More anime than ever, more audience than ever, more titles, more platforms, more everything. Yet, several major industry companies are closing fiscal reports with deficits or sharp drops in profits. If that sounds contradictory, it is, and it has a name: “boom without profits.” That’s exactly how an Imperial Data Bank survey describes the current state of anime production in Japan.

How Production Rises While Profits Fall

The problem has multiple layers, but the most visible is money. For years, streaming platforms paid licensing fees covering 80-100% of production costs. It was a comfortable model: produce, deliver, and the platform absorbed most risk. That “delivery bubble” period is ending. Platforms aren’t raising fees as fast, meaning studios must recoup rising costs through other means: international sales, events, physical products. Those who excel at this build solid businesses; others see their break-even point drift further away.

Meanwhile, internal costs keep rising. Animator shortages are real, outsourcing is pricier, and companies like Kadokawa accumulated significant goodwill after acquiring studios like ENGI, Kinema Citrus, and Video Kobo, raising their per-project profitability threshold. Japan’s Ministry of Economy noted anime production has hit the sector’s capacity limit. In short: the industry produces as much as it can, but it’s not enough to balance the books.

Negative results aren’t just from small studios. Kadokawa, Pony Canyon, TBS and ABC Animation divisions reported tough results. Studio KAI, behind Uma Musume‘s third season, saw notable drops. Toho and Toei Animation showed mixed results. MAPPA‘s case with Chainsaw Man illustrates the other extreme: the studio funded production itself to keep rights and build an independent business around the title—a gamble that could pay off big or cost dearly.

Another long-ignored factor is overproduction of isekai. While platforms still see the genre as a reliable viewer generator, the sheer volume has scattered audiences, significantly lowering success rates. With too many isekai competing for attention, the traditional media mix model—where anime drives manga, light novel, and merchandise sales—becomes much harder. This pressure has built for about three years, but current volumes are amplifying it.

The article warns that a seemingly obvious solution—simply reducing production—could worsen things. If Japan leaves market gaps, foreign studios like Korean Studio Mir are ready to fill them. The answer isn’t producing less, but producing smarter, with better distribution and licensing strategies. Anime isn’t dying as an industry, but the era where producing and selling were almost automatic is definitely over.

Do you think the solution lies in big studios absorbing small ones, or that independent diversity gives anime its variety and soul?