The Anime Industry CANNOT Rely On Overseas

Just over 46% of anime industry revenue comes from overseas.

American news outlets celebrated this fact when the report came out. Meanwhile, the industry was worried.

See, in 2017, it was looking a lot like overseas revenue would overtake domestic revenue. While it’s nice to have revenue, the source of that revenue can cause problems. For example, being reliant on revenue from overseas would put the anime industry at the mercy of other nations’ market forces. If something happens in the US or China that slows the anime market there, the Japanese industry feels the pinch.

On a deeper level, relying on overseas revenue causes structural problems for the industry. Because of the way anime is made, revenue from overseas rarely makes it into the hands of anime studios, if at all.

When thinking about “overseas revenue” in the anime industry, it’s easy to think of America. This is a misconception. “Overseas” refers to anywhere that isn’t Japan. This means America, but also the UK, France, Germany, Australia, South Korea, and of course China.

In 2018, China held the third most anime contracts, after Canada and the US. They’re by far the most anime’d up country in Asia (Besides Japan, of course.). A shift in China’s politics, culture, or market that affects their anime consumption could have a significant effect on the industry’s overall revenue.

That may be exactly what happened in 2018.

The 2017 prediction of overseas revenue overtaking domestic revenue didn’t pan out. Instead, overseas revenue plateaued, falling into a roughly parallel line with domestic revenue. It’s speculated that this slowdown overseas was caused not by any change in the US market, but by China. China tightening their regulations on internet media affected their anime market. That alone may have brought overseas revenue growth to a halt.

A lot of people in the industry mention the slowdown of the Chinese market as the major factor. It is widely known that China imposes strict regulations on expressions in media content, including movies and TV. On the other hand, the regulations on the Internet were considered rather mild until recently. China, however, decided to impose regulations as strict as those applied on the existing media on the Internet due to its growing impact. In addition, it decided to apply the censorship system for conventional media content to Internet content, too. As a result, the reluctance of buyers due to the concern over the impact of the regulations surfaced in the middle of 2018, although the regulations were unenforced until April 2019.

From the 2019 Report

This is the danger of the industry relying on overseas revenue. And industry professionals understand this.

In an 2018 international edition of Anime Busience, veteran director and producer Tetsuya Watanabe anticipated the possibility of the situation in China shifting in a way that hurts opportunities there for the anime industry. Later articles in that same issue talk about other possibilities, such as China deciding to produce its own “anime” media without involving Japan.

If the slowdown in 2018 can be linked to China, the anime industry has a problem on its hands. If other nations can’t be relied upon to make up for China, overseas revenue might prove too volatile. When coupled with falling revenue from sectors like merchandise and home video, it becomes a big problem.

The anime industry’s dependence on overseas revenue is a threat to its growth.

Unless major growth happens in the US and other markets, conditions in places like China could end up determining the overall industry’s growth or loss. Not to mention that occurs without uplifting the studios themselves.

It’s very easy to rejoice over how much places like the US contribute to the anime industry. However, the industry is more complex than that. Revenue is revenue, but not all revenue is equal in the anime industry.

Especially if we’re concerned about helping the studios and animators, we need to understand that domestic revenue is important to the anime industry.

We should all be very concerned if the anime industry can’t find a way to increase its domestic revenue.