Earlier today, ICv2 reported that the manga industry saw a combined earnings of $120 million for the year 2010. This is a 15% drop from the $140 the industry reported in 2009, and a 57.145% drop from the industry’s 2007 earnings of $210 million. This sounds dire and, well, it is. A 15% year over year drop is a sharp decline, regardless of the industry.

Earlier this year, ICv2 expected a 20% decline, or $42 milion down from 2009’s totals. In addition, ICv2 reported that sales are beginning to stabilize. The first quarter sales for this year were down 10% from 2010’s sales for the same period. However, the drop was less severe than the same period last year, which saw a 17% drop from 2009.

Now, what does this mean in plain English?

The situation is still bad. The industry’s still losing money year over year. However, the losses are starting to shrink. While the situation still isn’t ideal, and profits continue to drop, we’re beginning to see the gap close. It’s easy to be too optimistic in this case, though. While the drops are becoming less severe, they are still sharp year-over-year earnings drops, and should be treated with a degree of urgency. The country is technically in a recession, economic activity is sluggish. People are buying less, and unemployment is incredibly high. At the same time, we just saw a major manga retailer file for bankruptcy, and TOKYOPOP recently exited the industry.

Despite this, there is a silver lining. Due to the market’s embrace of digital comics could prove to be a boon in the near future. The digital comics market exploded last year, jumping from roughly $500,000 to somewhere between six and eight million dollars. The lower cost format, coupled with the growing sales could be an important factor in as the industry’s overall recovery.

The manga industry as a whole has never been forced to work through such a dire situation as this. It will be interesting to see how every company continues to adapt, as companies struggle to survive and find ways to expand the market to finally enter the realm of market and profit growth.