Is anime really dying?

anime industryThe community awaits doomsday as anime is slowly reaching its demise. Or is it?

I’ve stumbled upon many articles and comments over the course of time stating the anime industry had its peak at about the 90’s. Slowly, but surely, the industry is falling over the edge making less and less profit, having difficulty making ends meet. Studios are throwing everything at it to survive. Yet, a lot of those comments and articles seem to be pure sentiment when a season doesn’t necessarily give the new wave of original shows as anticipated. Is there truth in those comments? Is the end really near and what other factors join this game of faith? Time for a deeper look.

anime industryA graph released by Oricon spanning a timeframe between 2008 and 2012 shows an interesting trend. The graph reveals a severe decline in DVD sales, an increase in BD-sales, yet an overall drop in overall revenue. Let’s break down this graph down.

2008 was symbolized by the financial crisis that raged into late 2013 and early 2014. In many places it is still ongoing. Entertainment is a luxury product and when financial hardships are put upon an average household, decisions have to be made. Therefore it is logical that entertainment goods such as consoles, TV’s, computers and other hardware are less in demand. Same goes for theater visits, vacations and restaurants.

Another interesting metric is the decline in DVD-sales. That is easily explained by technological advancement, as in this case the Blu-Ray format which seems to have flourished in given graph. There are many factors that can lead a certain technology to become a commodity. In this case the Blu-Ray was superior to DVD in storage space and the commidification of BD, made prices drop, making it more widely accessible. With the launch of the Playstation 3 in 2007, the spread of compatible devices also got a boost.

It’s easy to highlight that only anime is suffering, since it’s part of multi category product line such light novels, manga’s etc. Across the board there have also been positive notes. Kodansha gets a sales boost in over 18 years thanks to Attack on Titan, a series which has generated quite the buzz. “Cool Japan” a project by the Japanese government has exported 30% more Anime and Drama products in the fiscal year 2013. The program generated $114 million dollars. The most popular franchises were Space Brothers and Love Live!

Those products are intellectual properties, meaning they are property of the businesses/parties involved and get royalties whenever a product with the same name or affiliation is sold. If a light novel is sold a share goes to the original creator, the publisher etc. It’s a cycle that contributes to the overall profitability of a product. The Disney movie Frozen has sold like crazy, but remember there is also tons of merchandise which contributes to the overall revenue of the series and not only the box office performance. A very valuable metric that determines whether a product is deemed profitable.

Taking a small look into light novel sales in the fiscal year of 2012 series such as Sword Art Online sold 2,764,454 copies, Biblia Koshodou no Jiken Techou 2,067,369 copies and Accel World 1,033,906 copies. Within the top 10, series sold over 500.000 copies. The fiscal year 2014 seems even more radical when you look at the top tier. One Piece sold 11,885,957 copies, Shingeki no Kyojin 11,728,368 copies and Haikyuu!! 8,283,709. Those are only the top spots, number 30 Chihayafuru sold 1,937,059 copies.

Remember that a fiscal year differs from a regular year. For example the government of Japan’s fiscal year spans from the 1st of April till the 31 march. The numbers reach into the many millions and add up to the overall profitability of a series. It’s easy to say that the whole anime industry is dying when profits/revenue come from all different places.

anime industryAnother common sound is the low working wages among Japanese workers in the anime industry as indicator that the industry is collapsing. Note that those statements ignore the working ethics in Japan, most notably lifetime employment. Something that isn’t as common in most regions across the western civilized world. While lifetime employment has great benefits, it has also economic downsides, namely business flexibility.

If the unwritten rule in Japanese businesses is that you hire somebody for life and the employee gives his or her all for the company, you have to face the consequences when harder economic times sweep through the company. Management feels obligated to keep all the staff and the employee has committed to stay. There is no flexibility at both parties to reshape their business model and careers, thus a compromise is made by both parties, lower wages for the same work.

While I’m not a pro concerning over flexibility in working environments since it will give too much power to corporations, it’s still a negative economic value that eats into the overall profitability of the company.

anime industryAnother much overlooked metric is the declining birth rate in Japan. I’ve thought a lot about this subject since a declining birth rate can have a negative impact on the amount of consumers an industry can target.

In research done by the National Bureau of Asian Research in the year 2012,reveales that the Japanese population will decline with one million people annually. In 2060 more than 40% of the population in Japan will over 65 years old. This has a negative impact on the economy. The already sluggish Japanese economy, will not benefit from this trend.

It has negative impact on the working population as well. Irregular jobs are increasing for those aged between 15 to 34 year olds. Roughly taken millennials, which suffer most from the consequences of the economic downturn. Irregular jobs pay 40% less than regular ones.

To combat this decline in a working force with less spending power than ever before, the economic climate in Japan has to change where more can be done with less and break down the anti-competiveness that strains many industries.

The anime industry roughly targets a younger audience, which is in decline. The birth rate or replacement rate isn’t in harmony with the industry size. The focus has to shift towards exporting the products or retargeting. Efficiency and innovation can help the industry to shrink or adjust properly to economic changes.

anime industryAn article in the Japan Times states that a lot of anime producers traditionally market their products for domestic distribution, which is logical. Yet due to their size it remains difficult to make great overseas productions. Plus gearing a show for a foreign audience makes an anime lose its charm.

There’s truth in those words, from both sides. For higher income you need gross sales not only in Japan. A reason why Hollywood productions are profitable is that they are highly marketable products. The size can be deceptive, but anime remains a niche product overseas.

There are channels that provide streaming services such as Crunchyroll and Funimation, who of course close off distribution towards Europe. Which is also one of the key features of the industry and most native Japanese companies, for example Nintendo who actively blocks outings on Youtube. Like with many media, regional codes prevent or help, which every way you interpret it, they are distributed sequentially and not globally.

Companies claim, unjustifiably, that piracy plays a big part in their loss, while their own systems prevent them from mass distribution and reaching new markets. There is no real evidence of lost revenue, since it is difficult to establish whether a consumer would otherwise buy the product. A lot of consumers are willing to pay for unlimited access when available.

Democratization is to be witnessed in the music industries where Spotify attempts to open the market. Plus price perception for entertainment has shifted due to readily available products, therefore high prices won’t be greeted with open arms by consumers. Consumers who also had to deal with a recession, that ate away a part of their free income spending.

anime industryA lot boils down to supply and demand. Super hero movies are box office winners, so as a result more of genre related movies are being released. Same goes for anime. Series such as Shinsekai Yori target a relatively niche audience, praised by the community. Yet, it remains more of an art house cult series that doesn’t necessarily reach great audiences. After all it remains an entertainment product and people want to be entertained most of the time. When action packed series as Attack on Titan reach global audiences, it is logical that those series get more attention and budget.

Original is also a very broad term and can be subjectively interpreted by the audience/reader/person. Original means its fresh, new and inventive. A human being doesn’t necessarily like change since they are creatures who are programmed to act based on patterns. A series can be praised as much as you want for its originality, but change isn’t always welcome and you see it in the sales numbers.

I’ve said this many times before and I’ll say it again, the most obvious reasons the entertainment industry is suffering is due to its own game rules. Distribution is difficult and good partnerships are necessary. Marketing plays a big deal in the success of an entertainment product. Targeting it right can make a huge difference and stimulating outings on social media, instead of combating them, helps wide spread awareness.

Breaking down the rules can give studios more freedom to distribute. Initiatives like Crunchyroll, don’t unite the industry. They are just a distribution platform that operates in certain regions. A platform such as Spotify can bring change, democratizing distribution into one single platform where everything is accessible for a monthly fee. Before that there’ll be a long way to go.

There are more factors that determine whether an industry is successful as a whole. Kodak might be a good example of how things can go wrong when you don’t adjust to a new situation. Consumer behavior changes, technology advances. Subjective reasoning such as originality is just a sentiment and not a good metric to determine the health of an industry.

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18 thoughts on “Is anime really dying?

  1. josefcd904 says:

    You make a lot of valid points. One thing that I see with anime is that sometimes it just does not end or give a good conclusion since it has source material. Some shows end with the promise of their being more, or come out with another OVA with the promise of their being more, but it never happens. This could be either caused do to lack of sales, or even not enough source material. There are so many shows I wish to see adapt more of the source material, yet never do. It can be a little disappointing knowing you need to read the source material in order to know what happens, it is even more frustrating when that source material is either not licensed or even being translated by fan groups. To me it feels as though if they change the way they go about making the show, maybe wait till the series has progressed more so if another season could be made it could be made in a reasonable time, while still not feeling like it is rushed like how some have been feeling lately when it comes to reading the source material beforehand.

    • ninetybeats says:

      I think a lot of adaptations use the momentum the source material has at that moment. They select series with high sales or potential and make an adaptation, taking the lack of source material as a calculated risk. When both are in harmony, they complement each others sales.

      • josefcd904 says:

        That has definitely has been shown in some series like you pointed out, it could also be said it is true here in the US in terms of sales for some manga as well when it gets a release after the anime was a big hit.

  2. CheesyJ says:

    Solid points, but I wouldn’t take lower DVD/Blu-ray sales as an indicator of any decline. As you touched upon, anime is part of an increasingly diversified entertainment industry which has expanded exponentially over the past three decades. Manga, Light Novels, regular novels, Video games and anime that deal with the same subject (SAO for example) matter have to compete for the same audience. With the growth of the other means of entertainment, it’s only natural that anime gets a smaller share of the pie. It’s a positive indicator that the anime industry has remained relatively stable as indicated by the above graph. We also can’t forget that the consumer does not necessarily have the means (as you pointed above) to purchase all of the above mediums of entertainment of any single franchise, so choices have to be made. The graph, if anything, indicates that anime adaptations are still a popular choice.

    What concerns me however, the the actual working conditions in which many animators and production related employees have to work in order to complete any given series. As it stands right now, both pay and working conditions are appalling and has been for sometime. It’s only a matter of time before some significant changes are made for what is essentially illegally low wages. The most significant change would come from this, since production staff are the foundation of the industry. It’s what I would look out for.

    On a related note, ANN released a three part series of article titled “The Anime Economy” a while back. It’s a rather rare and insightful look into how the industry’s inner gears work. If you have not read it already, you would probably find it quite interesting.

    Here’s the link: http://www.animenewsnetwork.com/feature/2012-03-05

    • ninetybeats says:

      Thanks for your contribution to the discussion. The disc sales are still used by many entertainment producers to prove a struggling industry, but indeed they fail to mention the franchise as a whole.

      I don’t think they are on the illegal side of wages, they just change contract formats for many workers across the board. Perhaps employee costs are too high in general, or they want to remain flexible. The government has to pull some strings to make life time employment less permanent, making it easier for employers to resize their staff size. Another option would be to narrow the wage gap between flexible and permanent staff, by either way increasing the wage of flexible contracts or lowering the pay of a permanent one. It’s a very difficult discussion concerning the many factors that come into play.

  3. miharusshi says:

    I don’t know if what I’m going to say will help this discussion, but it might provide some insight into the micro-situation in the anime industry, which I don’t think is dying (animation-wise).

    Anyway, I just wanted to say that not all animators are paid the same. We have in-betweeners who just have to provide the drawings between key drawings. Which means that the creative output required from them is relatively lower than those put out by the key animators, who make their names big in the industry, or at least within the sakuga fandom (but still not as famous as certain directors and writers). I’m not very knowledgeable, but I hear that many among key animators are freelance animators, especially the prominently ‘skilled’ ones who specialize in certain techniques. So they have a say to how much they’re going to get paid throughout a project where they will be put in. Thus I don’t think not all animators are starving.

    Japanese animation studios has been outsourcing their in-between drawings to other countries as well, most notably Korea (others in Philippines, and other Asian countries), to help alleviate their financial troubles. The question is, can Japanese animation studios keep outsourcing to help them stay on-schedule of production (or to help produce more anime)? (Though the truth is that, perfectly on-schedule production is very rare)

    Many fans are still not comfortable with 3D, but I somehow see an improvement with how 3D animation is integrated into the traditional 2D format by making those conspicuous CGI stand out less (Owari no Seraph comes to mind, though I’ve only watched the first ep). Meanwhile, there are fans who may be gradually warming up to CGI because the story works with this animation (Knights of Sidonia). I brought this up because CGI, to an extent, makes production progress faster (and cheaper) than if everything was drawn traditionally on 2D.

    • ninetybeats says:

      It’s interesting you point out the CG aspect of the industry. That’s an efficieny measure to help the industry as well. Disney has software tools that create computer images that look if drawn by hand. It’s a mixture between hand drawn and 3D. The short movie is called “Paperman”, if you haven’t seen it, you can find it on Youtube.

      There’s still a lot of ground to cover for the industry as a whole. I believe it’s reshaping/resizing the industry, discovering new business models and regions, making it all more adaptable. Outsourcing can be a solution for the short term, but when wages in those developing regions start to rise you’ll end up where you started. It’s not a permament solution.

  4. Michael Do says:

    It’s a good blog you wrote there. To be honest, I do somewhat agree with what you wrote. Regarding the low consumerism, there may be some speck of truth. I remember listening to NPR about the Japanese market:

    http://www.npr.org/sections/alltechconsidered/2015/05/07/404376767/a-startup-scene-thats-not-so-hot-japans-entrepreneur-shortage

    I was told from this article that the Japanese market has shrunk (but I can’t validate what the person in the article said is true or not).

    There’s another problem that is posing a big threat on anime outside of Japan. Korean pop culture (ie: K-pop, and K-dramas) are gaining more mainstream popularity (and headlines around the world) thanks to the Hallyu/Korean Wave. I mean for the last few years, K-pop and k-dramas has been making South Korea “outcooling” Japan:

    http://www.cnn.com/2014/08/08/opinion/yang-korea-cool/

    http://business.financialpost.com/news/retail-marketing/how-korea-became-the-worlds-coolest-brand

    http://www.korea.net/NewsFocus/Culture/view?articleId=121047

    The worse part is that Japanese language classes in US colleges has been on the decline for the last few years (while at the same time Korean language classes jumped up):

    Sources: http://monitor.icef.com/2015/02/foreign-language-study-us-declines-first-time-20-years/, https://www.insidehighered.com/news/2015/02/11/mla-report-shows-declines-enrollment-most-foreign-languages

    So yes anime popularity in the west is now under question. It’s also being shadowed by the Hallyu/Korean Wave.

  5. Anime Motivation (@AnimeMotivate) says:

    You made some good points and even points most wouldn’t consider or think about. It’s not so much that Anime is dying, but it’s more like if things don’t change/adapt it very well could one day. Maybe. ]

    DVD sales will continue to decline and have been declining for obvious reasons.

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