Anime Cupcake Factories (or How I Learned to Stop Worrying & Love the Industry)

I get questions every day via e-mail or see them posted on Facebook, Twitter, or here on the Blog regarding the prices for Anime series. How are they determined? Why are they so low/high (well, mostly high)? Who decides?

If you are not familiar with Sal Khan's excellent library of educational videos, you should check them out. Here are three of Khan's classic videos that he uses as a primer for his later discussion of the economics of inflation, deflation, and capacity utilization.

These three videos use 'cupcakes' to describe the fascinating process of the various market forces that exert both upward and downward pressure on the prices of things. These videos perfectly apply to the R1 Anime business as well, so if you've ever wondered what really drives the prices of things in markets like ours (or just about any other business), take 30 minutes out of your summer vacation and watch these:







I'm still waiting for that Robotic fulfillment center... -_^

My World - Conflicts of Interest

The deeper you dig, the more dirt you find - and it can be a dirty business.


Conflicts of interest are everywhere in the Anime industry. Publishers who want you to sell their product also have their own stores and sell them directly, often below your cost. Marketers put advertisements right in the products they give you to sell gathering data on your customers. Content sites that want you to pay them to advertise your product also give those products away for free to generate extra traffic so they can charge you more for advertising. Studios let your direct competitors handle the wholesale distribution of their product, allowing them access to all your buying and sales data. Marketplace sites that you pay to sell on will use your sales data to decide of they should carry an obscure product directly and undercut you. Loyalty between business partners doesn't exist except to sales numbers.

This is the environment we do business in.

My World - Overconfidence

Something to be avoided at all costs...


...though it doesn't seem to stop others.

My World - Reset

Sometimes, you have to realign your perceptions.


"You're not your job. You're not how much money you have in the bank. You're not the car you drive. You're not the contents of your wallet. You're not your fucking khakis. You're the all-singing, all-dancing crap of the world." -Tyler Durden



I am Jack's raging Anime dealer.

My World - Expectations

Back in 2005-2006, even I started to think this thing might end up bigger than all of us. That was when we were sinking loads of money into building out our infrastructure.


I was wrong too.

My World - Simplicity

One of the primary concepts behind the design of the RACS store site:


After 12 years I'm still not sure if that's right.

My World - Happiness

Something very important that took me a long time to learn:


This is why we keep doing what we do.

My World - Collaboration

I am a micro-manager (but I've quit 1000 times...) and I like to carve my own path, but my best decisions are usually made after extensive collaboration with others. Sometimes when you think we're just chatting, I'm actually putting an idea or concept through the wash cycle a couple of times.


I need to remember to do that more often.

My World - Planning

When we first started out (years and year ago), I had this concept upside-down for a long time.


"If you build it, they will come" no longer works. Our product no longer sells itself. Everything now revolves around incentives.

My World - Focus

Some things you can change, and some you can't. Some activities are productive, and some aren't. In times like these Focus is really, REALLY important.


In the Anime business, unlike most other businesses, we have the unenviable task of having to compete with 'free'. So you have to focus like a laser beam on what works.

This goes a long way to explain why we do some things, and don't do others. Sometimes we just don't have the luxury.

My World - Synergy

This is the 'synergy' I'm looking for (and haven't found yet):

My World - The Business Cycle

Outliers matter - and can fool you.

One this graph the top of the dotted line in the middle would be April 19th, 2006.

That was the day the R1 market peaked and turned. I'm not quite sure exactly where we are on the right side though...

My World - Risk

Re-invested capital in the Anime business:

My World - Uncertainty

Where I'm at in regards to the Anime Industry and our family business: