We recently sat down with FUNimation founder and CEO Gen Fukunaga in his office in Fort Worth, Texas to talk about FUNimation and the anime industry.  In the first part of this two-part interview, we talk about the history of FUNimation and anime in the U.S. and its licensing strategies.  For Part 2, see 'Interview with Gen Fukunaga, Part 2.'


When was FUNimation founded?



Why was it founded?

I'd always been entrepreneurial; in '94 I felt it was a good time to do something.  I thought I'd be doing it in high-tech, because that's my background.  I loved anime when I lived in Japan all of my eighth grade year.  It just dawned on me, why don't I bring that to the U.S. instead of starting a high-tech company where I'd have to raise jillions of dollars and wait five years for R&D for a product to come out?  It seemed like a lower risk path at that time.


Did you have to raise money from investors, or was it a bootstrap?

I didn't want to go out unless I started off right.  I was doing fine in high-tech.  I didn't want to derail my career unless I was sure I was getting a solid start.  It was funded by an angel group.


FUNimation has been identified as the Dragon Ball Z company.  In the last two years you've been diversifying.  What's your strategy in picking new properties?

Anime is one of our key focuses.  We're also focusing on being the top independent distributor for home video in general from all the independent producers.  The problem the independent companies have in North America, there aren't a lot of good choices out there.  You can go with the big boys, which will ignore your titles because they're only interested in major theatrical releases.  They have to sell millions of units minimum or they're not going to look at you.  You can go to the small guys who just don't have the volume power to do anything significant at retail.  Who else is left?  You just don't have any people left.  We feel we can be the independent video distributor of choice for all the independent producers.  That area is expanding outside of anime.


What about picking properties in anime?  How do you do that?

Our strategy is to pick only the AAA titles.  Also, we pick mass titles as well as good fan titles.  Our motto is, 'Content is King.'  We're not as driven by things like, 'Does it have a toy?  Our thing is, is it a AAA content title?  Is the story and character development really good?  Has it been proven in Japan to be really good?  Those tend to be our top focus.


So really it's based on Japanese sales?

We look at all sorts of data out of Japan.  There are some things that do well in Japan that aren't fit for the mass market.


How many people work at FUNimation?

At least a hundred and twenty permanent employees and fifty plus sub-contractors. 


You're a licensing agency for some properties in the U.S.  Now some Japanese companies are setting up here, like ShoPro.   You've also got competition from companies like 4Kids.  What role is licensing going to play in your future? 

We feel it's important because the U.S. market is so competitive, somebody needs to brand-manage the whole brand.  You start splitting the rights up all over the place, you're competing against Warner and Disney that won't split the rights.  They take it across their whole gamut of exploitation avenues and brand-manage their brands.  You're going to run into problems when you over-split the rights.  Brands don't get properly managed when that happens.  We need to keep pushing for the licensing rights in order to properly brand-manage our brands.  If we don't get them, and just get home video, so be it.  We're not going to turn away a good title, but we think it's probably detrimental to the brand.  We'll bid less in those cases.  We know it's going to hurt the brand so our forecasts will be lower on home video.


Of your anime portfolio, for which ones are you doing licensing?

Dragon Ball, Yu Yu Hakasho, Case Closed, and Fullmetal Alchemist are our big ones.  We're agents for a lot of twenty-six episode series like Kiddy Grade.  Samurai 7's an important one coming up.  We've announced that, right?  Tenchi Muyo, we're doing the license on all those.  It's hard on a twenty-six episode series to get a lot of licensing moving. 


How many anime properties will FUNimation be involved with at any one time?

We try for a couple of the big mass ones every year.  There aren't that many big mass market hits out of Japan.  Sometimes there's only one a year. 


Then we'd like to take about a dozen fan titles.  On the independent producer/distribution side, that's a whole different story because we don't do the licensing or the TV placement.  We're just a straight video company.  That's a whole other group of titles we'll take as a separate issue.


If you had to chart the growth of the anime market here in the States, what would the curve look like, in terms of what years was the growth the steepest? 

The big difference was when things went mass: when Pokemon and Dragon Ball hit like a one-two punch (coming out almost the same year, simultaneously), a couple other very strong titles came out.  It was almost like the titles were backed up waiting to come into the U.S. market because these were the biggest hits over the last ten years in Japan, and there wasn't an outlet.  Finally it popped open.  Of course everyone tried to bring in the best ones first, to make the most money.  Now that the best ones have come blowing through, everything is up to...there are still a lot of strong titles, but these Dragon Balls only come around once every twenty years.  That steep growth happened right as that mass bubble popped. 


Nineteen ninety-nine, two thousand...

Yeah.  Continued on to '01, '02...
For Part 2, see 'Interview with Gen Fukunaga, Part 2.'