In recent years, global demand for Japanese anime has reached an unprecedented level. Hit titles continue to emerge, and international recognition has driven the market to its largest scale ever. In 2024, the anime market grew four percent year on year to a record 362.142 billion yen, a milestone that should be welcome news for fans around the world.

However, behind this remarkable growth, Japan’s anime production field is confronting a severe crisis.

A Growing Market, but Studios Are Still Shutting Down

Despite the industry’s outward success, anime production companies are facing a wave of bankruptcies, suspensions, and closures.

According to research by Teikoku Databank, between January and September 2025, two studios filed for bankruptcy and six more ceased operations or dissolved, pushing a total of eight companies out of the market. This figure is on track to match or exceed 2018, when the annual number of exits hit a record high of sixteen. If the trend continues, 2025 will mark the third straight year of increases in bankruptcies and closures among anime production studios.

Nearly half of the studios that exited the market in the past five years were primary contractors capable of managing full-scale production. Notably, Ekachi Epilka and Cloud Hearts, both responsible for major subcontracting work, went bankrupt during January to September 2025.

Why Market Growth Isn’t Translating into Studio Profits

This paradox of an expanding market and shrinking production base stems from a core issue widely discussed within the industry: overwhelming workloads without corresponding profits.

Work volume has surged due to global demand, yet studios are unable to pass rising costs on to clients. This structural problem fuels what insiders call “busy but unprofitable” conditions.

1. Rising Production Costs and Labor Expenses
The most significant cost factor in anime production is personnel. As securing young animators becomes increasingly difficult, labor shortages push production costs, wages, and outsourcing fees even higher. Yet revenue growth is insufficient to offset these escalating expenses.

2. Yen Depreciation and Its Impact on Outsourcing
To respond to sudden increases in global demand, some studios outsourced work to companies outside Japan. But rapid yen depreciation following the pandemic caused overseas outsourcing costs to spike dramatically, worsening profit margins instead of stabilizing them.

3. Structural Inequality Favoring Large Companies
Small and mid-sized studios , especially those without stable intellectual property (IP) revenue , are especially vulnerable. Without strong in-house IP, they struggle with declining production volume and rising subcontracting costs, often resulting in losses.

In fact, in 2021, 39.8 percent of anime production companies reported red ink, the highest figure on record. Among specialized subcontract studios, the number soared to 42.6 percent, underscoring a growing performance gap between industry leaders and smaller firms.

From “Art” to “Science”

Another challenge stems from the nature of anime production itself. Many creators, driven by the desire to make something better, tend to pour additional time and resources into improving quality, even when it hurts profitability.

A key determinant of whether studios survive financially is whether they have staff who can manage production as a business, people who can track numbers and whose advice studio heads, often creators themselves, are willing to heed.

The greatest source of cost overruns is schedule delays. To stop financial bleeding, studios must strengthen schedule management, numerical planning, and upstream project oversight, not just financial controls.

The industry is increasingly recognizing the need for management frameworks that treat anime production not only as intuitive, creator-driven “art,” but also as a sustainable “science” supported by systems and organization.

Social Media and the Rise of “Art Critics”: The Pressure of Animation Quality

Social media has made fans an active part of shaping a work’s reputation. However, it has also intensified scrutiny of “animation quality,” creating new hurdles for studios.

For example, Blue Lock Season 2 (Winter 2024) was mocked on YouTube for scenes that looked like stitched-together still images. Personally, I did not find it distracting until I saw the criticism online.

Similarly, One-Punch Man Season 3 (Fall 2025) was called out for its frequent static shots, leading to endless comparisons with the staff and studio from Season 1.

In The Apothecary Diaries, a long-shot sequence where characters’ faces were intentionally simplified became a viral topic on X, with some claiming it was “lazy animation,” despite the fact that such stylistic omission is a recognized technique.

Even “in-betweens,” the frames used to connect key animations smoothly, have been misinterpreted as “animation collapse” when removed from context — the Sasuke scene in Naruto Episode 29 being a famous example.

Excessive expectations from fans may be another factor contributing to production fatigue.

Conclusion

The global reputation of Japanese anime remains strong, and its appeal as a cultural powerhouse is unquestioned. Yet the profitability of the studios that uphold this quality has been declining year after year.

Teikoku Databank stresses the urgent need for improvements such as fairer business practices and stronger animator training programs to ensure sustainable growth.
In North America and other regions, streaming platforms are beginning to pursue long-term co-production agreements and animator-support initiatives, aiming to coexist with Japanese studios by investing in high-budget collaborative projects.

To preserve Japan’s world-class creativity for the future, the industry must build mechanisms that ensure revenues from hit titles are properly returned to production companies.

For fans to continue enjoying top-tier Japanese anime, studios must grow stronger financially, combining creative passion with sustainable operational strategies. This is not merely an economic issue but a critical challenge that will shape the future of the anime we love.

Source : TBD Official