Anime is Suffering from Success

Anime is more Popular than Ever...

The Association of Japanese Animations (AJA) reports that the anime industry has reached a record 3.84 trillion yen, about $24.5 billion USD, marking 114.8% year-on-year growth. This is one of the largest increases in the industry’s history, second only to 2019, and reflects long-term expansion as the market has more than doubled since 2015 and grown to roughly 3.5 times its size in 2002. Overseas markets continue to drive the majority of this growth, far outpacing domestic demand, and at the current pace the total anime market is projected to have exceeded 4 trillion yen in 2025. If you follow the anime community, many have attributed this to a post-pandemic boom.

Ufotable and Aniplex’s Demon Slayer: Kimetsu no Yaiba has become a global phenomenon and a clear benchmark for anime’s international reach. Its films, Demon Slayer: Mugen Train and Demon Slayer: Infinity Castle, stand as Japan’s highest-grossing movies of all time, earning roughly 39 billion and 40 billion yen respectively, cementing the franchise as a defining example of anime’s global commercial power.

But at what Cost...?

Due to sustained year-on-year growth in overseas demand for Japanese animated exports, cracks in production quality have become increasingly visible. With roughly 47% of Japanese studios now outsourcing parts of their work, the industry has leaned heavily on cost-cutting measures, only to compound the problem. Cheap outsourcing followed by domestic staff being forced to correct subpar animation has driven burnout among skilled key animation directors, accelerating resignations and locking studios into a vicious, self-perpetuating cycle.

What was once seen as an anomaly with the disastrous Berserk (2016) adaptation is now becoming more common, with even acclaimed, highly anticipated titles like One Punch Man and Uzumaki turning into seasonal, meme-worthy punching bags due to inconsistent or subpar production quality.

According to a report by Teikoku Data Bank, the number of Japanese anime production companies going bankrupt or shutting down increased for the third consecutive year in 2025, even as the anime market hit record growth in 2024. In the first nine months of 2025 alone, two studios filed for bankruptcy and six others suspended or dissolved operations, bringing the total to eight exits, a pace comparable to the record year of 2018. Teikoku attributes this contradiction to a severe manpower shortage that has created what it calls a “profitless boom,” where studios face surging project orders that exceed their capacity. Some are forced to extend production schedules, driving up labor costs and shrinking margins, while others outsource overseas only to be hit by rising costs from the weak yen.

What can be done?

As Anime News Network’s Answerman bluntly puts it, “a lot of the blame lies with us, the global anime fandom. Too much anime is being made.” At a time when anime is generating more revenue than ever, it is unrealistic to expect major corporations and shareholders to willingly pursue less profit, yet the industry is increasingly collapsing under the weight of its own instability.

For now, the industry’s answer appears to be a mix of AI and expanded outsourcing. Industry giant Toei Animation’s Vision 2030 commits ¥20 billion to building new studios across Southeast Asia, India, and the Middle East, reflecting how outsourcing has shifted from pure cost-cutting to a search for technical capacity, with China declining, Vietnam and the Philippines rising, and nearly a quarter of studios now turning to the United States for high-end digital work. Labor shortages are also accelerating interest in AI, with dozens of Japan-based start-ups emerging and Toei alone investing ¥7 billion in AI R&D. Later this year the first wave of Japan-developed, domain-specific AI tools is expected to arrive, aimed at easing bottlenecks in areas like in-betweening, backgrounds, and color work while preserving the look and feel of hand-drawn animation rather than replacing artists outright.

Last October, Japan’s Ministry of Economy, Trade and Industry (METI) held its 8th Entertainment and Creative Industrial Policy Seminar, where it outlined five core principles for new policy guidelines covering Japan’s content industries, including anime, games, manga, film, and music. As reported by Otaku Soken, these guidelines are part of a broader strategy to expand the overseas market for Japanese content to 20 trillion yen by 2033.