CJ Insights

” Problems and Solutions to Issues Faced by the Animation Industry” Report on Makoto Kimura’s in-house lecture

2024/04/25 TRENDS

Excerpts from a lecture given by Makoto Kimura, founder of BLUE RIGHTS Co., Ltd., who spoke at an internal workshop hosted by Cool Japan Fund Inc.

Nowadays, the global fanbase for Japanese animation is increasing, and it has become more common to hear positive information about anime. The global anime market grew to around 3 trillion yen in 2023 and is expected to grow to around 8 trillion yen by 2030, according to industry reports. At the same time, there are a variety of issues facing the industry, and the severe reality of the need for structural reforms is becoming apparent. Makoto Kimura went from working at a TV station to a production company and has produced many popular anime, such as Jujutsu Kaisen, Attack on Titan, and Chainsaw Man. He has worked on both the investment and production side of anime and is the founder of BLUE RIGHTS Co., Ltd. We spoke with him about the current state of the Japanese animation industry and its future.

=== Makoto Kimura Profile ===============
2007: Producer for noitaminA, a late-night anime slot on Fuji TV
2017: Producer at Twinengine
2018: Producer and overseer of the rights business, including financing, licensing, etc., at MAPPA
2024: Founded BLUE RIGHTS

Demand for Japanese Anime is Rapidly Increasing due to Worldwide Streaming

With more than 200 million members, NETFLIX is putting considerable effort into its anime lineup. Crunchyroll, a steaming service for anime that has not expanded to Japan, has more than 100 million registered users. The viewing environment for anime is maturing both in Japan and abroad, and the market is expanding as demand increases. Production costs are rising proportionally. It seems that costs are two to three times more expensive on average compared to a decade ago. I believe the future of Japanese anime is nearly here, where, like in Hollywood, a budget is determined with the global market in mind from the start. Similar to The Super Mario Bros. Movie and Spider-Man: Into the Spider-Verse, I hope traditional animation in Japan can also be produced with a goal in mind.

A Shortage of Creators in the Japanese Animation Industry

While the market for Japanese anime continues to expand, signaling a promising future, the industry also faces a serious problem: a shortage of anime creators. While demand for Japanese anime continues to increase, supply has not kept up. In reality, the shortage of creators means that any attempt to create a new movie or series would take four to five years. Around a few hundred people enter the industry in Japan each year. Though the employment rate of students graduating from technical schools for animation is high, the turnover rate is also high. One possible reason for this may lie in the rights structure. Projects in the animation industry are quite complex and characterized by a web of intertwined rights. In general, business-like production teams tend to follow precedents mostly. I believe, however, that the rights structure must be adapted to the times in order to tackle the industry-wide shortage of animators. Having experience both as a creator and as a producer, I think that more favorable rights should be given to those who actually create the anime. There are various positions for all players involved in anime production, including producers, creators, and platforms. I believe that all those involved in the industry have a true desire to create both good anime and good teams. With a limited number of players in the industry, I want to discuss the available solutions to these issues and develop solutions with people in each part of the industry. It should be the objective of all players in the industry to increase the number of creators and distribute good anime worldwide in the next decade and beyond. I hope we can all look for a good system and win awards in the future, like Hayao Miyazaki, who won an Academy Award this year.

MAPPA’s Take on Structural Reforms

When I was an anime producer at Fuji TV, I was involved with the anime business from the production committee side. As a broadcasting station, we formed production committees by gathering funds from outside companies with different areas of expertise. I also worked in the rights business to monetize projects as we produced anime. I later had the chance to join MAPPA. I decided to apply my expertise at this production company in both planning and development and in the rights business, which I had developed over the years. I may have been a bit unusual when I transferred to MAPPA. At the time, others moved from production companies to companies organizing production committees (TV stations, film distributors, film producers, etc.) but not the other way around.
Production companies mainly accept requests for anime production from production committees and produce a gross profit. This means that the success or failure of an anime does not greatly alter revenue and expenditures. In a way, these companies are blessed to continue to receive requests and take on creative challenges, but at the same time, I think it’s quite difficult to break free from hand-to-mouth operations with such a setup. If pandemics and other unexpected issues arise and airing dates are pushed back, these companies will not be able to produce a finished product within the allotted production budget. This is a major risk for these companies. It is quite hard to pursue new businesses and grow as a company in such a situation. MAPPA implemented several approaches to change this environment and drafted growth strategies. One approach was to obtain rights to an anime through investments, and another was to produce a popular anime. A third approach was to pursue projects related to popular anime (merchandizing, events, etc.). With Chainsaw Man, we were determined to try our hand at all three approaches with a 100% investment. The hope was that this structural reform would give the production company strength and contribute to development in the industry. We would create, deliver, and sell products on our own. Several issues remained, but it was a financial success, and I hope we can apply this success to the next update.

*Mr. Kimura (left) and Takao Yamashita (right), General Manager of Cool Japan Fund, who was in charge of this project.

Japan Contents Factory’s Solutions to Production Finance Problems

There are issues in production companies holding rights. With hand-to-mouth operations as described above, production companies do not have the funds to invest on their own. Of course, there are available options, such as bank loans, but it is not so simple to borrow the several hundred million yen needed to produce a single anime, be it TV series or movie. For several years, it has become common in the anime business to raise money through presales (entering into broadcast syndicate contracts before production based on project’s strength and confidence in delivery). Japan Contents Factory (JCF) was established in 2018, the year I transferred to MAPPA. This fund was created by the Cool Japan Fund (CJF) to support the expansion of Japanese content abroad. JCF has functioned as a financing bridge for production companies (offering production fees to companies for a certain period based on the existence of a presales contract and the company’s ability to complete production). I had the chance to create a wholly owned production team using this bridge financing, but few people on the production side today have the knowledge required for such funding. I also feel that the JCF structure did not scale appropriately six years ago, as production companies that are subsidiaries of major companies do not need to finance their own operations in this way. However, with the recent success of Chainsaw Man, I believe the need for JCF and other forms of bridge financing will increase in the future. Having founded BLUE RIGHTS, I want to help create a system and develop the business so that we can solve organizational issues for production companies and animators. BLUE RIGHTS was founded very recently, and I hope to work with anyone who wants to collaborate in some way. It is every producer’s dream to create quality productions with a team gathered in this way (aiming for an Academy Award!).


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