Ask John: Is the American Anime Industry Dying?

Question:
Is the anime “boom” or fad finally dying in America? I’ve noticed that some companies have stopped releasing as many volumes of their DVDs or mangas, and that some people like CPM have stopped some of their lines due to poor sales. Another rumor I’ve heard is that DVD sales are down for anime. So is the anime fad finally dying? Or is it doing the opposite and growing?

Answer:
Before any reader takes my theories too seriously, I want it to be clear that they are nothing more than speculation. My observations are ones from someone who’s a professional in the anime industry, but not an “industry insider.” My professional affiliation affords me a more comprehensive view of the American anime industry than is available to many other fans. But there are also countless professionals, and even amateur anime fans in the domestic fan community that are more “connected” than I am. So my perceptions are based on only my own observations, knowledge and suspicions. With that said, I’ll attempt to provide an objective, factual response peppered by my own, subjective thoughts.

For years I’ve stressed that the American anime community is not as big as many American anime fans believe it is. The American anime industry is estimated to have been worth roughly $500 million in 2004. By comparison, the American video game industry earned over $9 billion in 2004. That may help put things in perspective. During the early years of this decade, roughly 2000 until 2002, the massive mainstream American success of Pokemon and Dragonball helped the American anime industry double in size. But when Dragonball ran its course and mainstream interest in Pokemon died off, the American anime industry shrunk to a less artificially inflated size. With current anime television broadcasts exposing more mainstream viewers to anime, I have no doubts that the size of American anime fan community is expanding, but I don’t think it’s expanding as quickly as most Americans think.

I firmly believe that the foundation of America’s anime fan community lies in individuals who are deeply devoted to the appreciation of Japanese animation. So regardless of where the American anime industry goes in the future, a core American fan community will always exist. Where there’s a market, there will be an industry to satiate that market. Anime has established itself in America effectively enough that there will always be an American anime distribution industry, but lately there have been signs of a potential major upheaval in the American distribution business. I don’t know for certain how massive or how obvious this shift will ultimately be, but it seems to have already begun. Before citing concrete examples, it’s necessary to explain a precise context for them. There are signs that the American anime industry is constricting and beginning to suffer the consequences of its own excesses. The profitability of the American anime industry seems to be decreasing as a direct result of the industry’s own policies and the actions of consumers influenced by the American anime industry.

There’s been some recent discussion in the American fan community over the announcement from Bandai Japan that American Bandai Entertainment sales have remained steady or increased while profit has significantly decreased. Central Park Media has canceled numerous titles and laid off employees. AD Vision has directly run a sale offering consumers select ADV DVDs at up to 75% off. An un-named industry representative has been quoted to say that anime titles that would have sold well in former years do not sell well in the current market. Toei Animation has announced plans to begin distributing some of its anime titles directly. Shueisha has licensed the Naruto anime to its own domestic subsidiary. Bandai of Japan has done the same. Shueisha is condensing its American subsidiaries ShoPro Entertainment and Viz. Manga Entertainment has been absorbed by a larger company. FUNimation is in negotiations to be absorbed by a larger company. These and many other circumstances imply that the American anime industry may be losing money. If sales remain steady but profit decreases, it’s possibly because chain retailers are paying lower wholesale prices in order to pass along lower retail prices to consumers. Companies including AD Vision, Media Blasters and Central Park Media are heavily discounting releases and constantly re-releasing titles presumably in an effort to squeeze out whatever profits they can possibly get. Japanese companies may be moving toward distributing their own titles in America in an effort to cut out the middle man. If there’s less profit to be earned in the domestic industry, we may be seeing Japanese companies that own anime attempting to collect profit directly instead of filtering it through domestic distributors. At the same time, the massive number of anime titles available in America, and especially the frequent re-release of titles, are a boon to fans but are also flooding a small market and cannibalizing the anime industry’s own sales and ultimately its potential. As Geneon representative Nobu Yamamoto says in an interview in the April/May issue of Anime Insider magazine, “Companies are going to be more selective in what they release… Five years ago, there was a huge demand for just anything because there wasn’t as much of a saturation. But consumers are savvy now. They know what’s going on, what the buzz is behind and they’re going to key in on those.” Fans may argue that “mid-range” titles aren’t worth supporting, but when consumers only buy “top tier” or high profile releases, the result is fewer anime titles being released in America, and an industry that can’t afford to release a wide variety of anime domestically.

It’s not my intention to lay blame or be alarmist. I’m only pointing out facts. I have no fear that the American anime fan community is shrinking. If anything, it’s expanding. I have no reason to believe that the importation of anime into America will suddenly cease. However, there do seem to be unmistakable signs that the American anime industry isn’t growing exponentially, and may even be shrinking in some vital areas. There are more and more anime titles being released in America, but each release seems to be selling fewer copies at a lower price. If that is indeed the case, there’s simply no way that the American distribution industry can continue to survive on the strategy its employed over the past several years. I think that much of the industry itself is beginning to recognize that its excesses have undermined some of its long term stability. The future may prove me mistaken, but I believe that the domestic anime industry is finding itself forced to constrict and become less prolific, more corporate and less responsive to the small American hardcore fan community in order to remain profitable by streamlinging the distribution process.