Editorial: The Possible Consolidation of Bandai Entertainment

For the past few months, Bandai Entertainment has weathered the storm that is anime distribution in the US thanks to a spate of replicator issues that led to large batches of the biggest shows of the year in Code Geass to ship out with large numbers of defective DVDs. 

To its credit, the distributor takes great care to address customer issues thanks to the now common replacement program which the company has become known for, dating back to the start of DVD production and distribution for the company.

Now, a series of events within and outside of Bandai Entertainment and Bandai-Namco may affect the very existence of one of the most well-regarded distributors in the US in terms of licenses and distribution.

This begins with the spate of defective product that was shipped out by the distributor earlier this year starting with Code Geass.  

According to this thread on Mania’s AoD, the first regular and limited versions of Code Geass suffered from major playback issues in copies shipped to brick & mortar and online resellers.  The problems were eventually pinpointed to poor replication and poor implementation of additional DRM measures such as RipGuard, which was eventually solved by replacing any affected discs.

While the issue was being dealt with, more and more people that initially demonstrated an interest in the aforementioned series expressed a high level of surprise, displeasure, and frustration towards the distributor that had been held in such high regard by so many anime fans not too long before the incident.

For its part Bandai Entertainment has posted a blog on the Quality Control process, but it has inferred that it leaves physical media testing directly to the replicator as the check discs that it receives are supposed to be representative of the final product and that their discs demonstrated no errors before authorizing final replication for distribution.

Another factor affecting Bandai Entertainment was the recent merger of Bandai Visual USA into Bandai Entertainment earlier this year.

The merger stems from the failure of Bandai Visual’s distribution (retail distribution was provided by Geneon USA before the shutdown of the company in 2007) and business model of selling high-quality Japanese R2 alike DVDs with English subtitles and packaging for identical pricing (between $60-90 MSRP) as the anime buying market increasingly shifts away from more profitable singles to more convenient complete collections at similar pricing.

With Bandai Visual USA becoming a sub-label for Bandai Entertainment via the Honneamise label, Bandai Entertainment launched its controversial “Nebula Project” which consisted of hidden clues within its homepage found via the source code, which at times revealed cryptic clues regarding new licenses and internal activity.

While all of this was going on, Bandai-Namco Holdings was having issues of its own, mostly owing to the volatility of international markets, with a significant percentage of the company being purchased by British investment firm Silchester International Investors Limited in June, just as the credit crisis was beginning.

After the investment, Bandai-Namco reignited its initiative to pursue simultaneous global releases for its major properties with the completion of the latest phase of the Nebula Project with new licenses and a couple of recent ambiguous events that could or could not be a sign of more problems. 

The first one is the shut down of its main distribution warehouse this week into next as a way to reduce costs according to the RACS blog.  This could be interpreted in many ways, but nothing more is known at this time other than the delay of a few titles and the indefinite delay of another.  The next is a recent interview with Robert Napton of Bandai Entertainment USA in which he lets slip information on a new online project with many companies involved, and that he will be focusing on these projects in lieu of production work.

What was striking about the second part of the interview was the relative insecurity when giving his answer to a question about future projects with audible nervousness and attempts to dance around the issue, which would naturally cause one to question the answers given, especially as Bandai Namco will be holding a job fair in Japan next month that seeks translators and more personnel for an unknown amount of positions, which may or may not be interrelated as there has been no definitive confirmation on Bandai’s rumored plans to officially launch the Bandai Channel service in the US.

With these events, it will remain to be seen if the distributor will prevail over the events that have transpired over the year, and emerge stronger than ever.  As a fan of the distributor I can only hope that they can continue their successful formula and fix their QC issues.  With those issues properly addressed, Bandai can continue its trend of growth at a faster pace and enjoy their well-deserved success while avoiding potential further corporate consolidation.