During a conference call with analysts discussing the
Deacon talked about the infusion of cash that FUNimation's two main competitors (Geneon and ADV) received from Japanese investors nearly two years ago, which according to Deacon, allowed them to bid up the cost of acquiring new anime series to levels at which FUNimation believed the series could not be profitable. The departure of Geneon from the market has, according to Deacon, put 'downward pressure on pricing' of new anime series.
Deacon also explained the settlement of a dispute with Atari over revenue from the Dragon Ball video games. The initial $10 million advance payment has been 'earned out,' which means that FUNimation will be receiving monthly royalty payments that could add up to as much as $3.3 million a year (50% of which must be sent to the Japanese Dragon Ball rights holders). The Atari agreement runs through 2010, so no new big advance payments are in the offing.
Overall Deacon noted that FUNimation had a solid quarter and met operating profit expectations (see 'FUNimation Repoerts Solid Quarter'). Inventory for the publishing segment, which includes FUNimation was estimated at $3 million, below the total held during the same quarter in the previous year.