The Global Rise of Anime and Its Untapped Potential

On December 19, Douglas Montgomery, CEO of Global Connect Media, spoke at the Foreign Correspondents Club of Japan (FCCJ) on the global anime market and its potential. Montgomery is also an advisor for Parrot Analytics and an adjunct professor at Temple University.

Parrot Analytics is an entertainment analytics company. It measures audience demand for content using data from social media, streaming platforms, and online searches to provide insights for media companies. Montgomery was joined by Makoto Tezuka, a renowned visual artist, film director, and the son of the legendary manga pioneer Osamu Tezuka.

The conference focused on the anime industry's economic impact and the need for Japan to ensure profits from streaming and merchandise benefit local studios. Both Montgomery and Tezuka covered data-driven strategies, the role of generative artificial intelligence (AI) in production, and Japan's approach to managing this cultural export to maximize national gains.

Anime's Billion-Dollar Surge

Earlier this year, Montgomery met with the Japanese government to discuss the anime market's growth. The rapid global rise of Japanese content has not gone unrecognized. It is estimated that the content industry is worth ¥4.7 trillion JPY ($31 billion USD). Montgomery clarifies that this "rivals the steel industry and is approaching the value of semiconductors."

Additionally, the Japanese government has set an ambitious target of ¥20 trillion ($120 billion) net worth of the industry by 2033. Its mid-point target is ¥10 trillion ($62 billion) by 2028. Achieving this, Montgomery argues, will require "sophisticated data techniques to track, measure, and target areas."

Parrot Analytics measures consumer engagement with content through what they call demand metrics. It captures billions of data points daily from sources like Google searches, Facebook interactions, and Wikipedia. Then it ranks and attributes these points to gauge attention, engagement, and viewership. More effort by consumers to engage with content results in a higher weighting. For example, a Facebook "like" is low-weighted, while a blog post or discussion is heavily weighted.

Anime series Dandadan. Within five weeks of its release on Netflix, Dandadan amassed 7.8 million hours watched, matching the viewership of Demon Slayer Season 4, which took ten weeks to achieve the same number. (Via X)

By applying this metric to streaming revenue data, Parrot says it can estimate the global streaming revenue for anime. According to its data, Japan leads with the highest share of the total, significantly outpacing other regions despite its smaller population.

In 2023, anime generated approximately $5.5 billion in global streaming revenue, accounting for about 6% of the global total. This success is largely driven by the strength of Japanese content, particularly anime. "While South Korea follows in second place due to the rise of K-dramas, Japan's dominance reflects the vast library and rich history of anime," Montgomery explains.

Closing the Profit Gap

Beyond streaming, anime also drives significant merchandise sales. In collaboration with the Association of Japanese Animators (AGA), Parrot estimated the global anime merchandise market to be worth $14.3 billion in 2023. Together, anime streaming and merchandise make up a $20 billion global industry.

In 2023, North America led in streaming revenue at $2.24 billion, followed by Asia at $1.6 billion. Despite North America having only 7% of the world's population, it generates nearly half of global streaming revenue. Meanwhile, Asia, with 60% of the population, contributes about 30%. This highlights significant growth potential for anime in Asia over the next 5-10 years.

How much of this revenue is making its way back to Japanese companies, however, remains an issue. Teikoku Data Bank reported that just over one-third of anime studios saw higher revenue in 2023.

Acknowledging the Creators

What can be done to ensure that anime studios and workers also benefit from the boom?

"That does need to be corrected," Montgomery affirmed, "Which is why the government has started these various initiatives looking at content. Look at our neighbors across the sea, (South) Korea. Korea has had a very intentional strategy of using pop culture to benefit the country. I would say, in general, Japan has been much less intentional and more accidental."

Japanese companies overseas, Montgomery claimed, need to be more strategic in their efforts. "Using this (kind of) data, you can do many things that you couldn't do in the past," he emphasizes. "So, I think Japan, quite frankly, needs to be more intentional in (its) efforts overseas and not leave it to somebody else."

*Anime series Oshi no Ko. The premiere episode set records on HIDIVE, becoming the most successful launch in the platform's history in terms of viewership and subscriber growth. (Via X)*

AI: Opportunities and Limitations

On the subject of AI in anime, Montgomery was candid. "Slippery slope or not, it's coming," he stated. "You cannot stick your head in the sand and pretend it's not there."

He also warned against attempts to regulate it. Regulating it within Hollywood studios, for example, he suggested, would lead to those outside Hollywood and the guilds capitalizing on it.

Tezuka, however, had a more nuanced perspective on the matter. "AI can generate many stories quickly," he acknowledged. "However, manga requires significant emotional depth, which AI currently cannot produce." While AI is used in manga to create general storylines, Japanese creators must still manually craft the emotional elements, he said.

In anime production, animators use AI for text revisions and technical adjustments, such as simple character movements or background changes. "Generating complete animations is still beyond AI," he continued. "Japanese animation remains largely hand-drawn, unlike overseas production methods. Fully integrating AI into anime production remains challenging."

Author: Daniel Manning