First, let’s take a look at manga publishing:

ICV2 Report On The Manga Industry

At the 2009 Graphic Novel Conference which immediately preceded the New York Comic-Con held in early February, ICv2 (the pop culture retail news source) presented its annual white paper which looked at the past year of the graphic novel market in North America. ICv2 Founder and CEO Milton Griepp made the presentation.

The part dealing specifically about manga had the following points:

• North American publishers released a total of 1372 individual volumes in 2008…a drop of about 9% from 2007’s 1513 volume
• ICv2’s projection for 2009 is for 1224 volumes to be released
• The actual sales figures for 2008 are down 17% from the 2007 figures…roughly at the levels seen in 2005

Mr. Griepp stated that in his opinion the reason for the drop in sales was due to at least four factors:

• The overall effect of the economic recession

• Anime, which could help drive manga sales, recently has had a lower visibility on broadcast television and cable…as an example, he mentioned the decrease in anime offerings on Cartoon Network/Adult Swim

• The changing graphic novel order policy of the bookstore chain Borders…Mr. Griepp speculated that this may have been due in part to the departure of Borders’ former graphic novel buyer Kurt Hassler who left to join Yen Press in Nov. 2007

• “finally, Mr. Griepp pointed to the simple effect that the Twilight series of novels, and the film based on them, had in siphoning off the audience of female readers that could be expected to be manga customers” (quoting from the ANN report)

The paper noted that the smaller manga publishers would probably be the hardest hit by the economic downturn. They usually have fewer titles and most of them will have no television or marketing tie-ins to help boost sales.

Bad News for Manga Fans

One more bit of bad news for manga fans is that while manga sales were down by 17%, overall graphic novel sales were up by $20 million (US)…$375 million in 2007 to $395 million in 2008. The non-manga graphic novel market grew by about 33%, driven primarily by the Batman and Watchmen graphic novels.

Bright Spots in Manga

There were a few bright spots. The majority of graphic novel releases in North America are still manga titles…around 55%. Manga continued to make inroads on the shelves of mass retailers (like Walmart) and specialty retailers (like Hot Topic). The Naruto phenomenon continues stronger than ever. The BookScan Graphic Novels sales chart for January had 7 Naruto titles in the top 20.

Image of Milton Griepp from ICv2

ANN Report: ICv2 Graphic Novel White Paper

Broccoli Internation USA, Tokyopop & Viz Media Troubles

Here is a sampling of what has happened to three North American manga publishers and one Japanese publisher:

In November 2008, Broccoli International USA shut down and the company was dissolved by year’s end. They had licensed and published titles like Aquarian Age, Digi Charat Theater, Galaxy Angel, and Disgaea.

Before the economic downturn, manga publisher Tokyopop was already having a rough year in 2008. In June, the company restructured and laid off 39 employees. After the downturn started, they laid off an additional 15 employees in December. You can read more with additional links to the sources here. It is the third story from the December 2008 News Highlights.

Even with Naruto on its side, Viz Media is being affected by the slow economy. Late last month, Viz Media CEO Hidemi Fukuhara issued the following statement:

“Viz Media is in the process of refining its focus and is restructuring to adjust to changing industry and financial market realities. Viz feels confident that with these changes, the company will be more streamlined to face the current economic climate.”

The company did not give specifics, but apparently there were some layoffs. They did confirm that Shonen Jump Editor in Chief, Marc Weidenbaum (who was also VP of Original Publishing) left the company to “move on to other projects”. There was no comment on what effect his departure will have on their original content project.

ANN Story: Broccoli International USA to Shut Down by Year’s End (Updated)

ICv2 Story: Restructuring at Viz Media

Kodansha Financial Report

In Japan on Feb. 23, publishing giant Kodansha announced its financial results for the 2008 fiscal year. The news was not good. A drop in advertising revenues combined with a drop in comic and magazine sales led to a loss of just under 7.7 billion yen (approx. $77.9 million US) which is the largest loss in the company’s history.

Breaking down some of the numbers (note: the percentages are compared to the 2007 figures):

• magazine division revenues were at 93.7%
• book division revenues were at 92.1%
• advertising revenues were at 89.8%

On a side note, Kodansha had established a Kodansha USA holding company in July 2008. This was the first step in setting up a North American base for manga publishing. However, there have not been any updates about this plan, which now appears to be on hold.

ANN Story: Japan’s Kodansha Reports Its Largest Annual Loss Ever

Next, let’s take a look at manga distribution.

Manga Distribution

Diamond Comics Distributors, one of the largest distributors of comics and graphic novels had changed its purchase order benchmark in January. This is the figure that Diamond uses to decide whether or not to buy a title. The following interview excerpt has Diamond Vice President of Purchasing Bill Schanes talking to Newsarama about the change:

Newsarama: First off Bill, can you explain what has changed?

Bill Schanes

Bill Schanes: Sure. Primarily, in 2008 and prior, purchase order benchmark at Diamond cost – so our cost of goods – has been at a guideline of $1,500 of our cost. We’re raising that to $2,500 at our cost. So when someone brings a new product to us, we look at previous sales on that same series, or with a like artist, or on a like product, and evaluate if we think the new product will hit that benchmark.

If we think we can, then we’ll list them. If we think it will be less than that benchmark, then we’ll have a conversation with the publisher what they’re going to do to help sell the product – get a sales and marketing/promotional campaign together or other means to help drive consumer interest to the retailers.

NRAMA: To be fully clear – when you say at “our cost” – that’s…

BS: What Diamond pays the vendor.

NRAMA: So what’s the quick and dirty formula to gauge the benchmark?

BS: We take a book that we buy at 60% off – $6,200 at retail equals roughly $2,500 of Diamond’s cost of goods.

NRAMA: So any product needs to see retail sales of $6,200 across all the accounts serviced by Diamond in order to be listed?

BS: Basically – it’s a guideline.

Mr. Schanes said the reason for the change was the economic downturn. Diamond’s sales were down in 2008 and they project further decreases in 2009.

The benchmark change looks like it will hit the small publishers the hardest (as suggested in the ICv2 white paper). In fact, Mr. Schanes mentioned later in the interview:

“If there’s a very small press publisher who publishes maybe one or two titles a year, and they haven’t been getting any kind of groundswell from the consumer base, or retailer recognition, they’re most likely to be affected first – and those will no longer be carried by Diamond in the future.“

Diamond De-lists Over 1000 Items from Viz

Two publishers of note have already been affected by the new policy. First, Diamond de-listed over 1000 items from Viz. They put those items on an “as supplies last” sale to their retailers and once those supplies run out, “they will no longer be available for reorder or back order”. Second, Diamond cancelled its March solicitations for two manga books from Seven Seas, Hayate x Blade, Vol. 3 and Tetragrammaton Labyrinth, Vol. 5. Seven Seas mentioned that Diamond would probably not carry any future volume of either title as well as any future volumes of Venus Versus Virus and Inukami!.

It should be noted that alternate distribution channels exist for most if not all of the items affected for Viz and Seven Seas. However, Diamond, because of their size, has a very large network of retailers. Publishers who have to use the alternate channels will have to work harder to get the same coverage.

Besides this policy change, Diamond has done its own belt tightening. According to the Publishers Weekly blog, The Beat, Diamond laid off 13 employees in late January. The wages for the remaining staff and management were reduced as well.

Image of Bill Shanes from ICv2

Newsarama Interview: Diamond’s Bill Schanes on the Benchmark Change

ANN Stories: Diamond to No Longer Restock 1018 Viz Items, Seven Seas Manga Affected by Diamond’s New Order Minimums

The Beat Article: Recession Watch: 13 laid off at Diamond

Positive News for the Manga Industry

Finally, there is a little positive news.

As mentioned in the ICv2 white paper, in North America, manga is gaining retail shelf space and the big name titles (especially Naruto) still are selling well.

Vertical Manga

At their 2009 New York Comic-Con panel, manga publisher Vertical announced an alliance with a major Japanese publishing house. Few details were given and the name of the Japanese publisher was not released. The announcement did say that Vertical will receive an investment from the Japanese publisher as well as access to the books owned by the publisher. Vertical says that this will allow them to expand their 2010 offerings to at least 14 separate titles.

Toranoana

Toranoana, a Japanese chain of stores featuring anime and manga products aimed at otaku, has a strategy not simply to survive the recession but to grow during the recession. The company saw a 120% growth in sales in January. There are 16 stores nationwide and the chain is planning to open its third store in Akihabara. Also, plans are in the works (quoting the ANN story) “to develop a conduit for spreading the ‘Akiba’ culture and doujin (self-published) works overseas in the near future“. Toranoana president Hirotaka Yoshida believes that there is an opportunity to export the ‘Akiba’ culture since Akihabara attracts many tourists from overseas.

ANN Stories: Japanese Company Invests in Manga Publisher Vertical, Doujin Chain Reports Rising Sales Despite Recession

Stay tuned for part two: anime later in the week!