Tokyo Broadcasting System (TBS) Holdings announced Thursday that its anime division faced a significant financial challenge this fiscal year: despite boosting revenue by 80.8% to 3.198 billion yen (about $20.1 million USD), the division reported a gross loss of 524 million yen (approximately $3.29 million USD).

The culprit behind the loss was straightforward—production costs for animated projects climbed faster than revenue could keep pace. However, TBS had a bright spot: overseas distribution of the Dream Animals: The Movie film helped drive the revenue gains.

TBS is making structural changes to address these challenges. In early May, the company's anime planning and development subsidiary Sand B acquired a controlling 51% stake in 3D CG anime studio Xenotoon, making it a Sand B subsidiary. More significantly, TBS and Sand B plan to merge Xenotoon with Seven Arcs, another TBS-owned studio, sometime in mid-2027.

Seven Arcs, which TBS acquired in December 2017, is best known for producing the Magical Girl Lyrical Nanoha franchise. The studio is currently working on the latest entry, Magical Girl Lyrical Nanoha EXCEEDS Gun Blaze Vengeance, scheduled to premiere July 4.

The consolidation moves reflect TBS's broader strategy through Sand B, which the company established in May 2025 with a substantial 30 billion yen investment (roughly $207 million USD). Sand B was created specifically to maximize anime revenue and accelerate global expansion through collaboration with Mainichi Broadcasting System (MBS).

Kazuhiko Akatsu heads Sand B, which focuses on planning, developing, and producing animation. By merging studios and streamlining operations, TBS appears to be betting that efficiency gains will help bridge the gap between production costs and revenue—a critical move as the anime industry faces mounting pressure to maintain profitability while meeting global demand.