Japanese media companies Kadokawa and Bandai Namco Holdings are acquiring independent anime studios as they struggle to supply enough content for a booming overseas market due to a shortage of workers.
By deepening ties with affiliated studios, the companies aim to boost production capacity and the supply of high-quality content, giving momentum to efforts to develop intellectual property abroad.
In July, Kadokawa said it purchased Doga Kobo, the studio behind the hit anime Oshi no Ko. Kadokawa now counts six anime studios as subsidiaries.
By 2025, Kadokawa seeks to consolidate legal, accounting and similar administrative functions. The animation industry relies heavily on freelancers, so the process of managing contracts and invoices is often complicated.
Bringing those tasks under one roof will let Kadokawa cut expenses and offer better compensation to employees.
“There’s an urgent need to implement business systems to improve the quality of creative works and pay for animators,” said Takeshi Kikuchi, chief anime officer at Kadokawa.
More than 300 television anime titles are now produced annually, along with an increasing number of major anime movies. Production costs have swelled, and schedules run longer as studios seek to meet mounting fan expectations for appealing artwork and dynamic action sequences.
The labor shortage in the anime industry is spurring changes to the business models. Until now, so-called production committees were formed from investments by TV channels, publishers, and other stakeholders that held the IP rights to an anime.
Roles were clearly demarcated in this arrangement. Planning and distribution was separated from the production of the works.
Those lines increasingly are blurred. For example, production companies might have subsidiaries handle the animation and may also invest directly in the production committee.
Production company sources have reported waiting 2–3 years for an outside studio to complete a title, which they said illustrates the growing need to possess in-house animation capabilities.
When it comes to an anime based on a hit original work, having the TV series air two years later risks missing out on the height of the work’s popularity. Anime studios also take on risk by investing in a production committee, but they would reap recurring earnings if the series they animate becomes a hit.
Bandai Namco is improving productivity in its anime business through integration. The subsidiary Bandai Namco Filmworks came into being in 2022 after Bandai folded its anime operations into Sunrise, the affiliate studio behind the Gundam franchise.
As part of the consolidation, former Sunrise studios once scattered in multiple locations were moved into the building serving as the home office for Bandai Namco Filmworks. Roughly a dozen animation teams were reorganized into five groups.
“The groups are divided into their areas of expertise to maintain diversity, and by combining locations, they are able to help each other out in line with how busy their schedules are,” said Shin Sasaki, managing director at Bandai Namco Filmworks.
In April, Bandai Namco Filmworks acquired anime studio Eightbit as a wholly owned subsidiary. The two sides share processes and coordinate production and release schedules.
Toho, the Japanese movie company, bought anime studio Science Saru and turned it into a wholly owned subsidiary this June. Science Saru animated the movie Inu-Oh.
“Science Saru is highly regarded overseas,” said Keiji Ota, Toho’s managing executive officer who heads the anime group. The group is also the parent of Toho Animation Studio.
Japan’s anime market, including goods and related products, totaled JPY 2.92 trillion yen (USD 20.4 billion) in 2022, the Association of Japanese Animations reported. The scale is double from a decade prior.
Despite the growing market, animator pay has not kept up. The Japan Research Institute reported that animators make a median of roughly JPY 1,300 (USD 9.1) an hour, which is JPY 1,100 (USD 7.7) lower than the overall average for all industries.
This could change with the buyout of anime studios by larger companies. Toho said it will raise the pay levels of newly acquired employees to match that of Toho Animation Studio. Bandai Namco Filmworks pledged to improve the working hours to correspond with Bandai standards.
“Production studios often run shoestring operations even if they produce popular titles, so being a subsidiary of a large company will lead to business stability,” said Yosuke Yasui, senior economist at the Japan Research Institute. “However, it is necessary to watch closely whether [a takeover] will lead to the development of young talent, and not just the short-term profit of the studio.”
This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.