The Dual Edge of Netflix and the Ruthless Anime Industry

The anime industry is in a strange place right now. Revenue has never been higher – the industry is currently worth 2.0 trillion yen.

One Piece
Revenue is at record highs, but not everyone in the industry is benefiting.

Licensing from China and North America has reached record highs and has led to Japanese companies acknowledging the effects of international markets.

The current amount of hours being produced has skyrocketed, with any given season comprising 35 to 50 anime series at a time.

Anime Production
Animators are struggling to keep up with demand, which has led to some outsourcing to South Korean and Filipino studios. Most “outsourced” animation is sent to smaller Japanese studios.

Netflix has stated that they are producing 30 original anime titles for 2018. Crunchyroll, Amazon, Funimation, and Apple Studios have also invested into anime series.

But the newfound money and international interest haven’t exactly translated into enthusiasm for animators, who are the lifeblood of the industry.

The bad working conditions and below-poverty wages have been reported by various outlets and individual animators have taken to Twitter to voice their frustrations about the industry they love. In an interview with The Hollywood Reporter, Sola Digital Arts President Joseph Chou said, “Lately the media has been bashing the anime industry over working conditions; the TV stations have been reporting on it, but they’re a big culprit.”

The average animator works 11 hours a day, 6 days a week and earn 100,000 yen ($911) a month.

Chou is referring to how TV stations are being two-faced in their reporting. Late night anime have to buy airtime from TV stations, which doesn’t always come cheap. The contracts are also ruthless – if a studio is having production issues and need to delay an episode, like the final two episodes of Long Riders!, they have to pay for both the missed and new time slot.

TV networks, like NHK and Fuji TV, also have seats on production committees. They are fully aware of the working conditions and cut-throat deadlines because they help dictate the budgets.

Long Riders!
Long Riders! was produced by veteran studio Actas, and infamous had its final 2 episode delayed by nearly 2 months.

The production committee system used by a vast majority of anime benefits all parties except for studios and animators. Outside of a few, like Kyoto Animation and Sunrise, many studios lose money after the airing of their work. They have to rely on home video and portions of merchandise sales to leave the red.

Chou credits Netflix for helping alleviate some of the stress, “Netflix is restoring it to a sane business model. You’re looking at maybe a 15 percent margin rather than a 5 percent loss.”

In fact, Chou told The Hollywood Reporter that streaming services like Amazon’s Anime Strike and Crunchyroll are, “scrambling to meet with everybody,” but Netflix has the advantage of being more aggressive.

The Seven Deadly Sins
Streaming services like Netflix, Crunchyroll, and Anime Strike may be heading towards an “original programming” arms race.

Regardless of who is making the deals, Kotaro Yoshikawa, VP of Distribution and Licensing at TMS Entertainment, believes streaming services dealing directly with studios is a much-needed shake-up for the industry. “There’s no TV station involved to say what needs to be done to make something okay for broadcast.”

The newfound creative freedom may be exciting, but not everyone is jumping for joy. Back in August, animators launched a hashtag to voice their displeasure with working on Netflix produced series. Many animators said that working conditions did not improve and their pay did not increase – dashing the hopes of fans who believed Netflix could change the harsh working conditions.

In fact, the orders for original content from Netflix and other streaming sites have put increased strain studios. A shortage of animators and increased negative press of working conditions have made young animators wary of entering the industry, leading to longer work hours for freelancers and increased production delays.

Despite a shortage in animators, studios are determined to meet the increasing demand for anime. The worry is that this can worsen the already poor working conditions animators face.

Chou said, “It’s not a bonanza or bubble yet, but nearly all the studios are fully booked until 2020.” There’s estimated to be 75 active, main animation studios.

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