Big From Japan

There you go, Astro Boy! Ever since anime pioneer Dr. Osamu Tezuka's iconic creation burst on the scene in 1963, American kids and adults alike have been fascinated with the genre—and its popularity in the U.S. shows no significant signs of slowing down, industry insiders tell Playthings.

In fact, the expressive animated storytelling pioneered by Tezuka (Japan's answer to Walt Disney) is now a surging business worldwide—worth at least $275 to $300 million a year in DVD sales for North America alone, not counting its licensing potential in toys and related products, according to ICv2.com, the Web-based pop culture authority. “In terms of the fan base, anime is probably as big as or bigger than it has ever been, with the possible exception of the Pokémon era in 1999-2000,” Milton Griepp, CEO of ICv2, says. “The state of kids anime is very good.”

For companies seeking to bring new children's properties to market, anime has now become a standard source, says Roz Nowiki, executive vice president of marketing and licensing for 4Kids Entertainment, New York. “Anime has become part of our culture, and will be for the foreseeable future,” she says.

As Griepp points out, the continued popularity of veteran series Pokémon, Yu-Gi-Oh! and Dragon Ball Z—as well as recent favorites like Naruto—has meant impressive success in the lucrative licensing arena.

“Something that lasts 10 years? A tiny, tiny, tiny percentage of entertainment properties last that long, so it's an amazing property,” Griepp says of Pokémon.

Griepp also notes that Dragon Ball Z, though only in limited broadcast, remains steady in popularity, with toys and collectibles debuting this year from Bandai, along with DVD releases from producer Funimation. The series ranked as a top anime property for 2007 based on DVD sales, according to ICv2.com data.

Inspired by the successes of those brands, it's no surprise that more companies are looking for ways to get into the anime game. The field is wide open for new standouts, though there will always be obstacles when trying to replicate the frenzy that some of those properties enjoyed, industry insiders say.

“Kids' anime is a hit-driven thing,” says Mark Northwood, vice president of licensing for Nelvana Enterprises, Ontario, Canada. “The toy business is a bit of a fashion business. If something starts to drive some revenue, everybody jumps on board and the anime business itself becomes big. Then it may not [be] such a large business for a year until something else comes along that drives the boys to it again.”

Liza Coppola, vice president of marketing for San Francisco's Viz Media, holds a similar view. “The state of kids anime is very much in line with the rest of the animation industry—there are the break-out hits and everyone else,” she says. This year, Viz will continue to expand and support its flagship Naruto property with new toys, books and other products, as well as promotions. Kids' properties are “a very important percentage of our business,” Coppola says.

The company is also betting on Blue Dragon, produced by Naruto's Studio Pierrot and featuring character designs from famed Dragon Ball Z manga artist Akira Toriyama. Based on a popular Xbox 360 game, Blue Dragon is actually “grown-up anime for kids,” Coppola says. “You will see style and depth to the animation that you won't see in regular kids' animation. It's a very exciting property. We think it will set a very different tone for anime and kids' properties. This is the property to definitely keep an eye on.”

ICv2's Griepp concurs. “Of the new stuff, Blue Dragon probably has the best chance of being a break-out over the next year or two,” he tells Playthings.

Greipp also notes that Bakugan—from Nelvana, Spin Master and several Japanese companies and licensed through Cartoon Network—has solid potential for success in 2008, too, especially for its target of kids 6 to 11. The premiere episode, which aired in February on Cartoon Network following Pokémon Movie #10: Rise of Darkrai, “drew very well, indicating continuing audiences for Pokémon, and a solid launch for Bakugan” based on about 788,000 viewers, Griepp says.

Bakugan is being supported by a range of toys launched from Toronto-based Spin Master, its brand creator and co-developer. An expanded product debut, store support and promotions are planned throughout the coming year, during which games, puzzles, youth electronics and DVDs will all debut. Cartoon Network is also actively seeking partners to create apparel, accessories, books and novelties in 2009.

Nelvana will also be supporting Di-Gata Defenders this fall, another series “very intricately tied to the toys,” says Northwood. Available in Canada, products are planned for the U.S. market soon.

By pursuing the partnership route—especially with Cartoon Network (CNE)—Nelvana is hoping to ensure the success of its properties in the U.S. market, Northwood says. “They're all very strong players,” he says of Bagukan's partners. “The idea of the partnership is that everybody brought something to the table and I think CNE brings something else that we need … They carry a lot of power in this business.”

For most properties, partnerships with Cartoon Network and other TV venues mean a larger and more secure broadcasting presence, critical to capturing kids' attention and, ultimately, successful licensing.

This relationship between media and product has grown quite symbiotic in recent years, Northwood says. “There's an interdependency in the anime business between the show and the toys themselves. And it's great to see that because it means the toys actually help the broadcaster's ratings.”

Notes Griepp, “We have a phrase here at ICv2—the 'Cartoon Network effect.' When one of these [series] hits Cartoon Network, it immediately has an impact on sales of the manga and the licensed products. One of the reasons Pokémon was such a huge hit last year was that it aired four times a day. You can't beat that in terms of marketing.”

This has also been the experience of 4Kids Entertainment, Nowiki says. 4Kids' focus in 2008 for broadcast as well as marketing will be on its new Yu-Gi-Oh! series as well as Dinosaur King, which recently launched. The show will have trading cards later this year, with toys next spring (along with new Yu-Gi-Oh! product). “We see 2008 as a year of building momentum for our anime-inspired properties,” Nowiki says.

For Flower Mound, Texas-based Funimation Entertainment, 2008 definitely means stoking the fires for its existing kids' series, which include Dragon Ball Z, according to Gen Fukunaga, president and CEO. “Dragon Ball Z looks to remain our strongest title,” he tells Playthings. With new toys, a Fox movie, an Atari role-playing game and digitally remastered DVD sets, “this looks like a big year for the franchise,” he predicts. The company will also be supporting its new titles for teens and adults such as Shin Chan, One Piece and Vexville.

Funimation's anime content remains sourced from Japan, or co-created with Japanese producers, Fukunaga says. Viz Media's content is the same, according to Coppola; both Coppola and Fukunaga say this is because there is still a wealth of good Japanese manga—which typically inspires much of the available anime—being created that can be appropriate for kids.

Fukunaga adds, “Japan is still the most competitive environment for generating animated content. Through manga and anime, the volume of titles created and launched there has made a system which forces innnovation, cut-throat competition and great content bubbling up to be the winners. I am not seeing concepts like Full Metal Alchemist from other sources than anime.”

Still, a number of companies are piggybacking on anime these days to attract attention to their own properties, either stylized animated series sourced from other Asian companies or U.S.-animated properties that are directly inspired by the anime genre. “You have things like Avatar,” ICv2's Griepp says. “Obviously it was a huge success, very anime-influenced, and there are certainly others like that. [U.S. companies are] going to try to figure out how to get a piece of it.”

For Santa Monica, Calif.-based Shout! Factory, sourcing titles from other big markets, such as Korea, or turning to classic video game brands, like Sonic the Hedgehog, are other options for staying relevant and reaching out to both kids and their parents, Melissa Boag, vice president of marketing, says. “Shout has titles like Pucca and Oban Star Racer that are younger brands, and yet there is still the quality in the animation and stories that can appeal to adults.”

Cleveland's American Greetings Properties is also jumping on the bandwagon. Its new Sushi Pack series—for which it hopes to begin merchandising later this year—“has undertones of anime without looking like an import,” Tamra Knepfer, senior vice president of consumer products, tells Playthings.

It is precisely this styling that's capturing fans. Notes Coppola, “As there are more imitation anime programs out there such as Kappa Mikey and Avatar, there will continue to be a blur between anime and animation.” She says, “I think the focus in the industry is more on platforms, how to reach and engage the consumers on different levels. That you have several live action movies being released this year based on anime properties … is an indication of that.”

Adds Fukunaga, “Hollywood is monetizing anime's 'coolness' factor with big budget movies planned for Speed Racer, Akira, Dragon Ball Z and Robotech, while properties such as Batman and Terminator are being created into anime.” And as for Astro Boy? He'll get his own big-screen debut next year.