Today, we are seeing a lot more Japanese anime TV series and movies being produced. A decade ago, I think each season (quarter) saw around 30 anime TV series. That number has since more than doubled, with over 60 series per season and going to around 300 series each year.
This is in spite of a shrinking population (and therefore, work force and market) in Japan. The main reason is that the market for anime has expanded, and streaming services allow Japanese anime to be easily distributed to viewers outside Japan. Better connectivity also allows Japanese production studios to contract people outside Japan to work on their anime works, whether these people are freelancers outside Japan, or entire production studios (usually in China, South Korea, and various countries in Southeast Asia). Globalization has expanded the market and available work force even though the domestic situation is in decline.
In the long term, though, I see such an approach leading to an overall decline for Japanese anime.
This anime boom now in Japan means that all the major publishers are trying to grab their share, as much as they can, as fast as they can. When profits relied on advertising and merchandise sales, the goal was to produce anime that people want to watch, that people want to rewatch, that people want to talk about and spend money on. The goal was, in short, to gain fans. However, today, the main source of income from anime comes from the sale of streaming rights. It doesn't matter anymore if anyone actually watches the anime (which helps to improve advertising income) or become fans and buy merchandise. All they need to do is be able to sell the anime's rights to a streaming service. Whether anyone watches it or not doesn't matter to the publishers; that's a problem for the streaming service.
What this means is that, if anything can be turned into an anime, it will be turned into an anime, whether there is a significant demand/audience for it. It is why we keep seeing a flood of light novels being adapted into anime, with each light novel being more or less similar to the other one. Will an anime adaptation help book sales for the publishers? Maybe. But probably not significantly. Will the production committee earn profits from merchandise sales? Yes, but again, probably insignificant. What is significant is the money that comes from streaming services. Because of the anime boom and tough competition, streaming services are grabbing series when they can; they don't want to be the only service that does not have a series should that series prove to become popular. Streaming services don't know if the goose will lay a golden egg, but they want to be at that table in case it does.
Which means that, for the time being, anime production committees will be able to earn money just by making more anime series for sale to streaming services. The influx of money also means that more and more production studios will be created to handle the increase in demand for new adaptations. If animators and other creators in Japan cannot handle the volume of work, a part of that work will be outsourced to freelancers and studios in other countries. For now, the money is there to be earned.
But streaming services also face tough competition, and buying streaming rights and producing their own original stuff cost money. With costs going up, and new subscribers not growing as fast due to intense competition, there will be a point when streaming services will need to start choosing the series that they pick up. This is further compounded by anime series having a range of quality. Because of the 300+ series available in a year, subscribers are not going to be able to watch them all. When they watch enough mediocre anime series in a row, they may lose their interest in anime. Some of them may even end their subscriptions. Loss of subscribers means less money for streaming services to spend on acquiring streaming rights. They will need to start being picky.
When the money starts falling, production committees will start seeing losses. Because it costs money to make those 60 series each season. This is a cost that, if not recovered through sales, becomes a loss. But when losses start, it is not the big publishers that close. No, the publishers will continue to launch production committees to make anime. But they will make less anime. Which means all those production studios will be fighting for a smaller pie. And some of them will start to close due to a lack of revenue. People who entered the industry during its boom will start to lose their jobs. Good animators may no longer be earning enough to sustain their living, and end up leaving the industry altogether for another job. Especially freelancers who work for several production studios, only to find half of these studios closing over a short period of time.
The result is an overall shrinking of the industry that may happen quite rapidly. The big companies at the top may feel a pinch, but it is the animators and other creators working day and night to support the industry that will end up suffering. When anime revenue falls, it is not the director or general manager in charge of anime at publishers that lose their jobs; the anime department is the one to feel the axe. The production studios are the ones that lose income. The animators and other creators are the ones that lose their livelihoods. And fans will not see the sequels to their beloved series (or may have to wait a decade or two).
There is a way to avoid this. If the big companies at the top can take a more moderate and balanced approach now, to start scaling down on trying to adapt every single light novel and manga out there, then we have a chance for the industry to become sustainable in the long term. But then, this approach relies on companies reining in corporate greed. That's not really going to happen. Sigh.
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