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Musicland Blowback?

Expected Impact on Anime, Manga Businesses

Published: 12/19/2005 12:00am

The impact on the anime business of any Musicland restructuring (see 'Musicland Asking for Creditor Relief') will be greater than the impact on the manga business based on Musicland's respective shares of the two categories, according to industry sources.  Tokyopop COO John Parker described Musicland's share of the manga business as 'single digits,' but noted that the company's share of the anime business was larger, recalling that when Musicland and Best Buy were one company (see 'Musicland Sold'), their combined share of the anime business was over 40%, although Best Buy may have the larger portion of that percentage now.

 

Manga and anime may also be impacted differently because Musicland buys its book product through Ingram, while at least some anime companies sell to Musicland directly.  As a result, Ingram would be the company 'facing some hard decisions' about any debt issues from manga purchases, according to Parker.  'They're probably less than enthralled at being treated this way,' said Parker.  He described Tokyopop's relationship with Ingram as a good one, noting that 'Ingram continues to be and has been a great supporter of ours.'

 

No impact on shipments was occurring as the result of any debt issues, according to both Tokyopop's Parker and ADV Films' Sr. Vice President Sales and Marketing Mike Bailiff, who also responded to questions from ICv2.  'We just shipped them Meet the Fuccons,' Bailiff said, noting that a previously scheduled promotion was proceeding as planned.  'Suncoast came in big for it, and we're happy we were able to keep that going despite whatever hiccups they may be experiencing.' 

 

Neither Tokyopop nor ADV Films admitted negotiating with Musicland over its outstanding payables.  Bailiff said '...Nothing's been presented to us yet.'  And Parker said that Ingram was the company that would have to deal with any issues related to receivables restructuring from Musicland. 

 

If there is a loss of doors for anime and manga from store closings, or if something more dramatic happened to Musicland, the suppliers we talked to were not expecting a long-term impact on sales.  Bailiff noted that some business might migrate to other retailers.  'We're very close to our customers, and we know that Suncoast has been sharing customers with other retailers,' he said.  'That business may migrate, but it won't evaporate.  We're not afraid of losing volume over the long run.'  

 

Parker said he expected little impact on Tokyopop's sales, noting that Suncoast had changed its purchasing to emphasize manga with associations with anime, reducing its purchases from Tokyopop over the last year.  Parker described Musicland as part of a mature channel, which although not unstable, was also not a growth channel. 

 

ADV's Bailiff spoke kindly of Musicland and noted its role in the development of the anime business in the U.S.  'We're very supportive of Musicland, and we wish them all the best.  They deserve a lot of credit for helping pioneer the retail anime business, at least at the national level....'  Suncoast and Waldenbooks were two mall chains that were early and enthusiastic adopters of manga and anime and popularized the categories with mall kids. 

 
But ultimately, everyone we talked to felt that if Suncoast, and to a much smaller extent Sam Goody and Media Play, were no longer there that most consumers would find another place to buy the product.   'Anime is  a lot bigger than any single retailer, no matter how big,' Bailiff said. 
 
 
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