the single biggest global threat to the anime industry and fansubbing is at the heart of the piracy problem. Fansubbed versions of programs recorded in Japan make their way to every illegal outlet for video content, these illegal outlets damage the ability of Japanese producers to sell DVDs and sell into Television in local markets and make it increasingly difficult for the studios to pay the animators, voice actors and actresses, writers, original creators, and everyone else who makes the anime that some fans enjoy responsibly and legally and that some fans pirate illegally.

The US market for DVDs is down 30% in terms of DVDs sold and more than that when looking at revenues since price per DVD is also coming down.  We have a lot of evidence which leads us to believe that a large part of the decrease in volume is due to illegal file sharing.

We understand that fans are really keen to see our shows as soon as possible (and that is really appreciated!!) but illegal file sharing and postings on streaming sites like YouTube are destroying our industry – and the starting point of file sharing is fan subbing.  In order to try to protect our livelihood, we must do something and the whole industry in Japan is beginning to realise that we can’t stand by…otherwise the entire industry will disappear….that’s how bad things are!!

3. Let's say that a particular group has defied a cease and desist letter. What type of legal actions would your company impose?

Ultimately, anyone involved in supporting illegal file sharing is supporting a criminal activity – someone else owns the content and fan subbers are using that content against the wishes of the content owners.  If a shopkeeper runs after someone who has stolen an item from his shop and someone else trips the shopkeeper up to stop him from catching the shoplifter…that person is also responsible for stealing.  They haven’t made any personal gain from it, but they have encouraged stealing.  That’s the way I see it.

I know fans want to see all the shows as soon as they are released in Japan but if the content owner does not give you permission for that, please understand that this is for good commercial reasons, not to torture you!!  We are working to bring release dates in the US and elsewhere closer to Japan release, but viewing fan subbed versions before official release is not different from smashing the window of a Mac Store and taking an iPhone the day before it is released.

We believe fans will listen to the various people who are beginning to speak out against illegal file sharing and fan subbing. If not, eventually, all legal possibilities would be considered I suppose, but I really hope it doesn’t come to that.

4. Would GDH also go after individual fansubbers and enforce the same legal actions?

Fan subbing is only the first part of the problem….the other part is those who post fan subs on Bit Torrent sites and YouTube etc. and those sites who actually sell our content without any permission and without paying any royalties….I am sure you know which sites I am talking about!!  They charge a monthly fee for free downloads….these sites are all illegal.

We have a responsibility to our investors to make a positive return on each production (of course!!) and if that means we need to take legal actions, I suppose we’ll have to do that.  In fact, we are already preparing legal action against various sites.  For individuals….we hope to get the message out so that is not necessary, but I have a feeling that certain people feel they are entitled somehow to take our content for free – these people are not supporters of anime, they are selfish and will destroy the industry for everyone if they are not stopped, so individuals like that will be targeted I would guess.

5. Foreign fans think that watching fansubs is not hurting the industry.  What do you think about this?

Let me give a very clear message to each and every fan who thinks that:

You are totally WRONG.  Fan subs are DEFINITELY hurting the industry A LOT because they are part of the illegal file sharing activities going on everywhere on the web – how else can anyone explain why the overall DVD market in US is down 15% and anime DVD market, even though interest in anime is GROWING much faster than other types of programming, is down 30%!!  How can that be, if not through the impact of file sharing!?! 

Fan subs seem innocent in themselves but they lead to illegal file sharing and file sharing is destroying our industry – if you want to continue to enjoy our anime, please, please buy the DVD or watch it through some other legal method.

We are not a big Hollywood type industry which makes its money in theatres or by selling to TV – we rely on the DVD sales to survive.  Please respect our strong request – STOP fan subbing without our permission and stop file sharing and tell your friends to stop too.

To say it in another way, repeating Shinichi Watanabe’s comment – “when the movie industry promotes a movie, they don’t present the entire movie do they?....they just present a trailer!!  So obviously fan subbing all episodes of a series is not good for business!!”

6. Is piracy affecting what sorts or how many new series we will be seeing from GDH?

Yes, we are already having to cut production budgets and asking all our staff and creators to accept little or no pay increases to help us survive.  We are lucky that we have some other businesses such as on-line games to help us support the anime production business; otherwise we’d be in real trouble.  I am sure there will be some production companies who go bankrupt – it is a real shame and is totally unnecessary.

7. How did the market for the Japanese anime industry change after its sudden popularity in North America, and how much does the Japanese anime industry depend on the American market and companies?

The US and the rest of the international market have become increasingly important to the anime industry over the last ten years. Growth in international popularity and availability of anime has given more and more people in more and more places the opportunity to enjoy the genre and the unique brand of entertainment it provides.

I hope we can continue to expand interest in anime around the world

8. How much is your company affected by fansubbing and illegal downloading , and what would happen to the Japanese anime industry if the American industry collapses?

It won’t collapse but it will be severely restricted – already there are fewer US DVD publishers and lots of Japanese companies are now finding it difficult to find someone to publish their products in US so it is already beginning to happen. 

We’ll have to concentrate on safer titles which are aimed more at Japan market and also we’ll have to reduce production budgets so the quality of animation will decrease.

9. How much is your company affected by fansubbing and illegal downloading?

- Significantly.

10. In addition to the Ministry of Foreign Affairs filing an official request to the US government to help prevent the illegal online distribution of anime, and sending out cease and desist letters to fansubbers, are there any other means that the industry could use or provide to stop copyright infringement online?

We are aiming to release DVDs earlier (hopefully much earlier) and also to offer direct legal alternatives to illegal file sharing (such as iTunes or XBoxLive).  The fans want to see anime earlier than US distributors currently release product….we understand that and we need to listen to that and do something about it.  That is the other side of what we plan to do over next 6-12 months.

11. Shinichi Watanabe is probably the first Japanese creative talent that spoke about this hotly debated topic during his recent visit in the U.S., and the fans seemed to listen. Do you think that the creative talent in Japan should start becoming vocal on the matter, especially if they're directly affected by this?

-Yes. The worst thing about piracy is that it affects the people who create the content first – which is ironic as those people are held in such high regard by the fans. Creators and animators in Japan are not paid like Hollywood superstars, they depend on the money they make to live and provide for their families.

12. Is there anything being done in Japan to stop the uploading of series or movies to bittorents, YouTube, or other means of distributing anime or manga online, so that it doesn't fall into the hands of the funsubbers?

There are certain commercial software being looked into at an industry and government level that impede piracy. The industry has recently condemned the process of uploading RAW files and have begun tracking down RAW providers [some having links with organized crime in Japan] and prosecuting them.

However, let’s face the facts – somehow copies will get through, so we need to rely on other means to try to stop file sharing.

13. If the trend continues, how much longer can the Japanese industry keep providing fans what they love to enjoy and watch?

It is a good question without a definite answer, some companies will last longer than others, but it is a certainty that, within a short period of time, there will be less anime for fans, less variety in anime, and less work for the many talented creators who make anime possible.

14. Mr. Smith, thank you very much for your time and speaking out about this sensitive topic in the anime industry, but before we let you go, do you have anything that you would like to say to the fans out there?

Firstly, thank you for your great support over the years for making this industry what it is today.  Without your support, we wouldn’t be here today.  If you have any positive comments, please send them to activeanime and we’ll try to listen to them.

	1. 24-11-2007 18:35
	The thing is that I agree in principle with what Mr. Smith said. But I think his numbers could do with some explaining. First 15 percent and 30 percent of what? Profit margin? Unit sales? Grated cheese?    Now, I respect his point of view. But how does he measure the growth in anime viewership? By fansubs? Because I know for certain that convention attendance at Otakon has been relatively stable. Which would at least hint to me that the market is neither growing nor shrinking, but has reached a saturation point (probably a reason that fansubs have become an issue now when they haven't been an issue for the last ten years.)    Third, how can he compare a mainstream DVD market with what is largely a niche market? Isn't that kind of like comparing the sales of Roleplaying books to the sales of books in general? And aren't we dealing with two wildly different markets here? One that is populated by people up to the age of about 50, to one that pretty much targets the 12-30 age group.     No disrespect, but his supposition has some serious holes, and seems to be a gross oversimplification of the problems facing the anime (and all industries) right now. http://searchofno9.blogspot.com Registered Report

Cameron

	2. 24-11-2007 19:06
	Also, I question Mr. Smith's assertion that while other companies don't have to rely solely on DVD sales, the anime industry does.    While, I agree that DVD sales are more important in the anime industry. They are also one of the largest sources of revenue for the movie industry as well.     Also, what impact does the DVD rental business have in this. Since Mr. Smith seems to be asserting that the only way we should be able to preview a series is by renting it. http://searchofno9.blogspot.com Registered Report

Cameron

	3. 26-11-2007 15:49
	when Mr. Smith Mentions growth rate of say a quarter which is three months, and say there has been a 30% growth in that period, he is looking at the final results from the last period (Bear with me I am simplifying this...) and is comparing them to his current results.    Say there were 100 anime fans first period, and there was a 30% growth during the next period, now there are 130 fans in that market.    Samewith DVD sales and such... 100 DVDs last period, but there was a drop in sales of 15%, so this current period there were only 85 DVDs sold... and so what he is saying is that for every two fans we gain, we are losing one DVD sale, does that make sense? If I am totally wrong, please correct me Rommel, and like I dunno, point it out.     That should help with your first question. Cameron.    I would like to point out to you Cameron, that you are overly nit-picking at a buisness professional's comments and simplifacation.    The reason a buisnessman(Mr. Smith) would simplify to this degree is so that anyone who reads this article whether some Joe on the street to an Oil Tycoon, will have a basic grasp of exactly what is going on. First rule to public speaking, make sure your audience can understand what you are talking about.    Reguardless of his comparisons, understand this... Anime is intellectual property, that is why there is a copywright symbol in the opening and closing credits. Say you had a drawing and I took it to a T-Shirt company and made millions off of the drawing's design... then I gave you nothing. I understand this is not the exact same thing, but I took your property that you could have made millions off of... Registered Report

Haissan

	4. 26-11-2007 15:51
	To finish my thought, That's stealing, even if you make no money off of it.    Rommel, please correct me if I am wrong. Registered Report

Haissan

	5. 27-11-2007 08:58
	Quote: The reason a buisnessman(Mr. Smith) would simplify to this degree is so that anyone who reads this article whether some Joe on the street to an Oil Tycoon, will have a basic grasp of exactly what is going on. First rule to public speaking, make sure your audience can understand what you are talking about.     Cameron, Haissan is correct in this manner. Keep it simple so everyone can understand.    Quote: Reguardless of his comparisons, understand this... Anime is intellectual property, that is why there is a copywright symbol in the opening and closing credits. Say you had a drawing and I took it to a T-Shirt company and made millions off of the drawing's design... then I gave you nothing. I understand this is not the exact same thing, but I took your property that you could have made millions off of ...     Cannot argue with that. Registered Report

rommels

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