Risky Business

The Japanese anime industry represents an extremely high-risk business. Only one in ten productions ever turns a profit, meaning that banks are reluctant to loan anime studios working capital. This has in turn forced studios into arrangements with investment consortiums called "production committees," in which they secure the bare minimum required to animate a show or film by trading away their rights to the other committee members (which include  television stations, advertising companies, toy companies, DVD publishers, comic book publishers, etc.) This system has funded nearly every anime produced in the country, including more than a few considered to be classics. It has also largely reduced the people who do the actual work of animation to poverty.

A recent working paper written by Robert Dujarric and Andrei Hagiu for the Harvard Business School lays out the problems facing the anime industry in stark, depressing detail (download PDF here). It is study of how hierarchical organizations can "lock out" innovation, stifling a company's ability to grow -- and one of their prime cases in point is that of Japan's domestic animation industry.

Fans tend to romanticize the anime world as one of unbridled creative freedom. The reality is a vicious cycle in which production committees not only dictate the content (as they will only fund the series they feel are solid investments) but keep the majority of the profits (as animation studios have traditionally only been paid a fixed sum, without royalties, for their work.)  The vast majority of the men and women who actually create the stuff toil in poverty and obscurity, because they are at the absolute bottom of the food chain.

Flip ahead to section 3.2 (page 20) for the bits about the anime world. While the government has taken a few tentative steps to address the massive inequities in the industry, these are essentially band-aids. As things stand, no Japanese animation company can ever flourish into a "Disney of the Orient," as Toei Doga boldly declared they would become in 1956. (Half a century later in 2005, Toei's revenues were a fraction of their competitor: $175 million to Disney's $32 billion). If Japan wants to bank on its "Gross National Cool," it will have to overcome the inertia of a system that has essentially reduced its most talented architects to the level of beggars.

Comments

[Tim Eldred]

So here's a question then...if I buy anime merchandising (books, CDs, DVDs, models, etc) the money stream STOPS with the licensor? No amount of that actually goes back to the creators or the artists? That's what is implied by the 'production committee' model.

By that reckoning, the best-case scenario is: I see an anime I really like (let's call it show A), I buy all the merchandise I can find, and the money earned from that MIGHT be used (by whatever committee member gets it) on a future production that may or may not involve the same creators.

I *think* I'm voting with my dollars to support show A, but I'm actually just encouraging the profiteer to back show B in the future. And show B could be nothing at all like show A. Meanwhile, the creators of show A only have the incentive of doing a good job so they might get to work on show B if and when it comes along. And even then, they'll only get a subsistence wage.

Dude, that's sick and wrong. Then again, it's not so different from my job. My incentive is to do good work on show A so I can get hired again for show B. The difference is, I probably get paid a lot more than the creators whose work inspires me. And the production committee in American animation is a lot smaller; studio & network.

[Ray "AcroRay" Miller]

Gad, Matt - that has to be the most depressing, sobering thing I've read is a season of depressing, sobering economic reporting...

(So, the fansub community may only be stealing profits from the coffers of the production committees...?)

[MattAlt]

I would really hate for anyone to twist the above into some sort of justification for torrenting/fansubbing, because the industry needs all the money it can get right now.

Tim: is there a union for animators in the US that guarantees (or at least lobbies for) a living wage for people in the industry? Something like SAG for people in your line of work?

[Tim Eldred]

Absolutely. It's the Animation Guild, local 839, of which I am a grateful member. They manage my pension and 401k, and protect our wages from corporate scumbags. They are the ones who guarantee that I make more money than Japanese animators who are ten times more talented than I.

"The industry needs all the money it can get right now..."

Yes, but what IS the industry? If the production committees get all our dough, that makes them the industry, yes? Even though they do none of the actual work?

[MattAlt]

It's true. Of course, I agree a greater share of the profits should go to the people actually making the stuff. What I meant was, I'd hate for this to further inflate the already inflated sense of entitlement a lot of American anime fans seem to have about their personal access to anime.

[Francesco Fondi]

"Yes, but what IS the industry? If the production committees get all our dough, that makes them the industry, yes? Even though they do none of the actual work?"

Welcome to capitalism guys!

---

Beside Disney, are there others animation giants in USA?

Disney stopped producing 2D animation movies several years ago so I wonder if it's still right to consider Disney as a "classic" animation company or a 3D animation power house (know as PIXAR)...

[Tim Eldred]

Define animation. Is 3D not included? If it is, Pixar is the undisputed leader followed by Dreamworks. This is just in terms of volume, though it's possible that DW actually makes more movies than Pixar. But I don't think anyone even IN the industry considers them the leader.

Diz has The Princess and the Frog coming, which is a return to 2D. I wish them luck, but I'm completely uninterested.

Then there's TV animation. Nickelodeon probably has the most production going on, followed by Cartoon Network. Then there's WB and Film Roman (I do work for both) with a handful single-show shops scattered here and there.

In terms of most successful, Nick is the clear leader in volume and ratings, though you gotta give it up to FR for two non-stop decades of the Simpsons. See, it all depends on your definition.

[math4origami]

But, what about the cultural impact of said media? While places like Akihabara are not the norm in Japan, there still exist much programming on TV, advertisements on billboards, stores that sell merchandise, 7-11 that sell serialized magazines, bookstores that have over half their stock full of manga, some of which get made into popular anime. Comics in the US are no where near as pervasive. You won't find as many stores selling Pixar merchandise as Gundam merchandise in Japan, per capita. Yet, all the money from sales of physical merchandise is not going toward the animators that produce the original TV shows that attract the viewers that build some emotional attachment to these fictional characters that cause the viewers to buy the merchandise that makes the money.

[Ray "AcroRay" Miller]

[Just a note: I didn't intend to use the situation as a justification for the fansubbing argument. There was just a certain irony there that came to mind.]

[Tim Eldred]

Maybe we were looking at it backwards all this time. The tail isn't even wagging the dog. The dog is the tail.

tail = animators
dog = production committees
us = dog walkers

[MS]

The only way I can think of helping the animators as a consumer would be to buy their sketches/manga at conventions like ComiFes.

But that is limited to those in Japan, twice a year. Maybe some international cons can invite them as guests to provide support?

Any other ideas? I plan to spend up big when I visit Japan in September but I'd like to support the industry in the best way possible.

[Daquan Wright]

I've been reading up on the anime industry a lot lately, I wasn't aware that the industry was so poor. I must say that in a world where you may have to beg your parents for some money...well it's pretty disheartening, especially since a lot of companies are in Tokyo (one of the most expensive cities in the world).

But if we can't help the creators make a better living by buying more anime, they still get the short end of the stick.

[MattAlt]

I wish I had an easy answer to the question of how best to support one's favorite animators and animation companies. I think the best anyone can suggest now is "hang in there." The issues are simply too deep and ingrained to be addressed by consumers alone; it's going to take a sea change in the way anime is distributed and consumed (which is already happening to a degree) to reboot the system.

[adn]

I think they should move to the Radiohead model and declare digital distribution with a request for payment. Make it explicit: if you don't pay a few bucks for the show you're gonna watch, there won't be a next one. I actually think it would work, and a lot better than avoiding the Internet is going to when everyone gets all their anime free there.

As a sidenote I find it interesting that this article is so venal when the Gundam mech designer is sort of like "fuck it" when it comes to money. It just seems kind of gauche for Americans to moan about someone else's lack of money. I'm not going to state something unilateral and cliche about the drive of starving artists, but I'm also not so hasty to wish government subsidies on them. I think anime's real issue is more that it ultimately decided it even WANTED to be so commercially successful. Practically the only saving grace is that many big blockbuster hits like Haruhi and Eva have been so idiosnycratic, so slavish imitation is somewhat impossible.

[The Dark Magician Knight]

expecting people to pay for media is a bit too idealistic. The option already exists for people to pay for movies and music, yet piracy continues to climb.

simply telling people that they risk losing quality in the artform through being unwilling to pay, will not make much of a difference

[Gundam Wing]

Avoiding the internet is absolutely impossible.
These company's have to try and take profit of all the new online marketing posibilities.