The Japanese Anime and Manga Cluster Can Such An Established Cluster Still Rescue Japan's Economy?

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The Japanese Anime and Manga Cluster

Can such an established cluster still rescue Japan’s economy?
Case Study
This case was written by Mayra Calcagnini, Sinan He, Zhang Dan, Albena Iotova, Mengyuan Liu,
Krupa Submanian, Yan Xu and under the supervision of Professor Mark Esposito, Grenoble
Ecole de Management. It is intended to be used as the basis for class discussion rather than to
illustrate either effective or ineffective handling of a management situation. This case was
compiled by published sources.
© 2011, Grenoble Ecole de Management & Lab-Center for Competitiveness. No part of this
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Table of Contents
Introduction ............................................................................................................................................ 4
Japan Macro Overview ........................................................................................................................ 5
Background.......................................................................................................................................... 5
The Economy ....................................................................................................................................... 7
The Asset Bubble ................................................................................................................................. 8
Japan Micro Overview ......................................................................................................................... 9
Trade.................................................................................................................................................... 9
Foreign Direct Investment (FDI) ........................................................................................................ 10
Education........................................................................................................................................... 11
Patent Protection .............................................................................................................................. 11
Industry Sector .................................................................................................................................. 12
Country Diamond................................................................................................................................ 13
Firm Strategy, Structure and Rivalry ................................................................................................. 13
Factor conditions............................................................................................................................... 13
Capital market: .............................................................................................................................. 13
Technology: ................................................................................................................................... 14
Demand conditions ........................................................................................................................... 15
Government ...................................................................................................................................... 15
Related and Supporting Industries.................................................................................................... 17
Cluster Development......................................................................................................................... 18
Cluster Diamond ................................................................................................................................. 22
Demand Conditions ........................................................................................................................... 22
Targeted Consumers ..................................................................................................................... 22
The Domestic Market .................................................................................................................... 23
Exports........................................................................................................................................... 25
Supporting and related industries..................................................................................................... 27
Film Industry.................................................................................................................................. 27
Media Industry .............................................................................................................................. 28
Video Software Industry................................................................................................................ 29
Toys and Games Industry .............................................................................................................. 29
Digital Publishing ........................................................................................................................... 30

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Publishing Industry ........................................................................................................................ 31

Advantages: ....................................................................................................................................... 31
Government: ..................................................................................................................................... 32
Cluster strategy: ................................................................................................................................ 33
Structure............................................................................................................................................ 35
Rivalry ................................................................................................................................................ 35
Conclusion ........................................................................................................................................... 36
Appendix: Sources of Data for Figure 15
Bibliography......................................................................................................................................... 40

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Introduction
Japanese cartoons and animations have successfully disseminated and proliferated
throughout the world in the past four decades. In 1963, the Japanese animation Astro
Boy captured the North American audience only eight months after its first release in
Japan. Since the beginning of 1970s, Japan exported multiple animations to other
Asian countries and in the late 1970s the Japanese animation Gouda was reached
the French market. Detective Conan, Pokémon and Spirited Away rank amongst the
most famous Japanese cartoons and animations. Spirited Away, first published as a
manga, or a cartoon, in 2001 gained wide popularity with domestic and foreign
readers. Its success translated into an anime, or animation, which reached box office
sales of about ¥30 billion domestically and $250 million overseas. Moreover, in
February 2003, Spirited away became the first Japanese animation feature that won
an Oscar award for Best Animated Film (Hayashi, 2009).
There are several reasons for us to study the Japanese cartoon and animation
cluster. First, manga and anime products have captured a large market share in
Japan. For example, the anime box office sales for the top 20 Japanese anime
movies peaked at ¥27.4 billion in 2005 (Japan External Trade Organization). In
addition to the domestic success, the Japanese manga and anime exports
significantly contribute to Japanese international trade. Second, Japanese cartoon
and animation has become a tool to spread Japanese culture globally. Up to 70
countries have broadcasted Japanese anime in their national TV stations (Talk about
the Japanese Anime of the Three Major Business Opportunities in Japan, 2008).
Thirdly, the Japanese cartoon and animation industry is now facing a crossroad since
its traditional supporting industries are declining, but it is attempting to transit from its
traditional forms to modern and electronic types. The customers want different
features than before and there are new technologies that enable this transition.
Fourthly, this study of the manga and anime as a cluster is unprecedented although
manga and animation have been studied separately in the past. We also explore the
strategic alliance between the two. This cluster; however, operates in a domestic
economy, which is currently plagued by stagnation which has already lasted for the
past twenty years. The currency deflation negatively affects exports. Moreover, the
declining and aging population is an unfavorable demographic condition, which
reduces the domestic market size for the Japanese cartoon and animation cluster.

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Japan Macro Overview
Background
Japan is a mountainous, volcanic island nation situated in East of Asia and in the
Pacific Ocean. With a surface of 394,000 square kilometers, Japan is surrounded by
oceans and its neighbors across the waters are China, Russia, North Korea and
South Korea as seen in Figure 1. Because of its geographical location, the country is
popularly called the "Land of the Rising Sun" as the characters in its name mean
"sun-origin". Japan is made of up 6,852 islands and most of which are mountainous
or even volcanic. Tokyo, the capital city, is the world’s largest metropolitan area and
home to 30 million people. As of 2009, Japan is the 10th most populated country in
the world, with around 127.07 million residents (datamonitor 2010). The official
language is Japanese. According to the data from the CIA Factbook, the standard of
living in Japan is currently one of the highest in the world, with the fifth highest life
expectancy of 82.25 years (The World
Factbook, 2011) and the third lowest
infant mortality rate according to the
United Nations World Population
Prospects report (World Population
Prospects: The 2008 Revision
Population Database, 2009).
The Japanese Immigration Control Law

of 1952 imposed severe immigration
restrictions. Moreover, in 2004, the
Immigration Control and Refugee
Recognition Act aimed to decrease the
number of unauthorized immigrants in
Japan.
Figure 1 Map of Japan (Teaching and Learning in 2011, Strict migration policies have resulted

2011) in high employment. The
unemployment rate in Japan averaged 2.60 percent
from 1953 until 2010, reaching an historical high of
5.60 percent in July of 2009 and a record low of 1.00
percent in November of 1968. It was last reported at
4.6% in February 2011 due to the shortages of labor
resources (Japan Unemployment Rate, 2010).
However, with a long life expectancy and high living
standards, Japan is confronted with the problem of
employing and re-employing the ageing population,
23% of which is over 65 year as seen in Figure 3.
Figure 2 Japan's population‐2011(The
World Factbook, 2011)

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The problem becomes more severe as the age cohorts in the country begin to appear
as the post-war baby boom arrived at 56-60 years of age in 2010. In term of total
population, approximately one out of three will be over 60 years of age in 2015.
Japan has therefore revised its regulations of the law concerning the promotion of re-
employment for middle-aged and older workers which entered into force in 2004 and
one concerning the securing of employment opportunities for older people up to the
age of 65 which went into effect in 2006. Furthermore, the Japanese enterprise
unions shūshin koyō, guarantee permanent employment, which is commonly
practiced within Japanese companies.
Figure 3 Japan Unemployment Rate (Japan Unemployment Rate, 2010)
Japan has transformed from an industrial economy into a service-oriented country in

the past 3 decades, as can be seen from Figure 4 & Figure 5 the employment in
industries has declined with fluctuations from 35% to 28%; while that in services has
witnessed a constant growth from 54% to 67% from 1980 to 2010.
Figure 4 Japanese Employment in industry (Employment in Industry in Japan, 2010)

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Figure 5 Japanese employment in services (Employment in Services in Japan, 2010)
The Economy
The Japanese yen (JPY) is a stable currency at 2011 exchange rate $/¥ of 81.92.
The yen has depreciated 1.5 % against the USD between 2003 and 2007 and
appreciated by 30% against the USD between 2007 and 2011 contributing to a
negative inflation rate in the past years as seen in Table 1.
Table 1 Exchange rates (Datamonitor, 2009 & 2010)
Year Exchange Rates Inflation

Rate
($/¥) (€/¥) (%)
2003 116.0093
2004 108.2251
2005 110.1322
2006 116.3366 145.9627 0.30%
2007 117.8145 161.2087 0.00%
2008 103.4662 151.3969 1.30%
2009 93.6167 130.1751 -1.50%
2010 93.6167 130.1751 -1.00%
According to the World Bank report, in 2009 Japan’s gross national income (GNI) per
capita of $38,080 ranked 32nd and its purchasing power parity (PPP) of $33,440
ranked 37th globally (World Bank, 2011).
Although Japan has only 2.09% of the world population, it has arrived at the second
place, right after the U.S. with a 13.4% of the global GDP. It is one of the third largest
in the world with a GNP lagging behind only the USA and China.

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Figure 6 Japanese GDP growth rate (Japan GDP Growth Rate, 2010)
Japan’s service-oriented exporting economy differs from its heavily industrial

geographical neighbors. In 2010, its GDP derived from services (75.9%), industry
(23%), and agriculture (1.1%) (The World Factbook, 2011).
The Asset Bubble
The Japanese asset price bubble (バブル景気, baburu keiki) refers to the economic
bubble that occurred from 1986 to 1991, which the Japanese call it the Lost Decade.
During this period the real estate and stock prices greatly inflated. The bubble's
collapse lasted for more than ten years with stock prices bottoming in 2003. After the
crisis in the early 1990s, the Japanese government reformed the financial system
through the Big Bang Program, to make it “free, fair and global”. These measures
aimed to liberalize and diversify the financial market, in order to retain investors.
Japan’s bank-based system has low dependence on the market, so the risk related to
the market failure is low as well. However, the functional separation across markets
hinders the financial market to fulfill its economic functions. The market prices hit a
lower value during the global crisis in 2008 as seen in Figure 6. Being relatively
distant from the subprime crisis of the United States, the Japanese economy did not
experience the severity of the economic crisis until the fourth quarter of 2008 and the
first quarter of 2009. This resulted in an average GDP decline of less than -10%.
Some argue that the appreciation of the Yen led to the bubble which decreased the
exports and forced the government to decrease the interest rate to stimulate internal
consumption. Others argue that the low interest rate did not stimulate the internal
consumption of the country but boosted investments. The Government took the
financial and fiscal measures to save the situation. These included lowering the
interest rate to nearly zero and providing subsidies to domestic industries to stimulate
exports. (Watkins).
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Japan’s public debt is the highest among other industrialized countries, measured at
200% of GDP in 2010 (The World Factbook, 2011) and its economy is deflation-
plagued. Falling prices make consumers reluctant to spend money thinking that
purchase is likely to be cheaper in the future. Deflation depresses investment by
corporations because falling prices make it difficult to predict returns and make debts
harder to pay off. In 2010, the Bank of Japan enhanced loan programs for banks
aimed at increasing liquidity in the Japanese economy. The central banks lowered
the interest rates in order to encourage economic activity. This practice made it
cheaper for businesses and consumers to borrow loans and less attractive for them
to save. The country exercised a zero interest-rate policy from 2001 to 2006, when it
gradually started raising rates, which reached 0.5 percent in early 2007. In late 2008,
the central bank again started to cut rates as Japan’s economy was hit by the effects
of the global economic crisis (Tabuchi, 2010).

Figure 7 Market capitalization of Tokyo stock exchange (Datamonitor, 2010)
Japan Micro Overview
Trade
Japan is an export-oriented country. In 2008, as the fourth largest exporter and sixth
largest importer of goods and services in the world, the share of exports of goods and
services in Japan’s GDP was 17.5%, while the share of imports was 17.4%.
Japanese exports and imports both had consistent growth during 2000-2008 as seen
in Figure 8.
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Japan's main export goods are cars, electronic devices and computers. Due to the
lack of natural resources, in 2009 46.2% of Japan’s imports were raw materials such
as oil, foodstuffs and wood. China has recently replaced United States to be Japan’s
most important trade partner (16% exports to China, 18.8% imports from China),
followed by US, European Union and other Asian countries. The bilateral trade
agreement with the US, and historical trade relations with Korea and China helped
promote Japan’s trade interests. Japan attempted to energize its economy through
liberalization of trade, and it is negotiating free trade agreements with many countries
in East Asia such as China, Korea, Singapore, etc, as they account for the highest
and most dynamic share of Japan’s trade.

Figure 8 Japan's external trade (Datamonitor, 2010)
Foreign Direct Investment (FDI)
FDI into Japan remains at a low level compared to those of other developed
countries. The authorities attributed the low level of FDI as seen in Figure 9 into
Japan to macroeconomic factors, such as the appreciating trend of the yen, as well
as the high costs of business and regulatory barriers, which Japan is taking steps to
rectify (WTO Trade Policy Review, WT/TPR/S/142). USA is the largest investor in
Japan, accounting for 45% of Japan’s FDI stock. Europe follows in with a share of
30%. The main sectors attracting foreign investment are the manufacturing sector
(40%, half of it in machinery), followed by services (31%), retail and wholesale trade
(22%), and finance and insurance (4%). However, Japan’s outward FDI is at a high
level due to large cash holdings of Japanese companies and the appreciating yen.

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Figure 9 Japan's inward FDI (Datamonitor, 2010)
Education
The Japanese education system includes two parts: mandatory education and
optional education. Six years of elementary school and three years of junior high
school are mandatory education, which allows all children to be equally educated.
Three years of high school and above are considered as optional education.
The education reform movement of the 1980s focused on flexibility, creativity,

internationalization, individuality, and diversity. It has significantly improved the
quality of Japan’s education. Japan's high quality education system contributed
strongly to the modernizing process of Japan. “The world's highest literacy rate and
high education standards were major reasons for Japan's success in achieving a
technologically advanced economy. Japanese schools also encouraged discipline,
another benefit in forming an effective work force” (Patterns of Development, 1998).
The quality of universities and higher education in Japan is internationally
recognized. In the 2010 Quacquarelli Symonds’ World University Rankings, the
University of Tokyo is ranked 19th and Kyoto University is ranked 25th (University
Rankings in 2011, 2011).
Patent Protection
Patent protection plays a critical role in Japanese business. Baughn, Bixby and
Woods (1997) indicate that Japan patents two and a half times more intensively than
the US relative to gross domestic product. Japanese patent law has initially been
influenced by the elements of systems from a few industrialized countries, such as
France and Germany. It is based on first-to-file principle and the term of patent is 20

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years from the filing date. According to the Japanese Patent Act, infringement of a
patent must be engaged in penal servitude or a monetary fine. Japan’s patent law
aims to encourage invention by protection and thereby contributes to the
development of the economy. “Japanese patent law places more emphasis on
industrial development. The Japanese view inventions more as a public than a
private good. Their laws facilitate the diffusion of technology, encourage cooperation,
avoid litigation, and promote Japanese industry” (Baughn, Bixby, & Woods, 2010).
Industry Sector
Japan’s industries are highly diversified and a variety of industries are successful.
The development of high technology resulted in the steady performance of Japan’s
industry sector. After the World War II, the Japanese government set industrial
policies to promote industrial development. The industrial policies shifted resources
to specific industries to gain international competitive advantage for Japan. The
development of knowledge-intensive and high-technology industries has been
strongly encouraged. Examples include the automotive industry, machine industry,
computers and robotics. Japan is one of the largest producers of motor vehicles. The
major automotive manufacturers in Japan include Toyotas, Honda, Nissan, Suzuki,
and Mazda etc. Japan is also one of the world’s largest exporters of semiconductors
and electrical machinery (Datamonitor, 2010).
A keiretsu business model appeared in Japan during the “economic miracle,” period
spanning from WWII to the 1970s. Keiretsu is a traditional Japanese economic and
social network system providing a close interconnecting structure amongst suppliers,
manufacturers, and distributors. Within the keiretsu groups, there are both
horizontally-integrated and vertically-integrated alliance and financial resources are
available to group firms. Toyota is the biggest one among the major postwar keiretsu
group (See the Invisible).
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Country Diamond

Figure 10 Diamong analysis of Japan
Firm Strategy, Structure and Rivalry
In Japan the highly competitive and internationally successful industries such as
automobiles and consumer electronics are coexisting with noncompetitive and
internationally unsuccessful industries such as construction and transportation.
Researchers have found that within internationally successful industries, competition
is fierce. Entry occurs in industries even if many rivals are already in place and profit
prospects are modest. Extensive government intervention interferes with industry
competition (Porter & Sakakibara, Competition in Japan)
Factor conditions
Capital market:
In the previous decades the savings rate of Japanese households was high. In early
1980’s, Japanese households were saving about 15% of their after tax incomes. The
population has been aging and spending its retirement savings. Young consumers in
Japan want more consuming goods than previous generations. These factors have
contributed to a declining savings rate of just above 2% while the public annual deficit
was about 7% of GDP in 2009. The risk is that there will not be enough capital

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outflows in the future and Japan may become a net drain of global savings
(Feldstein, 2010).

Technology:
Japanese are enthusiastic about new technologies. Japan is the world leader of
space, automobile and transport, medical, robot, and water processing technologies.
According to a research published by Japanese government, from 2001-2005, the
number of world class (top 1% cited worldwide) thesis published by Japanese
researchers in certain areas are top 3 in the world, following American and Germany
(日本下一财年科研经费猛增, 2010).
New policies encourage the development of new technologies. For instance, “Center
of Excellence Plan” was established to help improve higher education and attract
world class researchers by providing ample funding. The new fixed term employment
system, allows for shorter contracts as compared to the lifelong employment
practices in Japan. It encourages the fluidity of employees in the research field.
Meanwhile the national funding for scientific research has been increased in the
recent years. In 2011, the government will grant 223 billion yen to fund research in
Japan (日本下一财年科研经费猛增, 2010).Table 2 displays the amount of funding
and its growth rate (Grants-in-Aid for Scientific Research: Budget).
Table 2 Budget (Japan Society for the Promotion of Science)

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Demand conditions
Most of the Japanese customers belong to a well educated middle class. There are
multiple world leading companies in Japan like Sony, Panasonic etc. Japanese
consumers prefer domestic brands and they are extremely demanding in terms of
quality. Michael Porter has described the features of Japanese consumers (Porter,
The Competitive Advantage of Nations, 1990):
“A vast number of companies packed into a relatively small land area.

Moreover, The Japanese people are culturally and ethnically very
homogeneous, which serves to concentrate purchasing power even
further…Because of crowded conditions and limited living space,
Japanese demand was for compact, portable, quiet, and multifunctional
products…These and other attributes of Japanese home demand
directed Japanese firms to segments of the market that were ignored or
underserved elsewhere, and only later emerged as global
segments...Consumer durables, in particular, are important status
symbols among Japanese…Japanese buyers are willing to replace
products frequently to get newer and better models…Japanese
consumers will reject a product because of a small surface
defect…Japanese consumers are also fickle in comparison to those in
most other nations…the sophistication of Japanese buyers is reinforced
by an extreme abundance of product information. ”
Meanwhile Japanese customers value brands. As we can observe from many

companies’ experiences in the Japanese market, a revolutionary product will attract
the Japanese consumers.
The Japanese markets offer large range of unique and sometimes shocking
products. Niche markets are thoroughly developed. Japanese consumers expect
various products to satisfy their needs. Anticipating needs encourage companies to
constantly improve their products and changing demographics will result in more
companies servicing the aging population in Japan.
Government
The Japanese government stimulates consumption through a Keynesian-style
economy. In Keynesian economy, the government borrows large sums of money
and distributes them to the Japanese populations via tax rebates or other stimuli.
These consumers then spend the money, resulting in increased demand for goods.,
which in turn, drives the growth of industries, and hence, employment. The

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Keynesian economy; however, is also characterized by cheap money, huge deficit

and decreased growth rates of Japan (A Must Read on Keynesian Economics for the
Japanese Government, 2010).
The Japanese government provides good external environment for emerging and
high-tech industries. It actively influences the market through “administrative
guidance”. The Administrative Procedure Act of 1993 defines administrative guidance
as "guidance, recommendations, advice, or other acts by which an Administrative
Organ may seek, within the scope of its duties or affairs under its jurisdiction, certain
action or inaction on the part of specified persons in order to realize administrative
aims, where such acts are not Dispositions." Administrative guidance is not legally
enforced, but breaching it will result in government imposed restrictions on business
activities.

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Related and Supporting Industries
Table 3 Cluster details (SMEA 1997)
Many clusters operate within the dominating Japanese industries as seen in Table 3.
According to Hideki Yamawak (Yamawak, 2001), there are strong linkages between
Japanese clusters. First, the interlocking structure creates hierarchical relationships
between manufacturers, first-tier suppliers, and second-tier suppliers. Second,
manufacturers extensively subcontract with the suppliers. Third, a large number of
firms with different complementary skills coexist in the clusters. Yamawak also found
that almost all the clusters value specialization and division of labor, diffusion of
technology and technological cooperation as contributors to their success. As noted
in Table 4 the companies within clusters share R&D, production, marketing, and
other efforts through frequent and extensive cooperation.
Table 4 Inter‐firm cooperation within clusters (SMEA 1997)

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Michael Porter argues that the real competitive advantage does not contribute toward
the market share, because it is based on low return on capital. The existence of
many inefficient and non-competitive industries alongside the globally successful
ones and the lack of new emerging industries are underlying crisis for Japan (Porter,
Sakakibara, & Takeuchi, 2002).
Cluster Development
The Japanese anime and manga industry evolved significantly during the World War
II period. Before this period, animators faced several problems. First, they had
difficulties competing with foreign producers like Disney, which had influence over
both, audiences and producers. Since foreign films had already generated sizable
profits at home, they could be sold at lower prices abroad. As a consequence,
Japanese animators who typically worked in small companies had to keep their
prices low in order to stay competitive. However, the lower prices generated lower
revenue, which reduced salaries and made it difficult to compete in terms of quality
with foreign production. Larger enterprises could offer superior features such as color
and sound. Until the mid-1930s Japanese animation used cutout animation instead
of cel animation because the celluloid was too expensive. This resulted in a type of
animation that was flat and without detail because forward and backward motion was
difficult to reach (Sharp, 2009).
Japanese animation improved considerably after the introduction of multiplane

camera, which creates a three-dimensional effect, and along with the introduction of
sound and cel animation techniques. However, such innovations were hard to
support commercially and prewar animation depended considerably on sponsorship.
For this reason animators often concentrated on making public relations films for
companies, educational films for the government, and works of propaganda for the
military (Katsunori, 1997).
Since censorship and school regulations discouraged film-viewing by children during

this period, the Ministry of Education supported and encouraged anime that offered
educational value. Such support was important for producers who had experienced
difficulties releasing their work in regular theaters, and it allowed producers to make
great improvements in animation techniques. Animation found a place in scholastic,
political and industrial use (Katsunori, 1997).
World War II had the most significant impact on the development of Japanese
animation. In the 1930s the Japanese government began enforcing cultural
nationalism. This also led to a strict censorship and control of published media. Many
animators were obliged to produce animations which enforced the Japanese spirit
and national affiliation. Some movies were shown in newsreel theaters, especially
after the Film Law of 1939 which increased government authority and involvement

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over the cinema through the promotion of documentary and other educational films.
Such support helped boost the industry as bigger companies formed through
mergers and created major live-action studios. More and more animated films were
commissioned by the military, showing Japanese people winning against enemy
forces. The major animated films of this period were created with the help of the
Imperial Japanese Navy. Anime films of this genre include Momotaro's Sea Eagles in
1943, and Momotaro's Divine Sea Warriors in 1945.
Due to the World War II and the weak economy, the unemployment rate in Japan
was very high. This had a detrimental effect on the cinema industry. The extremely
militaristic Japanese government saw cinema as the perfect propaganda tool to show
people the glory and invincibility of the Empire of Japan. Many films from this period
represented deeply patriotic and militaristic themes. In 1942 Kajiro Yamamoto’s film
Hawai Mare oki kaisen or “The War at Sea from Hawaii to Malay” portrayed the
attack on Pearl Harbor.
With the end of World War II, Japan became exposed to American animation which
had been banned under the war-time government. Japanese anime became more
Disney-like in their features with musical numbers and animal sidekicks. The success
of The Walt Disney Company's 1937 feature film Snow White and the Seven Dwarfs
influenced Japanese animators greatly. The manga artist and animator Osamu
Tezuka, considered the "legend" and the "God of manga", adapted and simplified
many Disney animation-techniques to reduce costs and to limit the number of frames
in productions. He started a production company called Mushi Productions, and his
work inspired characteristics and genres that remain fundamental elements of anime
till date. Another critical personality for the development of Japanese anime was
Yasuo Ōtsuka, animator of the Toei’s production. Mushi Productions and Toei’s
productions were the most important production companies in Japan. Toei lent its
talent to international companies like Sunbow Productions, Marvel Productions, DiC
Entertainment, Murakami-Wolf-Swenson, Ruby Spears and Hanna Barbera. They
collaboratively produced several animated cartoons for America during the 80’s.
Other studios like TMS Entertainment, were also being used in the 80's, which lead
to Asian studios being used more often to animate foreign productions. However, the
Japanese companies involved, still produced anime for their domestic market.
During the 1970s, the Japanese film market shrunk due to competition from
television. This increased competition, reduced Toei Animation's staff and many
animators went to other studios. Mushi Productions went bankrupt and its former
employees founded studios such as Madhouse Production and Sunrise. As a result,
many young animators were thrust into the position of directors instead of being
promoted and this injection of young talent allowed for a wide variety of
experimentation. One example of such experimentation is the television series Heidi,
Girl of the Alps, which represented a shift from the fantastic theme to the realistic
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drama aimed toward the children. Heidi became an international success as it was
exported to many European countries and it became very popular there (Kehr, 2002).
Anime became a major cultural export between the 1980s and 1990s. According to
the Japan’s External Trade Organization, the anime market only for the United States
is worth around $4.35 billion. Anime has also had commercial success in Asia.
Anime in Europe and Latin America, has become more traditional than in the United
States. For example, many anime based video games were released in Europe due
to its popularity; even years after the show went off-air. Anime distribution companies
handled the licensing and distribution of anime outside Japan. Licensed anime is
modified by distributors through dubbing or subtitling. The Internet has played a
significant role in the exposure of anime beyond Japan. Before the 1990s, anime had
limited exposure beyond Japan's borders. As the popularity of the Internet grew, so
did interest in anime (Basker, 2008).
The combination of internet communities and increasing amounts of anime material,

from video to images, helped the process of internationalization. Another factor that
contributed to the expansion of anime in the Western world was the phenomenon of
“fansubs”, who are a group of fans who create subtitles for anime on their own and
then distribute the episodes by uploading them on websites and advertise them, to
earn money. This violates copyright laws in many countries. Even though ethical
implications of distributing or watching fansubs is a topic of controversy, fansubs
played an important role in helping anime become popular, especially in the English
speaking world.
During the 1990’s, international TV networks started to broadcast anime regularly. In

the United States, cable TV channels such as Cartoon Network, Disney, Syfy, and
others dedicated some ‘air-time’ to anime, whereas others such as the Anime
Network and the FUNimation Channel, specifically aired anime. Sony-based Animax
and Disney's Jetix channel broadcasted anime in many countries. AnimeCentral
solely broadcasted anime in the UK (Leonard, 2003).
Since anime became commercially profitable in western countries, it made a

significant impact on the Western culture. Since the 19th century, many westerners
have expressed an increasing interest towards Japan. Anime dramatically exposed
more westerners to the culture of Japan. Aside from anime, other aspects of the
Japanese culture increased in terms of popularity. For example, the number of
people studying Japanese increased worldwide. In 1984, the Japanese Language
Proficiency Test was devised to meet the increasing demand. Anime-influenced
animation refers to non-Japanese production of animation, which adopts the visual
style of anime. Most of these productions are created by studios in the United States,
Europe, and Asia excluding Japan (Convention Schedule, 2007).

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Another important phenomenon is the diffusion of anime conventions, events with the
primary focus on anime, manga and Japanese culture. They began to appear in the
early 1990s, during the Anime boom, starting with Anime Expo, Animethon, Otakon,
and JACON. Currently anime conventions are held annually in many cities across the
Americas, Asia, and Europe.] Many attendants participate in “cosplay”, short for
"costume play". It is a type of performance art in which participants wear costumes
and accessories to represent a specific character from a popular fiction in Japan. In
addition anime conventions and anime clubs have become popular in colleges, high
schools, and community centers as a way to publicly exhibit anime as well as
widening Japanese cultural understanding. For instance the Japanese term otaku is
used as a term for anime fans who hail from other parts of the world, who are
obsessed with anime. The term otaku has a negative connotation in Japan but
contrastingly in the international context it is considered a matter of pride for the fans.

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Cluster Diamond

Figure 11 Cluster diamond
Demand Conditions
Table 5 Anime and manga customer demographics (Kokesu)
Targeted Consumers
The Japanese animation and
cartoon (anime and
manga, respectively)
industry has developed
a marketing strategy
based on age and
gender. Table 1 shows
the demographics of
the targeted market
sectors including
children, teenagers,
and adults. As seen in
the table, the content of
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the anime or manga changes depending on consumer demographics and each

category represents a large number of products released via video software,
television broadcasting, movies, internet, mobile phones, books, and magazines.
The Domestic Market
The Media Development Research Institute reported on August 9, 2009 in its
Animation Market Analysis Project that the Japanese domestic and foreign animation
market grew by 1.6% between 2008 and 2009 to about ¥216.4 billion (US$2.52
billion) (Domestic and International Animation Market in Japan Grew 1.6% in 2009,
2010), but has not reclaimed its 2006 peak of ¥241.5 billion (US$2.026 billion)
(Japanese Anime Market Grew to 242 Billion Yen in 2006, 2007). The bar graph in
Figure 12 displays the declining trend of Japanese animation consumption in the
recent years. Foreign titles have captured less than 15% of the Japanese animation
market (Japan External Trade Organization).
Size in 100 millions of yen

Figure 12 Size of Animation Market in Japan, 1970‐2009 (MDRI Press Release, 2010)
Since about 40% of anime revenue is derived from video sales

(日本のアニメが世界に「売れない」生き残りの道は , 2009), the introduction of
Blu-Ray disks has contributed to the increase of anime sales in 2009. Oricon, the
head of the Japanese corporate group supplying statistics on the entertainment
industry, reported that anime Blu-Ray and DVD sales rose by 9% from to ¥71.5 billion
yen ($796 million) in 2008 to ¥77.7 billion yen ($865 million) in 2009. At the same
time the anime DVD sales declined by 9%; however, the sharp increase in Blu-Ray
sales more than compensated for it (Overall BD/DVD Sales: Anime Sales Rise in
Japan in 2009, 2010).
According to the Japanese External Trade Organization (JETRO), the Manga market
size for 2005 was ¥502.3 billion, accumulated from ¥260.2 billion from tankoubon or
manga books and ¥242.1 billion from manga magazines (Manga Industry in Japan,

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2007). In 2006, however, the manga market size dropped by 4.2% to ¥481 billion.
The manga sales have exceeded ¥500 billion annually for many years; however,
manga magazine sales have been decreasing since 1995 and tankoubon sales have
started decreasing in 2004. Japan’s domestic manga market has been decreasing as
a whole since 1996 when it reached ¥584.7billion. By 2006, the market has
decreased by nearly 20% (2006 Japanese Manga Market Drops Below 500 Billion
Yen, 2007).
Contrary to the decreasing interest in printed manga books and magazines,

electronic versions of manga have proliferated the world’s largest eBook market, in
Japan. In 2008, 84% of all mobile phone downloads in Japan, worth ¥40,200 million
($447million), were manga. Manga had also captured 33% of the ¥6,200 million ($69
million) PC eBook market. The manga eBook sales totaled ¥35,000 million ($389
million) and comprised 75% of the entire eBook market in Japan.
Japan has currently the world’s largest eBook market of ¥93 billion ($1.033 billion)
out of which ¥71 billion ($789 million) or 74% is manga. Sales forecasts anticipate
eBooks to capture 14% of the ¥500 billion manga market by 2012 as seen in Figure
13. Manga is also expected to make up 74% worth ¥71,000 million of the ¥93,000
million eBook market in Japan (Voyager, 2010).
eBook sales (¥100 million)

Figure 13 eBook Market Size in Japan (Voyager, 2010)
Despite the adaptations of anime and manga to new technologies and consumer
goods, the Japanese cartoon and animation cluster is facing unfavorable
demographic trends. Low birth rates and restrictive immigration procedures result in
an aging society and declining consumer pool (Japanese Anime, Manga Markets
Decline, 2007). Furthermore, the global financial crisis has shaken consumer
confidence and further dampened the growth of sales (Euromonitor International).

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Exports
Anime has established a large market size at home; however, its sales abroad are
only a fraction of its domestic sales as seen in Figure 14.

Figure 14 Anime market size (日本のアニメが世界に「売れない」生き残りの道は , 2009)
Anime sales abroad are generally highest in the regions of North America, Europe,
and Asia. In 2005, Japanese anime-related sales reached $500 million, mainly
derived from character merchandise geared toward children. Sales of DVDs catered
to the teenage market segment peaked in 2003 at approximately $550 million, but
have experienced a decline since then as seen in Figure 15. Manga sales peaked in
2007 at $219 million and declined to $140 million in 2009. European countries;
however, have imposed entry barriers including the screen quota system, which has
forced Japanese anime to compete against American movies. Furthermore,
children’s titles do not gain popularity unless they are aired on TV, which hinders the
development of markets for character goods, character-based games, card games,
toys and manga. Similarly, China requires a government permit to air the anime on its
TV channels. Moreover many anime titles are sold illegally in the form of pirated
DVDs there. South Korea has imposed different regulations for anime programs
including restrictions on letters and words. The distribution of anime in Southeast
Asian countries is through small contracts; however, pirated copies have infiltrated
the markets there too. Singapore and Thailand impose fewer restrictions on anime-
related merchandise advertisement. India and the Middle East also seem as potential
large markets (Japan External Trade Organization).

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Figure 15 U.S. Anime and manga markets (see Appendix)
The market demand for Japanese manga and anime has declined at home and
abroad. The domestic market has shrunk because of the decrease in the number of
TV viewers and the poor financial performance of the TV companies. Furthermore,
companies face difficulties appropriating value from online streaming because anime
and manga fans upload and download electronic versions for free. Other factors also
hindered expansion of the global anime market size, for instance in the U.S., the
ratings of the anime programs aired on TV went down due to lack of popularity and
violent contents. Moreover, fansubs, which translated the programs into English and
made them available for distribution, hindered the TV business model. European
countries have continued to impose local business protective barriers that restrict
manga and anime opportunities. They also continue emphasizing their own culture
through TV programming. Anime interest in the East and Middle East Asia has failed
to expand contrary to popular expectations because of the economic recession (IT
Media).

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Supporting and related industries

Anime-related Industries

Figure 16 Japanese anime industry overview
Film Industry
Anime accounts for 60% of the Japanese film production (Kehr, 2002). In 2009,
Pokémon: Arceus and the Jewel of Life was the third best selling movie in Japan with
¥4.67 billion box office earnings (Kakeo, Kondo, & Yano, 2010).
Although the Japanese film industry has been able to produce enough movies to
match the amount of films imported into Japan since 1995 (J-Pitch, 2010), the
Japanese film domestic market share experienced an all time low of 27% in 2002
(Petkovic & Usui, 2009). In 2003, the Japan Association of Theater Owners, the
Motion Picture Producers Association of Japan, the Motion Picture Association, and
the Japan Association of Theater Owners launched the “Let’s go to the movies!”
campaign to increase theater attendance (Japan External Trade Organization, 2006).
Since 2003, Japanese films have gradually gained domestic market share reaching
nearly sixty percent in 2008 (MPPAJ, 2008), but then decreasing to 57% in 2009
(MPPAJ, 2009) and 53.7% in 2010 (MPPAJ, 2010). The Japanese film industry is
experiencing a decrease in market share despite the continuous increase in number
of Japanese releases and decrease of imported films displayed in Figure 17
(Petkovic & Usui, 2009).

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Figure 17 Japan Film Industry statistics 2009 (Petkovic & Usui, 2009)
Media Industry
The Japanese Media Industry experienced steady declines of nearly 2% for 2008 to
2009 and a meager growth of 0.3% in 2010 as seen in Table 6. The compound
annual growth was -0.5% between 2006 and 2010. According to the 2010
Datamonitor forecast; the Media Industry is expected to grow on average at
approximately 1% per year until 2015 (Datamonitor, 2010).
Table 6 Value of Japan Media Industry (Datamonitor, 2010)
Year $ billion ¥ billion % Growth

2006 100.7 9,423.60
2007 101.8 9,526.00 1.10%
2008 100 9,361.40 ‐1.70%
2009 98.2 9,194.00 ‐1.80%
2010 98.5 9,222.60 0.30%
CAGR: 2006–10 ‐0.50%

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Video Software Industry
In 2009 anime made up 59.8% of the Blu-ray Disc sales and 25.1% of the DVD sales.
As seen in Figure 18 the market value of the recorded DVD and video industry in
Japan declined by
9.9% in 2008, to
reach ¥285.9
billion. This
decline is partially
compensated by
the emergence of
new recorded
technologies such
as the Blu-Ray
disks. Moreover, a
favorable market
value forecast
anticipates a 4.1%
increase by 2013
(Datamonitor,
2009).
Figure 18 Japan Recorded DVD and Video Market Value (Datamonitor, 2009)
Toys and Games Industry

Figure 19 Japan toys and games market value (Datamonitor, 2010)
Pachinko gambling games account for 40% of the Japanese entertainment industry.
Nearly all Japanese train stations neighbor a Pachinko Parlor. These, as well as
many other games and toys go hand-in-hand with the anime characters that have
infiltrated the domestic toys and games industry (Russell, 2010). This tight
relationship between the toy and game industry and the anime industry has resulted

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in mutual promotions. Recently; however the toy and game industry has experienced
a decline similarly to the anime and manga industry as seen in Figure 19. In 2009,
the toys and games market shrank by 1.2%, reach a new low of ¥ 643 billion.
Unfavorable demographics, resulting from low birth rates has further crippled the
industry because 28.4% of the market comprises of infants and pre-school children.
The Japanese toys and games market is expected to decline another 1.7% between
2009 and 2014.
Manga – related Industries

Figure 20 Japanese manga industry overview
Digital Publishing
Bitway is a subsidiary of Toppan Printing, the second largest printing firm in the
world. Masaaki Shimizu, who is the General Manager of International Business
Strategy for Bitway, estimates the Japanese market size for manga downloads in
2010 at ¥55 billion (about $654.5 million). Manga amounts to 89% of digital
publishing. Between 2009 and 2010 the mobile manga downloads increased by 16%,
a slow down compared to the 30% increase between 2008 and 2009. On the other
hand, the downloads for other consumer electronics such as the iPad increased by
20% between 2009 and 2010 and are expected to undergo exponential growth in the

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next few years (ICv2, 2010). As seen in Figure 21, new electronic devices are
expected to drive the expansion of the digital publishing market.

Figure 21 Japan digital book market forecast (ICv2, 2010)
Publishing Industry
Manga comprise about 25% of book sales and 20% of magazine sales in Japan
(Japan External Trade Organization, 2007). However, the Japanese publishing
industry is following the declining global trend. In 2010, the domestic sales of books
and magazines dwindled to ¥1.936 trillion, a 27% decrease from 2009. The industry
has experienced continuous decline from its 1996 peak of ¥2.656 trillion (Osawa,
2010).
The increasing popularity of rental bookstores, the growing number of secondhand

bookstores, and the rapidly emerging comic cafes or manga kissa, where for a fixed
hourly payment customers can read comic books, have contributed to the decline of
the Japanese publishing industry in terms of copyright protection. Other contributors
to the market decline include the decreased number of children, who are the main
consumers, and their mass transition from physical books and magazines to the
internet (Moeran, 2010).
Advantages:
Japanese Anime cluster has few natural advantages including large, population and
high life expectancy contributing to the labor force. Moreover, the Japanese Anime
cluster has developed most of its advantages through government support,
education, technology and its marketing strategy.

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The Japanese government’s support is a major contributor to the success of the

Anime cluster. Government and Anime industry players started promoting and
exporting anime aggressively as the ‘Japanese culture’. In 2004, the Japanese
government passed a law regarding the content of mass media industry promotion, to
sustain Japanese anime industry’s top position in the world. Previously Animation
was not associated with the Japanese culture. Now the Japanese government
promotes “cool Japan” culture by leveraging the popularity created by Manga, Anime
and Video games. The government globally markets anime as the modern extension
of traditional Japanese arts (Younghan, 2009)
Japan has the first mover advantage as the pioneer of Anime. Furthermore, Japan
utilizes the low cost labor of its neighbors. The Japanese have developed powerful
high-quality animation production platforms to produce good quality anime, which has
attracted competition from North American television and film producers who also
outsource their production in Japan and the rest of Asia (Woods, 2011).
Japanese anime has reached 87.2 percent of the world’s population. Due to this
popularity, people worldwide associate animation with Japan. Therefore, anime
exports generate over ¥18 to ¥20 billion in revenue. It is evident that promoting and
exporting animation has expanded the Japan’s anime cluster’s sphere of influence
(Nagata, 2010).
Another important advantage acquired by the cluster is the development of close ties
with licensed operators. These operators have further extended the value chain of
anime industry. They sell shirts, caps, video games, costumes etc worldwide. This
factor adds to the revenue of this cluster (Japan External Trade Organization).
Government:
The government policies, relating to the clusters, have various agendas and
initiatives in place to regulate and cultivate the anime industry. The government aims
to promote Animation industry nationally and internationally. It also aims to stimulate
more interest within the younger Japanese generation in order to revitalize the
existing anime industry’s creativity. Apart from this, the government has stringent
laws in place to protect the minors from explicit content of adult anime.
In an effort to promote “Cool Japan”, the Japanese government has partnered with
cultural and artistic institution to promote the Japanese culture overseas. Their
directives were aimed at developing and training people who are involved in the arts
and entertainment industry and to restructure the current training program itself by
working closely with universities.
Bureau of Industry and Labor has collaborated with the Animation Training Education
Production Committee to produce textbooks for ‘young aspiring animators’. These
books consist of the anime industry’s composition, strategy and opportunities, along

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with instructions on how to draw human and animal anime characters, which aim to
develop the knowledge and skills required to become an animator (A Failed
Japanese Policy to Save The Dying Anime Industry, The Anime Textbooks, 2009).
Following these initiatives in 2009, the government proposed a stringent legislative

amendment to restrict pornography in anime. According to this bill there must be no
representation of characters aged fewer than 18, engaging in sexual or pornographic
activities. Furthermore, the sale of these materials should be classified under adult
content and must be displayed in a separate category away from the regular anime.
This restricts the availability of anime with adult content accessible to the minors.
Failing to adhere to this law would result in a fine of ¥30,000 (Siliconera, 2010).
Cluster strategy:

Figure 22 Japanese anime and manga cluster strategies
The major strategies of the Japanese anime industry are the separation of production
from the marketing process, and the reduction of potential industrial risks through the
filtration mechanism of the market.

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The comics are serialized in comic magazines. First, the comics are mainly produced
by various comic associations; however, there are many free lancers as well. If the
initial version of the comics is approved by the editor of the comic magazines,
contracts will be signed, the creators will then continue their work, and the magazine
will start serializing the comics. In Japan, people can buy a comic magazine at the
price of a newspaper. High labor costs have resulted in outsourcing of the printing
process to Chinese companies to significantly lower the production costs. The top 10
comic magazines usually can sell more than 1 million copies for each issue, creating
a large base of potential consumers for relevant industries in the future. In addition,
the publishing house seeks feedback through surveys or ranking lists and keeps
informing the creators of the latest trend of the readers’ preference. If a comic story
proves unpopular amongst the readers, the magazine will stop publishing it (LI,
2007).
Popular comics are printed in books dedicated toward a single series. However, the
production costs of the specialized series are much higher than these of the comic
magazines. Testing the market through comic magazines before printing the
specialized magazines has decreased risks and therefore justified the higher costs of
the specialized series. Successful comic books are made into animations. Japanese
anime production costs exceed eight million yen per minute. At the end, toy and
game industry produces anime character based consumer goods, which generate the
largest part of the value chain revenue (Reid, 2004).
Since the manga and anime industry is volume based, the ability to react rapidly to
the market trend is a key drive of the success. Furthermore, Anime industry had
previously focused on international expansion, not only geographically, but also
demographically. This has made the cluster a huge success, generating billions of
yen in revenue. Despite the popularity of anime worldwide, its domestic market is
shrinking. It has recently adopted a reactive strategy and by shifting its focus of its
characters and story lines towards its core fans. The Japanese anime’s core fans
consist of teenage boys and girls. For example, the recent anime hit “K-on!!” targeted
teenage girls, with its cute characters, who are members of an all girls high school
band. This anime series has also released CDs with the songs played throughout
the series. The CD sales have exceeded one million copies automatically making it
the first ever anime band number one in Japan. In this particular case the series was
created to cater to its core domestic fans (The Japan Times Online, 2010).

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Structure

Figure 23 Process structure (JETRO, 2005)
“Under the anime production companies, approximately 300 production companies,

creators, screen writers, anime producers, anime audio producers and approximately
2000 voice actors are involved. Approximately, 160 Computer Graphics (CG)
production companies, 350 post production companies, include 102 companies who
are partially involved in the production of anime.” (Anon)
Figure 23 above, shows the structure map of the animation industry in Japan. Here
the TV stations and ad agencies help plan the production of the anime. The plan is
then implemented in the production stage, where the animation is created, edited and
dubbed. This stage can be split into two, depending on the animation firm into prime
contractor and the sub contractor. When the production stage is completed it is then
passed on to the distributors. This may be the TV stations who broadcast these
anime, movie theatres for screening purposes, or video software makers who convert
these anime into video or software games which are then sold in retail stores or
available in rental stores.
Rivalry
“According to a report by the Tokyo-based market researcher Teikoku Databank Ltd.,
the domestic anime market has been shrinking despite the growing popularity
overseas. The report says combined sales of 118 anime production companies in
fiscal 2009 saw a two-year consecutive decline to ¥164.8 billion, down from ¥179.1
billion in fiscal 2007.” (Nagata, 2010)
This decline is majorly due to the availability of anime on the internet, illegal
uploading or streaming videos. Owing to this, the investors are very wary of investing
in or providing funds to the anime industry.
Animation from other countries such as USA, Korea, Germany, Canada, and France
has also captured a major share of the animation market. Emerging animation
producers also include India and China. Lastly, North America constantly searches

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for Asian producers who provide animation content at a lower labor cost, compared
to the Japanese animation producers. This poses a serious threat to the Japanese
anime cluster. (Animation Inc).
Conclusion
Manga and Anime have gained worldwide popularity and reshaped Japan’s cultural
image as a trend-setter in the cartoon and animation industry. It has become Japan’s
most popular export and has spurred anime clubs and conventions throughout the
world. Furthermore, box office hits such as Spirited Away and popular series such as
Pokemon have promoted enormous sales of cards and other character-related
merchandise. However, nowadays the Japanese cartoon and animation cluster is
struggling with a declining trend. There are several reasons for such decline
(Hayashi, 2009).
Anime workers are leaving the industry because they toil for long hours at low pay.
Usually studios ask each artist for about 300 sketches a month. In order to meet
deadlines, artists have to work 13 to 14 hours each day, sometimes with only one
day off per week and with monthly wages falling below 100,000 yen ($1,050).
Japanese anime are suffering from increased competition from other forms of
entertainment like videogames and animated shows from its neighboring countries.
Competitor studios from China and South Korea utilize cheap labor to produce
increasingly-higher-quality competing products and in some cases they benefit from
government subsidies. (Yamawak, 2001). It is difficult to maintain an animation
company with other volume-based competitors. In order to respond to their lower
prices many animation studios are beginning to outsource the more repetitive and
expensive elements of their jobs, such as the labor-intensive rendering of in-between
frames, to other far eastern countries such as Vietnam and India. The practices of
outsourcing, however, lead to loss of know-how and home-grown talent.
Furthermore, the low wages chase young talent away from the Japanese anime and
cartoon industry. The Japanese government can interfere to ameliorate the situation
by subsidizing competitive startups though increased spending on education and
training for young animators. Furthermore, the industry should invest more efforts in
film marketing (The Wall street Journal, 2009).
Moving the production process to foreign countries had a detrimental effect on

Japan's ability to cultivate creative talents and therefore on the quality of the
production. Many studios based their production on the quantity rather than the
quality of the animations. This is one of the main reasons for the industry’s decline.
Increasingly, today’s anime stories and plots are repetitive and lack originality,
causing loss of interest amongst the audience. The creative ideas of young artists are
not utilized sufficiently since they are only allowed to perform the repetitive drawings
and do not have the opportunities to use their creativity via experimentation (Den of
Geek, 2010).

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Given the Japanese seniority based organizational hierarchy in every industry, it is

very difficult for the new entrants to voice their opinions. This results in lack of new
ideas or limited creativity. If the studios allocate creative tasks to younger employees
this might add positively to the industry as a whole.
Moreover, there are less and less productions in English, because the cost of
dubbing is not worth it, which reduces the available products to paying foreign
customers. In order to further market its products at home and abroad, the cluster
can exercise aggressive advertisement techniques. For instance, after the foundation
of Disney Land in Tokyo in 1983, there was a trend to build theme parks in Japan.
However in the late 1990s when the Japanese economy went down sponsors
became hesitant to invest in theme parks since there were not enough tourists. The
existing theme parks are not able to compete with Disney land because they are too
small. Theme parks are a good way to complete the industrial chain. The animation
companies in Japan are not the owners of the cartoon characters they made.
Instead, the authors are the owners of these characters, so unlike Disney, if the
sponsors want to build a theme park in Japan, they will have to negotiate with each
author about the details of co-operation which need a lot of time and effort. The
suggestion is for the Japanese authors to give part of the authority to the animation
companies then the companies can represent these authors to negotiate with the
theme park builders. In addition companies can keep on building theme parks for a
certain cartoon character, for example “Crayon Shin-chan” and “Doraemon”, to target
niche market. (日本为什么没有像迪斯尼乐园一样的大型动漫主题公园, 2010)
The anime market is also threatened by online piracy, which is increasing with
studios losing revenue as their work is freely distributed on video sharing websites.
At the same time, YouTube and other free Internet services have hurt sales of DVDs.
Sales of Japanese-made anime DVDs decreased by 18% from a year earlier to 72.8
billion yen (about $800 million) in 2008, after peaking at 93.7 billion yen in 2006,
according to the Japan Video Software Association. It is essential for Japanese
government and organizations to reinforce government cooperation with countries
where copyright laws are not enforced. Equitable copyright income has been difficult
to obtain in Southeast Asian countries and other regions where video piracy is
rampant (Japan External Trade Organization). Nowadays there is a large amount of
illegal downloads of Japanese animations from the internet. Also some users of video
websites illegally upload Japanese animation on the internet. In the future the copy
right exchange market between Japan and foreign countries should be developed
increasing the information exchange, simplifying the processes, and increasing the
capital and the number of agents. Government cooperation may also include a series
of agreements to forbid copyright infringement acts. Furthermore the Japanese
government may also co-operate with the World Intellectual Property Organization.

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Adding to these factors, the shrinking population of children in Japan has

discouraged toy makers, television networks and other traditional sponsors from
funding new programs. In rapidly aging Japan, people 65 or older accounted for 21
percent of the total population, now the world’s highest. According to Japan's Ministry
of Health and Welfare, by 2015, one in four Japanese citizens will be 65 or order.
Cartoon industry should consider exploring the market for the seniors in order to
significantly increase its market share. It can produce cartoons that meet the
preference of the elder population.
The traditional anime and manga supporting industries are currently experiencing a
decline, while new electronics-related supporting industries are on the rise and offer
potential growth for the manga and anime cluster. For instance, while the Japanese
publishing industry is declining, its digital publishing industry is expanding. While its
broadcasting industry is experiencing difficulties, sales of DVDs and Blu-rays grow.
The Japanese cartoon and animation cluster can take advantage of this transfer to
electronics by offering more applications for mobile phones, computers, iPads and
other consumer electronics. Real time online streaming is an example of a popular
application, which the cluster has not catered to significantly yet. The Content
Delivery Network (CDN) market size continued increasing despite the poor state of
the economy. More video content is made available online. Its quality is increasing
and more streaming platforms are developed (Dan, 2009).
The Japanese anime and manga cluster is currently at a crossroad and depending
on its future decisions, it may recover or it may further decline.
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Appendix: Sources of Data for Figure 15

http://www.icv2.com/articles/home/6340.html////http://www.publishersweekly.com/pw/
print/20041018/24424-manga-sells-anime--and-vice-versa-.html
http://www.icv2.com/articles/news/8604.html////http://www.publishersweekly.com/pw/
print/20041018/24424-manga-sells-anime--and-vice-versa-.html
http://www.icv2.com/articles/news/8604.html/////http://www.jetro.org/trends/entertainm
ent_news_1.php
http://www.jetro.org/trends/entertainment_news_1.php
http://www.icv2.com/articles/news/17292.html
http://www.icv2.com/articles/home/6340.html
http://www.icv2.com/articles/home/6340.html////http://www.animenewsnetwork.com/n
ews/2010-10-07/icv2/2010-n-american-anime-market-worth-us$160-200-million
http://www.icv2.com/articles/home/6340.html
http://www.icv2.com/articles/home/6340.html////http://www.animenewsnetwork.com/n
ews/2010-10-07/icv2/2010-n-american-anime-market-worth-us$160-200-million
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The Japanese Anime and Manga Cluster Can Such An Established Cluster Still Rescue Japan's Economy?

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The Japanese Anime and Manga Cluster

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Publishing Industry ........................................................................................................................ 31

Japan Macro Overview

The Japanese Immigration Control Law

Figure 1 Map of Japan (Teaching and Learning in 2011, Strict migration policies have resulted

Japan has transformed from an industrial economy into a service-oriented country in

Year Exchange Rates Inflation

Japan’s service-oriented exporting economy differs from its heavily industrial

Japan Micro Overview

The education reform movement of the 1980s focused on flexibility, creativity,

“A vast number of companies packed into a relatively small land area.

Meanwhile Japanese customers value brands. As we can observe from many

Keynesian economy; however, is also characterized by cheap money, huge deficit

Japanese animation improved considerably after the introduction of multiplane

Since censorship and school regulations discouraged film-viewing by children during

The combination of internet communities and increasing amounts of anime material,

During the 1990’s, international TV networks started to broadcast anime regularly. In

Since anime became commercially profitable in western countries, it made a

the anime or manga changes depending on consumer demographics and each

Since about 40% of anime revenue is derived from video sales

Contrary to the decreasing interest in printed manga books and magazines,

Year $ billion ¥ billion % Growth

Manga – related Industries

The increasing popularity of rental bookstores, the growing number of secondhand

The Japanese government’s support is a major contributor to the success of the

Following these initiatives in 2009, the government proposed a stringent legislative

“Under the anime production companies, approximately 300 production companies,

Moving the production process to foreign countries had a detrimental effect on

Given the Japanese seniority based organizational hierarchy in every industry, it is

Adding to these factors, the shrinking population of children in Japan has

Appendix: Sources of Data for Figure 15

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