Anime. You know it in one form or another. Maybe you watched it when you were young, or your kids watch it, or you’re watching it now.
It’s a universal and ageless media that caters to everyone, and due to that immortality, it has expanded and evolved into every corner of media. Nothing can escape anime’s grasp, and this begs the question: why and how did anime win the West? And what can we learn, as business professionals, from the explosive growth of anime as a medium?
Well, there are countless reasons why, as it has a historic 30 years in the making, and there is no better place to start to talk about anime than the land of the setting sun and the birthplace of anime: Japan.
Japan’s Anime Foundation
If I ask you what five things you associate Japan with, you will most likely say, Sushi, The Bullet Train, Ninjas, Sumo Wrestling, and Anime. Each of these five things have deep roots within Japanese culture spanning many years with each one deserving of its own article. Anime is no exception as the Japanese imbue it into everyday life.
What exactly is anime anyway?
To understand how anime won the West, and why you should care, you need to understand what anime is. To do that, it helps to talk about how its roots in Japan formed the juggernaut of a medium that we know and love today.
Anime is a hand drawn style that originates in Japan. Anything that’s been designed outside of Japan is just considered “anime inspired”. The origins of anime date back to the 1900’s. Oira no yakyu (Our Baseball Match) is a good example of this style.
But it wasn’t till the 1960’s when anime arrived on our TV screens with the debut of Astro Boy. Astro Boy is what a modern viewer would recognize as anime as it was an animation derived from manga. Manga are the comics of Japan, and a vast majority of anime have come from a manga at one point. (A side note for those getting into manga: you read it right to left.)
Now anime is a genre of it’s own, with its own art style(s) which make them stand out from one another. I’m going to stick with Japanese styles, and not Chinese or anime-inspired to keep this straight forward, but they’re worth looking into. There are many art style(s) so I’m going to list the most notable:
Shōnen – Aimed towards 12-18 year olds
Sienen – Aimed towards young adults, so 16+
Shojo – Aimed towards female target demographic
Kodomo – Animed towards 10 or under
Those are the anime types that target certain demographics, but it absolutely does not mean you can’t watch certain anime. Anime is so diverse that even its diversity has diversity.
Whoa, almost confused myself there. What I’m trying to say is that anime has you covered no matter what your tastes are.
Anime started as an art style and transformed into part of Japan’s identity.
One thing that transcends all anime art styles is that there will be something kawaii. Kawaii is a word that evolved from kawayushi which means cute, shy, loveable, adorable, and other words associated with cuteness.
Sure, anime didn’t invent the concept of kawaii, but it’s a part of Japanese identity and it pairs very well with the slice of life genre. This genre is a realistic representation of everyday experience but normally involves women. There will often be a scene or many scenes of them doing kawaii things. The best thing to do is just show you a clip from “My Ordinary Life”.
Walking the streets of Tokyo, you are bound to find something anime-inspired. You will see kawaii character trains that attract tourists, unique and bizarre cafe culture involving maids and monsters. Heck, they even created vending machines called Gachapon so you can gamble for anime toys. The list goes on and on, but you can see for yourself by taking an anime-inspired Tokyo Tour and Kawaii Tour.
This embrace of kawaii to the point of it becoming an identity – paired with anime – has fueled a tourist powerhouse. With over 96,000 tourists this year alone (even amid a pandemic), Japan knows this will benefit its country for a lifetime.
How Japan Lives, Breathes, and Runs off Anime
So if Japan is so entrenched in anime and living kawaii, then how profitable is anime itself? Well, The Association of Japanese Animations (AJA) 2020 Survey says:
In 2019, the Japanese animation market recorded 10 consecutive years of growth, with 7 consecutive years of record-breaking sales. The market size reached 2.5112 trillion yen (115.1% of the previous year), thanks to growth both in the domestic and overseas markets. Despite negative factors, including Japan’s aging and shrinking population and China’s tighter regulations that were put into effect in April 2019, the Japanese animation industry recorded more than a 15% growth compared to the previous year.
In any economy, showing a 100%+ increase from previous years is impressive. Now consider the fact that this was also during a pandemic. These are serious numbers.
So of the more than doubled increase in revenue, what was the major contributor? Why, the cute-but-addictive gambling loophole pachinkos to the tune of 319.9 billion yen (2.9 billion US Dollars) decked out in a kawaii style.
Pachinko: The Slot Machines of the East
Pachinko is a gambling stronghold that takes regular pinball to a whole new level. A vertical level, in fact. Users shoot small balls into holes to win vouchers that can be exchanged for money outside the parlor. This sounds odd at first, but it’s a brilliant legal loophole in Japanese gambling law. Japan has a wide reaching ban on most forms of gambling, with several exceptions including horse racing and some motorsports.
There are 800 pachinko parlors and the industry grew by a whopping 112.8% in 2019 from the previous year. As I mentioned before, that is 319.9 billion yen, or 2.9 billion USD, going straight into the Japanese economy in 2020 alone. The number of parlors is also twice that of the number of casinos in America. And they also dwarf America’s 29.98 billion casino spending consumption according to Business Insider;
“Japanese gamblers spend $200 billion on vertical pinball-like slot machines called pachinko. That’s 30 times the annual gambling revenue of Las Vegas, double Japan‘s export car industry, and more than New Zealand’s entire GDP.”
How cute anime graphics encourage your gambling addiction
Now, how does anime get tangled up with gambling? Well, there’s a heavy anime influence on the aesthetics of pachinko machines as all machines have enchanting graphics, flashing lights, and loud music similar to our western slot machines. The ones that have screens show anime characters teaching you how to play pachinko.
If you want to see for yourself what a pachinko parlour looks like, akidearest has a fantastic video on visiting one of these anime casinos.
Now I have just touched the tip of the iceberg of the influence of anime on Japan’s culture. To put it all too briefly: the art style is everywhere from kid’s shows to casinos.
But we must ride the influential waves of anime and manga and all things cute to the USA. So Doc Brown let’s go back to the past, to the 1990s where anime made the biggest splash that sent the West wild for anime.
The 1990s: The decade that anime became mainstream in the West
The 1990s was the decade that anime entered the golden age headed by the leading broadcast channels Toonami and 4Kids Entertainment. These channels brought the mega titles such as Sailor Moon, Dragon Ball Z, Gundam Wing, and Pokémon. These channels and animes didn’t just open a door, they blew the hinges off it for many more animes to come to the West.
Without Pikachu and Pokémon, anime wouldn’t be as big in the West as it is
Now Pokémon is without a doubt the most influential anime and game series that has ever existed. Bold statement, but the data backs me up here. In 2020 it made an absurd $1.1 billion in sales. But back in the late 1990’s, Pokémon graced our screens, our game consoles, and card games. The holy grails of media tv, games, and print media made it so that you’d never escape Pikachu’s cute face. As its popularity grew, it cemented itself in the Japanese culture too by appearing on a jet, a traveling theme park and there is also a protein named after Pikachu, called Pikachurin.
Ghost In The Shell inspired Hollywood
Other than TV shows, we have to talk about the influential Japanese movie Ghost In The Shell. This is the first anime film to be released at the same time in Japan, Britain, and the United States. Its intended goal was to bring anime to a more mainstream audience in the UK and the US.
Winning the Best Animation Film Award at the 1st Animation Kobe (1996) is a big deal, sure, but personally I think it is even more noteworthy what Ghost In The Shell went on to inspire – none other than cult classic, The Matrix.
I know, my mind was blown too. If you don’t take my word for it, then go ahead and watch both movies and track the influences! Or you could also watch this video that conveniently showcases the influences.
And it all comes full circle as Hollywood creates their version of Ghost in the Shell in 2017 as a live-action film. The film spawned controversy based around the casting of Scarlett Johanson as “whitewashing”. The film itself fell flat too with an abysmal 43% Tomatometer.
To recap, Ghost In The Shell started off as an impressively animated anime Japanese film that grew to capture a North American audience. It then influenced a major cult classic in The Matrix, and then came full circle with its own Hollywood version. Regardless of how the Hollywood version was received, that’s still an impressive resume in my book.
TV may have killed the Radio Star, But the Internet made Anime Stars
The TV of the 1990’s planted the seeds of anime on our screens and minds which created a massive impact that would inevitably create the massive industry we know today. However, the internet further increased our exposure to anime, making it more accessible as ever.
Have you heard of Netflix? I’m going to take that as a yes. The 24 year old streaming conglomerate is known for brilliant forecasting capabilities. Even though the company started with physically mailed movies, they always planned on incorporating the internet and moving towards streaming. They were just waiting for the Internet to get up to speed.
In following that same forecasting spirit, in 2018 Netflix recognized the benefits of producing their own original films and television series. An initial 8 million-dollar investment was used to finance 80 Japanese inspired original films and 30 anime series.
Other Internet Streaming
Netflix isn’t the online service with its fingers in the proverbial anime pie. Another massive streaming conglomerate Amazon Prime is trying to go head to head with other streaming providers, and has seen the value of anime.
There are also more anime focused streaming services, such as Crunchyroll and HIDIVE. Crunchyroll came out in 2016 and was acquired by Funimation for $1.175 billion in August. HIDIVE (Sentaifilmworks) specifically focuses on streaming all things anime, to the tune of 50 million a year.
Want a deeper dive on which streaming service has licenses for what? Check out this detailed article that breaks it all down, including popularity, exciting material, and firstrun/simulcast.
This global expansion and streaming market development created exponential growth in anime viewers. The top 5 countries with the highest average of people watching anime are China, India, Indonesia, Brazil, Russia. I was surprised that the United States wasn’t in there, but they scooted in at 6th place with 74,475,596 average viewers. This dominates cable TV’s top viewed show NCIS on CBS with an average of 15.4 million viewers.
From going mainstream in 1990, to kicking off a massive investment by Netflix in 2018, anime has grown and expanded faster than Naruto’s light speed.
It would only take 2 more years till anime would make a third impact on Twitch and Youtube.
The Slice of Life Genre in Real Time
Let me introduce you to Virtual Tubers, or Vtubing. Take a Youtuber or a Twitch Streamer, but use a digital avatar and you’ve got a Vtuber. What does this have to do with anime? Well, for starters, the avatars are often heavily anime-inspired. And secondly, some attribute the birth of Vtubing specifically to all things anime and kawaii.
Many people rightfully credit the character Kizuna AI as the origin point of Vtubing. Her home channel A.I. Channel was the first channel to use motion capture software to create a CG avatar to create content. This character ticks the kawaii box by being small, young, and is a big fan of anime.
A.I. Channel is the first of 3 channels that showcases Kizuna AI. The first channel came out in the beginning in 2016 and as of writing today has 2.98 million subscribers with a daily average of 130 million video views with estimated earnings of $7.6 to $121 thousand a year. According to the character’s Wikipedia page, the second channel “A.I. Games” came out in 2017 specifically for gaming, and a third “A.I. Channel China” opened in 2019 specifically for her Chinese audience.
As you can see, there is a benefit to being able to clone Vtubers and showcase them on multiple channels. Currently, there are 5 different versions of this computer generated avatar. Original Ai and Black Ai share the same voice actress, but #3, and the Chinese AI have substitutes. This means you can produce content at a rapid-fire rate in different mediums. Imagine the amount of Mission Impossible films we could get out if there was more than 1 Tom Cruise.
Hololive, The Next Generation of Vtubers
Now, what do you do when you’ve got a bunch of Virtual Tubers popping up all over the place? You get a talent agency. That led to Hololive, a Vtuber talent agency that manages the voice actors and creates the virtual avatars that they control. They also hold auditions for existing vtubers and characters that can become affiliated with Hololive.
It spawned from Cover Corporations in 2017 with their first Vtuber Tokino Sora along with an augmented reality (AR) app allowing you to view the Vtuber. This was heavily inspired by the success of Kizuna AI. A year later the app was upgraded by removing the AR and replacing it with a facial motion capture allowing people to become animated avatars. Not unlike an animated bitmoji. This was the upgrade that catapulted Hololive to having over 50 talents making over 500 million yen ($4.55 million USD) in super chats alone in 2020.
How falling in love with an anime character makes millions
The thing with Vtubers is that they are nearly always anime women, and that makes a big difference. There’s a culture associated with liking these girls and men called waifu and husbando. It’s a way of saying “I connect with this character strongly”. The best way to put it in western terms is that it’s like crushing on a celebrity.
However with a waifu or best girl, it can go from crush to having a genuine love interest with the anime character.
Why is this a thing? I cannot tell you that as there’s no definitive reason towards having an anime girl love interest. But if you want to read someone’s story, Chang Kim talked about waifu in this article.
Now let’s get back to how Super Chats tie into this. Super Chats is one of the many ways a Youtuber or VTuber can make an income. During a livestream, a viewer can show support through a monetary Super Chat donation. Hololive was able to rake in a cool $4.5 million through Super Chats because of the waifu culture. Talent and talent agencies recognize that people have genuine love interests and connections to their favorite anime characters, so why not make them come to life.
This connection is unlike anything else you can get in anime which is why Vtubing as a business model is ingenious. As TV shows end, live streams involving the same characters continue on and on and on. It can create a very strong bond with the viewers which make the Vtubers and Hololive a very lucrative deal.
Hololive English, the group that catapulted their industry into the Western Spotlight
Hololive English was Cover Corporation’s way of marketing to the English speaking audience, and it was a monumental success. They debuted 5 wonderful and unique characters that all had something special worth watching.
One in particular was Gura, a shark girl that debuted in September. Within one month she was the first Hololive member to reach 1 million subscribers while also surpassing original Japanese talent Shirakami Fubuki and Inugami Korone. The fact that Gura surpassed these two major players in the Vtube world shows how incredibly influential English speaking talent is.
Now the roster is getting bigger with the recent debut of the Hololive Council. This council is a talent agent specific to English Vtuber talent. Currently, Hololive Council has 11 English Vtubers with a combined 9+ million subscribers on their Youtube channels.
It’s amazing how well Vtubers did pre-Hololive Council with the Japanese and Indonesian talent. But it’s even more incredible to see how impactful a western marketed group can have on their product. It’s like how Porche, a German car company sold its first car in 1952 in America, catapulting its brand and spawning a 140,000+ member Porsche Club of America.
What Conclusive Business Lessons Does Anime Teach Us?
Like with all media, anime has to stay relevant and it has to expand or it will go stale. However, this is easier said than done. Anime was able to do this to a tee with the help of western distributors. This gave a whole new audience a chance to consume anime. The key lesson to take from this is to make your products easy to access.
And this accessibility came through the colossal expansion into every form of media imaginable. The companies that pushed anime weren’t bound by rigid rules or preconceived notions. They tried new things and a lot of them worked!
For example, the kawaii identity in Japanese culture, often on display in anime, fueled a phenomenal pachinko industry. This bolstered overall sales figures for the anime industry as a whole in Japan. The financial strength of anime in Japan pushed western TV broadcasting channels to take a chance and air anime to totally new viewers.
And as this style of anime washed up on western shores, it differed so much from Disney and Dreamworks at the time that it created a new and noteworthy experience that spawned a dedicated fan base. This fanbase was spurred on by the loveable yellow mascot Pikachu on TV, Gameboy and cards. Now millions are going to anime conventions every year.
It then evolved, branched out, and developed from its original roots to not just stay relevant but to push the boundaries of how relevant it can be. With the newest addition being Vtubers, a living, breathing anime TV show that never ends.
Finally, the beauty of anime is that it’s not just a one-trick pony, it has over 500 animation studios all creating something for everyone. And even though the content is abundant it remains fresh because the creators are always experimenting. This has allowed the fan base to grow at an extraordinary rate as new fans and veterans can find someone to watch any day of the week.
Anime built a strong foundation in Japan first, and with the help of western influence, it was able to expand at a staggering speed unlike almost any other industry. Anime found a way into almost every facet of media and that’s no easy feat.
Where will anime go next? It’s anyone’s guess. Maybe we’ll see the first anime girl on the moon in a year or two.