With Toho’s Purchase of GKids, the Domestic Anime Distribution War Heats Up | Analysis

Since the success of “Demon Slayer: Mugen Train,” which grossed nearly $50 million domestically in 2021, it’s been clear that anime will continue to be a major player at the specialty box office for years to come. Now, with Toho International’s acquisition of one of the medium’s top American distributors, Gkids, competition for the eyes and dollars of anime fans is about to step up.

It’s a natural fit for the two companies to be joining forces. Last December, Toho and GKids made box office history by pushing two Japanese-produced films into the top 3 at the U.S. box office on the same weekend. For Toho, it was “Godzilla Minus One,” the first ever film from cinema’s oldest franchise to win an Oscar, earning $56.4 million in America.

For GKids, it was Hayao Miyazaki’s likely final film — and also Oscar winner — “The Boy and the Heron,” which earned $46.8 million to become the highest-grossing original anime film ever in the U.S..

Now the two companies will join forces in a theatrical anime market that has been largely dominated by the Sony-owned Crunchyroll, a streaming platform with a theatrical distribution arm that has earned $100 million in domestic grosses going back to the release of “Dragon Ball Super: Super Hero” in June 2022 and boasts more than 15 million subscribers. If anything, the Toho acquisition speaks to just how much of a growing demand there is for anime, both from its millions of fans and from theater owners who see the value it can bring.

“Anime has an ability to bring people out to theaters at any time of the week. It’s destination viewing,” Mitchel Berger, Crunchyroll’s SVP of global commerce, told TheWrap. “There are some films that sustain over time, but there are also event releases that really appeal to theaters because they can fill up an auditorium on a Wednesday night or a Saturday morning.”

The consolidated Toho/GKids should mean more competition in the anime marketplace, causing Crunchyroll, which has been both a partner and competitor to Toho in years past, to also up their game. This means more anime, bigger anime (from some of these longstanding franchises, like “My Hero Academia”) and a larger push for the mainstream. With these titles regularly appearing in the top 10, what’s to cause one from breaking through and actually claiming that #1 spot?

“I spoke at CinemaCon earlier this year and said, ‘Anime is not coming, anime is here,’ and I truly mean that. I think we’re still figuring out those upper limits for its theatrical potential,” Berger said.

If there’s a downside to the Toho/GKids arrangement it’s that the company will be more single-mindedly focused on anime. Where this leaves the oddball European films that GKids would normally distribute domestically, things like the Irish films from Cartoon Saloon or the French films like “Ernest & Celestine,” remains to be seen. It does say something that French animation auteur Sylvain Chomet’s latest “The Magnificent Life of Marcel Pagnol,” which opened in France this week, is being brought to American audiences next year by Sony Pictures Classics. Sure, SPC released Chomet’s “The Triplets of Belleville” and “The Illusionist,” but it’d be right at home at GKids.

There were also rumblings in the animation community that GKids would, eventually, start producing their own films, becoming a kind of mini-major to go up against Disney, DreamWorks, Sony and, indeed, the other smaller distributors like Toho or Crunchyroll. With the acquisition, those plans are almost undoubtedly scuttled.

The GKids model for success

GKids is a unique success story — a studio that made its mark by championing auteur-driven animated films and building them into box office and awards successes.

It started out in 2008 as a two-man operation, by Eric Beckman (CEO) and Dave Jesteadt, with a name that was rumored to stand for “Guerrilla Kids International Distribution Syndicate.” It was born out of the New York Children’s Film Festival, a nonprofit Beckman founded back in 1997. Two years after GKids was founded, they had secured their first Best Animated Feature Oscar nomination for “The Secret of Kells,” from Irish studio Cartoon Saloon. In 2012, Beckman said there “is a huge hole in the U.S. market for handmade, mostly auteur-driven animated movies because the animated market here is so dominated by expensive-to-produce, expensive-to-distribute movies.”

Two years later GKids had two more nominees, edging out Steven Spielberg’s lone animated feature “The Adventures of Tintin.” The two nominees by an independent distributor, Beckman noted at the time , had never happened before.

Over the next few years GKids would form landmark partnerships, like in 2011 when they acquired the North American theatrical rights to the Studio Ghibli library, which would lead to GKids also distributing new Studio Ghibli films domestically. They would later also acquire the home video rights, which they would release in partnership with Shout! Studios.

GKids also continued their partnership with Irish studio Cartoon Saloon, and they acquired the license to Japanese anime series “Neon Genesis Evangelion,” one of the most influential series of all time and one that was outrageously difficult to watch (legally) in the United States. Soon after, they gained the rights to some of the films. GKids also championed filmmakers like Makoto Shinkai, whose blockbuster “Weathering With You” GKids would distribute domestically, before releasing several of his earlier films on home video.

And they racked up Oscar nominations – 14 in total. They finally won their first last year with Hayao Miyazaki’s “The Boy and the Heron,” besting Netflix’s “Nimona,” Pixar’s “Elemental” and Sony’s “Spider-Man: Across the Spider-Verse.” Amongst Oscar prognosticators and animation enthusiasts, the fifth slot for the Best Animated Feature has become known as “the GKids slot.”

Its fierce independence and its unshakable commitment to bringing older, marginalized international animation to the United States, including things like Miyazaki’s early series “Future Boy Conan” and “Nadia: The Secret of Blue Water,” a collaboration between Miyazaki and future “Neon Genesis Evangelion” creator Hideaki Anno, are what has made GKids so special.

Which is what made the acquisition by Toho all the more striking.

Toho was established in 1932, producing films from Akira Kurosawa, Kon Ichikawa and Ishirō Honda and contributing to global pop culture with the 1954 release of “Godzilla.” A year before “Godzilla” became a phenomenon, they established Toho International, a Los Angeles-based office meant to broaden the company’s appeal by targeting North American and Latin American markets and co-producing western films.

GKids has closely worked with Toho before, most notably on the Studio Ghibli films, and Beckman and Jesteadt are staying put. GKids will now operate as a subsidiary of Toho International. And not for nothing, Toho currently has a Japanese animated feature in the domestic top 10 (“My Academia: You’re Next”).

Call it a match made in anime heaven.

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