Anime News Network has posted Part II of their anime and the economy. Part II focuses on the impact of home video on the anime industry. The article begins with the differences between the North Amercian and Japanese home video market.
To a Westerner, the Japanese DVD market seems horribly overpriced. With the average disc running over ¥7,000 (US$92) and only containing 2-4 episodes of a series, the cost of collecting a single show can easily run several hundred dollars -- more than many American fans spend in a single year.
The prices actually stem from a business practice we used to have in America, too: rental pricing. Basically, back in the dawn of the home video business, the industry was constructed in a way where "niche" releases were only meant to sell a few thousand copies, mostly to video rental shops. Prices were high (typically $89.95 in America), but video shops benefited from having a wide and semi-exclusive selection of movies that normal people would never pay for. At those prices, only a few thousand sales could mean over a million dollars of revenue. Initially, video industry people didn't think there was much of a market in selling to collectors.
Once again, the information in this series is outstanding and makes it a must read!But the fans proved them wrong. Otaku of all kinds (not just anime fans) started buying the videotapes and laserdiscs, and they bought them at those high prices that were intended just for video stores. There was no reason to lower it. In fact, there were a few experiments to drop the price to a more affordable amount, but that usually resulted in a slight increase in sales -- not enough to make up for the drop in revenue.