Money is a necessary driving force for any enterprise to work.
This holds true for anime too. Whether you intend to make your own anime one day, or you are just trying to win a comment section fight, there are a few questions you may want answering.
From seeing how successful anime is, how do they do it? And How are their workers so underpaid? Why do They do it anyway? And could you, yes you, make your own anime one day?
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Anime primarily makes money through the merchandising, selling rights, and creating theme parks/arcade games for their specific anime property. The broadcasting of the anime does not make any money for the anime. Instead, it acts as an advertisement for these 3 streams of income for anime.
Naturally, there is more to it than that. Such as the anime committee, who are the ones that fund anime. In order to learn of these, you will have to click through this article.
How Does Anime Make Money?
Anime make money through rights, not air time.
There is a myth that arises around anime and its revenue.
People believe that an anime, let’s say Naruto for example, makes money the same way as music would. Meaning people by a CD, and that equates money for the artist/publisher. Then when the music from the CD is played on TV shows, or movies, or radio.
Then that TV show, movie or radio pays the artist/publisher. However, this is not how anime works.
In order to be profitable, an anime needs 3 things; first it needs money, then it needs people who will make the anime, and then it needs to be sold to the public.
Obviously, there needs to be a more money coming in then the money that was spent on the “people who will make the anime”. For each of these steps to take place, anime has taken to doing certain things different from western cartoons in order to guarantee profit, lower costs, and maintain creative freedom
1. Anime Production Committee
Anime is extremely expensive to make.
Masamune Sakaki (a CG creator who works in the anime industry) says an average 12-13 episode anime season costs 250 million yen (or 2 million USD). At the same time a 30 minutes episode can cost up to 11 million yen (76 715,10 USD).
With that being said, it is common for companies to come together, and fund an anime. These companies are coming together form what is known as an anime production committee.
The company usually have specialized roles.
For example one can be an animation based company, the other advertisers, and another can be music based. These companies invest their money into the anime production, and they are paid with rights to the anime’s merchandises, and the likes.
Anime production company were started around the 80s, and at that time, it was due to the drying revenue stream of CDs.
At that point, anime studios had to choose. Either they drop their themes, and subject matters so they could be eligible for TV networks, and sponsors. Or, they could do get another company to fund their anime production, and continue creating anime with creative freedom.
So they did just that, getting companies to fund them, and promising the companies a percentage in whatever the anime would make in turn. Which leads us to the next point.
2. Anime studios
While it may have been the anime studios who first approached the anime committees, the power balance has certainly shifted.
Anime studios today make all their money from the money they receive from anime production committees when the committees are suggesting a new anime. Now, the anime studios must use said money to pay all their workers, and also save up for future projects.
This means that most anime studios are now owned by committees.
In fact, the committees tell the studios which anime to make, and sometimes will use multiple studios to make a single anime, just to save costs for themselves. Anime studios have no power.
Anime studios use the money they have to pay story writers, voice actors, animators, and musicians to create the anime for the studios. Then, they have to save up some of the money for next anime, as it would be hard to know when the next pay day will arrive.
3. Broadcasting/ Air time
After the anime has been made, it is then sent off to be broadcasted, and this is where things get interesting.
While in the earlier music example, the TV networks pay the musician to play their music, it is the opposite in the anime world. The TV networks do not pay to use the anime, instead there are even instances where the anime production committee pay the TV networks.
Most of the anime we know are called, Late Night Anime.
These are anime directed towards teens and adults. Anime production committees pay TV stations for time slots in a process known as brokered programming. It is the same thing done for informercials. So of course the question then becomes how exactly do anime make money if all they do is pay for slots on TV?
Well, the anime aired in these slots that were bought, and much like informercials, these anime act as advertisements.
What Anime Industries Do To Be So Profitable?
The anime that is used on TV, and the anime that we also watch is more of an advertisement.
It advertises the true product that these anime have, mainly DVDs, and blue rays. But as time has gone on, anime studios have found other ways of generating revenue. These include:
- TV (DVD and Blue ray);
- Movie;
- Video;
- Internet Distribution;
- Merchandising;
- Music;
- Pachinko;
- Live Entertainment;
The primary way that anime makes its money back is through the DVDs, and blue rays.
They present the anime with better visuals, no sensors, and sometimes they will add scenes to the story. But the blue rays are ever more expensive to make up for the losses. All this comes together with anime’s generally efficient costs cutting techniques.
What Anime Industries Do To Avoid Loses?
As shocking as the price of anime is, the truth is that anime is actually a lot cheaper than your average animation.
While a season could cost 2 million USD, a western cartoon like Avatar the Last Airbender costs about 1 million to make 1 episode. So how does anime lower their loses so much?
The first technique that anime uses to cut costs is their unique animation technique. Unlike other animations, anime uses a lot of limited animation, which is things like reusing frames for different scenes.
This saves budget on the animation side for the anime studios. Also, they need to save the money they’d saved because they cannot know when they will be paid again by the committee. Which leads to the second technique; not paying the animators.
This trend is truly horrible.
Who Gets All The Money?
The three biggest revenue streams for anime are merchandising, pachinko (arcade games), and internet distribution.
Basically, the money that goes to the anime production committee members. The smallest though are video, movies, and TV, which are the ones that are meant to be going to the anime studios.
As previously stated, the money that anime makes mostly goes to the production committees, while the anime studios must find means of getting by.
What Can Writers Learn From How Anime Makes Their Money?
You will need to balance your passions for writing with wise financial habits.
You need to be able to free yourself, and be your own financial boss, or else someone else, some studio can come do it for you. And it is easy to do, as you can see here. Just sell your own merchandise, or internet things.
Start with none physical costless things, that take the least amount of money, then move on to the ones that do cost money when you become more financial independent.
Once you learn how anime makes money, you could do something similar for business so that you can help your book writing business. Once you can monetize your writing, you will be that much closer to mastering mastery.