Cartoon business looks outside the lines

Anime companies test new material, methods

Japanese toons — known commonly as anime — have conquered the world several times over, while long dominating the domestic market. In 2006, four of the 10 top-grossing Japanese pics were toons, including the leader, Goro Miyazaki’s “Tales From Earthsea,” which earned ¥7.65 billion ($64.3 million).

In Japan, the toon mainstream has a monolithic look, with long-running series (“Pokemon,” “Doraemon,” “Detective Conan,” “Crayon Shinchan”) racking up hit after hit, and major toon houses like Toei Animation and Studio Ghibli — the creative home of Goro and father Hayao Miyazaki — sitting atop B.O. ranking charts decade after decade. Nearly all the highest-grossing feature toons are based on highly rated TV shows, which are in turn sourced from bestselling comics — a pyramidal structure that looks to be as enduring as, well, the pyramids.

But a closer look at the creators and toon houses generating the most B.O. and fan buzz, both at home and abroad, reveals that companies are developing new strategies aimed at expanding the aud beyond core anime fans. At the same time, the biz is facing issues, from a talent drain to stagnant DVD sales abroad, that threaten not only its current bottom line but also its future.

One firm that has mastered the international market is Madhouse, whose long list of credits, going back to 1973, includes everything from the usual manga-to-TV toons to prizewinning features by leading anime auteurs, such as “Paprika” and “The Girl Who Leapt Through Time.” Latter became a breakout hit in Japan while collecting armloads of prizes, including the animation of the year award at this year’s Tokyo Anime Fair.

At that event, Madhouse confirmed it is in negotiations with Hollywood studios to develop two of its toons into live-action pics. The key to growth in the U.S. market for anime, says one exec, is to provide “high-quality animation” and “stories that U.S. audiences can connect to” without simply pandering to American tastes. “We always focus on what excites us on a creative level and then determine its potential in the marketplace,” he explains.

Another toon house taking the high road to international riches is Production I.G., best known abroad for its “Ghost in the Shell” franchise, beginning with the 1995 pic that became the first Japanese feature to top the Billboard video sales chart. The company is now talking with Hollywood majors about a live-action remake.

Micott & Basara, a media company relatively new to the toon game, has staked its animated future on 3-D CG, beginning with “Appleseed,” which used motion-capture technology to render 2-D anime-style characters amid 3-D mecha and sets. In partnership with U.S.-based Axis Entertainment and Hong Kong-based Lion Rock Prods., Micott is now making a sequel, “Ex Machina,” using an unusual-for-Japan strategy: profit-sharing deals with its partner toon houses, which are usually paid straight fees for their work. “That encourages them to keep the quality high, even if they are not paid much up front,” says prexy Sumiji Miyake.

Studio 4oC, whose pics include the “Animatrix” omnibus and “Mind Game,” is also using a profit-sharing scheme for the animators making its new seven-part omnibus “Genius Party.” The company invited seven anime “geniuses,” including “Mind Game” director Masaaki Yuasa, to take part in the project, giving them absolute freedom within the budgetary constraints. “In a way they’re competing with each other, which helps raise the quality of their work,” says producer Yukie Saeki. For the project’s July 7 bow, Studio 4oC is focusing on the arthouse market, where “Mind Game” was such a success. If the pic is a hit, the artists will reap the rewards. “Genius Party 2” is already in production.

Most of the animators laboring in the biz, however, are not geniuses, but rank-and-filers making absurdly low wages — about $1,000 a month even for full timers — while working insanely long hours. The result is high turnover, as talent migrates to game companies and other more lucrative pastures. “Most of the profit (in animation) goes to the ones with distribution power and leverage, such as TV stations and advertising agencies,” says Chou. The creators get what amount to subcontractor fees.

Meanwhile, toon houses are outsourcing more entry-level animating work to China, Korea and elsewhere in Asia to hold down costs even further. “This starts a vicious cycle of deterioration for the entire industry where young artists are exiting in droves and the number of jobs to train them is also declining,” says Chou.

In other words, the industry’s future geniuses may have Chinese or Korean passports.

The solution? “The Japanese industry should strive to stay ahead of the curve and keep pushing the boundaries, both in terms of technology and artistic expression,” comments Chou.

Some companies in the biz are already heeding his advice, but its pyramid builders, with their legions of low-wage workers, don’t seem to be listening.

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