How The Anime Industry Makes So Much Money (Despite Obvious Problems)

With KissAnime gone, piracy is an ongoing conversation.

What’s funny is the anime industry makes almost $20 billion dollars per year in spite of it. Which makes you question the so called “problems” piracy brings to the industry.

How is that even possible?

If piracy went away, would that figure double or triple or quadruple? That’s an answer for another day.

Let’s talk about how the anime industry:

Makes money
Brings in profit
Sustains itself

And still manages to grow, regardless of problems like piracy, animators being overworked and so on.

How The Anime Industry Makes Money:

1. Lots and lots of licensing

The money is in the licensing. It’s what I call “fast money” for the anime industry.

Anime is different to MANGA in the way it thrives and brings home the dough.

This is comparable to:

Films
TV Shows
Documentaries

And intellectual property in general.

The best way to make a point is with:

Naruto
DBZ
One Piece
My Hero Academia

Anime shows like these is what the industry needs, since anime is a long term investment type of business. Just like stocks and shares.

The reason why you see these anime on legal streaming sites without fail, is because:

The demand is ongoing
They’re world famous
Mainstream

And of course – it allows studios and owners to consistently make millions of dollars.

Those “millions” are accumulated by reselling the licenses to:

Crunchyroll
Funimation

And any company that wants the rights to distribute and stream these famous anime shows.

That’s why they continue to be the bread makers of the anime industry.

Outside of famous titles that have “paid their dues” and have paid off in the long term, many shows make money in the short term.

The Ambition Of Oda Nobuna is a good example of a show like this.

Made by Madhouse studios, the anime aired years ago. And hasn’t had a 2nd season ever since.

When Madhouse (and whoever owns the rights) sold off the license to this show at the time, they would have made “fast money” on the spot.

But since shows like this haven’t gone on to go mainstream or build a franchise, that money is only short term.

kinos travels kino subtitles — Same thing with Kino’s Travels.

By selling an endless amount of licenses to shows like this and shows in general, the anime industry continues to make serious money every year.

Licenses put money in the bank FASTER than any other method, and the amount made in one go is substantial.

The anime industry would collapse if it ever got to the point where selling licenses is difficult.

Each license can last for a few years, 5 years, 10 years, or whatever number licensors decide to go with.

2. Manga and light novels

Manga and light novels are the reason manga and light novels.

The biggest difference with manga and light novels is:

Both make money directly through retail.
Higher chance of recurring revenue (never stops selling).
Different audience.
Niche market.

Another difference is the authors of manga and light novels don’t need anime studios.

They can sell directly to their audience, fanbase and customers.

Through things like:

Pixiv
Patreon
Own website
Amazon

Or any other similar site, platform or method the author chooses. Even bookstores.

This isn’t common in Japan though.

Usually they work with companies to distribute their material, and sell it through platforms.

One advantage manga and light novels have over anime:

Dedicated fanbase already built up.
Cost LESS money to make.
Higher potential of recurring profits.
Cheaper long term investment.

In Japan there’s a massive audience for manga and light novels. More so than the west.

Anime happens to be another medium, but both help each other make money and keep the industry growing on a yearly basis.

3. Product sales (DVD’S)

Anime DVD’S have been declining since 2006 and haven’t stopped declining since.

In the modern day, DVD’S are becoming extinct, harder to get a hold of, expensive, and inconvenient.

For a Crunchyroll or Funi subscription of less than $10 dollars a month, you can get more value than an anime DVD could ever give you.

Regardless, money today.

But compared to the other money makers, DVD’S are more of a supplement than they are a relevant contribution.

This trend will continue in the years to come as streaming and digital options become more prevalent.

4. Affiliates

Affiliates are companies, influencers, publishers and websites that promote anime products and take a percentage of each sale made.

Funimation is one company that works with affiliates.

Japanese anime companies haven’t caught on yet and most are outside of the Japan (but still contribute to the industry).

Affiliates aren’t the biggest contributor to the industry. And even though I don’t have stats to back it up, this will be more relevant in the years to come.

It’s definitely gonna continue to grow.

5. Merchandise

Merchandise is an obvious one, but it’s still gotta be mentioned. It’s a big part of the industry.

Whenever an anime gets released, merchandise is likely to follow. And ironically – fans who pirate anime are known for buying plenty of anime merchandise.

Since it’s a retail product, anime merchandise forever makes money and continues to “feed” the anime industry.

When you buy a T shirt, figurine or otherwise:

That allows the retailer to make money.
Then they can buy more merch from Japan.
Which then puts money into anime manufacturers pockets.
And that lets them make more merch for anime characters and shows.

It’s a virtuous cycle.

Everyone wins and the anime industry continues to grow, directly or indirectly.

6. Live Events and conventions

Because of COVID-19 virtual events have become more of a thing now.

Funimation, Crunchyroll and others have took part in it. With plans for Winter or Autumn I’m sure.

Besides that – live events, conventions, comicon’s and so on make A LOT of money in the industry.

When so many fans gather in one central place, and pay for the right to do it, it stands to reason those 1000’s of fans bring in some nice dough.

Multiple conventions are held every year, and even in the UK – every month or 2. And it’ll continue to make money forever,because there’s tons of appeal.

Industry insiders, journalists, cosplayers, directors and plenty of people show up here.