Viz Media is the biggest manga publisher in the U.S., and in the past few years it has been one of the most innovative as well. They rolled out their digital manga service as an iPad app about two and a half years ago and since then they have expanded it to multiple platforms. They also converted their monthly "Shonen Jump" magazine to a weekly digital magazine that now carries new manga chapters for popular series like "Naruto" and "One-Punch Man" the same week they come out in Japan.
Ken Sasaki, who joined Viz as Vice President for Strategy and Business Development in 2008 and was promoted to president and CEO in April 2012, has been a driving force between much of this. He began on the anime side of the business, which has gone digital, and he continues to be an enthusiastic promoter of both digital and print manga. CBR News spoke with him on the exhibit floor of Comic-Con International in San Diego, and he gave us an exclusive look into the publisher's digital transformation and sales.
CBR News: It seems like Viz has been through a lot of changes in the past few years. Lets start with the broad view: How have you reinvented yourself for the new manga market?
Ken Sasaki: I started as a business development guy, and I was hired to transition this company from a physical-only company to a mixture of physical and digital. I was in charge of the animation business first and then a few years later I started on the comics side of it.
You started with Viz in 2008, so you came in after the peak of the manga boom, when it was already a down market for manga and anime. How has the company reinvented itself to match up with the new reality?
Before I came in in 2008, we were kind of a follower; we were always following somebody else. Of course, in bringing manga to this part of the world, we are leading, but at the same time, [there was] nothing innovative. It was just traditional book business. When the world was about to change, around 2008, we really wanted to step ahead of everybody, so we were one of the first companies who started doing the streaming anime content – working with iTunes and Xbox and PlayStation, Amazon, those guys – and we started doing the download to own business. We definitely were a few steps ahead of the other folks in the comics or anime industry, and then right before the iPad became available, we already knew that that would basically change the way people consume the content. So we started developing our own digital application and the platform very early on, working with a company called Westside Labs first, and then when I became CEO, Westside Labs became part of Viz. So I think [it's] being a few steps ahead, making sure that we learn from good stuff and mistakes, just running really fast with the changes in the environment.
When I started covering manga, in 2005, Tokyopop was trying to do a lot of this, but they couldn't because the Japanese licensors traditionally didn't want to let you move on to the digital platforms. That's the story I heard for years. What changed?
I think maybe in that case, for Tokoypop, the timing was too early. After I came, around 2008, 2009, although things were not changing that quickly back in Japan, people started seeing the change, and me being a ex-management consultant – I don't know – I have a very convincing way of doing things. The reason I was brought into Viz originally was to do that job, convince the Japanese licensors of the reality of the environmental changes here, and I use data to prove what's going on. I use financial implications – what this change might mean both to the licensors and to Viz – and just stay focused on what we want to achieve, and eventually you can convince [them]. Then also, start with a small experiment – let's do this and learn from that. That experiment provides you with information. [We] synthesize the information, package it so people can understand and then translate that into business implications. At the end, everybody is running a business. That was one of the critical things that was kind of weak in the industry in general and at Viz: just focusing on what we want to achieve. Of course bringing manga culture, anime culture...that aspect is very, very important, but at the same time, we have to run a business. Otherwise we won't be able to bring more things.
How much of your business is digital as opposed to print? Can you paint a picture of your digital market?
Our fiscal year ends in March. Our last fiscal year, [in terms of] the number of units sold, the digital exceeded 10 percent.
Are you talking about manga and anime, or just manga?
Just manga. The number of downloads we had over the number of units we sold at physical retail now became over 10 percent digital. That's pretty much the very first full year we had digital product. Prior to that we had partial, that was 2% or whatever. I saw exactly the same pattern when we started digitizing anime products in 2008. The first full year the business became around 10%. I think next year or this fiscal year we would expect it to go to even more – I don't know how far – depending on how many more outlets we can secure. As you know, we just announced that we are working with Kobo. We have Nook and Kobo and a few more out there. So we are definitely trying to expand our reach in terms of retail. That's exactly what happened on the animation side a while back. So I would expect that trend will continue. The animation business and the publishing business are not exactly mirroring the pattern, but just for data-wise, currently, on the animation side, after five years – starting in 2008-9 – the anime side our business revenue-wise I think this year we may have 50% coming from digital. And the streaming is doing extremely well, so we have a lot of big revenue coming from streaming and also download-to-own, and now we have our own Neon Alley channel. About 50% of our revenue comes from digital products on the animation side.
In terms of manga, how do the different platforms compare with each other?
The app is the majority [of sales], but retail is catching up.
You mean the Nook and the Kobo?
Yes. The Kobo we just started. The Nook is doing quite well. And I think if you start adding more e-reading devices, it will be a matter of time that the share of our own app will become smaller. The readers may increase but the whole pie will grow.
Are different manga more popular on the different apps?
I think Nook has a little more representation of shoujo [girls'] manga, but usually the things you will see on the top 20 list are not that different. We have some digital first products, so those can skew the data a little bit.
You at Viz have a strategy that everyone on the American comics side thinks is death: You are releasing digital first or simultaneously at a lower price than print. Obviously it makes sense to have the backlist digital, because you can't even find many of those books in bookstores, but when you've got the new volume of Naruto digital first, everybody on the comics side says that will kill the business. Why is that a good strategy for Viz?
Digital first is not exactly our strategy. We are experimenting with digital first. We do simultaneous. We believe right now the market is too big and we are not tapping the potential. We see clearly the division of digital readers versus physical readers. We don't see any data to indicate that those two businesses at two different pricing points are cannibalizing each other. It's more like, when we push product at the same time [and] market it so it's available either physical or digital, we are just basically giving the choice to consumers and by doing that, recognition of the titles could be more than [if we were] marketing each product differently in a different timing. At the end, I think we see a lift on both products rather than seeing cannibalization. That was also very obvious data on the animation side of the business. When the studios started [making anime] available on DVD, Blu Ray, download, they can put more resources into pushing that brand at the right time.
So people are seeing it in a bunch of different channels at once?
Yes. But on order for that strategy to work well, we will need to be everywhere.
People in the digital world seem to think one of the hardest things to do is bring digital media to children. You launched a children's app. What is your strategy for getting kids to read your digital comics?
Bringing popular IPs: "Pokemon," now we have "Hello Kitty," we have "Ugly Doll," we have "Max Steel," we have "Ben 10." This year we have a lot of good IPs that are very popular among children so at the end, I think content is what matters. Even if you have a super cool children's platform, if the content is not good, nobody is going to read it. Bringing the quality children's products and making sure to introduce children as well as parents to the product so that they know what they are getting into. Hopefully they will start seeing some of the really cool things we have been doing. The new "Hello Kitty" comics and "Ugly Doll" comics, those are fantastic.
We are going to start developing a more friendly website. Right now our Perfect Square website is just informational. I think the most important thing is to have strong IP. We didn't have that until last year except for Pokemon and Zelda. Now we do. It's good because once we started doing the strong IPs and creating children's comic books, we started getting a lot of calls from IP holders.
You took a big risk with switching "Shonen Jump" from print to digital. Has the readership changed, and how do you plan to continue expanding its subscription base?
We are definitely getting new readers, readers who have never been on our physical distribution list. I think the audience who are reading "Shonen Jump" also grew up, and so there are people who are strong "Shonen Jump" fans, they are still with us, but also at the same time we introduced this digital simultaneous product and the younger generation is a lot more comfortable with that. So I think we have started getting a good mixture of our old fans as well as new people.
How do we grow the base? Right now we are trying to expand into more different countries. We're going into England, Ireland, Australia, New Zealand, South Africa, and we are doing marketing efforts. That meetup [at Comic-Con], that's a very good way to get connected with the fans, and our "Shonen Jump" podcast, that is getting a lot of traction, a lot of inside information by our editors. People like that. All these little almost grassroots efforts. That's what I think is actually working. It's not bringing millions of people yet, but we are definitely seeing constant, constant growth in the readership. We are also trying to expand "Shonen Jump" to more outlets. So right now it's on the web or our own app, and I think we will try to expand that into the e-reader market. I don't know when, but that's definitely the way we can also expand the base.
Would you consider offering your content as DRM-free downloads, like Image comics and your own SuBLime imprint?
I'm not sure. I know it worked well in the music industry, but I'm not really sure on the manga side, especially as this is more on the license, the Japanese licensor, if they are willing to go with it. I see a huge hurdle with that.
Where do you see the potential in the U.S. manga market?
The physical side is actually doing quite well this year. This past quarter we are beating quite a bit of our forecast. With Borders gone, I have been seeing things go downward, and I asked my team to really try as much as you can to stop the decline but for the first time we are actually seeing the uptick – and then of course [on the] digital side, a big uptick. We are definitely getting better in terms of running the business, but also, at the end, it's content. We started seeing more interesting content – "Shonen Jump," "One Punch Man" is very popular. We are still seeing content that will excite fans, and we are also bringing back some classics like "Ranma ½," so those will be a good addition. Bringing the content and making sure that we will make the products available for the consumers in the way they want to consume, whether it's print and digital. I'm not trying to replace physical product with e- product; we are just trying to work with each other. People make the mistake [of thinking] "Ken is trying to kill the physical business just to grow the digital business," but actually for the past few months, all I'm doing is focusing on the physical business just to make sure we are not abandoning our roots, and I think it is working well.
Stay tuned for more from Comic-Con 2013 on CBR!