The anime industry achieved unprecedented financial milestones in 2023, with a record-breaking market scale of ¥3.3465 trillion, marking a 14% year-on-year increase, according to the Association of Japanese Animations (AJA).
However, despite this impressive growth, a significant portion of anime production studios continued to face severe financial challenges.
AJA reported that 32% of production studios operated at a loss, underscoring the stark disparity between the industry’s booming revenue and the struggling production sector.
Rising Profits, Rising Problems: Paradox of Japan’s Anime Studios
While the total market value reached ¥3.3465 trillion in 2023, production studios—responsible for the core creation of anime—received only ¥427.2 billion, or 13% of the total market scale.
This imbalance stems from the production committee system, where large corporations such as broadcasters and advertising agencies come together to fund anime projects.
These entities pool resources to cover the high costs of anime production, which can range between 300–600 million yen for a 12-episode season (25–50 million yen per episode).
While this system reduces financial risks for investors, it comes at a cost for production companies. The committees retain intellectual property (IP) rights, allowing them to reap long-term profits from merchandise, streaming, and licensing deals.
Production studios, on the other hand, are often excluded from these committees, especially smaller or emerging studios.
Without access to IP rights, these studios must rely solely on one-off production fees, which cover the immediate cost of creating an anime but do not guarantee sustainable profits.
This leaves studios with no share in the lucrative downstream revenue streams, such as global merchandise sales or international streaming royalties.
Naoki Ishikawa, deputy secretary-general of AJA (51), explained that production studios are in a weak position and cannot negotiate for higher allocation shares, even if the distribution is small.
While 45% of production companies reported increased profits in 2023, the growing gap between successful studios and struggling ones continues to raise concerns about the sector’s sustainability.
Challenges for Smaller and Emerging Studios
There are 811 animation studios across Japan (as of a 2020 AJA survey), nearly double the number from 2011. Among these, about 100 studios play a central role in planning and production. These studios are often referred to as prime contractors.
Established production studios with a track record have managed to secure higher production costs and, in some cases, invest in Production Committees to hold intellectual property rights, allowing them to earn long-term profits from merchandise sales and other avenues.
MAPPA is a prime example in this case, having invested completely in the Chainsaw Man anime. However, sometimes these moves too don’t pan out as expected.
However, smaller or newer studios face significant barriers to financial success under this system. They often lack the track record or resources to secure a seat on production committees.
This leads them to accept low production budgets to remain competitive and forfeit intellectual property rights, further restricting their revenue potential.
As a result, these studios operate on razor-thin margins, making it difficult to invest in better equipment, training, or wages for their workforce.
The imbalance becomes even more stark when looking at the profitability of production companies. In 2023, while 45% of production companies reported increased profits, a significant 32% operated at a loss, as mentioned before.
This growing gap between successful studios and struggling ones threatens the sustainability of the anime industry, as smaller studios often lack the resources to weather financial difficulties.
Broader impact of the disparity:
The concentration of power within production committees not only exacerbates revenue disparity but also impacts the long-term health of the industry.
Creating an anime involves hundreds of artists per project. It is production studios, not Production Committees, that pay their wages.
When sufficient revenue is not distributed, wages remain low.
An October 2024 report by Nikkei Business emphasized that production studios operating under a production committee model often operate under severe financial constraints.
According to the report, these studios find it difficult to raise wages for animators or invest in long-term growth without going broke themselves.
With studios receiving only 6% of overseas sales revenue and 16% of domestic sales revenue, many rely heavily on subcontractors to meet production demands.
However, subcontractors face even greater challenges. With limited financial returns trickling down the production chain, many subcontracting studios operate at a deficit.
This reliance on subcontracting exacerbates the financial instability of smaller studios, creating a cycle where the most vulnerable players in the industry are left to bear the brunt of its challenges.
Animator Wages and Workforce Challenges
Amid these financial pressures, the impact on animators is severe. Entry-level animators earn an average of 1.5 million yen ($10,000) per year, according to the United Nations’ May 2024 report on Japan’s animation industry.
This low pay has led to high turnover rates, with 25% of animators leaving the industry within four years and 68% exiting within eight years, as noted by the Japan Research Institute (JRI).
This exodus of skilled workers has led to a shortage of technical expertise, hindering the production of high-quality animation. As a result, studios have increasingly outsourced work overseas to manage production demands.
Moreover, the UN report found that nearly 31% of the workforce in the animation sector operates as freelancers or independent contractors.
These artists lack labor protections and are subject to excessive working hours and unfair subcontracting practices.
While Japan’s recent labor reforms have reduced working hours, the financial situation for studios has worsened. In 2017, 30% of animators worked over 260 hours per month, but by 2022, this number dropped to 10%.
Despite this improvement, reduced overtime has squeezed studio profits, making it harder to meet the growing demand for anime, particularly from international markets.
What next?
Japanese government unveiled plans in June 2024 to support the creative industries, including anime, under its Cool Japan strategy.
The initiative aims to grow the industry’s market scale to ¥20 trillion by 2033 by supporting young creators, addressing unfair trade practices, and enhancing collaboration with international law enforcement to combat piracy.
Prime Minister Kishida emphasized the need to promote anime worldwide while ensuring fair revenue distribution across the production chain.
However, industry veterans remain skeptical about whether these measures can address the entrenched issues within the production committee system.
While the anime industry’s growth reflects its increasing global appeal, the financial struggles of production studios reveal a troubling imbalance.
Without systemic reforms to address revenue disparity, improve working conditions, and support smaller studios, the industry risks losing its creative talent and undermining its long-term sustainability.
The question remains: Can Japan’s anime boom translate into a sustainable model for those driving its success, or will the industry’s structural flaws lead to further financial strain for its creators?
Source: Tokyo Shimbun
