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Tokyo Keizai: Poor Accounting at Animation Production Studios Is the Reason Behind Low Animator Wages

posted on by Kim Morrissy

The Tokyo Keizai's online newspaper published an article on Wednesday about the effects of COVID-19 on the Japanese anime industry, using quotes from an anonymous industry insider. The article's central argument is that COVID-19 is bringing into sharp relief the pre-existing problems with financing and accounting in the anime industry.

According to the source quoted in the article, many anime production companies are clumsy at handling the financials. "Many managers cannot read the balance sheet, cannot track the cash flowing in and out of the company, do not understand the importance of internal reserves, and only worry about living from paycheck to paycheck. So when they run out of cash, they accept work on a new anime project in order to receive the advance payment, knowing all the while that it's beyond the studio's capacity. Then they run into trouble in production, and the workplace ends up in shambles. The root of the labor issues in the anime industry stems from the lack of ability on the managers' parts to plan ahead and improve the financials."

No anime production company has declared bankruptcy yet due to COVID-19, but according to the source, it is only a matter of time, given that roughly 40% of companies are in the red. Anime studios today are currently working on projects that were planned around 2-3 years ago, but when production committees start feeling the results of box office losses, canceled anime events, and other forms of revenue, then less anime projects will receive funding in future. Under the production committee system, a group of companies band together to fund anime in order to reduce the financial risk, but it also means that struggling anime studios can't afford to invest in their own properties and must act according to the demands of the production committee.

As an example of a studio that is in charge of its own financials, the article brings up Khara, which was founded by Evangelion creator Hideaki Anno. When establishing the studio, Anno familiarized himself with accounting and was able to invest 100% of the company's own capital into the Evangelion Rebuild films. However, it is rare to find creative-minded people who are also skilled at handling business matters.

Another issue the article points to is the importance of team building and training programs. The article argued that the qualities involved in creating a hit are intangible and can't be discerned through a team's track record, bringing up Makoto Shinkai as an example of a person who created an unprecedented hit that could not have been predicted through the numbers. However, he spent years building a team and developing a work culture that enabled him to create a hit anime. This makes robust training programs an essential investment.

At the same time, such programs are difficult to implement on a wide scale due to the financial difficulties. For struggling studios, this can result in a negative feedback loop where they produce low-quality work that does not result in a hit for the production committee, and therefore aren't in a position argue for more funds next time, which in turn affects the quality of the work. Because of the industry's aging workforce (according to a 2019 JAniCA survey, 16.5% of respondents had worked in the industry for over 30 years), the quality of anime will likely decline in the long term unless widespread training programs are implemented.

The anime industry isn't all bad, though, which is why the source hopes for better money management from studios in the future. "There are a lot of people who only focus on the overwork and the problems in production, but I think that the anime industry is a good industry. There's a strong sense that everyone is working together to achieve a goal. I think that this is the biggest difference from companies in a different field. The anime industry is full of harsh deadlines, and the pay is low. But the people who work with and what kind of satisfaction you get from it are important for you as a human being. That's something that I realized all over again from the coronavirus situation."

Source: Tokyo Keizai (Natsuhiko Ujiie)

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