We got a chance to sit down with Tokyopop CEO Stuart Levy at New York Comic Con.  Levy is the founder of the Tokyopop Group, which includes six companies in the U.S. (including Tokyopop Pictures and Tokyopop Digital), Japan, Germany, and Great Britain.  He’s also Tokyopop’s Chief Creative Officer.  Under his leadership, Tokyopop paved the way for broad distribution of manga and the growth of graphic novels in bookstores.  In Part One of this wide-ranging interview, we talk about some key points in Tokyopop’s history, including the revolutionary move to a standardized right to left manga format; and talk about the challenging year of 2008, the returns, the layoffs, and the war that is entrepreneurship.  In Part Two, we talk about the changing nature of American fandom, the future of anime, Tokyopop’s move on the Web, its movie development efforts, and the big question some are asking:  What’s the future of Tokyopop?    

Maybe you could start us off by talking about when you started Tokyopop and how that happened.

I started it in 1997.  I was in Japan and I had a company in Japan doing multi-media, which at the time meant CD-ROM, because the Internet was out, but it wasn’t big so we were putting out CD-ROMs, “edutainment,” which meant games for kids and things like that.  I fell in love with manga while I was in Japan and one thing led to another and met with Kodansha, and I had fallen in love with a particular title called Parasyte and I was inquiring about rights and talking about things, and after about a year of talks, from late ‘95 into ’96 they decided to license me a few titles including Sailor Moon and I decided to take a stab at starting a manga business in the United States, and then in early 97 I started Tokyopop. 

Was that the MixxZine era?

Yes.  The original name was Mixx, and we had a magazine MixxZine, and we had a couple of our graphic novel publications that were very small, pocket-sized, at the time.  Sailor Moon and Rayearth, and Parasyte of course, and another one called Ice Blade.  We started with those four. 

So that was the Mixx era.  Around 1999, 2000, it seemed like Tokyopop went through a dot com phase, when there was heavy involvement with the Web.  Can you talk about that?

Sure.  I came from the world of multimedia.  I actually made my first Website in 1995 and won an award Best Design on the Web way back then.  My website was called Japan on Line and I was introducing Japanese pop culture in English.  That wasn’t just manga but music and film and games and everything (I just did that more as a hobby) so for me I’d always really paid attention to the Web. 

Around 98 I teamed up with Mike Kiley, who was running an import business online at the time, importing Japanese pop culture goods.  So we decided to get together,  and he joined Tokyopop and we started Tokyopop’s e-commerce shop at Tokyopop.com around late 98 and decided to try to build out a strategy where we had content, community, and commerce.

The three Cs—we were right there with you.

Right, the three Cs, back in the day.  So that was our strategy and we built that up, and the e-commerce side actually did really well.  We tried really hard to build up the community but we couldn’t get any revenue stream going there, very similar to nowadays.  Things haven’t changed.

One other historical event we wanted to touch on was the Authentic Manga strategy, which really revolutionized manga in the U.S.  Can you tell us what led Tokyopop to that step and how that all happened?                                                                      

That was the Big Bang for Tokyopop.  Until that point Sailor Moon was what paid the bills.  In 2001 I was getting a little frustrated with the lack of standardization, the lack of momentum in general with the business.  And I recalled back in the days where I had been in CD-ROMs that PC-related CD_ROMs had all different kinds of packaging, all different kinds of pricing; and videogames for Playstation or things like that were all standardized.  I’d always wanted to be more standard, but I noticed that some other publishers had different sizes, we were trying a pocket size but it wasn’t quite taking off the way we’d hoped so we tried a larger size.  And finally I thought,  "You know, I saw overseas that  in Germany the right to left authentic style was working."

Was that Tokyopop Germany?

No, that was before Tokyopop Germany.  A company called Carlsen was putting out Dragon Ball at the time.  We had inquired previously about putting things out right to left. We thought it would be closer to the original.  It was easier production-wise.  And also you don’t have to flip the characters, so it’s better for the original Japanese sound effects.  So all of that were the reasons we wanted to do it, but we’d been told no every year up until then by the retailers.  But then when we saw that in Germany it was working, we said, “You know it’s all about presenting it in the right way.” 

So I brought together a group of folks at our company and said, “We’ve got to do this you guys, let’s make it happen.” 

Some of the people in the company wanted to test it and said, “Why don’t we try a couple things.” 

But I really believed that if we only did it with a couple things, they would never be given a shot.  So I said either we do it or we don’t.  Let’s go all the way, let’s take all of our new releases (and we had been collecting some new licenses). Why don’t we go out big, put them all out at one time, put them all out right to left and make a big deal about it.

Everybody was very nervous about it, but that was what I wanted to do.

We made a big campaign about it and we launched them in 2002.  We had a campaign, “manga done the right to left way” and we had POPs.  It was the first time manga or comics at all had POPs in the stores and we were fortunate that some of the retailers joined in and it became kind of a wave. 

Manga had a tough year last year, and so did Tokyopop.  Which was cause and which was effect? 

Well I don’t think it’s Tokyopop’s fault that manga had a tough year (laughing).

Your licensing stream was changing, that’s the direction we were going with that.

I wish that last year was the first tough year we’ve had but we’ve actually had lots of tough years.  As an entrepreneur I feel that most of the time is tough and every now and then there’s a time that’s not tough, but I don’t get that for very long.  So for me it’s always just one huge, tough, challenging war and battle by battle I lose quite a lot and every now and then I win one, so 2008 happened to be really hard.  It was hard on our staff; it was hard on us emotionally because we had to let people go.

We actually started doing it a few months before the economy crashed.  When we first did our layoffs in June people thought there was something wrong with us in particular because nobody else was doing it yet. 

This was not the first time I’ve ever had to do layoffs.  We’ve done layoffs at Tokyopop a couple of times before, and every time it’s been really, really hard.  But the lesson I’ve learned each time is that you’ve got to act fast.  If you’re a huge company and you have tons of money in the bank you could take more time I guess, but when you’re a small entrepreneurial company, you either act fast and survive or you don’t survive. 

So we did the layoffs and then fall came along and winter came along and everybody in the world started laying people off.  I think at that point it became clear that it’s not just a Tokyopop thing. 

So in other words you were seeing declines in your sales that led you to believe that you had to prepare for a smaller market?

There were declines in sales, but there were also returns.  The returns were the big things.  We’ve seen declines in sales before.  But the amount of returns that were coming back from retail was so significant.  We saw that early first quarter and then continuing in second quarter. 

We’d seen first quarter returns before, but continuing second quarter like that was the first time.   It really shocked us and I said, “There’s something going on here.” 

Why do you think that happened?  Was the appetite for Japanese content waning, or was there just too much stuff out there? 

I don’t think it’s just about Japanese content.  If you look back historically now at business in general you find that a lot of the retailers that have struggled in 2008, they all started struggling in Christmas season of 2007.  Whether it’s Borders on the book side or Circuit City or a lot of the guys in the retail market that are the #2 or #3 stores in each of their markets, they actually had a very bad Christmas in 2007.  And 2008 became very tough for them and they started to adjust their balance sheets by doing a lot of product returns and then the domino effect hit the manufacturers.  You see that in every single channel, every single retailer, the first tier guys are kind of tough but they’re flat and the second or third tier guys are having big problems.

And then you have books, which is a smaller market than something like a Home Depot type market.  With books you’ve got the same kind of a trend and then within books you’ve got graphic novels or manga. 

Looking at graphic novels and manga, Tokyopop probably has more titles out there than anyone.  I’d say it’s us and then Viz, and we have more mid-list titles than Viz.  They happen to have a couple more hit titles; and they have more shows on TV.   I think it’s mainly the mid-list that came back.  We got hit pretty hard by that; I’m pretty sure they got hit pretty hard too.  I don’t know how they work internally, but they’ve got huge parent corporations and they also have the buffer of a few more hit titles than we do.  Everybody was taking the brunt of things but Tokyopop didn’t have as many shock absorbers. 

Click here for Part 2.