On September 9, anime business site animeanime.biz reported on the 2010 yearly totals of Japan’s animation market. The market showed a total intake of 229 billion yen ($2.98 billion) for fiscal 2010, up from last year’s 216.4 billion yen ($2.82 billion) in 2009. The increase represents a total increase of 5.8% year over year, and marks the second consecutive year that the animation industry saw increases in revenues.

Japan’s animation market peaked in 2006, when it took in 241.5 billion yen ($3.14 billion). The following year, the market contracted by 9.53%, to take in 230.2 bilion yen ($2.995 billion). The market continued to contract until 2006, when the industry took in 212.9 billion yen ($2.77 billion). Prior to this point, the industry’s lowest overall take was in 2003, when it took in 190.3 billion yen ($2.48 billion).

Before we begin celebrations, it might be wise to look at this situation a bit closer. The industry is increasing year over year, which looks great on the surface. However, this includes both the domestic and international markets. In addition, Toy Story 3 hit Japanese theaters last year, and grossed 10.8 bilion yen. With this in mind, we’re looking at a market landscape where the maximum anime intake was about 219 billion yen. This is slightly up from last year still, but not quite the “massive version-up jump” that we’d expect from the initial figures.

In addition, the general market saw some fascinating shifts. Home video sales, especially on Blu-ray saw massive gains last year. In particular, ANN reports that anime (and other animated works) accounted for roughly 60% of all Blu-Ray sales through fiscal 2010 and the first half of fiscal 2011. Mobile markets saw small gains in the market, while the PC-centric anime market remained stagnant.

This sounds fantastic, yes? Sales are increasing, and markets are growing. However, the real telling factor is the anime TV audience. The TV anime market shrank again for its fifth consecutive year. Over-the-air animation viewers shrank, while the market for paid TV, such as satellite and cable grew.

Now, what does this mean?

Frankly, the market’s still shrinking. New viewers aren’t watching, and existing viewers are moving away, in general. With this in mind, the fact that Blu-Ray sales are up isn’t entirely encouraging. While we may see this market carry the flagging TV market for the next couple of years, we’ll eventually see a drop-off in all categories. Because new customers aren’t being created, and are instead bleeding out, we’ll see the market for home video shrink, which will mean a general decline of the market as a whole.

Is Japan’s anime market dying? Hell no. I’m not going to cry that the sky is falling, and that we’re all doomed because of [Insert Baseless Conjecture Here]. Is the market healthy? Well, that’s debatable at this point. While revenues are up, the TV figures are troubling.

However, this isn’t something that we ourselves can do. This is a problem that Japan must tackle as a whole. They need to look at the structural problems that exist within the industry, and within the general market. As I’ve been parroting for the past several months: Content is king. It’s glib to say this, but it’s quite true: the industry must begin producing compelling content. Rather than pander to the niche, the mass market must become the absolute goal.

The shift to paid TV content is an interesting one, as it is indicative of numerous issues, from a lack of content viewers want, to increased cash flow in the overall economy.

I don’t doubt that we’ll begin to see a shift in the market, as the industry races to recover the viewers it’s shedding. As Japan is in a general population decline, they will need to do more to attract the general population, as the younger market grows older. Just how things will shift, I don’t know. However, it will be fascinating to see what happens in the near future.