How is anime as a whole profitable? (If it is)

Question

I'm considering the following facts:

1. Japanese people have few spare time, with their jobs taking a lot of their time usually, even kids or teenagers have intense schedules.
2. There are lots of anime series each year, we can easily expect at least 100 series with maybe an average of 20 chapters per each series.
3. Most anime don't get out of Japan, even if we consider either worldwide legal or illegal services that offer anime, what is seen most are the most well-known series.
4. Anime is not cheap to produce, we can consider that each anime episode is about 120000 US dollars.
5. Anime is pretty time consuming to watch in general.

(I'm making up the previous quantities but I don't think I'm that far from the real ones).

With these facts I wonder how it's profitable in general as my guess is that with those conditions most series would not cover their costs, so it looks somehow strange that people are willing to spend much in something that's hardly going to be profitable (although if the anime is successful and moreover, exported worldwide, it can be truly profitable, that's true, maybe it's just that with their big hits they cover all the rest of the unsuccessful series).

I thought that maybe it was subsidized by the government but with an internet search it looks like this doesn't happen often.

What is missing or faulty in my reasoning, or is anime really profitable? Maybe it's what I've said earlier that their successful series cover the costs of the unsuccessful series?

On the other hand, could it be that it's not usually profitable but they still try to do it just because anime is so big in Japan and they love it?

Answer 1

1. Merchandise, DVD & Blu-ray sales. If the predicted net profit from the sales of Merchandise, DVD & Blu-ray is low then some studios will hire freelancers. For example, Madhouse is known for hiring Freelancers.

2. Some studios are already powerful and big enough such that they could themselves invest certain amount of money in the anime rather than the production committee giving them a budget. Thus they would get a larger chunk of profit. Example, Kyoto Animation and Sunrise studios.

3. Some studios are directly owned by big and well known production committee members who have produced not only anime but also video games, soundtracks, merchandise & food companies. All of which can act as a source of money for the production of a anime.

   Example, A1 Studios -> Aniplex -> which in turn is owned by the Sony Music Entertainment Japan.

4. International licensing.

5. Finally, some anime may perform poorly initially, but, several years later they might do well in the international market or during the re-runs. By which the studio and the production committee can get back their lost money. Remember how Gundam 0079 had very low ratings initially? Or how Serial Experiments Lain was a flop in Japan but not so much in US? Or how Ghost Stories utterly failed in Japan but did comparatively well in US?

Point is, even if some shows don't make profit in the initial run, doesn't mean they will always not make a profit later on.

Answer 2

It's usually not. Art is not profitable. You may find facts and stats around but some of the process isn't really holding up anymore now, the industry is not doing that well. That's actually a good thing because now it'll be forced to adapt to the new climate and cut off on bad industry practices like making fifty generic book adaptations every year that only gets made because of marketing and no one will care enough to watch half of it and yet talent is being wasted on it.

Anime is a luxury. This means you buy it because you want it, not because you need it. Figurines, goods and spin-off works are hugely marked up because something has to pay it off, but sales are largely tacked onto the random number generator of "which show gets popular" and so the business doesn't really have a good idea of what they should focus on. Sometimes it's blu-rays, sometimes actual merchandise, or even hosting events and selling tickets.

Stuff is made because some book company decides they want to fund a show, so they take money and pay a committee / studio to make one. That's one way money could come in. It could also be some investment that the studios is doing, because they want a try on that random number generator. Sometimes your project strikes gold and your project turns out to be profitable. Other times they're not and it doesn't net a profit.

The inherent problem of trying to find profiting points of anime production is that anime production is not a consistent field to study. There are studios that work closely with game companies and get paid by the game company to turn some of that gacha money into a marketing opportunity, there are studios that make original works that very likely won't make it into mainstream attention and profit but are still made because it's art and the team is fueled by artistic passion, sometimes it's just because a project can be done for very cheap so let's roll the random number generator.

I heard gainax is going to fund their projects through patreon soon. Anime might find a living on new-age media along with content creators who make their living off the internet. This may not necessarily be the vision I am aiming for, but either way something will probably happen on that note.

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25/07/18 addendum: No, TRIGGER's Patreon Won't Save Anime