The anime/manga markets are larger than ever. I'd say too large.
The term you're looking for is oversaturated. A lot of anime is being produced, but the market hasn't appreciably grown in Japan in decades.
Same thing goes for the video game market.
The video game industry is also largely static. I think someone brought it up in another thread, but ex-Sony executive Shaun Layden (I think that's his name) revealed that the video game market only rises to about 250 million users every generation. That's it. Its a hard number, and it neither rises nor falls. This is why each video game generation largely shakes out with one clear winner, and two also-rans who don't make any profit. Once a company crosses 124 million console sales threshold, they've basically won the generation by having taken half the available sales. Its part of the reason the current status quo with three companies is ultimately unsustainable, and why, prior to Microsoft's involvement, that setup never lasted more than a generation, and any console outside the two market leaders was doomed to fail. When Sony entered the console race, it was basically over for either Sega or Nintendo because one or the other would never reach the critical mass of sales to maintain their business. Microsoft has stubbornly hung on through basically throwing good money after bad, but that's probably not sustainable anymore. There is a finite user base, and its not going to grow beyond what it is now by any appreciable number, and you basically have one chance to try to get the jump on your opponents. If you stumble out the gate, your basically done.
The Chinese market is Japan's biggest export/import partner
The Chinese market is unreliable due to the erratic nature of its government. It was only a few years ago that China cleared the sale of video game consoles at all. Also, the Chinese primarily play mobile and gacha games, and the games that do get released there are subject to Chinese censorship and political pressure, which is worse than western censorship and political pressure because its outright mandated by the government.
58% of Japanese adults play video games in some way shape or form and like 51% watch anime or read manga. A key difference is that most of those games are gacha games or portable games.
The very video game markets that the AAA gaming industry is weakest in; that industry is primarily dominated by Chinese and Korean companies, not Japanese ones. But even those games are not immune to western pressure. See, for example, the Apple Store banning certain Asian games like Girls' Frontline unless they censor themselves.
especially for vidya and shit like that followed by ASEAN countries like the Philippines, Indonesia, and the rest of Southeast Asia.
And the games they play are those very same mobile and gacha games that are popular in Japan, which are subject to the same issues I've already presented.
They're just going to give us the censored versions of their media, like Nintendo did in the 80s when the banned religious iconography in their games and focused on making everything super family friendly. I've seen so much manga and anime that is uncensored and simultaneously untranslated, that's the only logical conclusion you can make. Japanese people are very homogeneous in their tastes. They don't necessarily hate Western media, but they don't like it to the point that they will mindlessly gobble it up. They just don't really understand the West the same way we don't understand their tastes, which is why they keep on giving these DEI brokers the power to localize their media for what they think are Western tastes (which isn't but they don't know that). These same companies that are putting woke shit in vidya now are just doing the same thing they have kinda always done (minus Sony, they just hate Japan and now Japan hates them back). It's why there are so many references to Western media in one way or the other in a lot of Capcom, Sega, Square Enix and all the major companies that make their living off of international sales ever since the 90s but especially in the early 2010s.
The problem is that whereas before Western media was a relatively accurate representation of what Westerners believed, DEI is a poor representation of that and now you have board room Japanese executives thinking Americans want trannies, ugly women and fat sassy black women that speak in millennial writing and all these things that they think will sell well in the West in their games and unlike Asian markets, there's no real way they can get a good pulse of what they want since it is a completely alien culture and would have to learn about it to make shit we actually want, which would be expensive and that's money they can use on soapland whores. It also doesn't help Japan has one of the worst English literacy rates of any Asian nation (which pretty much precludes them getting influenced by our propaganda). Meanwhile, they can just see what's hot on the ground of China, the Philippines or Thailand jut like that and tweak the product ever so slightly for those sensibilities, which is a bit easier just due to the general shared East Asian values of the region.
The problem, at least in the video game industry, is that its actually starting to effect their actual game design (see Street Fighter 6), not just localization, which is where it historically would have been limited to. Anime and Manga do seem far more resistant to these pressures, probably because they are not
as reliant on western sales to support themselves (yet), and there seems to be a ground level push back by creators and the audience. No idea how long that will last though. But the Japanese video game industry definitely seems to be industry, and are even openly talking about "diversity and inclusion" and creating detailed plans on how to make their games appeal to international audiences (see the Capcom leaks, for example).
It's why the FF7 remake are tanking in sales while Dragon Quest, Splatoon 3 and Nikke (along with NieR: Automata on the Switch from my own research into this) is selling well and Nintendo is killing it with the Switch over there, Sony's fumbling and Xbox never had a chance. I don't think the whole wokeshit thing is taking root there anytime soon. There's just too many factors that pretty much prevent that from taking hold in Japan at all.
A lot of this is just that wokeshit isn't popular, even in America, and those failures are starting to be felt in Japanese woke games and corporate slop. Now, will that stop the DEI infiltration? Probably not immediately. The next few years will probably determine how much farther it will infiltrate.