How True Is the Trickle Down Effect in Anime?

Anime is bringing in more revenue than ever, even through COVID times, but to what extent is the workforce at large feeling the trickle down effect? Gaku Narita, executive director of original content for Japan at The Walt Disney Co., recently claimed in an interview with The Hollywood Reporter that “It's not just the select few who are getting rich; the artists on the ground are starting to make decent money.”

How true is this, exactly? The first problem with answering this question is that the anime industry doesn't pay standardized rates; it's up to individual production studios to negotiate their share of the budget, and it's also up to individual contractors to negotiate their slice of the pie. In an industry that relies heavily on freelancers and outsourcing studios (often based overseas, with lower average rates than their Japanese counterparts), this means that wage increases are heavily dependent on negotiating power rather than pressure from external bodies.

Talking to contractors currently active in the industry paints a mixed picture. Perhaps the closest thing to an answer is “Some artists can negotiate for more on some projects, depending on the state of the budget and schedule.”

Before we get into the specifics, one thing that we can say for certain is that anime production budgets have been climbing dramatically over the past decade. This is reflected in higher licensing costs nowadays: according to ANN's Chris Macdonald, A-list titles can cost US$250,000 per episode to license in North America, which is roughly the production budget for many series, although higher budget anime sometimes cost as much as US$500,000 an episode to produce. According to the Media Development Research Institute Inc., it cost around US$140,000 to produce the average TV anime episode in 2010.

When Netflix first delved into anime in earnest, there was some talk about whether this would pave the way for better conditions overall, but according to industry insiders, that hasn't been the case. JoJo's Bizarre Adventure: Diamond Is Unbreakable character designer Terumi Nishii remarked in 2020 that the budgets might be “twice” or “thrice” as big as other anime, but animator wages haven't been raised accordingly. Last year, animator Ippei Ichii claimed that an anime project made at MAPPA for Netflix offered 3,800 yen (US$34) per sequence when the average rate for TV series is between 3,800 to 7,000 yen, putting this particular project on the lower end.

Several days later, MAPPA issued a statement claiming that it has never coerced creators, and that payment rates are determined on a case-by-case basis. Which… once again points to the central issue here: regardless of who foots the bill, there is no systematized standard for allocating those wildly fluctuating budgets.

The same can be said of Disney-funded anime. According to Jun Sugawara, who runs the Animator Supporters advocacy group, the junior animators he spoke to who worked on Star Wars: Visions were paid 250 yen (roughly US$2.25) per frame. This was very low, he told me, and not any different from the norm.

Sugawara believes that it's the managerial jobs that have been seeing the biggest benefit from the budget inflation due to recent Japan-wide work reform policies. “This has led to better treatment for positions normally hired as full-time employees such as production facilitators,” he said. “Most animators are hired as contractors which means that they're unable to benefit from this work reform.”

Despite the damning complaints, this doesn't mean that no one on the ground has been seeing any benefits, nor is it simply a case of executives pocketing everything. According to industry analyst Tadashi Sudo, studios need higher budgets more than ever, for multiple reasons: because of a growing awareness of industry problems, studios are trying to spend more on training and digital workflows. Also, the pressure to produce enough anime to meet the demand, even when the studio doesn't actually have the resources for it, means that costs for retakes and outsourcing will climb, even more so when it must be done at short notice.

According to an anonymous industry insider speaking to Tokyo Keizai, poor management and accounting doesn't help. “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,” they claimed. “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.”

For many studios, this paints a grim picture indeed. Teikoku Databank reported that 37.7% of anime production companies were in the red in 2020. Terumi Nishii likens Netflix's production budgets in this situation to rain in a desert: “It gets swallowed by the sand, and it's not enough to make plants grow.”

So Who Can Make Money?

As I wrote near the start of this article, some artists can negotiate for more on some projects, depending on the state of the budget and schedule. Who are these artists?

According to Tadashi Sudo, changes are concentrated most in understaffed occupations, and the environment varies from animator to animator. Although the working environment for entry-level animators working as employees for major studios has improved dramatically, a major challenge for the future will be to close these gaps in working conditions.

In the context of anime's overproduction crisis, animators are increasingly valuable labor. Freelance translator and Production Coordinator FAR (profiled here for their contributions to Wonder Egg Priority) says that production managers are under more pressure than ever to spread their net widely for recruiting talent. “[They are] substantially much more desperate and much less experienced in terms of negotiation and financial management, and these conditions mean that for the first time many animators are starting to have the upper hand in unit price negotiations,” FAR told me.

They said that an acquaintance managed to negotiate three times the normal unit price for the direction of an episode of an upcoming show. It takes savvy and a willingness to reject an initial lowball rate, but skilled artists who know what they're worth can afford to hold their ground.

At the same time, the onus shouldn't be on the individual animators to negotiate their share of the budget. A system like that is frustrating because it means that there is money to go around, but those with the financial power have decided that they'd rather make individual exceptions than lift standards across the board.

Even with a higher budget, a “trickle down” effect to the industry's lowest-paid workers does not happen if nobody takes responsibility for them. For standard rates to rise, then the production committees responsible for funding anime need to understand the importance of the labor costs up-front and account for that ahead of time.

It's easy to read these stories and fall into pessimism, but the bright spot is that there are people arguing for reforms on the inside. The growing international awareness of this issue is a factor in these closed-door negotiations. If you want to help as a fan, I encourage you to share information and bolster initiatives like Animator Supporters. Listen to the workers themselves, and lend your support if they ask you.