A record market with shrinking margins
Japan’s anime engine has rarely been busier, yet more production companies are falling out of the business. Teikoku Databank, a major corporate research firm, reports that the number of anime production companies going bankrupt or shutting down is on track to rise for a third straight year in 2025. In the first nine months of the year, two studios filed for bankruptcy and six more suspended or dissolved operations, bringing departures to eight. The rate is similar to the wave of closures seen in 2018, a year that reached a record high of 16 cases. When small subcontractors and freelance collectives are counted, the real number of exits is likely higher.
The shakeout has spread beyond secondary vendors. Prime contractors and gross contractors, the companies that can deliver an entire series internally from layout to final composite, have been hit as hard as the suppliers they oversee. Teikoku Databank’s review of recent years indicates that roughly half of the studios that left the market were primary or gross contractors. Names include Ekachi Epilka, Cloud Hearts, and Studio5. These are outfits that once handled end to end production and coordinated large teams across long calendars.
At the same time, the wider anime business is setting new highs. Industry data show the global anime market reached about 25 billion dollars in 2024 across television, film, streaming, music, events, and merchandise. The production segment inside Japan also reached new heights, close to 2.45 billion dollars in 2024, with average revenue per production company rising for several years. Yet profits are not following. A Teikoku Databank survey found that 60 percent of the companies actually making anime as prime or gross contractors saw profitability worsen in 2024, and many posted losses despite higher top line revenue.
Teikoku Databank describes the moment as a profitless boom. Studios face a shortage of experienced staff while orders pile up. Production periods stretch, overtime grows, and labor costs rise. Some producers turn to overseas outsourcing to meet delivery dates, but a weak yen makes dollar contracts costlier. Quality issues on outsourced work often require extensive fixes back in Japan, which burns out key animation directors and supervisors. Resignations in those senior roles then feed a cycle of delays and more rework.
How the anime business model squeezes studios
Many of the financial pressures start with how money flows in anime. Most series are funded by a production committee, a consortium that includes the original rights holder, a publisher, a television network, an advertising agency, a record label, and sometimes a streaming platform. The committee owns the rights and collects cash from licensing, streaming, and merchandise. The animation studio is usually hired to deliver the show for a fixed fee and has limited exposure to the upside unless it also holds a stake in the committee.
That structure helps explain a case that drew attention in 2025. A-1 Pictures, producer of Solo Leveling, recorded a net loss of 178 million yen for the fiscal year ending March 2025 according to Japan’s Official Gazette. Solo Leveling drew massive global viewership and awards, and season two became one of the most watched anime on major platforms in early 2025. Yet the studio does not own the solo leveling intellectual property. It was contracted to animate the show while the committee and rights holders captured most of the commercial income. During the same period, A-1 Pictures also delivered other projects, which raised workload and costs even as headline success grew.
For a studio, the combination of fixed fees, limited royalties, and intense delivery risk creates a tight path. Schedules slip, staff hours climb, and additional cuts or retakes erode margins. When a hit travels worldwide, the studio’s financial results may improve only modestly unless it holds rights or secures bonuses tied to performance.
What is a production committee
A production committee is a cost sharing and rights holding group that spreads risk across several companies. Typical members include a publisher, a TV station, an ad agency, a music label, and the original author’s company. In recent years, streaming platforms or overseas partners sometimes join. The committee finances the anime and controls most rights, then earns revenue from TV slots, streaming deals, theater releases, music, and merchandise. The animation studio is often a contractor. Some studios own a slice of the committee, but many do not, or hold only a small stake. That is why a popular series does not automatically lift a studio’s profit.
A labor shortage that drives up costs
Behind the numbers lies a talent shortage that is reshaping production. The volume of greenlit projects has outpaced the growth of experienced staff. Training pipelines for in between artists, key animators, compositors, and production managers have not kept pace with demand. Pay for entry level roles remains low relative to living costs in Tokyo, so many young artists leave after a short time. Workloads concentrate on veterans who are already stretched across multiple shows, and production calendars extend to keep crews afloat.
Teikoku Databank’s 2024 study of prime and gross contractors shows how this crunch hits margins. Many studios reported record revenue but weaker profit. Longer schedules mean more months of salaries, more revisions as early cuts fall behind, and fewer windows to take on new work. That creates opportunity cost for small companies that rely on steady throughput. Burnout rises across layout, key animation, and direction as teams chase deadlines for several projects at once.
Why outsourcing no longer lowers costs
For years, Japanese studios controlled costs by sending parts of the pipeline to partners in South Korea, China, and Southeast Asia. That equation has shifted. The yen’s depreciation raises the price of dollar contracts. Wages have risen in major outsourcing hubs. Quality variations and rushed handoffs often lead to heavy rework back in Japan, which lengthens schedules and inflates labor hours. Industry veterans warn that a pattern of buying large volumes of low priced work and then asking domestic staff to repair it has damaged morale. Several key animation directors have stepped away, which removes the very leaders who maintain quality and pace.
Closures across the spectrum
Bankruptcies and quiet closures have touched every layer of the production ladder. Second tier subcontractors have folded after losing anchor clients or facing dry spells in between projects. Prime contractors have also exited after long runs of thin margins and schedule overruns.
- Cloud Hearts began bankruptcy proceedings on December 18, 2024 according to filings in Japan’s commercial registry. The company had handled titles such as Whisper Me a Love Song and The Iceblade Sorcerer Shall Rule the World.
- Ekachi Epilka, a studio that took on prime work, exited the market within the past five years.
- Studio5 also left the field in the same period.
- Gainax, the historic producer behind Neon Genesis Evangelion, filed for bankruptcy after years of financial strain and management trouble.
In the first nine months of 2025 alone, two bankruptcies and six suspensions or dissolutions were recorded. These figures do not fully capture small companies that operate as unincorporated teams or freelance units, which makes the actual count of departures higher. The effect is immediate on ongoing shows. Production committees must reroute work, freelancers scramble to find seats on new teams, and schedules slip as assets and timelines are reworked.
The turbulence also affects international partners. Overseas investors and platforms see delivery risk rise, so they add oversight and contingency spending. That makes projects even more expensive and can push more work to large studios that already have crowded slates.
Currency swings and global demand
Exchange rates have become an underappreciated cost driver. When the yen loses ground to the dollar, overseas outsourcing and imported software licenses grow more expensive. Many studios are paid in yen by domestic committees, but a growing share of their vendor bills are in dollars. The mismatch widens when delivery dates shift and extra cuts are commissioned late in production.
At the same time, anime has never been more visible worldwide. Streaming platforms bid for licenses, theaters schedule more anime films, and merchandise lines reach new markets. The windfall largely accrues to rights holders on the committee. Unless a studio owns a stake or has performance bonuses written into its contract, very little of that international success turns into bottom line gains for the team that animated the work.
Streaming money rarely reaches the animators
Streaming deals are negotiated by the committee, and cash often goes to recoup investments by publishers, music companies, TV networks, and sponsors. The studio’s fee is set before the show airs, and only modestly adjusted for scope changes. Some studios have joined committees to capture royalties, but this is still the exception. Cases like A-1 Pictures’ loss during the Solo Leveling boom show how a studio can ship a global hit and still report weak financial results.
Steps that could change the trend
Several initiatives from major publishers and the Japanese government aim to improve working conditions and how money is shared in the production chain. Teikoku Databank argues that urgent measures are needed, especially in training. Practical steps can help stabilize budgets and reduce the rush that saps quality.
Training and career paths
Studios need a larger pool of trained staff. Expanded apprenticeships for in between artists and assistant animators, funded seats at vocational programs, and paid training for compositing and 3D tools can shorten the ramp to full productivity. Standardized onboarding for production assistants and coordinators would ease pressure on line producers. Better pay and predictable schedules for entry roles would slow attrition in the first two years of careers.
Contracts and schedules
Committees and studios can write contracts that reflect present costs. Higher base fees for prime contractors, milestone bonuses tied to on time delivery, and small royalties for studios that ship on quality would align incentives. Locking scripts earlier, resisting late scope additions, and capping the number of simultaneous shows per core team would reduce overtime. Currency clauses and basic hedging practices can protect budgets when the yen weakens.
There is also room for process improvements. Shared digital asset libraries, clear style bibles, and more use of scene reuse across multiple episodes can lower redraw work. Moderate adoption of assistive tools, such as interpolation and cleanup aids, can save hours without replacing the craft of animation. These changes will not solve every budget gap, but they can pull production back from a cycle of overcommitment and rework.
Key Points
- Teikoku Databank expects anime studio bankruptcies and closures in Japan to rise again in 2025, the third straight yearly increase.
- Eight companies left the market in the first nine months of 2025, including two bankruptcies and six suspensions or dissolutions, matching the pace of the 2018 record year.
- About half of the studios that exited in the past five years were prime or gross contractors that can complete an entire show internally.
- The broader anime industry hit new revenue records in 2024, near 25 billion dollars worldwide, while the production segment also set a record near 2.45 billion dollars.
- Despite higher revenue, 60 percent of prime and gross contractors saw profit decline or posted losses in 2024.
- A-1 Pictures posted a net loss of 178 million yen for the year ending March 2025, despite the global success of Solo Leveling, highlighting the limits of the production committee model for studios.
- Labor shortages extend production schedules and inflate costs, and rework from overseas outsourcing has contributed to burnout among key animation leaders.
- Yen depreciation raises the cost of dollar contracts for overseas vendors and software, squeezing fee based projects.
- Proposed fixes include expanded training, better entry level pay, schedule discipline, higher base fees for studios, modest royalties, and basic currency protections.
