How Japanese Anime Became the World’s Most Bankable Genre – The Hollywood Reporter

The coronavirus pandemic has yielded many surprising insights for the global film and TV business. One of the most curious new facts to emerge is that Japanese anime might just be the world’s most COVID-resistant form of popular entertainment.

During the height of pandemic lockdowns in 2020, when total U.S. box office sales fell 80 percent for the year and Japan’s theatrical market slipped 45 percent, Japan’s total anime industry contracted just 3.5 percent, with a total market value of about $21.3 billion (more than 2.4 trillion yen). In that same fraught year, the anime business also produced its biggest theatrical hit of all time: Demon Slayer the Movie: Mugen Train, an action-packed period fantasy that earned nearly $48 million in North America, $365 million in Japan and $504 million worldwide, becoming the biggest theatrical blockbuster of any kind in 2020 (it beat the Chinese war film The Eight Hundred, which took in $461 million in its home market). And the outsized earnings for anime have only continued. The top three titles at the Japanese box office in 2021 were all anime hits; and Jujutsu Kaisen 0, a dark fantasy anime based on a manga series of the same name by Gege Akutami, brought in $106 million there earlier this year, as well as a healthy $34 million in North America for a $187 million worldwide total.

According to consultancy Parrot Analytics, global demand for anime content grew 118 percent over the past two years, making it one of the fastest-grow- ing content genres throughout the pandemic (the firm measures its demand metric by combining consumption data with social media activity, social video and independent research).

“Even in pandemic times, still the anime market thrived,” noted Kana Koido, a partner at Japanese indie distributor The Klockworx during a recent panel discussion at the Far East Film Festival. “Japan is such a unique market, where even though total box office in 2020 was almost half of what it had been in 2019, still there was this rare content that did better than ever.” 

Those who are tapped into Japan’s anime industry say the precursors for these boom times have been building for years. During the decade before the pandemic, from 2009 to 2019, Japan’s anime industry doubled in total market value to $22.1 billion, according to the Association of Japanese Animations.

The key force behind such growth has been a widening demographic embrace of anime culture, both within Japan and among consumers virtually everywhere. Once the province only of otaku — Japan’s hard-core anime and manga fans, formerly stereotyped as socially awkward misfits too absorbed in their fantasy worlds to participate in “normal society” — anime is already far along the well-trodden path of niche subcultures that have found themselves suddenly embraced by mainstream society as the next cool thing.

“Over the past five to 10 years, in Japan and in the West, there’s almost been this anime renaissance that has happened, where it went from being this thing you would get bullied for liking to being something all kinds of people want to talk about,” says 27-year-old anime influencer Joseph Tetsuro Bizinger, who goes by Joey The Anime Man on YouTube, where his channel has grown over the past decade to 3.2 million followers. “It’s going through this motion that gaming went through in the 1990s, where if you played games you were a nerd, until suddenly everyone played games. That’s why anime films are just becoming such a massive thing. It’s not just a few nerds from your class who go see [the latest anime release] — now the entire class is going to go.”

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‘Jujutsu Kaisen 0’
Courtesy of Crunchyroll

Bizinger adds: “And I think that’s the big reason why the streaming sites are trying to get as much anime as possible, because they see the bigger potential in it now.” 

During the AnimeJapan convention in Tokyo in March, Netflix revealed that it would launch 40 new anime titles, spanning a growing range of genres, in 2022 alone. Characteristically, the streamer had data to justify the expansion: In 2021, over half of all Netflix subscribers worldwide watched at least some anime content on the platform. 

Other platforms report the same findings. 

“We’re seeing more and more appetite for anime throughout all demos, in all countries,” notes Gaku Narita, executive director of original content for Japan at The Walt Disney Co., which is also in the process of dramatically boosting its output of licensed and original anime titles on Disney+. “It’s increasingly becoming a borderless form of mass entertainment.”

But anime also continues to operate by its own unique logic. Setting it apart from most forms of filmmaking, anime’s theatrical earning power has been enhanced rather than eroded by the streaming revolution, which continues to increase the accessibility and awareness of key titles, while also shortening the cycle between the release of hit anime TV series and the spinoff feature films that typically follow in theaters. And anime’s strong fan culture and the event-like nature of its releases would seem almost tailor-made for a moment when the theatrical model more than ever needs to emphasize the benefits of the in-person communal experience. 

“The atmosphere of going to the theater to see anime is very different from watching a normal Hollywood film,” notes Asa Suehira, chief content officer at anime streamer and distributor Crunchyroll, which has been building the U.S. anime audience for years by making Japanese TV releases instantly available via simulcast. “People dress up in cosplay, they scream from the crowd when their favorite character comes onscreen or sing along with the songs,” he explains. “It really is more of an event than just watching a movie.”

The anime boom times have sparked a predictable wave of consolidation and dealmaking in the sector. Last year, Sony Pictures Entertainment acquired Crunchyroll, one of the largest U.S.-based anime specialty streamers, for $1.2 billion from AT&T. The Japanese conglomerate has since merged Crunchyroll with Funimation, the anime streaming service it already owned, creating the largest specialty platform devoted to the subculture. AMC Networks followed in January with the acquisition of Houston-based Sentai Holdings, a global supplier of anime content and merchandise, best known for its popular anime-focused streaming service, HIDIVE. Meanwhile, Hulu and Amazon Prime Video also continue to expand their anime offerings, while HBO Max, which has yet to launch in Asia, is known to be lining up licensing arrangements. 

Anime also appears to be immune to the recent reassessment of the streaming business model — at least so far. Netflix’s disappointing first-quarter financial results, which entailed the streamer’s first subscriber fall in a decade and a 25 percent plunge in its share price, have only increased the value of anime. 

While Netflix is trimming its profligate content spending in most areas, it’s likely to spend more on anime. The U.S. and European markets are believed to be fully saturated for Netflix, but Asia Pacific is the one region where the streamer still has headroom for growth — and it’s the area of the world that watches the most anime. As subscribers stalled or fell virtually everywhere else last quarter, Netflix added 1.1 million Asia-based subscribers. And as the world’s third-largest economy, Japan, in particular, is a vital growth territory. Just 5 million of Japan’s population of 121 million people currently subscribe to Netflix — but 90 percent of those who do subscribe watched anime in 2021, the streamer recently reported.

A similar logic will apply to to the various other Hollywood and Silicon Valley streamers that are now clamoring for growth in the region.

Predictably, as in so many other areas of the economy today, the torrent of global demand has spiked prices for the finite exist- ing supply of top anime titles and production partners. 

“The overflow of capital isn’t necessarily a great thing — because of the relatively small size of the industry and the number of people who are working in it and actually drawing the frames for these shows,” says Netflix’s creative director of anime, Kohei Obara. “It’s not like we can have twice or three times more of them instantly, just because the money is there.” 

Obara estimates that there are only about 5,000 anime artists and creators at work today in Japan — a figure that shows how profoundly Japan’s creative community already punches above its weight on a global basis. (The U.S. is estimated to have thousands more, with Disney’s Pixar — just one of the many Hollywood animation giants — employing a staff of more than 1,200.) 

The cascade of foreign investment has brought benefits too, though. Despite its centrality to Japan’s popular identity, the anime industry has always had a darker side — studios known for punishing hours, exploitative conditions with few benefits and a workforce that many employers viewed as disposable. Companies that violate Japan’s labor laws in this way are referred to as burakku kigyō, or “black corporations,” and Tokyo’s anime world was once notorious for them.

“If you take a snapshot at some particular point in time, then you still see some of those old antiquated ‘black’ conditions existing throughout the industry,” says Disney’s Narita. “But overall, the influx of capital has really brought on a lot of positive changes. It’s not just the select few who are getting rich; the artists on the ground are starting to make decent money.” 

The boom should bring exciting developments for fans as well, aside from easier access to titles. Production budgets for premium anime projects have increased anywhere from one and a half 

to three times, insiders say. And with ever greater demand for their talent, top anime artists are experiencing greater creative freedom than ever before. 

“There are more and more opportunities and options for distribution, which has really increased production budgets,” adds Genki Kawamura, one of anime’s most prominent producers, who works regularly with leading artists like Mamoru Hosoda (Mirai), Makoto Shinkai (Your Name) and Tetsurō Araki (Netflix’s latest anime feature, Bubble). “That means that there is more breadth to what we can express creatively — which is a really great thing.” 

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‘Evangelion: 3.0+1.0 Thrice Upon a Time’
Courtesy of Toho

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