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Musicland Blowback, Part 2

Impacts in Every Category

Published: 01/13/2006 12:00am

Musicland's Suncoast chain is involved in numerous categories, and it's safe to say that all of them are going to feel some pain at the supplier level in the short term from the company's bankruptcy filing and related events (see 'Suncoast Returning all Manga Inventory').  In addition to DVDs and manga, Suncoast also carries a significant amount of action figure and other licensed toy inventory, and some collectible games.  Any company that had been selling to Suncoast is unlikely to be paid for product delivered before the filing any time soon, if at all, and manga producers are going to see significant quantities of returns. 

 

The effect will be most dramatic for anime companies, since up to 20% of the U.S. anime market goes through Musicland. 

 

The impact on the manga companies is also going to be significant.  Although not as big a percentage of the manga market as it is of the anime market, Musicland accounts for 5% to 15% of the market, depending on the publisher and title. 

 

And Suncoast is one of the few specialty retail chains that carried a wide range of action figures and other toys based on anime, movie, and TV properties.  Companies that produce collectible figures for adults are going to lose an important sales venue, as well as having to deal with receivable and potential return problems. 

 

At the retail level, the short-term impact will be positive for Suncoast's competitors.  The company with the most to gain is probably Borders Group, which has Waldenbooks stores in many malls with Suncoast stores, and stands a good chance of picking up significant manga business.  Barnes and Noble will also benefit.  And independent retailers may also pick up some new manga business, especially those in mall or other highly visible locations. 

 

It will be harder for Suncoast customers to find stores that sell the kind of toy and game products that Suncoast carried.  Independent retailers may have the best shot at picking up this business, simply because they're one of the few alternative outlets that stock that kind of merchandise. 

 

Longer term, few expect Musicland's travails to hamper the growth of the manga and anime markets.  'We don't feel there will be a great long-term effect,' said Dark Horse Vice President Business Development Michael Martens, 'as the vast majority of Suncoast stores are in malls, most of which also include a Barnes and Noble, Waldenbooks, or Borders.' 

 

Viz Media, which is a supplier (through distributors) of both manga and anime to Suncoast, also sees little long-term effect.  Viz Director of Marketing Anthony Jiwa said of the impacts, 'Certainly any difficulties at Musicland will have an impact on the category.  However, at the same time, other retailers have also championed these categories and have also developed strong positions in anime and manga.  We work closely with all our partners to build the business, so we feel that we are well positioned, despite any difficulties that Musicland may be experiencing.' 

 

These sentiments are similar to those expressed to us by representatives of Tokyopop and ADV Films last month (see 'Musicland Blowback?').
 
 
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