Ask John: What Exactly Has Caused the Present State of the Anime Industry?

Question:
Without argument the anime industry is in a downward spiral, or at least in some bizarre transitioning phase. But what exactly caused it? Did the companies over estimate themselves? Was it because they licensed a lot of niche titles instead of “power playing,” titles?

Answer:
The declines in the American anime industry that have occured over the past four years can’t be blamed on any single thing. It’s a combination of several simultaneous factors that has led America’s anime industry to its present condition.

The sudden, tremendous success of the Pocket Monster franchise in America in the early 2000s generated a massive swell of interest in anime among American consumers. During those years, the domestic anime market grew exponentially, and the anime industry reacted to that stratospheric growth eagerly instead of cautiously. Domestic licensors sought to secure prominent market position and big profits by satiating the exploding American demand for anime. Domestic licensors invested heavily in acquiring anime distribution licenses, and popularized a marketing strategy of multiple, increasingly discounted DVD re-releases designed to reach an ever widening consumer market. While these discount priced re-releases and complete series collections did generate additional sales, for a short time, they also indoctrinated consumers to stop purchasing new release titles, which ultimately has lead to the present state of America’s anime market in which DVD sales had dropped drastically.

The mad dash to acquire anime titles encouraged Japanese licensors to demand top dollar for their properties. As licensing costs steadily increased, domestic distributors were faced with a choice of either pay higher licensing fees, or stop licensing and drop out of the anime industry. While it’s natural for Japanese licensors to desire the most they can earn from their properties, a lack of consideration for American market conditions set the anime industry on a doomed course. Media Blasters’ CEO John Sirabella, for example, has publicly admitted that the American release of the first Ah! My Goddess television series will probably never be profitable because its distribution license was so expensive. Exorbitant licensing costs meant that American companies that were able to continue releasing anime in America were staying active, but weren’t generating the revenue necessary to sustain themselves. Geneon’s exit from the domestic anime industry appears to have been one result of this trend.

Fansubs have been heavily villified, but fansubs existed before the American anime industry, and were instrumental in helping to launch the American anime industry. There’s no doubt that fansubs have had some harmful impact on the commercial anime distribution industry, but no one knows exactly how much impact. However, the cause of the damage done by fansubs lies in a more fundimental roots: growing fan interest in anime, and the technology that has made personal anime distribution possible.

During the early 2000s, advances in digital communication technology including the development of DivX and Flash video, and the widespread American adoption of home broadband internet connections made fansubs and peer to peer anime distribution easy, immediate, and international. Fansubbing exploded because new developments in technology allowed fansubbing to propagate.

I believe that it’s these factors: the intentional devaluation of anime by America’s distribution industry, demands from the Japanese licensing industry that failed to respond to the condition of the American market, improvements in computer and electronic communication technology, and the impact that these factors have had on the psychology of American consumers and anime fans collectively explain why the value of America’s anime industry has halved within the past four years, and why the amount of anime being released and purchased in America is steadily declining.