I subscribe to Robert's Anime Corner's weekly e-newsletter which is delivered every Friday night (US time). So this was what came up in today's edition.

RAC Weekly Newsletter

Yasuo Yamaguchi, managing director of The Association of Japanese Animations (AJA), described the anime industry as a "bubble several years ago that burst" in an industry report that came out in Japan this week. He added that he thinks that the industry is heading from times of surplus toward restructuring (ya think?). AJA reported that the number of anime television programs rose from 124 in 2000 to a historic high of 306 in 2006. However, that number has since fallen to 288 in 2008. In 2006, a record 60 anime programs premiered in April, but only 30 anime programs were expected to premiere this past April, a 50% decline.

Well, it's good to see that the Japanese are finally speaking publicly about what we've known for more than two years. Let's face it, too much of a good thing is almost always bad. The consensus in Japan going forward is that Anime production must now focus on quality over quantity, something we've also known for several years. The worldwide anime market NEVER had the potential to support anything close to 300 shows a year, and the Japanese producers never had enough resources to make even a fraction of that into good shows. Even back in the 90's I remember that they had to produce about 100 shows a year to give us 25 or 30 that were actually worth purchasing. I will say that I think the theory in the fan community is way over blown that publishers failure to adapt to a digital distribution model is the culprit for much of the contraction in the industry - rather than the negative influence of fansubs and P2P which have made it extremely difficult to monetize Anime in a digital environment. Free Anime is never going to inspire good Anime. What many fans and studios alike never want to admit is that the real problem the industry has had for several years now is that unadventurous studios have caused the overall Anime audience to contract by churning out too many recycled moe (aka: character fetish) and mecha Anime rather than take risks and explore new ground. It's a creative art after all. Hollywood could take a lesson from this as well.

Additional Reads (additional materials which I looked up which are related to the above):
ANN: [ Anime is a Bubble that Burst]
The Japan Times: [ Future of 'anime' industry in doubt]

Misc. Info

An interesting graph from an Asahi Shimbun article reporting that industry insiders are claiming that the “anime bubble has burst”



The top part with the red line shows the number of new works of anime produced each year since 2000. The bottom part shows total sales for the anime industry, with the darker blue section of each bar representing anime aimed at a general audience and the lighter colored section representing anime for kids. Both graphs show a decline since 2006.

Sources : http://blog.livedoor.jp/dqnplus/archives/1258998.html

Just to keep the main articles from getting mixed up with the commentaries.

My take on this?

Too many anime chasing too few resources. Quoting from ANN, AJA reported that the number of anime television programs rose from 124 in 2000 to a historic high of 306 in 2006. However, that number has since fallen to 288 in 2008. Still a lot of anime being produced in my book. Rather than spreading resources thin over too many lackluster titles, cut down the number of output (this is already happening), thereby increasing the resource allocated per title to at least come up with original megahits with the potential for merchandise. tie-ins, royalties, etc on the level of Evangelion (might be asking for too much here).

Rehashing. How much of a good thing is a bad thing? Are we sure that everyone loves moe? Or fanservice? But does the industry needs so much of it? An individual might not mind the moe/fanservice overdose but on aggregate, is it overkill? An online community is only a small portion of a larger anime watching audience but does it represent the taste/infatuation/fetishes of the larger unknown audience? If the domestic anime industry is suffering from declining sales, is it due to the lack of interest on the consumer's part (aside from expensively priced DVDs) as a result from being over-exposed to such elements up till the point of developing the "seen them once, seen them all" mentality? People who have watched the series on TV just aren't keen to pick up the DVDs it seems. Again, lackluster titles are partly to blame as they try to bank on cliches/fads/fetishes to pull in viewers. Heck, even deciding which fansub title to follow is a pain since the choices available for this season aren't exactly appealing. Good ones are far and few in between. The rest are just eye-candy material good for a first watch but not really something worth spending a single penny on due to low re-watch value.

Personally I feel that the anime industry is in dire need of a large infusion of creative thought. Each season when I look up what's going to be released, the descriptions never fails to mention the words "Adapted from a popular manga/light novel..." or "Adapted from a popular game...". Whatever happened to original titles not born out of any printed or game medium? Back then, we had a good mix of both original and adaptation titles. I miss those good ol' days. Not that adaptations are a bad thing as the nineties had its fair share of good enjoyable adaptations but lately there's just too many of them. When constraint by an episode count, if unlucky, the anime tends to end up either;
01. hanging halfway through; <- the must read the manga/play the game to know the whole story type
02. rushed to come up with some original (unsatisfactory) ending; or
03. a combination of 01 and 02

So what moves have been made by the anime industry? Simultaneous broadcasting via sites like Cruncyroll and Hulu is a good move but at present, it is only limited to R1 viewers, which is a big annoyance. Would be great if they could open up to the other regions as well. And I don't think I'd mind paying for a high quality download to keep on my HD even if it is a week later than the broadcast. If people are willing to legally buy music off iTunes , then can't the same model be applied to anime as well? Online distribution seems to be the buzzword lately and touted as the next gen business model (at least that is what iTunes seems to represent).

The drop-off could have been affected partially due to the decline in the economy last year, with less people going out to buy DVD's and merchandise and whatnot, but there's certainly more causing the drop.

I think what we need to wonder is why was there such a huge surge in 2006? In my eyes it's just a time when animes like The Melancholy of Haruhi Suzumiya and Code Geass helped boost the anime industry. It certainly seems like we need really creative and experimental animes like Neon Genesis to get money into the industry. Whether or not fan service and the like work to help boost the industry, I have no idea, but there are certainly people out there who buy that kind of stuff.

I definitely agree that companies took time to catch on to the fact that technologies like YouTube, P2P and far more superior than physical mediums such as DVD's. I took a course in university last semester and I found that the Internet has become a medium for successful dissemination entertainment media, anime being one of them, yet P2P and fansubs are generally frowned upon and blamed for the loss of money. While loss of profit through fansubs is true, it is also true that it took the industry long enough to realize the potential of the Internet. Now we're seeing different forms of broadcasting through the Internet, like how some shows may be shown on the Internet if you pay for them during the time of the broadcast, but are available for free after a week. YouTube has become a place for companies to upload their own videos, like Haruhi-chan webisodes Kadokawa is currently airing. I think very soon companies will find a way to make profit by airing their shows through the Internet instead of the television and then buying the DVD's later on.

I personally don't think that the bubble has burst quite yet since I don't think the graph shows a huge downhill cliff, but if it does continue to go down then it's a worry, so I guess companies should really play it safe and come up with something to boost their sales. It's true that a lot of non-original animes are constantly being aired, stuff adapted from light novels, visual novels, and manga but I don't particularly think they're all bad. While some people can choose to read the manga and not watch the anime, that's where it could hurt, but I don't think that's a reason to not make it since there are tons of people out there willing to watch and buy the entire franchise. These adaptations have been around for a good part of the 21st century and some have been successful like Haruhi. There are also some original works being released like Tengen Toppa Gurren Lagann and some others so I don't think they're completely dead yet, although a rise in the number of original works should help, but I wonder how hesitant companies are at creating original works.

Well, I mean,... all I can say is, those several Animation companies in Japan are fighting for their survival, man. They don't wanna lose their jobs. And who would take the risk to create something new when there is a lack in budget or the risk in losing 99% of their investment to it. I mean, that's quite understandable when no company would wanna take risks... because most of the Animation companies around the world are simply poor. They are no Powerhouse like Disney who has built up a long-term reputation. Those companies can take risks because they are better prepared for financial crisis and for compensation.

It seems to me, that Anime and Manga are on a negative trend, even in its own country because, we have got other things to worry about than watching Animation.

I mean in order to reduce that bad situation, most people who once dreamt about being Animation artists should really get another job because Animation is not the way to survive especially in an economic crisis that affect all around us in the world

Similar things can be discussed in here:

http://www.animepaper.net/forums/AnimePaper/65704

I don't think that I'm ready or expert enough to enter this discussion at the level of current discussion, but I don't buy, the economic downturn argument. Let's be more honest. Japanese culture has supported manga as a media outlet form for at least a 100 years, and anime has been around since television became commonplace in the 1960's.

As a very young child I remember watching, Speed Racer in the morning as the older kids went off to school, and later coming home from school and watching Speed Racer reruns when I was in the second grade.

This is not the first economic downturn that anime has been forced to endure. It's an enduring art form that is more than capable of securing more fans, and freshly minted ones at that. The idea that the studios and artist are at death's door due to economic conditions seems foolish to me. Take the question back to it's origin. Is it quality or quantity? I don't buy the idea it's economics.

Maxi-Ryu99

Similar things can be discussed in here:

http://www.animepaper.net/forums/AnimePaper/65704

While almost similar in nature, I try to narrow my focus more on industry performance, what drives sales (after all, money makes the world go round), consumer behaviour, factors beyond the fansubbing excuse that resulted in the industry being in the state it is today, what moves we have seen from the industry lately, etc. In a nutshell, I prefer to talk about top level business analysis and strategy rather than dwelling too much on the operational level, which your thread already covers.

Maxi-Ryu99

Well, I mean,... all I can say is, those several Animation companies in Japan are fighting for their survival, man. They don't wanna lose their jobs. And who would take the risk to create something new when there is a lack in budget or the risk in losing 99% of their investment to it. I mean, that's quite understandable when no company would wanna take risks... because most of the Animation companies around the world are simply poor.

The anime industry has reached saturation point IMO. The anime enthusiasts are now more picky in what they buy. The era of frenzied anime fandom is on the decline. I think it is high time that anime production studios went through a round of merger and acquisitions to reduce the number of companies in the industry, painful as it may be. I'd prefer that someone more capable and having vision be left to run the companies while the unadventurous CEOs who refuse to explore new grounds be axed. I'm sure there's a lot of potential talents in the human resource side which have yet to be discovered. Plus, by merging and acquiring, you consolidate your resources which puts you in a better position to deliver (assuming that you have the right personnel on the job in the first place).

Another issue I believe lies at the problem of poor production companies is the lack of a reliable alternative revenue source besides DVD sales and broadcasting networks. Lack of good quality titles certainly hit DVD sales while an overabundance of titles being produced means broadcasting networks have greater bargaining power over payment negotiations. So what's the alternative? Merchandising and tie-ins in the form of toys, collectibles, and games. Look at the titles in the market nowadays and see how many have the long lasting merchandising power of Evangelion or Gundam. Near zero. Most of the merchandise would appeal broadly to the hardcore otaku and a small number of the casual anime collectors. That means merchandising revenue potential will always be constraint as you are unable to tap into a larger customer base.

Makes you wonder how on earth did Evangelion managed to maintain such a high popularity up till now.

To solve the quality problem, well... the only way to do it is to hire ONLY the best Animator talents in Japan or from elsewhere, pay them an accaptable amount of salary which keeps those peeps motivated, get rid of unnecessary workforce... I mean, that's the way it is. Not everybody has the talent for an animator of Manga-ka. It is quite unbelievable how little profit the animators in famous Animation studios get and how badly they get snubbed by their producers.

IMO having a dream like that is the riskiest that one could ever have. The majority of the next generation wannabe-Manga-ka and Anime Artist should have alternative plans prepared in order for them to survive in life.