Is anime really dying?

The 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.

A 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.

Another 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.

Another 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.

An 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.

A 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.