The structure of the Japanese cultural industries

3.3 The structure of the Japanese cultural industries

Tokyo represents the hub of the Japanese cultural industries. It is the place where an important part of the products is initially created, produced and commercialized. Out of 419 animation studios, 365 are located in Tokyo, representing 87 per cent of the Japanese animation companies (AJA, 2014: 6). Akihabara is the Mecca for the passionate fans of anime, manga and video games. Shibuya and Harajuku represent fashion centers, particularly for young people.

In addition to big companies, the process of creation and commercialization of the Japanese popular culture includes thousands of small companies and venture start-ups. These small actors are at the heart of the production of this culture (Otmazgin, 2013: 54).

3.3.1 The structure of the anime industry

The animation industry employs approximately 5,000 animators (Otmazgin, 2013: 54). The figure below gives a description of the structure of the anime industry. Actually, it represents the structure for the planning, production and distribution of anime.

Source: JETRO⁴², 2005: 3.

In the planning stage, a production committee is created in order to fund a new project. This committee includes TV channels and films companies. It also ranges from advertising agencies to toy companies as well as video games makers and publishers. The involvement of toy companies is necessary to develop character goods and other spin-off products based on the characters of the anime (JETRO, 2005: 2). The making of anime is undertaken by a prime contractor, an anime production. This prime contractor subcontracts to numerous anime companies every phase of production. Most anime are developed for being aired on TV. Feature anime primarily produced for the release in cinema, such as Ghibli feature anime, are an exception (Yokota Masao Interview, 06/03/2014).

The production committee system implies that its members share the copyright of anime because they invest money in the anime production. Anime companies are sometimes part of the production committee. But they are very few, for example Tōei (Yokota Masao Interview, 06/03/2014). Anime companies are deprived of the revenues generated by the commercialization of anime if they are absent in the production committee. Indeed, the prime contractor (an anime studio) only receives money from the contract with the production committee, and the subcontractors (other anime companies) from the contract with the prime contractor (Yokota Masao Interview, 06/03/2014).

However, even if anime studios participate in the production committee, they have to share the revenues with each member of the production committee in proportion to each participant’s respective investment (Matthew Alt Interview, 29/01/2014). One anime producer confessed to this author that his studio receives less than 20 cent of the revenues (Anime Producer Interview, 30/04/2014). Members of the production committee try to compensate the loss of most TV anime by the sales of DVDs and spin-off products such as character goods (JETRO, 2005: 3).

In 2004, Gonzo, Japan Digital Contents, Rakuten Securities and JET securities created the first anime fund to address the issue of financing. The following year, Japan Digital Contents and the Organization for Small and Medium Enterprises and Regional Innovation, an independent government agency, endowed a fund with ¥500 million each to finance content production (JETRO, 2005: 2). Nevertheless, it still remains very difficult for the anime industry to find financing to produce animation because banks consider that this sector does not offer enough guarantee (METI Official 1 Interview, 25/02/2014; Yokota Masao Interview, 06/03/2014). The Japanese government decided to conduct the Cool Japan policy because the Japanese banks are extremely reluctant to fund the expansion of the Japanese cultural industries abroad (see Chapter 5, Section 5.2.4).

Before the 1990s, one big company used to invest in the production of anime in order to gain wide public interest (Former METI Official Interview, 30/04/2014). In the mid-1990s, the production committee system began to spread. It is now the most common way of funding anime because the members of the committee share financially the risk. The business of anime is a risky one. It is hard to predict which anime will be successful. Every three months, two or three new anime will be a success out of the forty new ones broadcasted on TV. If an anime becomes a hit, it can generate huge profits for the production committee (Former METI Official Interview, 30/04/2014).

The anime industry is characterized by a low budget for production, lack of animators and production outsourcing. An episode of thirty minutes for TV costs between ¥11 and ¥14 million (Masuda, 2007: 22). According to the JETRO, this cost is nearly ¥10 million. There are even cases where the anime companies received only ¥5 million (JETRO, 2005: 3). By contrast, the American animation studios have a much bigger budget. They spend hundreds of millions of yen per thirty minutes (Mōri, 2011: 34). Such a low budget can be traced back to the decision of Tezuka Osamu⁴³ to accept the production of Astro Boy, the first popular animated Japanese TV series, for ¥555,000⁴⁴ per thirty minute episode in 1963. For the same series, the American channel NBC paid ¥3.6 million for each episode (Fujishima, 1990: 238 and 244).

Tezuka’s anime studio, Mushi Production, reduced the amount of frames necessary to be drawn in order to respect TV deadlines and to produce Astro Boy with a very small budget (Jenkins, 2013). In addition, Tezuka created a “bank system” to recycle used pictures for new productions (Mōri, 2011: 34). Through this methods, the production of this anime (almost 200 episodes) required only four people, including Tezuka, for four years (Beldi, 2013: 116). He established the business model for the production of anime that Miyazaki reproached to Tezuka as it has caused the ongoing low budget for the Japanese animation (Mōri, 2011: 41; Beldi, 2013: 116-8).

Despite this business model, Tezuka sold Astro Boy at a loss. It is why he decided to license fees for character goods, in other words franchising, and international sales (Jenkins, 2013). For instance, Astro Boy was aired in the US (Shiraishi, 1997: 267). However, as detailed in Chapter 4, Section 4.4, the Japanese anime studios withdrew from the American market in 1982 after the failure of Tōei to attract attention from the American movie studios (Leonard, 2005: 287).

As part of a low-cost strategy, in the 1970s, the majority of anime studios, for example Tōei Animation and Mushi Production, began restructuring. The number of full-time animators was reduced and replaced by freelance animators. The anime production was also outsourced abroad (Mōri, 2011: 34-5). Anime companies have increasingly reinforced this phenomenon recently. The stages of planning, directing and those requiring high-level knowledge are still located in Japan, whilst easy tasks such as animating and coloring have moved to other countries such as China, South Korea and elsewhere. This means that young Japanese animators have fewer and fewer opportunities to learn basic skills. It is likely that anime only produce in Japan will be rare in the future. Tōei employs approximately 130 people at its Philippine branch. Ghibli outsourced a part of the production of the world-hit Spirited Away to Korean companies (JETRO, 2005: 3). In this way, animation “made in Japan” is produced in part by subcontractors in South Korea, China and other Asian countries (Mōri, 2011: 34).

This low-cost strategy has provoked the degradation of the working conditions of animators. In 2015, the Japan Animation Creators Association⁴⁵ (JAniCA) issued a survey about the working conditions of animators. For 31.1 per cent of animators, their career lasts less than five years (JAniCA, 2015: 22). They are relatively young. Their average age is around thirty-four years old. The age bracket the most represented is the one between twenty-five years old and twenty-nine years old (24.5 per cent) (JAniCA, 2015: 12). Their average annual income (¥3,328,000) is lower than the average income of employees (¥4,140,000). Almost half of animators (49.8 per cent) earns annually less than ¥3 million, and 27.2 per cent less than ¥2 million (JAniCA, 2015: 44).

The salary of the Japanese animators is also extremely low so that they remain competitive against animators in other East Asian countries (South Korea, China, the Philippines, and so on) (Ishikawa Shinichiro Interview, 15/04/2014). Not surprisingly, these working conditions have resulted in a steady exodus to the video games industry and elsewhere. They have also caused a lack of animators (JETRO, 2005: 3). A part of animators compensates their low income by income from other activities, such as royalties from works they participated in, teaching their job of animators, dōjinshi and so on (JAniCA, 2015: 45).

Most of the animators are freelancers because studios cannot afford to have full-time animators. The only exception was Studio Ghibli. For a TV series production, animators usually only receive around ¥4843 to make one cut (from layout to key frames), whilst inbetweeners are paid only around ¥242 per drawing. To make a living out of it, animators have no other choice but to work fast. Most of them work for several studios at the same time as freelancers. Nowadays, anime studios lack skilled and experienced animators to supervise the production and train young animators (Romain, 2015). .

As this industry is now producing too much content at an incredibly fast pace, anime companies have to rely on poorly skilled animators, sometimes on amateurs who only do this job as a hobby. Animators, especially skilled workers, are very busy all the time. They do not work on the making of an anime until the very last moment. The production sometimes begins only two weeks before the broadcasting and episodes can be completed only few hours before the airing on TV. The quality can be poor but the most important thing is to broadcast something. Against this background, it is common to hear that an episode aired on time is a “miracle” (Romain, 2015).

Poor working conditions, outsourcing of the production abroad and low budget for the creation of anime, all combined together, are undermining the foundations of the Japanese anime industry (Matthew Alt Interview, 29/01/2014). Furthermore, new competitors are emerging in other parts of East Asia. For example, South Korea is implementing a national policy to promote its domestic anime industry to compete with Japan (JETRO, 2005: 3).

3.3.2 The structure of the video games industry

The video games industry consists of some 18,500 employees for a total of 146 mainly small companies (Otmazgin and Ben-Ari, 2012: 19). The big companies are illustrated for example by Sony, Nintendo, Square Enix, Capcom, Namco and so on. The video games industry is divided into the hardware and the software manufacturers. Hardware refers to home consoles which are connected to a TV and portable consoles which can be easily carried. In Japan and around the world, three companies are hardware manufacturers: Microsoft, Nintendo and Sony. Whilst the two latter make both home and portable consoles, Microsoft has only focused on the home consoles market. Whilst being hardware makers, Sony, Nintendo and Microsoft are also software producers (JETRO, 2007: 13-4).

Source: Smith, 2012; CESA, 2013: 206; Phillips, 2013; Xbox, 2014.

Source: JETRO, 2007: 14.

Source: JETRO, 2007: 14.

3.3.3 The structure of the manga industry

About 4,000 mangaka and 28,000 assistants work in the manga sector (Otmazgin, 2013: 54). This industry is made up of 4,260 publishing companies. Nevertheless, the ten major manga editors such as Shōgakukan, Kōdansha, Shūeisha and Hakusensha publish the majority of manga. The sales of manga constitute around 20 per cent of the magazine sales and around 27 per cent of the book sales in Japan. The sales of dōjinshi are estimated at several tens billions of yen a year. They make up 10 per cent of the manga books and magazines sold (JETRO, 2008: 3). According to Ian Condry, manga represent 20 per cent of the value of the Japanese publishing industry overall (Quoted in Jenkins, 2013). In a nutshell, manga are an important segment of the Japanese publishing industry (JETRO, 2008: 3).

The manga industry is divided between mangaka, publishers and retailers. Mangaka are the artists who draw manga. In many cases, drawing a series by himself represents such an important workload for an artist that he must be helped by assistants. Publishers are in charge of editing, binding and printing manga magazines and manga books. In some cases, despite having their own internal editing department, they subcontract a part of the editing process to external editing companies. Retailers deal with the sales of manga to the consumers (JETRO, 2008: 3-4).

Manga artists are the copyright holders of their works. However, frequently, mangaka prefer signing a contract with publishers which become responsible for the management of the copyright of manga. Manga artists receive royalties when their works are published. A typical course for manga is first to appear in manga weekly magazines. Then, if the manga is well received, it is commercialized as a book. Lastly, manga are often adapted into anime. Indeed, many anime are inspired by manga. Manga characters can also turn into character goods. If manga become a spin-off product such as anime or character goods, the copyright holder has to receive a usage fee (JETRO, 2008: 3 and 5). The figure below illustrates the issue of manga-related rights for manga.

Source: JETRO, 2008: 5.