The merging of New York Comic Con and New York Anime Festival has turned the Anime Festival quite literally into an underground party. Programming for the New York Anime Festival as well as the NYAF Artists Alley was held on the lower level of the Javits Center, but anime and manga fans turned out in big numbers all weekend long and the area was jammed with young fans attending cosplay contests, concerts and other on-stage contests.

As for publishers, the few still in the race exhibited although most the announcements had little to do with new licenses. Newly launched Kodansha USA Publishing, set to take over the manga licenses of Del Rey Manga, was not in attendance. However, NetComics, Yen Press, Vertical, Mediablasters, Dark Horse, and Fanfare Ponent Mon (which publishes a variety of comics in addition to “literary” manga) were present. The most exciting news came from Yen Press and Vertical, Inc. Yen Press will launch an iPad app later this month (as well as a digital storefront) which will host all of its original work including Night School, the James Patterson properties Maximum Ride and Daniel X, Gossip Girl, and Clique manga adaptations. Yen Press also announced that star artist Svetlana Chmakova (Nightschool), will adapt James Patterson’s Witch and Wizard prose series into a graphic novel series.

The Yen Press app will be available later this month via the Apple iTunes store. “It would be foolish not to forge ahead,” Yen Press publisher Kurt Hassler said referring to the company’s library of original work. Yen Press has already relaunched its YenPlus magazine and a monthly online subscription service. Now the release of the app allows Yen Press to show their Japanese licensors a model for digital distribution. “The Japanese are receptive to this conversation,” Hassler told PWCW, explaining that while Japanese publishers remain wary of handing out digital rights, they are evolving. “It’s only six-months old, but before this, if you brought up digital they would immediately shut you down,” he said.

While Japanese publishers’ response to digital distribution may be evolving, they continue to be skeptical. Michael Gombos, director of Asian licensing at Dark Horse, said that their partners in Japan remain resistant to digital distribution. “Scanlation has soured a lot of publishers to the idea,” he said. Dark Horse made a splash at the show, announcing their own digital publishing plans and announcing plans for an app, although none of their Japanese properties will be available through it. Dark Horse announced new licenses: Bloodline Battlefront by Yasuhiro Nightow (Trigun), and Drifters by Kohta Hirano (Hellsing). Dark Horse will also release Shinjuku II-Azul which will be illustrated by Yoshitaka Amano. And despite an overall down U.S. manga market, Gambos said Dark Horse manga properties have shown impressive sales figures having increased by 13% from 2009-2010 with a large part of those sales coming from brick and mortar stores.

Vertical, Inc.’s new properties forthcoming in 2011 included a new Tezuka license, The Book of Human Insects, as well as a title by Usamaru Furuya, No Longer Human, a manga adaptation of the novel by Osamu Dazai [**after this was published Vertical was notified that this annoucement was premature and the North American license for No Longer Human has not yet been granted**]. Vertical is also preparing for their spring 2011 release of Furuya’s Lychee Light Club, a dark comedy about a group of teen boys who have designed a robot to help them meet beautiful girls. Vertical plans to shrink wrap the series which contain “graphic underage sex between beautiful boys” as Vertical editorial director and executive vp, Ioannis Mentzas, described it. “If we are taken to court for this series, I will gladly fight that fight.” He added. Furuya also has a series with Viz Media entitled Genkaku Picasso.".

Vertical will also add a one-shot volume by one of manga’s most controversial creators, Jiro Matsumoto’s Velveteen and Mandala. The license offers many examples of Matsumoto obsession with perversity and may not be for the squeamish. His books include vomiting, defecation and zombie gang-rape to name a few. Mentzas explained that they looked to license a work by Matsumoto that had never been scanlated—translated and posted online by fans. Matsumoto’s Freesia and Keep on Vibrating were both scanlated works, with Freesia, about an unfeeling mercenary in a futuristic Japan that sanctions revenge killings, earning the mangaka a global following. Velveteen and Mandala is one of Matsumoto’s titles that was never scanlated and Mentzas also equates scanlation with with piracy and lost sales. “I don’t buy the argument that scanlation leads to awareness and [more] sales,” Mentzas said.

As for manga itself, the enthusiasm for the properties, the characters, and the creators, continued to emanate from the crowds. Although this enthusiasm isn’t always reflected in sales. ICv2 reports that U.S. market for manga has dipped 9% in the first half of 2010, making this the third bad year in a row for manga sales. While the manga category has grown more mainstream and readership is still strong (half the graphic novels sold in the U.S. are manga and millions read pirated manga on aggregator/scanlation sites every day), the shrinking footprint of U.S. manga publishers, inventory cuts by retailers and the lack of widespread legal digital access have only widened the gap between the manga producers and the manga consumer.