Fighting the Streaming Wars With Prestige Cartoons

by

Approximately a year ago, independent animation distributor GKIDS was enjoying an Oscars triumph. Hayao Miyazaki’s “The Boy and the Heron”, a Studio Ghibli film distributed by GKIDS in the U.S., clinched the Best Animated Feature Oscar, making it only the second hand-drawn film to do so (the first being “Spirited Away” by Miyazaki). This year, GKIDS has decided not to participate in the Academy Awards, although they had hoped to. As Dave Jesteadt, president of GKIDS, explains, “Despite a bit of competitive spirit, what excites me this year is the nominations and success of ‘Flow’ and ‘Memoir of a Snail’. These are two films that I would have loved to see [nominated].

As a supporter, I find it reassuring that Jesteadt no longer feels isolated in the indie animation distribution game, given GKIDS’ long-standing reputation as a prestigious cartoon distributor since its co-founding by Eric Beckman and himself in 2008. Over the years, GKIDS has established a formidable theatrical and licensing empire, competing with industry giants such as DreamWorks and Disney. They’ve been instrumental in bringing masterpieces from various countries like Japan, France, Belgium, Ireland, and Spain to American audiences, earning critical acclaim for films such as “My Life As a Zucchini,” “Buñuel in the Labyrinth of the Turtles,” “Wolfwalkers,” and many more.

In October 2024, Jesteadt and Beckman announced their decision to sell GKIDS to the Japanese entertainment titan, Toho (best known for Godzilla). This move signifies a new chapter in GKIDS’ dominance and has animation enthusiasts concerned that the company’s international focus might lean too heavily towards Japanese animation. However, I remain optimistic about this change, eagerly awaiting what the future holds for GKIDS and its continued contribution to the world of indie animation distribution.

Jesteadt confidently tells me that’s not the situation, as he discusses the changing worldwide approach of the company and the hurdles it encounters. He describes the initial year post-Toho acquisition as “very experimental.” This implies restorations of timeless animated films, a heightened emphasis on TV series production, and the upcoming theatrical release of the newest title in the highly profitable Gundam franchise. However, he nearly guarantees that GKIDS will not establish their own niche streaming platform, but almost…

Our movies can now be found on most significant streaming platforms, such as Studio Ghibli’s library on Max, Wolfwalkers on Apple TV+, Look Back on Prime, and numerous others on Netflix. We’ve achieved great success without requiring our own streaming service like competitors Crunchyroll or Sentai’s HiDive. What are our future plans regarding streaming and licensing arrangements?

In the future, we aim to be adaptable in our approach for each film, considering available rights and opportunities. Essentially, our goal is to ensure that these films reach as wide an audience as possible. We may serve as executive producers, as with Wolfwalkers on Apple TV+, or handle sales of libraries, such as the Studio Ghibli library in the U.S., which we sold to Max. Additionally, we act as distributors for titles that have already secured global streaming deals and then provide distribution services for theatrical releases or home video rights. For instance, Look Back was a sale that originated in Japan due to its emotional impact and suitability for a theater audience. For younger viewers, streaming platforms and digital media play a crucial role in extending the life cycle of these films.

As a cinephile running this streaming service, one of the daily hurdles we’re navigating involves our background as an American or North American distributor. Historically, independent distributors like us have fragmented rights worldwide. This means that for each territory, there are multiple distributors who handle and specialize in these types of films with streamers. One of the challenges is dealing with this global fragmentation to secure licenses for our content.

In today’s world, with everything becoming more globally connected, streamers function like studios in their own right. Movies that once would have taken an independent route, relying on specialized distributors in various regions, are now finding themselves part of a global deal. This means that regardless of whether you’re from America or another significant market, you’re contributing to the success of a film as part of this larger global package. As our strategies and focus expand globally, even though our primary interest remains the local market, we must find ways to engage on a global scale.

Was your aspiration to engage on a global scale a factor in the Toho acquisition? Absolutely, it was. The film industry’s landscape is evolving, with both advantages and disadvantages associated with how films are distributed through streaming platforms. However, as we peer into the future, it seems clear that the world will become increasingly interconnected, not less so. We sought a partner who could aid us in achieving our global ambitions.

As a movie enthusiast, I find myself sharing a common ground with Toho when it comes to our 2024 Oscar-nominated films – their Godzilla Minus One and GKIDS’s The Boy and the Heron. However, the anticipation for streaming these Japanese masterpieces in the U.S. has been quite lengthy. This is due to the unique distribution dynamics between Japan and America. In Japan, there are distinct holdback structures that prioritize the theatrical release over digital platforms, a stark contrast to our streaming-centric culture here. Additionally, Toho holds a significant stake in one of Japan’s most potent and expansive theater chains, which further emphasizes their commitment to the theatrical experience.

In Japan, popular movies, particularly blockbusters, often have screening periods lasting up to six months or even an entire year. Conversely, in America, post-COVID, the release window for films is shrinking rapidly. This means that a film may only be available in theaters for 18 days, 30 days, or 60 days before moving to premium video-on-demand rental and then streaming services. In contrast, this isn’t typically the case for Japanese movies, especially popular anime films, which often have extended theater runs.

In dealing with a different release schedule, it can sometimes be challenging and even frustrating. Should we delay the theatrical launch significantly after Japan to provide a familiar timeline for domestic audiences, or accelerate the film’s premiere so that local fans experience it simultaneously with those in Japan and other countries? Typically, we find ourselves striking a balance between these options. The unique approach taken by Hollywood studios regarding release windows stands out within the global entertainment industry.

Will your alliance with Toho influence how you manage future licensing and streaming deals? Might they play a larger role in discussions about which titles should be placed on which platforms?

In essence, our relationship with Toho won’t significantly alter things right away. We maintain strong relationships with numerous partners. The market has taught us that consumers prefer not to subscribe to another streaming service. Our focus is on collaborating with existing services and adapting to their shifting strategies. We aim to meet the demands of our buyers as much as addressing our own needs. It’s a constant catch-up game for us, keeping in touch with various services and listening to programmers who inform us about changes in genres or catalog requirements.

The pace in the third-party licensing market is rapid due to its hollowed-out state. Nowadays, streamers are heavily invested in original content, making library licensing and general third-party licensing more difficult except for the “winner-takes-all” model. In this case, it’s the big films that have a proven audience and demand that receive numerous streaming partnership offers. Our goal is to build relationships with these potential partners to ensure all our titles, regardless of their size, can find a suitable platform.

Initially, in a 2017 interview, you expressed doubt about GKIDS venturing deeply into television production. However, since then, there’s been an impressive series of anime license reclaims such as Neon Genesis Evangelion, Miyazaki’s Future Boy Conan, Nadia and the Secret of Blue Water, and more recently Arcane. Now, your approach is to introduce shows like Dan Da Dan and the new Gundam show Mobile Suit Gundam GQuuuuuuX as theatrical compilation films first. It seems that the shift in strategy could be attributed to a change in perspective, or perhaps a more daring approach towards television production.

This statement wasn’t meant to catch you off guard! It often takes someone suggesting an idea for one to fully grasp what role might be suitable. Previously, I wouldn’t have referred to it as a dislike of television, but rather a lesser likelihood due to not owning a network or streaming platform. However, since then, a few significant events have transpired. With the departure from the home-video market and physical media, many studios have created an opportunity for preservation and curation of what I consider some of the most influential series ever made. This is beneficial for our business, as these titles make excellent additions to our library, and they are also very important to us as fans ourselves. Our employees are highly motivated by this.

Over the last few years, it’s become apparent that the sheer quantity of content being produced and released is overwhelming, often requiring marketing, curation, and audience development – especially when new series debut. This was a concept we explored last year for the first time with the premiere of the Dan Da Dan season-one, an eagerly awaited anime adaptation from the beloved manga, Shonen Jump, by Science Saru – a studio we’ve collaborated on numerous feature films. Given our familiarity with the team and the property, we knew it was exceptional, and we were keen to test strategies for promoting something available on multiple streaming platforms since they opted for nonexclusive distribution. This opened up an intriguing prospect as you could reach potential viewers across various channels.

Are you considering using Toho’s resources to launch your own streaming platform in the future? Not likely, but who knows? The streaming market is vast and competitive, with many platforms run by major global entertainment companies. Some of these platforms may not necessarily have found their audience yet. There are still plenty of developments expected in the coming years, such as mergers and consolidations. We’ll just have to wait and see how it unfolds. However, from the perspective of viewers, it doesn’t seem like there’s a strong demand for another niche service to subscribe to.

Is it complicated when attempting to screen a compilation film of an anime’s episode in theaters while another licensor holds streaming rights and is strategizing about their approach? In essence, we collaborate with the licensor, producers, and studio, while they also work with their streaming partners. It’s a complex process involving negotiations for showing episodes prior to release, but I believe it benefits the streaming release greatly. The theater screening allows core fans to see something early, enhancing their experience by enjoying it together as an audience, much like anime conventions generate buzz. Thus, I view this as an excellent supplementary experience for streaming, rather than competition. It simply creates a burst of positive energy around the series before its release. Only high-quality series with no potential negative word of mouth would be considered for such a theatrical proposal.

To address the concern about the potential prioritization shift after Toho acquisition, I’d like to clarify that our commitment towards European films, independent animation, and non-anime productions remains strong and integral to our business. As the global animation industry evolves, boundaries are becoming less defined. Last year, we executive-produced a Japanese-French co-production titled “Ghost Cat Anzu.” This is just one example of how there’s an ongoing exchange of animation talent, particularly during Japan’s production crunches. We value the vibrant filmmaking scenes in Europe, Latin America, China, and other regions, and we aim to continue supporting and championing their works.

Among my joys this year is seeing the nominations and triumphs for “Flow” and “Memoir of a Snail.” These are movies I’ve longed to create myself. In a broader sense, it’s beneficial that competitors tackle such titles. The more unique our niche becomes, the more it weakens the industry. Therefore, when theaters and studios recognize the potential success of these captivating animated films, it boosts the market in innovative ways for everyone’s benefit. This growth is truly exhilarating.

Have you ever attempted to acquire distribution rights for Flow or Memoir of a Snail? If so, have you pitched them? Well, it’s quite intricate. [Laughs.] In the past, we used to compete for numerous titles after film festivals ended. If a movie hadn’t been sold yet, we would offer a small guarantee and take that on. That’s how our company grew in the initial years as these films were undervalued in America and needed someone to demonstrate their worth. As the audience has expanded, and the market has matured, it’s wonderful to see companies like A24 with Marcel the Shell, Sideshow with Flow, and IFC with Memoir of a Snail succeeding. However, as we increasingly focus on animation distribution, it seems to reinforce the notion that animation is a single entity, while in reality, it should be a diverse part of any studio’s title portfolio. It shouldn’t be that we are the only company pursuing these films anymore.

As we move forward in the international animation landscape, the next few years seem promising given the emergence of a new, receptive audience. Our Los Angeles-based film festival Animation Is Film was initially a bold statement several years ago, but it now carries a sense of excitement rather than defense due to the younger generation’s acceptance and appreciation for all forms of animation storytelling. This growing openness has sparked a wave of innovative animators and filmmakers who draw inspiration from the previous generation, creating an exciting new era in animation.

Feels incredibly optimistic here, as there’s a sense of worry regarding global environmental issues and the impact of generative AI on animation and illustration. However, despite the gloomy outlook in some areas, I’ve been astounded by the remarkable work that has surfaced recently. I truly believe that if we can nurture these talented artists, we might be on the cusp of a new golden age, just over the horizon.

Read More

2025-02-20 23:54