Six Ways the Weak Yen is Affecting the Anime Industry

In case you haven’t been paying attention, the Japanese yen has been falling like a stone compared to the U.S. dollar over the past two years. This trend is causing some stress in the anime industry these days. Let’s learn more in this blog post!

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How is Japan’s Weak Yen Affecting Anime?

The other day, I came across an article that basically worried that Japan’s extremely weak currency would be bad for the anime industry, making it impossible for animation studios to outsource work to China, South Korea and other countries. If the yen falls against those currencies, Japanese studios will be forced to raise the amount they pay foreign workers or else find animators inside Japan to do the work…a seemingly impossible task.

アニメ業界にも円安の影響はかなり出て来ていて、年始まで取引出来ていた海外企業が今後は同額ではお請け出来ませんと言って来てる。
その反面、委員会からの元請け予算は変わらず円安分スタジオの利益削るか映像のコスト落とすかしか選択肢が無い。更にはアニメファンの購買力も低下する・・・
— おたろう (@otarou01) April 26, 2024

This X user argues that the weak yen is bad for anime because studios can’t hire overseas companies that do important work like in-between animation shots because it’s no longer profitable for them. Unless the budgets given to the studios by the Anime Production Committee rise, he argues, anime will become impossible to make.

And yet, the overall situation is much more complex. Expressed in U.S. dollars, anime has become a full 43% cheaper to fund, compared with May 2021. Since streaming has become such an important part of funding anime, with Netflix, Amazon Prime and Disney+ providing the majority of income for animation studios, shouldn’t things be getting better for anime creators?

Why is Japan’s Currency so Weak These Days?

In March 2022, Fed Chairman Jerome Powell started raising interest rates to combat the frustrating inflation that had taken hold in the U.S. as we all recovered from the COVID lockdowns. Interest rates climbed from nearly zero all the way to 5.5% in a short time. Japan has always been a country with low growth and, thus, low inflation, so rates have barely changed here. The unprecedented difference between U.S. treasuries and JGBs caused large Japanese pension funds to sell yen and buy dollars to lock in that juicy 5.25% treasury bond yield. This caused the yen to fall to historic lows.

The change in the yen has been frustrating for Japan. They’ve seen their country slip from #3 to #4 as Germany’s GDP surpassed Japan’s. This is partially due to the weak yen (GDP is always expressed in U.S. dollars) but also because, unlike most countries, Japan doesn’t concern itself with raising productivity.

Currencies can be confusing. American politicians sometimes say that Australia’s minimum wage is $23 per hour and ask why we can’t have the same in the U.S.? They’re ignoring the fact that the Australian dollar is a separate currency from the U.S. dollar, and AUD$23 currently converts to US$15.40. Currencies will rise or fall against each other for different reasons.

Why did Japan finally end its negative interest rate policy? Read my article here!

Winners and Losers

Every economic shift has winners and losers. The weak yen is great for Japanese manufacturers like Toyota and Denso because it allows them to make more profit or lower their prices in overseas markets. But it’s bad for foreign companies like Apple, which has to charge much more for iPhones and Macs in Japan. The current weak yen is terrible for Japanese trying to go abroad, where the already-high prices will feel even more expensive thanks to the conversion rate. But it’s great for foreign visitors to Japan…until too so many of them coming in puts stress on the tourism industry.

And yet, in all things, there must be balance. Since Toyotas, anime and naughty products from Japan are cheaper for international customers, they will presumably buy more of them. (Yay!) Over time, this flow of money back into Japan causes the yen to strengthen against the dollar, allowing for things to swing back in the opposite direction. Eventually.

How Does the Weak Yen Affect the Anime Industry?

In general, the current weak yen has the following effects on the anime industry:

Expressed in dollars, budgets for making new anime series have become about 43% cheaper over the past two years. This should be a net positive for the industry as long as the Production Committees are increasing the money flowing to the actual studios rather than keeping the entire windfall for themselves. Studios generally do not invest money into the Production Committee system and thus do not receive profits when an anime proves popular.
For workers in the anime industry in Japan, receiving their payment in yen, nothing changes. Maybe their iPhone gets more expensive.
When anime studios outsource work to companies around Asia, the cost must increase, or the work can’t get done. Actually, it’s kind of silly for the Japanese, who’ve had almost no inflation since the Japan Asset Bubble burst in 1992, to expect the price they pay for important services to never change. So, part of the problem is Japanese studios’ unrealistic economic view of the world.
Some studios, like Toei, might find the situation more challenging. They do 100% of their animation in the Philippines and are thus likely more affected by the weak yen.

Are studios being irresponsible by keeping the extra money that’s freed up by the weaker yen? We don’t know, since random people on X are not necessarily a good source of information. If they are not, I hope some insiders spill details to social media so fans can put pressure on them to do the right thing.

Thanks for reading this blog post, exploring the effects the weak yen is having on the anime studios we love so much. What are your thoughts on how the industry is structured? Tell us in the comments below!