Ask John: What is the Biggest Threat to the Anime Industry?

Question:
What is the biggest threat to the anime industry? Is it pirating (I refer mostly to bootlegging), over saturation, reduced standards for a lot of mainstream anime, or even possibly an evolving view of the definition of anime to include Non-Japanese works?

Answer:
This is a very intriguing and complex question which I think will have different answers depending upon the perspective of the person responding. I may not be in a position to have as broad a perspective on the anime industry as necessary to comprehensively and conclusively answer. I’ll provide my own, objective theory based on my observations, but I have to clarify that my own perspective is limited by my own experience and knowledge. Furthermore, I think that there are two answers to this question because I don’t believe that the same threats equally affect the Japanese and American anime industries.

Here in America, the biggest problem that anime seems to face is one of costs and profits. The cost of acquiring and distributing anime now seems to frequently outpace its profit potential. The cost of distributing anime is increasing, but the profit generated by distributing anime in America seems to be decreasing. The cost to license anime has increased exponentially within this decade, but the number of people buying anime in America doesn’t seem to have increased in stride, and the amount that American consumers pay for anime has decreased. Multiple re-releases, series sets, and discount priced re-releases have encouraged consumers to pay less for anime while the cost of bringing anime to America has steadily increased. As a result, over the past several years there’s been a noticeable decline in the number of new anime series brought to America, and a massive constriction of the domestic anime industry. In practical terms, American distributors including Central Park Media, AnimEigo, Synch Point, Super Techno Arts, Urban Vision, Arts Magic, Pathfinder, 4Kids, Anime Crash, and Discotek have either withdrawn from domestic anime distribution, or have become virtually irrelevant. In 2006, the domestic DVD release of Final Fantasy VII: Advent Children alone outsold Media Blasters’, Geneon’s, and Bandai’s collective cumulative anime releases for the entire year!

Video piracy was an integral part of American anime distribution decades before America even had a professional anime distribution industry. It’s arguable that America wouldn’t have an anime industry if not for the influence of underground anime distribution. Bootlegs and fansubs helped anime come to America in the first place. These days fansubs are tremendously influential in establishing market potential. Shows with exposure and name recognition in America’s fan community have a bigger potential consumer audience than shows with no name recognition. Over saturation of the marketplace was a contributing influence to the current state of the American industry, but it’s not a major problem now, since the number of American anime DVD releases has nearly dropped in half within the past two years. And a broadening American definition of “anime” doesn’t seem to be a threat as anime influenced American programs like Ben 10 and Teen Titans don’t seem to be significantly cannibalizing domestic anime sales.

At this point in time, the biggest threat on the foreseeable horizon of the domestic anime industry is a further constriction of the industry. Fewer anime titles are coming to America, and they’re being acquired and distributed by a smaller number of companies. From the perspective of both an industry employee and an individual anime fan, more anime available from a bigger number of distributors offers more choice, diversity, and competition, but America’s industry seems to be heading in the direction of less choice and less competition because fewer domestic companies can afford to continue licensing and distributing anime. Costs are too high, and there’s not enough support from the American anime fan community to maintain the size and status that the domestic industry had just a few years ago.

The Japanese industry seems to face different circumstances. Japanese DVD sales declined in 2006, but anime seems to have suffered the smallest reduction. Video piracy has always been evident in Japan, and does have some impact on the anime industry, but doesn’t seem to be considered a threat which can jeopardize the entire industry. The biggest obstacle that seems to face Japan’s anime industry is a labor shortage triggered by low wages. Since the majority of Japan’s anime production studios are located in Tokyo, animators have to live in or around Tokyo, but entry level jobs in the anime industry don’t pay a living wage for the Tokyo area. As a result, the anime industry has a high turnover rate, and many young people looking for a job don’t even consider the anime industry because there are other jobs available with better pay and better benefits. The anime industry must restructure its pay scale, which is determinant upon corporate sponsors and home video distributors more than individual studios, in order to attract the talent and labor necessary to sustain itself.

Both of these problems are surmountable, and I don’t think that anime is bound to disappear from America or become extinct in Japan. But these are, I think, the biggest obstacles that face the current anime industry.