Anime Expo - Interview with Shawne Klecker (TRSI / Nozomi CEO) -

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Anime Expo - Interview with Shawne Klecker (TRSI / Nozomi CEO)

By Jason Yeh     July 10, 2008

(NOTE: The following is not an exact transcription of the interview)

[JY] - Jason Yeh

[SK] - Shawne Klecker

[JY] Have there been any specific challenges for your company the past 12 months?

[SK] Well, nothing that's any different than the rest of the market. You got the slowdown of the sales of dvd product, which may or may not be translated by the continued issues from fansubs, the continued issues from basic economic concerns and the fact that there's less retailers to place the product. The really only specific issue was the [Iowa] flood that we dealt with. Beyond that, no. It's just the same general issues that everyone else is facing.

[JY] Some of the biggest news during the convention was from Funimation. They may have more, but any reaction to what they announced so far?

[SK] I'm actually glad to see some of the Geneon stuff get a home. It's for the market to remove some of the uncertainty that's there's been over the course of the last 18 months. I don't think that's a bad thing by any means. The question is how will it affect the market going forward, that remains to be seen obviously. The industry has needed some level of stabilization and I think that's not necessarily of bad thing.

[JY] Do you think any of those announcements will affect TRSI in particular?

[SK] The only issue there is more products to sell. In terms of, that's always a good thing. The more products I have to sell, the more value I can provide to the customer the better. I don't know that I can give you much more beyond that.

[JY] Some fans consider Nozomi as sort of a boutique anime label / brand that basically caters to the hardcore fans (especially with the more recent titles like Emma, Aria, etc). But even so, you mentioned during the keynote on Thursday that dubs are still what most anime fans watch. I'm wondering why hasn't Nozomi acquired any series you could dub?

[SK] I wouldn't agree with that. We just finished 2-3 months ago the release of The Third which was dubbed. It really comes down to a case by case basis. We look at the properties that we get feedback from fans they are looking for. If we feel that economically that we can do a dub version of that product and turn a profit so we can keep our lights on, then I'm more than happy to do that. I know the fans are looking for dub titles. I know the fans are looking for some of these titles to be able to just view them. That's why we look at each title and say, "Is there a way to bring this product the fans are looking for to market in a way that both the company and the fans can benefit." Some of those [titles] mean that we bring out a value priced box set. If we put out sub only box set, we put them out at a very reasonable price given how much content that you're getting. Compared to dropping them out as subtitled only, 2 or 3 episode dvds. We are adapting to the market in that matter.

As a great example, Emma is a great show. I would have loved to put a dub on that title, but I do not feel that based on the subject matter of it and the fanbase that is available that I could turn a profit by putting a dub on that title. So we chose to instead go the other direction and look at what we can provide for value. And what we did a sub only box at a very reasonable price and then added a lot of value in terms of the extra 96 gazette in there (it's a beautiful book), and we added extras to the bios and other extras to the discs themselves. To me, that's where we add value-add to the customer. If there is a way that we can do that with other products, then certainly we're going to do that. I look at all the products we look to acquire on a case by case basis. If we feel that the product has enough of a fanbase, certainly we will create a dub for it like we did for The Third.

[JY] So there's no overall strategy to target just the hardcore market? Some people really perceive that.

[SK] Although it may look that way simply because of the more recent titles we've acquired, it's really going to come down to also the availability of what we're looking for. In terms of major licensing projects over the course of the last couple years, they have been pretty limited. The amount of content coming from Japan at this point versus the content 3-4 years ago is down fairly dramatically. There are only so many shows, and we may not have the resources as some of the big players, so obviously we're not going to able to pick up some of those titles. As a small company, we allocate our resources to look at the properties that we think we can license and do a good job with. There's nothing to say that next week we won't buy a big, giant action flick that we dub. It just depends on what we find, what's available and what the market for it is. That doesn't mean I'm going to sit back and not pick-up the other stuff when we can.

[JY] In regards to yesterday's announcement about Gakuen Alice, I noticed you didn't mention anything about a preorder campaign for people to get their names in the credits. Is there and particular reason for that.

[SK] We haven't done it on everything. We did with Emma. We did not do that with Maria-sama where instead the people that preorder [it] we're doing a special set of limited edition cell phone straps which will be for each one of the sets versus names on the disc. If I did that on every release, I think people would get tired of it. I would rather try to have some level of variety. I'm sure at some point we'll probably do it again for a release, but for Gakuen Alice we'll probably do something else. What it will be, I'm not really sure yet. If people buy directly from us, obviously we make a little bit more money that way and there's some more money to help pay for the release. But that [also] allows us to make something that we can provide as a value-add to the customer.

[JY] With the Emma season 1 release, some people spotted an issue with the audio. Do you have any update on that?

[SK] I don't know if I said that at the [Nozomi] panel, but I certainly did say it in the [AOD] forums. We'll get it taken care of. The customers will be taken care of. Just like I promised the customers with To Heart that they will be taken care of. Will it be next week, probably not. It's going to take a little bit of time to get everything cleaning up and fixed. But we will take care of those people that want it taken care of. I know if a customer is unhappy with their disc on [Emma], that we've asked that they send their information to us so that we can get everything together. So when we have something to take care of them with, we can immediately take care of it.

[JY] I went to the first ADV panel during the convention, the Sneak Peek one. Someone asked about that liquidation / auction they had. Matt [Greenfield] mentioned the reason why they closed the warehouse is because they moved their warehouse operations to TRSI. Is that correct?

[SK] Yes, that is correct

[JY] Can you give any details on that? How long that was in the works?

[SK] We've talked about that for years. One of the nice things in where we're at in the country is a very good, logistical hub. ADV was looking for a partner and I'm very glad they decided to work with us. In terms of their liquidation, I'm not sure what they sold (I [only] saw the pictures like everybody else). I know they've downsized and they obviously without having that warehouse anymore had no need for some of that material, so they got rid of it.

[JY] So actually some of their product has been shipped thru TRSI's warehouse for a while?

[SK] That is the case.

[JY] They had multiple warehouses and in the end closed one of their own?

[SK] Yep.

[JY] TRSI, I think a lot of people find, is a unique company because you have both the on-line retail / mail order sales and then the Nozomi anime production stuff. I don't any other company has been able to do that as and balance the two.

[SK] How do we do it and nobody else does?

[JY] Yeah, and keep both going at a steady pace.

[SK] I don't know how to answer that question. We manage the best we can. We started out retail operations very early on. When we licensed Astroboy back in the late 80s, the big issue that we had is we could not, (with the way the video market was which was primarily rental), find a place that we could get our product in. People would not pick it up. It was rental only and it was difficult to get people to buy our cassettes. That is why we started a mail order company, so we could place those Astroboy cassettes to the fans directly. That section of the company morphed into what is now, over the course of the last 21 years or so. We've been doing it a lot time, maybe that's part of it. I don't know.

I think part of it is also the just the focus that we have on the customer. We're a very customer-centric company. That's something I demand from my staff. We have regular meetings and discuss our mistakes. We look to take care of our customers and make sure their e-mails are answered and if they have a problem that we take care of it. We publish our 800 number out there. My e-mail address is published out there. Anybody who wants to e-mail me, they can do that. I'm not going to be their personal company service rep, but if they're having problem, I'll see what I can do to help them. Nobody else really does that. Maybe that would be part of it. Now we have (over the course of time) because of the unique position we fit in the industry, taken on other things. We have over the course of time run on-line and/or mail order sales for pretty much every anime company in the market. And at this point, this still do that function for a number of companies. For example, Geneon store is still run by us, is run by us, etc.

We internally keep the company in two divisions, but those divisions do interact. What the fans are telling us (that we want) is prime, focused information to tell the production department, "hey this is what we need to be going out looking to license," and "this market is not being served." We can also pass that information on to our partners in the field thru either customer surveys that they're sending out that we're data entry for, or general customer comments. I talk to pretty much everybody in the market on a fairly consistent basis saying, "hey this is what I'm hearing", "have you considered this", or "this maybe be a problem you need to address" or so on. As a position in the market, we occupy this kind of neutral Switzerland area that is really good for the market because it does give some good information flow back and forth to the consumers and to the publishers.

[JY] That's a pretty long answer to the question.

[SK] Hopefully that's what you were looking for.

[JY] In terms of the revenue coming into the company, can you give a rough breakdown of how much is coming from Nozomi and then from the actual retail operations.

[SK] Yeah, I'm probably not going to do that. (*laughs*)

[JY] Not even a rough 50/50, 60/40 [type breakdown]?

[SK] Obviously I don't have access to those numbers sitting right here. I will say the retail operation generates more revenue than the production department does. As a private company, I'm probably going to keep that to myself. The production division is smaller than the retail division.

[JY] Many people have asked about Over time it has evolved and you guys have revamped some of the features, added new ones, tweaked things. Any plans for a whole / major upgrade to the system?

[SK] We have been working for some time on replacing different components of the way our business functions. The primary things that we've worked on have really been the customer side of things: the frontend, the way the site looks, the way the navigation is done and so on. The next big piece probably will be revamping the backend, but that's a much larger project. We've been working it for some time. As with any business you just got to keep plugging away on keeping your systems up to date. Can I give you a timeframe on that? Probably not. Everything is a work in process. We've added features to the site. We've added the podcast. We've added the forums. We'll continue to add any number of ways to interact with the consumer.

[JY] Would you say for the most part, that you're pretty satisfied with how the backend is working and that's why maybe you haven't put so much resources in it?

[SK] It's not that we haven't put the resource into it, because we have. It's just a lot bigger project. When you consider the frontend just has to interact with the consumer to take the order, [but] the backend has manage the inventories, the payables, etc. It's a much bigger project. It's not that I'm 100% satisfied [with the backend], because they are a lot of things I'd like to update, but it just takes time. You can not buy an off the shelf product that will do all the things we want it to do.

[JY] In terms of the sales [on], what kind of planning goes into them? Do you negotiate with the studios at all?

[SK] We do talk with all the studios because some of them have specific needs or desires or want things in certain time frames. I don't just say, "by the way we just had a studio sale, deal with it." They are semi-periodic, but not specifically periodic. We definitely coordinate those [sales] with the studios.

[JY] In terms of percentage discounts, does that depend on you guys or also studios?

[SK] It's going to be in conjunction, it's a mutual thing.

[JY] It seems like there's always been really strong feedback on the AOD forums, [in terms of] your weekly sales, all your postings and promotions. Have you seen any similar feedback anywhere on the Internet?

[SK] We hit several different forums: the ones, the forums. I have people looking at all of them. We try to interact with the fans in any we can. The customers are looking for information and I want to be able to provide it to them. I'm very pleased that we've got a positive response. We've got a core group of customers that are happy with our service and that makes me happy. And you have some people who will never buy from us and that's obvious. That doesn't mean I'm unhappy with them or I wouldn't answer their questions or do whatever I could if they want to buy one of our releases. Everybody has a choice, and I hope that we provide an attractive choice for buyers to buy the anime products that they are looking for. In general, I think we have a fairly good response. I think a lot of that comes from the fact that we do interact with the fans versus they send an e-mail to big giant black hole and they never hear anything.

The AOD site has got a lot more interactively I think than a lot of other sites and that's great, that's good for AOD. I can not make people respond to my posts [on other sites], but I do see that they are read, so that's just as important.

[JY] It's obvious from what I've seen that some of the AOD posters spend a lot with Would you say some of the highest spenders with are from AOD?

[SK] That would be very difficult for me to track that. We don't statically analyze that because there's no way for me to track if they are an AOD person or not. I know that when we put up our Emma [promotion] for the names on the discs, there was a group of [people] that all put they were from AOD, which I thought was really cool. I think we segmented them all out for their names as well so they were all in a core group, which I thought was really neat. They're vocal customers. They're vocal if we mess up and they're vocal if they are happy. You know what, I encourage that. I am the first person to tell you that we have group of humans that work for our company and they do make mistakes. If we screw up, I'm the first one to admit that we screw up. And we'll do our best to do right to the customer. That's what we're there for.

[JY] Would it be possible to do still some tracking thru the affiliate system?

[SK] Well AOD doesn't have the affiliate any more.

[JY] What about that AOD link? (ex:

[SK] I don't know if that's track any more or not. We disabled the affiliate because Chris told me to disable it. Even so, [AOD users] would all have to go thru that affiliate [link]. I'm sure that we have a group of customers from AOD which are our core customers that are devoted and/or loyal. It's obvious just from posts that I see. I'm very happy for that. It means I'm doing something right. It certainly makes me a happy guy. The only question really becomes, "is that the core of our entire market base?" I don't know about that, but I do know we have a lot of customers that come from AOD. [It's] another reason why we try to be active in the forums there.

We had posted our own forums a while back, and there was a question "well are you guys not going to participate on [the AOD] forums any more?" Well of course not, that would be silly. That's just yet another place that we can interact with the fans. Everyplace we can interact with the fans, we're going to do so as long it's going to be useful for us. The people that post on our forums post about different things obviously [than those] that post on the AOD forums.


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