Sony bets on homegrown anime to fuel decades of future growth

From the Walkman and PlayStation to Spider-Man’s box office records, Sony Group has shown a knack for shaping global pop culture hits. Now in the midst of a strategic transition, the company is pouring time and money into a homegrown genre with the potential to power growth for decades to come: anime.

After turning “Demon Slayer: Kimetsu no Yaiba” into a global phenomenon, the company is working to seed or acquire the next anime blockbuster. Some 80 years into its history, Sony is determined to create franchises that will last about as long.

The $28 billion anime industry is one of the fastest growing genres of entertainment globally. For Sony, it’s a key part of a broader shift away from relying on physical hardware like the PlayStation console and toward intellectual property and content.

Much as with beloved game characters transcending their original format, hit anime franchises become gold mines not only for viewership but also for merchandise, music and live experiences.

“With Demon Slayer, it is our intent to make this last 10 or 20, if not 50 to 100 years,” Atsuhiro Iwakami, president of Sony Music Entertainment Japan and chairman of Aniplex, Sony’s anime production company, said in an interview.

He points to “Dragon Ball” and “One Piece,” stories that have survived long enough to pass from parents to children and which Sony has rights to stream internationally. “We want to make sure we’re part of creating the type of franchise that can withstand decades.”

Tokyo-based Sony has turned anime into a scalable business in recent years with acquisitions of services like Crunchyroll, now the world’s largest streaming platform dedicated to the genre. It’s become a go-to destination for fans, who’ve grown from a niche group to a much larger contingent with the help of various celebrities and music artists embracing the genre.

The proof of the concept for Sony came with the Demon Slayer saga, depicting the adventures of a young swordsman battling demons while trying to restore his cursed sister to human form. Its 2020 movie, “Mugen Train,” became Japan’s highest-grossing film, dethroning Studio Ghibli’s 2001 classic “Spirited Away.”

Five years later, the first installment of Demon Slayer’s Infinity Castle trilogy grossed about $800 million worldwide, demonstrating that a franchise born from Japanese manga could become a global theatrical blockbuster.

The distinctly Japanese aesthetic and storytelling style, far from hampering international appeal, was a big part of the attraction.

At the center of Sony’s push to do more with anime is Iwakami, who’s been with Aniplex since its inception and has helped shape its trajectory over almost three decades.

He’s part of the strategic collaboration inside Sony to turn Aniplex and Crunchyroll into a complementary duo, where one produces and the other distributes original content.

Iwakami’s defining bet was to combine the visual craftsmanship of Ufotable, a studio known for spectacular anime aimed at what he calls “geeks or nerds,” with the mass appeal of manga from Weekly Shonen Jump. That experiment delivered Demon Slayer.

The underlying Demon Slayer IP still belongs to Japan’s century-old manga publisher Shueisha, whose titles also include One Piece, Dragon Ball and Naruto.

Asked whether Sony might invest in closely held Shueisha to gain greater access to its rich IP, Iwakami left the possibility open. “Perhaps, if the opportunity presents itself,” he said.

Japanese entertainment companies are often competitors and collaborators at the same time, making takeover deals complicated.

“So it’s not necessarily the case that just because we want to buy something, we can actually make that happen,” Iwakami said. “But if timing and chance align, we would certainly be open to entertaining different types of M&A.”

Sony is taking steps toward becoming an IP powerhouse. Last year, it became the largest shareholder in Kadokawa, owner of a vast library of manga, novels and games. It’s also trying to create more IP from scratch.

Securing the franchises and storylines that build enduring appeal is becoming increasingly competitive as streaming giants such as Netflix and Walt Disney also compete for anime licensing deals.

Aniplex and Crunchyroll formed a new studio, Hayate, focused on developing and producing original anime for global audiences. The two also announced plans to adapt more stories into Japanese anime and live action by collaborating with homegrown creators, giving Sony another route to build franchises.

The logic is straightforward. Anime has traditionally relied heavily on production committees, where publishers, studios, broadcasters and other partners share the cost, risk and rights.

Greater control of the foundational IP could give Sony more freedom, and potentially more of the economic upside, as it takes a hit story across streaming, games, music, merchandise and live experiences.

Sony put that ambition on display in New York in October. On the eve of New York Comic Con, about 500 creators, executives and other industry players gathered at the Javits Center for Crunchyroll’s first Anime Future Forum.

Sony Chief Executive Officer Hiroki Totoki opened the event, flanked by executives from PlayStation, Sony Pictures as well as Iwakami. Director James Gunn, actor Samuel L. Jackson and musician Big Sean took part in discussions.

The message was clear: Anime is becoming a central piece of Sony’s effort to knit together its sprawling entertainment businesses.

The audience Sony’s chasing filled the convention center. Fans of Nintendo’s Super Mario, orange-clad Naruto followers and stormtroopers in full uniform mingled with One Piece pirates in straw hats and sword-carrying Tanjiros from Demon Slayer.

Elaborate wigs, capes and prop weapons bobbed through the crowds as thousands of fans descended on Comic Con. Japanese anime, once a niche, spilled into every corner of the venue.

Sony has more ways than most rivals to turn that fandom into a business. Aniplex can produce anime; Crunchyroll, with 21 million paid subscribers, can take it to viewers around the world; PlayStation can turn anime into games or games into anime; and Sony Music’s core operations can extend franchises into soundtracks, concerts and merchandise, helping to turn a successful anime into something much larger than a television show or movie.

“Anime has a high affinity with the film and gaming businesses, making it an important sector for Sony as it aims to grow as an entertainment platform,” said Bloomberg Intelligence analyst Masahiro Wakasugi. “Furthermore, anime theme songs may positively contribute to Sony’s music business, and the IP of anime protagonists can serve as medium- to long-term assets. Alongside games, music, and movies, anime is expected to hold an essential position as entertainment content.”

Iwakami is also ready to imagine an audience beyond the action-heavy anime that fueled much of the industry’s global rise. He wants to explore animation for children and families, pointing to Bluey and Japan’s Chiikawa as examples.

Sony has also increased its ownership of Peanuts Holdings to 80%, giving it control of Snoopy and other characters with appeal across generations and markets.

Even a Sony theme park — like Disney or Universal’s — is a possibility.

“To make a theme park, I think having control of IP is a prerequisite and necessary,” Iwakami said. If Sony eventually has enough demand and enough control of its characters, “then we can look into something that big.”

But before Sony can extend anime into ever bigger businesses, it faces a more basic constraint: Japan is struggling to make enough of it.

Looking back to 20 years ago, Iwakami recalls an anime could go from planning to broadcast in about a year — but today it can take three to four years. Skilled animators are scarce, costs have risen, and the painstaking human craftsmanship that gives Japanese animation its distinctive character makes production difficult to accelerate.

Sony is investing in training young animators while engaging with local governments on ways to build infrastructure for developing talent, Iwakami said. He also sees technology as part of the answer.

He is cautious about generative artificial intelligence, saying it should support the artists behind anime rather than displace them.

“There will be tools that will assist,” he said. “But it is not our goal to replace any of these creators.”

That willingness to experiment has defined Iwakami’s career. A Hollywood movie fanatic and Gundam fan who collected Gunpla models, he says Sony has given young producers unusual freedom to test ideas.

Early in his career, he thought less like a corporate executive than an individual producer pursuing projects that seemed fun and worth trying.

Three decades later, he is trying to preserve that culture on a much larger stage.

“Sony has always been intertwined with the evolution of technology and entertainment,” Iwakami said. He wants to see the company spark another unpredictable leap in the tradition of the PlayStation, which Sony’s domestic music arm helped bring about by merging its entertainment mindset with hardware engineering.

“It’s my hope that someone among the ranks will emerge and take on a new challenge that will produce results and grow the business in areas that you and I can’t predict.”