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Tonari Animation's CEO on Which Innovations Will Help the Anime Industry

by Lynzee Loveridge & Kim Morrissy,

Tonari Animation CEO Jarrett Martin
If there's one thing Tonari Animation CEO Jarrett Martin wants anime fans to know about the Japanese animation industry, it's how long it takes to make anime.

“For one episode of anime, it takes about six months with a team of people, and they're all working from sun up to sun down,” he told ANN. “So you take 100 people working for six months, and then you're somehow creating a weekly release schedule out of that, which means we're basically producing an entire season of anime simultaneously.”

The reason such intense schedules can even work is because studios regularly support each other. One of the niches Tonari Animation fills is as an outsourcing company, providing animation for select episodes of Boruto: Naruto Next Generations, Blue Lock, Zombie Land Saga, and a host of other series.

Although the studio is headquartered in the United States, it hires animators from across the globe. Its very existence is one of the consequences of anime's globalized production pipeline. As Japan's aging population struggles to keep up with the global demand for anime, the industry is increasingly looking to overseas talent. Tonari Animation employs many animators in Southeast Asia, a region the Japanese animation industry has traditionally relied upon heavily for outsourcing, making it uniquely attuned to the nuances in the anime production pipeline.

“It is a brutal industry, and it's not for everybody,” said Martin. “People don't realize generally how low the pay is. If you just look at it on its face, it sounds exploitative because it's like, 'oh, these animators are making $4 an hour.' If you're in the Philippines, you're making $1 dollar an hour.”

So what can help? Martin suggested that new technology trends like AI and NFTs could be a boon—if implemented carefully.

“The problem with the AI stuff right now is that all of the data sets are stolen art. It's basically just scrubbing the Internet, stealing everyone's art, and then you can even type in any artist into these generative AIs, and then it will just steal a bunch of their images and make a new version of that,” he cautioned.

On the other hand, studios using internal data sets to train their AI programs shouldn't be a problem from a rights owner perspective. Martin said that Toei Animation is in the best position to exploit this trend, being the largest anime studio with access to a private server.

“Artists are in a position now where it's like, they can't keep up with the demand of the anime industry, and we can only train people so fast. I don't see us being able to keep up with demand unless we're open-minded to new tools. I think it might be similar to when anime went digital. We were able to save a lot of money and time by digitally doing cel painting.”

There is, of course, the fear that AI could outright replace jobs. Current applications still leave a lot of room for human intervention, however, like Netflix and Wit Studio's recent anime short that uses AI-generated backgrounds.

According to Martin, AI would have saved the production team around 30 minutes per background. “They basically drew the background layout, and AI did the first pass, and then a human did the second pass. So I think that saves you time on texturing. That's all. It does not do very much for them.”

“But,” he continued, “that adds up over time. So if you're making backgrounds for a whole series, 30 minutes per background is a lot.”

NFTs (Non-Fungible Tokens) are an even fuzzier case, especially in the context of consumer backlash. Martin argued that NFTs have a place as a supplementary funding source, and anime production companies are increasingly taking an interest in them.

“There are actually a lot of artists making good money producing NFTs based on their illustrations and auctioning them online. It gets a little bit more value than just posting something on Art Station or something. It allows people to own digital art, which is kind of interesting.”

Selling digital art can be a cost-effective way for anime studios to raise money separately from the production committee system. It is more efficient, for instance, than direct crowdfunding, which requires the organizers to expend extra money and labor on backer rewards.

“I think I've seen productions raise US$300,000 [through crowdfunding], but that's only enough to show a network that there's interest in it. So when they see like Bored Ape or Azuki or people like that making hundreds of millions of dollars or billions of dollars off of just a PNG that they could produce in an afternoon, everyone's like, 'Okay, well, if we could do something like that, then we could produce anything we wanted to make.' The artists could create anything, and there's no backer thing you have to worry about.”

Tonari Animation itself owes part of its existence to NFTs; one of its biggest early clients was an NFT anime project called Second Self. Although Martin said he was initially skeptical about the project's relevance to anime, he saw it as a good opportunity to develop an original IP—something that many fledgling animation studios struggle to get off the ground.

“My thought was we could go from doing odd jobs and subcontracting for anime and then moving over to being able to create original IPs. So that was the goal. So we tried it. We didn't make as much as we were hoping to.”

Tonari Animation no longer owns the IP to Second Self. Martin said they spun it into a new company called Kurogane Corp, which develops the IP separately from Tonari Animation.

“Basically, what happened was we raised enough money to develop a pilot. And in the development process of the pilot, we learned that even more than money, you need to have people around you willing to work on your project, your idea. We had a lot of artists in Tonari protest the whole NFT thing. They were like, 'We don't want to be associated with this.'”

Despite Tonari's own mixed history with NFTs, Martin said that he hopes people can be more open-minded about the topic.

“I think maybe the problem right now is that people are just talking about the technology too much. Maybe every image online in ten years is an NFT, and we don't care about the fact that it's an NFT. They're just like, oh, they're the verified owner of this digital artwork. That's all it is. It's like a receipt. It's like getting excited about receipts.”

For now, Martin said that hiring global talent is the right way to go when it comes to addressing the anime industry's immediate problems.

“All the experienced staff are aging out. And there's only two answers right now. One, either Japanese people need to start having more kids so that we get more artists from inside Japan, or we're going to have to be looking outside Japan. And I think that's what's been happening in order to meet the labor shortage.”

Martin said the low pay is a problem, although it can scale well in countries with favorable exchange rates to the yen and a low cost of living.

“If you're working in the richer countries, you're going to have a hard time affording anything. But $1,200 a month working on anime is actually a really decent paying job in the Philippines. I think it's created the perception in Southeast Asia that animation is a really good, high-paying career to pursue. One of the interesting things about this kind of globalization is that people can get a lot of buying power even if the pay is low.”

After establishing a Tokyo studio late last year, Martin's biggest goal for Tonari Animation is to create more full anime episodes, further establishing the studio's reliability in the Japanese production pipeline.

“Anime is a global phenomenon inspiring so many people all over the world, and it's been attracting a lot of artists. Everyone knows that kid in their high school that all they were doing all day was drawing anime in their sketchbook. Those are the people that are making up the kind of new workforce in the anime industry.”

“Back then, it was like, you're never going to draw anime for a living. Okay, well, now they are.”

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