convenience vs cost

In an ideal world, you pay more for increased convenience. Want to save money? mow your own lawn. Have no time? Pay the local kid $20. etc.

This dynamic seems to be inverted online, however, especially with regard to digital content. Here, you pay for decreased convenience – a good example being DRM restrictions on video games, where legitimate, paid users of a game like Spore must suffer through all manner of annoying restrictions and installation limitations and game activations and whatnot. Meanwhile, anyone who downloads the cracked version off the torrents for free, gets a clean, enjoyable gaming experience unmarred by all the nonsense. Therefore we have the curious situation where anti-piracy policies serve to incentivise piracy rather than prevent it[1. Shamus Young’s ongoing DRM rants are the definitive explanation of this dynamic. I think he needs to write a book.].

A similar dynamic applies to anime, except that instead of invasive DRM you have simple expense. This is partly due to region-coding, which maintains artificial price differences between markets. It’s also due to the increasing cost of producing anime, which gets passed on to the end user. Price is not a barrier for people with steady jobs who enjoy anime as a hobby, but this probably doesn’t describe the target demographic very well. Another problem with paid, legitimate anime is that it comes mostly in DVD form, which is physical media. As such, it must be carried around, doesn’t fit in your pocket, can only be played on specific hardware and displays (ie, a TV with a DVD player attached), might scratch, etc. Even if you circumvent the expense issue by paying for a service like Netflix (which is not free, but significantly cheaper than buying anime outright), you still hae these physical media headaches to deal with. Even a completely free solution like ties you down, as its DRM keeps you locked into your web browser. Meanwhile, users who simply download fansubs get all the benefits – free, totally portable digital content – and even some extras (eg. superior subtitle quality). Again, the incentive on the end user is to encourage downloading rather than paying.

So the question is, who perpetuates this imbalance? Is there a way to get users to pay for convenience again? The power seems to be solely in the hands of the publishers here. There’s already a set of concrete suggestions for the gaming industry, which are eminently reasonable but probably will never be embraced. A similar set of suggestions could be crafted for the anime industry as well, but I’ll leave that to otaku who have more knowledge of the industry itself than I do.

Speaking as a consumer though, I can define convenience that I’d pay for. I currently pay Netflix $20/month, so that’s a good guideline for a budget. If I could purchase entire seasons of a given anime for $10, or individual episodes for $1, and have these come in DRM-free files that I can freely reburn to DVD for home viewing or convert to any intermediate format for whatever digital player I might choose, then I’d never need to download again. I would also pay an extra $.50/ep or $5 per season for quality fansubbing. Note that if the anime studios went DRM-free, and completely outsourced subbing to the fansub community, then the latter coudl legitimately charge for the service (which would be a true value-add).

Of course, the scheme above means someone could just seed the files they buy out to torrent. But so what? That’s what happens now, anyway. at least with my scheme, people like me pay more in. Revenue will increase, and that’s the bottom line.

the future is Blu

Congratulations in advance to Ubu for joining the Haibane Renmei renmei. Almost as noteworthy are his comments about the state of the R1 anime industry, partly in response to Steven’s earlier comments about the size of the market and even earlier commentary about the impact of fansubs. Ubu writes,

At nearly 40 times the going rate for an American series, fansubs be damned: they aren’t giving value for their money, and they will go out of business if that’s their plan.

In fact, I worry that it is their plan — to self-justify retreating from the R1 market. […] there’s obviously a fundamental disconnect between Japanese management views and R1 market conditions.

I have to agree that the problem isn’t fansubs. The disconnect is at least partly because of region-coding. However, it should be noted that Blu-Ray (the likely victor of the nextgen DVD format wars, at least as far as anime is concerned) compresses Japan and the United States into a single region. I’ll leave informed speculation as to the ramifications of that to the experts, but it’s definitely time to start taking Blu-Ray into account.

LOTR on Blu-Ray?

Warner Studios made a big splash this past week when they announced they were going to ditch HD-DVD in favor of Blu-Ray. The ripple effect of this hasn’t fully played out, but one consequence appears to be that the Lord of the Rings (and The Hobbit, one assumes) will only be on Blu-Ray:

According to Variety, New Line and HBO will follow Warner’s lead to side only with Blu-ray Disc. BBC Video, the company behind the popular high-definition nature documentary Planet Earth, has not yet publicly expressed its intentions with format exclusivity.

New Line already positions its Blu-ray Disc products with greater priority than the equivalent HD DVD. New Line’s first high-definition film, Hairspray, hit Blu-ray Disc in late November 2007, while an HD DVD version was only promised sometime in early 2008.
Perhaps the most important outcome of New Line’s upcoming decision is that the studio owns the rights to The Lord of The Rings trilogy. Should the (second) most compelling motion picture trilogy hit high-definition home video, it’ll be on Blu-ray Disc.

If anything, this means that it’s better to just stick with legacy DVD and get my HD content via the internet. At least until the price of Blu Ray drives falls to the $100 mark or below (territory already occupied by HD-DVD). It also should be noted from the article that part of the reason for the preference of Blu-Ray is again the region-coding issue.

HD-DVD is not region-free

in teh great battle of nextgen DVD formats, one piece of information seems to be conventional wisdom: that HD-DVD, unlike Blu-ray, will not have region-coding. At AICN, Massawyrm cites being region-free as one of his main motivations for choosing HD-DVD, for example. But it’s been known for over a year that despite initial reports that HD-DVD would not restrict by region, it has since succumbed to the pressure and will likely have “some form” of region coding eventually. As Ars Technica noted 18 months ago, there’s a chance that this will affect the early adopters (including anyone who buys an HD-DVD this holiday season, it should be noted):

If RPC is ultimately approved and incorporated into the HD DVD format, it is unclear how the players that have already been sold will handle it. The most logical solution would be to allow the current handful of HD DVD players already on the market to play any HD DVD. Unfortunately, history tell us that logic is not one of the entertainment industry’s strong suits, so it’s not outside the realm of possibility that region-coded HD DVDs will cause problems for some early adopters.

Note that Blu-ray’s region coding scheme compresses the number of regions down from seven to three – and that includes lumping Japan and the United States into one region, which will definitely turn the economics of the anime industry upside down.

I still personally lean towards HD-DVD for the simple reason of cost. The Toshiba HD-A3 is selling at the $200 price point on Amazon, which is just a fantastic deal (esp if you have or are planning to buy an HD-TV). And there’s $100 players at Walmart, too (though not the name brand). I don’t think the worst case scenario is likely to come to pass because to be honest I don’t see either BD or HD-DVD going away anytime soon – both have years to go before they are a sizable fraction of traditional DVD sales. And there’s always standard DVD formats or the Internet download for the occasional movie I must watch but isn’t available on my format of choice. All of these physical media formats are going to be obsolete eventually anyway.

UPDATE: Anime R1 DVD sales peaked in 2003 and have been declining ever since. I speculate without evidence that 2003 was when fansubbing really started as an industry in its own right – and was a response almost entirely due to region coding alone. It’s also telling that the major players in the industry don’t even mention region coding as they discuss the state of the US market.

next up, for next down

I’m barely into The Girl Who Leapt at present, but am already thinking ahead. Based on Steven’s considerable enthusiasm, and Don’s deft enticement, it’s obvious that the next title on my list should be Shingu.

Which raises the usual ethical question: buy or download? Unlike TGWL, Shingu is available for purchase with subtitling. However, I have financial realities that I can’t ignore, especially after the expense of moving. That’s just a rationalization – anime is a voluntary pleasure, not a need, and if it comes down to diapers vs anime then obviously I’d choose the former (and believe me, there is enough projectile and explosive action on that front. don’t ask). But as a consumer I also have a philosophical objection to the present model wherein the movie industry expects me to believe that region encoding is anything other than a blatant ploy for milking profit beyond the market value of their product.

I pretty much entirely disagree with Steven’s assertion that the fansub industry is p*ssing in the soup; with regards to the options for the studios, I’d take his choice 1 (simultaneous release to US and Japanese markets) and go even further: abolish region-encoding entirely. Steven notes that simultaneous release would

undercut the Japanese business, because Japanese fans will start importing region 1 DVDs, paying $10 per episode instead of more than $25. Or if they try to charge Americans something like what they currently charge in Japan, titles will flop. No one here is going to pay $50 for a 2-episode DVD.

I don’t have much sympathy for the poor studios looking at losing their $40 price gouging to their captive Japanese market. If anything, it’s region-encoding that has pissed in the soup; that alone has created the fansub industry out of whole cloth. The fouling of the soup by RE is why the pricing model is on the verge of collapse, not the actions of genuine fans who’ve done more to increase profits for the studios (by introducing their product to new markets) than undermine them.

That said, the present law is the law, and downloading a fansub (or a legit copy) violates it. My conscience’s salve is that I will buy the title at some point if I enjoy it; I paid for full copies of Haibane Renmei and Sugar and have Someday’s Dreamers and Kino’s Journey on the list (and if TGWL ever makes it, will add that too).

There is of course a third option; using a movie rental service like Blockbuster or Netflix (I highly recommend the former). That was how I initially sampled Serial Experiments: Lain, though I did download the final disc instead so I could watch it more conveniently on my laptop rather than cart around the portable DVD player. The issue again comes down to convenience – which is by no means a right, purely a pleasure, but I confess to being as human as the next guy. If I am paying my monthly fee for blockbuster’s mail DVD service, and a title is available there, but I download it anyway, is there a difference? That’s more of a philosophical question I guess. The bottom line is that downloading lowers the action bar for me to actually bother with a title, and if that title is a quality one, makes it likely I will buy it. If I stuck to the book and only rented titles by mail or bought them outright, the simple fact is that I’d watch less anime, and probably buy none. That’s not an excuse on my part for skirting the law, but it certainly is a factual description of outcomes that I think the studios would be wiser to tap into for their own advantage. But I am not personally concerned with the studios’ business acumen; if they choose to remain on a path that obstructs me from their product, I’ll stop consuming it, and find something else.