We recently sat down with FUNimation founder and CEO Gen Fukunaga in his office in Flower Mound, Texas to talk about FUNimation and the anime industry.  In Part 2 we talk about anime DVD-buying demographics and FUNimation's plans for 2008. In Part 1, we talked about the anime market in the U.S., the impact and future of legal and illegal downloading, and timing issues for Japanese vs. U.S. releases. 

Some genres have been much more successful in America than others. FUNimation has released a number of shojo series such as Kodocha and Peach Girl.  Have those been successful?  What do you see as future of those non-action/adventure type genres in the States?

Those genres still remain weak outside of action/adventure, with absolutely no indication that they're moving up as far as we can tell.

Why do you think that is?

Females watch anime, but when it comes to collecting a DVD, males are the ones who are reaching into their wallets.  That's the pattern we're seeing.

Is that true in other categories, in other television shows or movies?  Are males more buyers than females, or is that specific to anime?

I think the general belief in Hollywood is that it's not specific to anime. 

Is that why Transformers, a young adult male title, was #1 last year?

It depends on what genre it is, because family titles are different.  Females buy family titles because they're buying to share with their family and their kids.  That's a little different buy than buying a female-oriented movie just for themselves. That's where it breaks down.

So they would buy High School Musical, but they wouldn't buy something to watch  themselves?

Right.  And with our genre, of course, most people aren't married with lots of kids so we have a little bit different demo.  They're buying for themselves, and therefore males seem to dominant that market.

FUNimation has announced a number of interesting live action releases.  How do you plan to distribute live action titles in North America and do you expect to do more of that?

We expect to do more live action.  In fact we've announced three of them that we haven't launched yet: Genghis Khan, which is a big budget Japanese film; Love and Honor, which is part of a trilogy that was nominated by the Oscars for Best Foreign Film; and then Hana.  We have three coming down the pipe, so yes, we are continuing with the live action genre.

Right now we've been focused on Japanese live action though, not Korean, Taiwan or China.  One of the obvious reasons is we've worked with the Japanese licensors for years, and two, it still maintains the Japanese cultural look and feel that our fan base is used to.

One of the differences between 2007 and the last few years is that there hasn't been a breakout feature hit.  There was no Miyazaki in 2007, nothing like Animatrix or Final Fantasy.  Do you see anything in 2008 that looks like it might have that mass appeal?

(Chuckles) Well, is there another Miyazaki film coming out?  Because if there is...  Excluding that, the two movies we're most excited about are Vexille, which is a really high end, high budget, all computer-generated anime.  It was from the same production team that did Appleseed.

And then we are hoping there will be a green light on another Afro Samurai.  If there is a green light on that, it would be an important one, especially with the videogame coming out.  The videogame is a major launch, and that could get it a lot more buzz with all the effort the videogame company is putting behind it.

Compared to previous years, how is the pipeline from Japan for new anime?

The pipeline, from our viewpoint, seems to be reasonably steady to down.  We aren't seeing a dramatic drop-off.

Have weakening DVD sales in Japan affected new productions?

Oh yes, the drop is DVD sales in Japan is shrinking production.

FUNimation is becoming more of a brand management company.  What are your current biggest licensing hits and what do you see as your biggest property for 2008?

Dragonball Z still remains a big pillar to the company.  We feel Shin chan has got a big breakout potential -- it's on Cartoon Network Adult Swim Comedy, which has generated lots of hits in the U.S. market.  And Shin chan's track record in all sorts of cultures is phenomenal. It's a blowout hit in Spain and now India, and of course in Japan. With 500 episodes, that's got a lot of potential.  And One Piece is a great title.  We feel we needed to do the more authentic dub that's exactly like the Japanese version.  With that and the fact that it's been seeded for a while on Cartoon Network, it's got enough seeding that it could really turn into something this year.

You've talked about FUNimation's big releases in 2008, any other big releases that you haven't mentioned?

We are doing the One Piece movie. T his February we're going to do the remastered Dragonball Z movies, several of those, which should be huge sellers for us.

We are working on a couple of deals that could be pretty big.  We haven't announced our biggest acquisitions yet for the year.  The xxxHolic-Tsubasa movie is a big one that we have announced.

There's obviously a shakeout in the anime producers -- Geneon not releasing, which was one of the biggest releasers in terms of SKUs in a year -- do you see the market headed to further consolidation?

I think that the market will further consolidate, absolutely.  We perceive difficulties on the ADV side -- who knows what's going to happen there -- and then with Manga switching hands, nobody knows.  How dedicated is Liberty to this genre, because it's probably not making that much money for them for the effort?  There are a lot of questions out there right now.

You do business in Europe.  What are the trends here vs. what you're seeing in Europe?

The UK has been a mediocre market for awhile (we only do the UK/Ireland territory in Europe).  I think that has a more upside trend because it's more of a nascent state than the U.S.  One of the issues in the UK is that titles often didn't get broadcast exposure, but now with the new world of Internet, you may not need any broadcast exposure, the Internet's good enough.  Australia is fairly saturated, but there's only one player in that market, because the size of the market is small -- they have about 98% market share.  So that's my prediction of the territories we're in.