Anime popularity soars - Should you be investing?

The word anime is an abbreviation of the word ‘animation’. In Japan, the word is used to refer to all animation, and outside of Japan, it has become the catch-all term for animation from Japan. Over the last four decades, it has grown into an international phenomenon attracting millions of dedicated viewers and being translated and dubbed into multiple languages. In the first instance, it’s just another ‘animated cartoon’ but in many ways like artwork, storytelling, and the cultural distinction exhibited by the characters, clear differences can be noticed, which makes it very different from that of any other animated cartoon!

Whilst many things try to make us different, the love for anime is what a lot of us have in common. Be it the Gen-Z, and their intense urge to binge their favourite anime or the Millennials, who enjoy watching their favourite OG anime, everyone deserves a break to just sit down and de-stress by watching something they love. The sheer range of anime out there shows that a fan of any other entertainment show or movie can find an anime that perfectly mirrors their style. The fact that anime content is one of the fastest-growing genres throughout the pandemic, and statistically according to the data from the Parrot Analytics the global demand for anime content grew 118% over the past two years is mind-boggling and is something that we simply can’t ignore. [1]

Data: Parrot analytics; Chart: Will Chase and Allie Carl/Axios

Naturally, anime viewers try to do everything in their power to support the creators and the production team by binge-watching, buying merchandise, joining live events, and donating to the same. However, some people wish to help in monetary terms, like financially investing in it. What might sound absurd to some strangers, but the fans are highly likely to go beyond what’s expected of them.

The current scenario

Technically, you don’t need to be an otaku (a person having an intense or obsessive interest, especially in the fields of anime and manga) to invest in this industry, and an apprehensive investor needs to understand the room for potential growth in this market. It is also noticed that so far, anime seems to be immune to the recent reassessment of the streaming business model. Taking Netflix’s current disappointing financial stance into consideration, and yet during the AnimeJapan convention held in Tokyo in March, the streamer revealed it would launch 40 new anime titles in a growing range of genres, that too, in 2022 alone. To justify the expansion, they’ve mentioned that over half of all Netflix subscribers worldwide watched have at least some anime content on the platform. The global pandemic has started, other platforms too are getting an increased number of viewers, and the emergence of Japanese anime might just be the world’s most covid-resistant form of entertainment. An increased number of viewers ask for more and faster content, and this is where investments can help speed up the process. As most creators are put at a halt due to funding issues, an initiative to invest in them would boost their efficiency.

How can you help the industry?

This eventually brings up the question of ‘How to invest in the anime industry?’

• Crowdfunding: To help fund the anime production, some creators conduct crowdfunding campaigns as most anime studios are unable to fund themselves. While crowdfunding has proved to be successful for the creators, for the funders to get some returns, you need to make sure you choose the right type.

• Besides crowdfunding, you can invest in anime like how you’d invest in any other common investment. But with the return on investment point, you need to take into consideration various aspects to make it a worthwhile investment. Some of the different factors to be taken into account are popularity, fanbase, acceptance, ratings, age, etc (like any other business).

Restraining factors

However, investing in the anime industry isn’t the same as investing in anime creators.

This brings two restraining factors,

• The lack of efficient artists due to the insufficient payments to anime artists is a potential threat that may hamper the growth of the global anime market during the forecast period.
• The availability of unauthorised online streamers of anime shows also poses a challenge to the industry players as these unauthorised streaming platforms result in financial losses to the original creators.

Types of anime - Insights

The market can be divided into segments depending on the anime type the company focuses on. It’s because not all production studios focus on the creation of the series from the manga. There are various other types like TV production, merchandising, pachinko ( a type of mechanical game, that is used as a form of recreational arcade game, frequently used as a gambling device, originating from Japan), anime movies, creation of manga (a style of Japanese comic books and graphic novels, typically aimed at adults as well as children), internet distribution– expected to grow the highest CAGR during the forecast period, music, and live entertainment.

Where to invest?

Let us take a glimpse at some of the players in the market.

• Bones Inc.
• JC Staff Co. ltd.
• Kyoto Animation Co., Ltd.
• Madhouse Inc.
• Madman Entertainment Pty, ltd
• PA Works Co, ltd
• Pierrot Co, ltd
• Production I.G, Inc.
• Sunrise Inc.
• Toei Animation Co., Ltd.

Though there are people that tell you not to invest based on emotions, it contradicts the whole point of making your stock do better. After all, it’s ultimately the viewers’ response and encouragement that helps a company and its stocks to do better. When the projection is wishful thinking on your part, you need to be aware as any stock can change due to mental trends, and other changes, which is why you still need to be rational as an investor. When you try to match up which company has been producing which anime, you will come to know why the company is flourishing and why its valuation is so. This doesn’t always have to mean your favourite anime publishing company is always on the top of the share returns, this is where the fact that the companies can be employed in making any type of anime comes as a possible reason even though the show isn’t doing well on online platforms.

Why is “now” the right time to invest in the industry?

Inspecting the expectations of the global anime market in the light of the recent turn of events gives us a proper view of how the market is booming. The market has been gaining significant traction in line with the growing popularity of anime content across the globe. While there might have been a turndown for live theatre and live entertainment during the pandemic, online streaming platforms have shown quite a remarkable traction, which is expected to only grow further. As a result, the key market players that are primarily engaged in the production, direction, editing, shooting, and planning of anime content, are strongly emphasising leveraging advanced technologies to visualize stories with high-end graphics.

On inspection, we understand that the global anime market size was valued at USD 25.16 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 9.2% over the forecast period 2022-2030 to USD 51.03 billion[2].

The consistent development and distribution of various anime characters and shows also created a positive impact on the market. The anime market generates a huge amount of revenue from overseas sales and not just in Japan.

In conclusion, it’s clear that the numbers show that you don’t invest as a recalcitrant weeb (a non-Japanese person who is so obsessed with Japanese culture) that can’t be contained, but as a mindful being that sees a potential market with high growth prospects. This makes it only natural that you invest in this lucrative industry with immense scope for growth, especially considering that you get extra benefits like an updated series or a new anime!

As the great legendary swordsman, Kenshin Himura quotes,

“Whatever you lose, you’ll find it again. But what you throw away you’ll never get back.”

Keeping that in mind, in the end, it’s up to the investor to recognise the flourishing anime market and make the best out of it!

Edited By Shon Kipgen

CITATIONS

1. Sara Fischer, Kerry Flynn, “Demand for anime content soars” Axios, 11 Jan. 2022, https://www.axios.com/2022/01/11/anime-demand-soars-content-straming?utm_campaign=Thought%20Leadership%3A%20Articles&utm_content=194066870&utm_medium=social&utm_source=twitter&hss_channel=tw-1107802028
2.  Sarantos, Constance. “How You Can Support the Anime Industry.” CBR, 27 Aug. 2020, https://www.cbr.com/how-you-can-support-anime-industry/.
3. Patrick Brezki, “Cannes: How Japanese Anime Became the World’s Most Bankable Genre” The Hollywood Reporter, 16 May 2022, https://www.hollywoodreporter.com/business/business-news/cannes-japanese-anime-worlds-most-bankable-genre-1235146810/
4. Nova1Advisor, Anime Market Size, Share & Trends Analysis Report By Type (T.V., Movie, Video, Internet Distribution, Merchandising, Music)- Global Industry Analysis, Share, Growth, Regional Outlook, And Forecasts, 2022-2030, 24 March 2022 https://www.novaoneadvisor.com/report/anime-market