Let's start on the anime side.  Viz has had an initiative with Toonami Jetstream and is also doing download-to-own with IGN.  Are there other digital delivery methods for anime that Viz is using?

In the future there may be additional delivery systems that we use, but right now, that's it.

When Viz announced working with Toonami Jetstream about a year ago, you announced that there were about 9.5 million streams the first four weeks after launch.  How has that trended over the past year, where are we now versus the launch period?

It's increased in general.  There are up months and down months. A lot has to do with kids' schedules.  For example, back to school last year was tough, because kids are focused on getting back into their routines.  Certain vacation periods, especially after Christmas, are very strong for us.

For the most part it's grown.  We're between two and three million streams a week.  We think it's very successful and we didn't expect to be as popular as we are.

Now that it's been out there a year, do you see any effect on DVD sales for episodes that are being streamed by the service?

On the DVD side we have not found an effect.

Not positive, not negative?

Not positive, not negative.  A lot depends on the property, but in general there's been no effect.

Do you have any feeling for why that is?  Are these totally different people that wouldn't have bought the DVDs anyway, or are they people who'd buy the DVDs regardless of whether they've seen it streaming?

If you're familiar with Toonami Jetstream, it's streamed in segments, so the experience itself is completely different than watching a DVD.  Additionally the DVD quality is better.  I think in general it's a good way for our audience to either catch an episode they missed or see part of their favorite episode or to introduce them to properties they might not be aware of.  I don't think in any way are these kids thinking this will replace their DVD purchases if they were going to buy the DVDs.

As you probably know better than I, episodic DVDs really are not selling well--with some exceptions--anyway, so Toonami Jetstream really is not having an effect.

Let's talk about download-to-own.  You started that in May with Death Note?

Correct.

How have your sales been?

Without any historical comparison, that's kind of a tough question, but we're happy with things.  We made the subtitled version of Death Note available, so the expectations were not that great, especially because it's been available subtitled on various sites before, so we were very happy with the results.  We're going to do Bleach, and Bleach has been out dubbed and broadcast, so we expect different results.  We have high expectations for Bleach.

Can you share any information on the number of sales of Death Note episodes?

I'd prefer not to -- sorry.

We saw some kvetching in the fan community about the Death Note episodes coming over and about how Viz handled fansubs.  It appears that Viz tolerates fansubs until those episodes become available in the States.  Because of the speed of the DTO service on Death Note, it meant that there were some episodes that weren't going to be available on a fansub basis.  Is that an accurate description of what happened?  And what are your thoughts on the relation between the fan sub community and the download to own service?

It's not exactly.  From the U.S. angle it looks like that's what happened, but everybody needs to remember we're responsible for the property vis-a-vie the licensers or the Japanese rights holders.  A lot of what occurs in the United States is on their behalf.  One of the Japanese companies associated with Death Note has been somewhat proactive in trying to combat fan subs, so we're stuck in the middle.

It's hard to criticize fan subs, because they are the fans and they're really proud of the property.  Death Note is -- I hate to use the word -- it's really a baby of theirs, but they really want to interact with the property, and that's a great thing.  However, they are using copyrighted material in an illegal fashion.  It's very difficult to say 'stop immediately' because you want to encourage people to like your property.  You want people to see it, and you want fans to interact with it.  However, they are also doing things that may not make the creators of Death Note happy, may not make the companies that produced Death Note happy.

So there has to be an understanding on both sides.  Of course, we need to do a better job of communicating things to the fans out there, but the fans need to understand that it's a very sensitive issue.  I think it might be even more sensitive in Japan than in the U.S. that people are taking copyrighted material and using it in ways that the creators may not  desire.  It's one of these difficult subjects where you can't really say.  'It needs to be done this way.'  Everybody has to take a step back and say 'Let's be reasonable, let's try to be balanced.'  But at the same time, sometimes you have to act.

Did the Death Note downloads change the way the company looked at fan subs?

It hasn't changed the way we look at fan subs.  Now there's actually an official alternative; that's the only thing that has changed.

What is your prediction on whether or to what extent there will be an impact on DVD sales from the download-to-own service?

It's hard to say, but I don't think it will have a major effect.  I think a number of companies that have worked with -- for example, iTunes -- have not found that it affected their DVD sales at this point.

So is it just recapturing a customer that might have been lost to DVD sales anyway?

Potentially.  I think especially the hardcore fans want it as soon as possible, but also like to get a lot of the extras.  I think more and more you'll see companies making their DVD packaging something special or adding not only bonus content, but adding a manga  or putting a t-shirt in, which is happening more and more in countries like France.  I think you'll find that happening more in the US too.  It's almost like download and DVD will become different products.

You mentioned you're also starting to make Bleach available on a download-to-own service.  That's obviously at a very different point in its lifespan, as you pointed out.  What's your strategy going forward, looking out for the rest of this year and 2008?  Are you going to add more properties to the download-to-own service?  Will they be older properties or properties very close to their release in Japan, or both?

We would love to do as many properties as we could.  We're trying to clear these rights.  The initial one with Death Note was, if you will, a test.  We think the test was successful.  Hopefully the rights holders think so, too.  Bleach is the second one.  We will announce another property soon that skews a little younger than Bleach.

That would be a children's property.  Isn't the challenge with download-to-own a little bit different with that audience because they don't have credit cards?

Yes.  Bleach is 12-17, and this property will skew a little younger but will still capture a lot of those teens.  It's an issue.  One of the ways we're looking to combat this is we have a deal with Total Vid, which is a very small video service, but they have subscriptions.  If a parent has a subscription, you can download as many episodes or features as you want in a given period of time.  So something like that helps get past the credit card issue.  One of the reason iTunes is successful is kids know their parent's credit card information is on there, and/or they get gift certificates.

Why did you choose IGN as the first place to try download-to-own?

For several reasons.  One is we reached an agreement.  We were in negotiations with a number of companies and it just happened that we were able to reach terms with them faster than other companies.  The other is their audience was really perfect for Death Note.  There's a strong gamer audience there.  They also have strong Fox content, so we thought they were a very good match.

You said that was a match for the property, as you expand the types and numbers of properties that you offer, are you looking at other venues for download-to-own?

Of course, we're continually in negotiations with different companies.  Right now we have three venues and hopefully by the end of the year that doubles.

So Total Vid, IGN, what's the third one?

Akimbo.

Are you doing any offerings of Viz properties through the cable video-on-demand systems?

Yes, for example Naruto is available on Comcast through Cartoon Network.

Those are free?

Yes.  But we are talking to video-on-demand services on various different levels.

Subscription or pay per view type?

Yes.

It seems the subtext on what companies are doing with DTO is trying to replace illegal downloads that are out there with a legal alternative. Do you have any estimates for the degree to which illegal downloads impact your DVD sales?

It's really hard to know if those people who are downloading would have bought the DVD.  At one point we were looking at the numbers of, for example episodes of Naruto that were -- not downloaded -- but streamed or were available on BitTorrent or one of the P2P (peer to peer) networks, and the number was in the several hundred thousands going up to the millions, so it obviously affects our business.

The degree to which downloads affect the DVD business, I don't know.  However, as I said before, in the future I think they're going to be almost separate businesses.  Hopefully it'll affect our download to own business, but hopefully it doesn't dig too deep into the DVD business.  I think right now it has hurt.  It's got to be one of the reasons that DVD sales have slowed.

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