On the Shoulders of Giants

Is anime's global dominance a sign of quality and business acumen — or a total fluke of blind luck?

“Streaming giants battle for anime supremacy,” reads the dramatic title of a recent Japan Today piece. Over the last five or so years, Japanese animated content has emerged as the fastest-growing genre on American streaming platforms. As a result, the anime industry has exploded like never before, to the tune of an estimated three trillion yen in 2022. 

This success is rightfully celebrated by anime fans, who see it as a recognition of their tastes and identities. Even as something of a lapsed anime fan, I find it cool, too. I grew up on anime. I owe my current life to it – I wouldn’t have studied Japanese with the fervor I did without the incentive of understanding Mobile Suit Gundam, then unavailable in translation. On the surface, anime’s incredible spread abroad represents a pop-cultural triumph like few others. But at the back of my mind there has always been a lingering question. Is this really a quantum leap for Japan as a cultural superpower? Or is it simply a stroke of luck that anime happened to be in the right place at the right time at this particular moment in history?

There are many reasons why a form of expression made by and for Japanese youth has such power to bewitch global audiences. Perhaps it is because the Japanese market had a huge head start on creating illustrated entertainment for sophisticated teen and young-adult consumers. Older (meaning non-kid) fans of manga and anime emerged as far back as the Seventies in Japan. In the West, on the other hand, it didn’t become hip to like comic books and cartoons until the Aughts. Another factor could be that, due to the Bubble economy bursting in 1990, Japanese youth wrestled with the implications of a hyperaging, permanent-decline post-industrial society before their counterparts in Western democracies. Thus content created there might more naturally appeal to young people facing similarly bleak conditions post-Lehman, post-Corona abroad. By turns dark and inspiring, anime is the perfect escape for millions around the globe.

But that is philosophical musing. On a concrete level, I think one of the biggest reasons for the success of anime in the streaming era comes down to a less romantic, more logistical factor: sheer volume. In America, big prestige television series tend to top out at thirty or forty episodes. Really big ones might go a little longer; Game of Thrones ended on episode 79. But Japan produces an astounding amount of anime, and long-running series have absolutely massive back-catalogs. There are eight hundred half-hour episodes of Dragon Ball. One Piece has well over a thousand. And those are just the big series. Japanese studios together produce around 100,000 minutes of anime on average every year. This is catnip to binge-watchers and the streaming platforms both. 

So Japan has lots of content and the world has platforms hungry for it. Seems like a big win for the anime industry. but when you stop and look at it closely, it’s more like an unexpected windfall than it is a canny business maneuver. None of the giants battling for dominance – Disney+, Amazon Prime, and Netflix – are Japanese. One might argue that Crunchyroll, purchased in 2021 for a cool 1.1 billion USD by Sony Pictures Entertainment, is now Japanese, but it was created in America and is run out of America (and only warrants a one-off mention in the Japan Today piece to boot.) I don’t think a Japanese entity could have created anything like these streaming platforms. There are simply too many players in the anime industry to make it viable.

Anime is an incredibly high-risk business. It is almost impossible for studios to fund their own productions. Traditionally, anime is created through consortiums of stakeholders called “production committees.” These include the studios themselves, manga publishers, TV stations, music companies, toy companies, and whoever else wants to chip in for a piece of the pie. 

Pooling funds reduces the risk for all parties, and promotes “media mix” co-branding strategies that reinforce the success of the production. (You watched the show! Now read the manga! And buy the game! And collect the figures! And stream the soundtrack! And, and, etc., etc.) But it also makes it incredibly difficult for any single party to claim ownership and fully exploit the finished product for themselves. (It’s kind of like journalist Karel Von Wolferen’s classic The Enigma of Japanese Power, in which there’s no single person in charge at the top of the governmental system; the buck stops with no one and just keeps circulating around and around.) This has effectively prevented studios from leveraging successes into something bigger than simply keeping the lights on. It has also reduced those working in the trenches, the animators themselves, to near poverty.

In the West, the names of the production companies behind megahits are practically synonymous with the titles. Disney’s Snow White. Pixar’s Toy Story. Dreamworks’ Shrek. Illumination’s Minions. In 2020, a Japanese animated film with the unwieldy title of Demon Slayer: Kimetsu no Yaiba – The Movie: Mugen Train emerged as the single top grossing film on the planet. Yet few save for die-hard fans will know that a studio named Ufotable made it. (There’s a bit of apples and oranges here; Demon Slayer was work for hire, based on a smash-hit manga series rather than an original I.P., but still, you’d think a massive success like this would bestow a little more pull in the zeitgeist.) Studio Ghibli has been one of the few to break out of this death-cycle, and that’s why it is one of the only anime companies with major name recognition abroad, not to mention multiple theme parks in Japan. 

Streaming companies, starting with Netflix around 2017, effectively did an end-run on this process by acquiring exclusive rights to titles, or paying studios to make bespoke anime series exclusive to their platforms. This resulted in a bunch of offbeat experimental projects getting greenlit, which is kind of cool – I’ve always loved when anime gets weird. Deviman Crybaby, the modern update of the Seventies classic Devilman by Go Nagai, probably wouldn’t have gotten made anywhere but Netflix. But to date, no major hit has come out of this new system. 

And while money from streamers lets studios chart their own destinies, it’s an open question as to whether it’s really better for them than the traditional production committees. The trade-offs are very real and quite serious. In 2020, Anime News Network revealed that while Netflix may pay more to studios up-front in comparison to production committees, it keeps royalties entirely for itself. In essence, if your wonky little animated experiment happens to turn into the Next Big Thing, you get to watch from the sidelines while the streaming platform pockets the riches. In this kind of situation, studios actually stand to do better (or more precisely lose out less) the worse their series perform. It isn’t quite on the level of Max Bialystock in The Producers praying for the failure of his own Broadway show, but it’s adjacent.

Now, that Anime News Network report was two or more years ago. The contract and bonus situation may well have changed. Hopefully. Studios could and should be negotiating better deals for themselves now. But it’s tough to square the upbeat reporting of late with stories of just a little over six months ago. That’s when Toyo Keizai described “a growing sense of unease in the anime industry” towards over-reliance on Western streaming sites. Could Japan be at the cusp of another bubble – this one animated rather than financial? It’s easy to gloat over the financials – a three trillion yen industry isn’t anything to sneeze at. But for those actually making the stuff, the situation better resembles the setup of the anime smash Attack on Titan: a world in which the dwindling ranks of humans animators live in world dominated by fearsome giant streaming sites, with long-term prospects hazy at best.