Commercial success is important for another reason, which is that for most film industries, even in the best of times, the more experimental films survive as a luxury: the existence of a large moviegoing audience means that there can be art houses that show offbeat films and small groups of dedicated fans who see them. A successful film industry can afford offbeat productions. Richie notes, «Nowadays an Ozu or a Kurosawa wouldn't be allowed to make films because the film studios couldn't get their money back.» Thus a decline in the box office has eventually affected quality. Says Richie, «Thirty years ago, I was on a committee to choose the best Japanese films, and it was an embarrassment, there were so many of them. Now it's equally embarrassing because there are so few. With the failure of films to make money, producers tightened the moneybags. Only company hacks were allowed to produce films, because they followed the formulas.»

How is it that the nation which gave the world Kurosawa is now producing Pokemon and not much more? It has partly to do with the «autopilot» syndrome we have met in other fields, a dependence on patterns set in the 1960s and never revised. Shochiku became so addicted to the Otoko wa tsurai yo series that it couldn't stop making these movies even when the star died-and its dependence on the income from the series was so severe that when the series finally ended, Shochiku itself died. Another reason-perhaps the most important one-was the abandonment of the adult market in favor of children. In the 1980s, «studios devoted themselves instead to churning out light entertainment for the mass teenage audience,» the film critic Nagasaka Toshihisa says. As cinema expert Mark Schilling observes, «Mainstream Japanese cinema, which used to mean classics like Kurosawa's Shichinin no Samurai (Seven Samurai, 1954), and Ozu's Tokyo Monogatari (Tokyo Story, 1953), is now primarily entertainment for children on school holidays.»

Godzilla is worth looking at because it epitomizes this history. The monster Godzilla debuted in 1954, and by the end of the 1990s, he had appeared in more than twenty films. In the West, Godzilla is something of a joke, synonymous with campy low-tech effects, but standards in Japan are now so low that critics polled at the prestigious bimonthly Kinema Junpo (Cinema Journal) voted it one of the twenty best Japanese films ever made. Each Godzilla film since 1989 has been among the top five money earners of the year for Toho, the company that produces them; Godzilla vs. Destroyer was the top-grossing movie of 1996.

It is not only in Godzilla and Otoko wa tsurai yo that old themes are repeated endlessly. Ekimae (In Front of the Station) had twenty-four installments from 1958 to 1969; Shacho (Company President) had forty remakes between 1956 and 1971. And there are numerous others, including the popular new comedy series Tsuri Baka Nisshi (Idiot Fisherman Diary), headed for its tenth installment. Repeats dominate the market: in 1996, thirteen of the top twenty films were installments in series. Hollywood is not averse to series, viz. James Bond, Indiana Jones, Star Wars, Lethal Weapon, and so forth, but generally speaking these are not cookie-cutter series but sequels based on a successful first movie, with very different stories, casts, directors, and actors. Formulaic series of the Japanese type flourished commonly before World War II: Westerns, Abbott and Costello, Laurel and Hardy, etc., and they exist today at the lower end of the movie market in the horror and high-school genres: A Nightmare on Elm Street, Friday the 13th, and so forth. But they are sideshows to the real business of Hollywood. Outside of Japan, producers learned long ago that cookie-cutter series, unless aimed at a niche market such as teenagers, soon lose their audiences.

In light of what we know about Japan's educational system, it should come as no surprise that cinema would devolve into this endless repetition of old formulas. In Godzilla we can also see the way in which insularity, another trait perpetuated by the school system, manifests itself in film. In 1962's King Kong vs. Godzilla, Arikawa Sadamasu, the cinematographer, recounts, «director Ishiro Honda saw King Kong as a symbol of America, Godzilla as a symbol of Japan, and the fighting between the two monsters a representation of the conflict between the two countries.» In one striking scene, Godzilla's burning breath sets fire to King Kong's chest hair. The theme continues in later films such as 1990s Godzilla vs. King Ghidora, in which Godzilla battles U.S. troops fighting the Japanese in 1944. Caucasians from the future then capture him and devastate modern Japan with a three-headed dragon – their aim being to force the country to buy foreign computers. Such is the level of «internationalization» in Japanese cinema: filmmakers cannot get beyond the idea that the Japanese are all alone, victims of foreign monsters.

There is one bright spot in this otherwise gloomy picture: anime. In contrast to the independent films, whose self-conscious artistic inventions do not attract a mass audience, anime have been top grossers for more than a decade. Innovative and visually striking, anime shared the lead box-office spots with foreign films for most of the 1990s. They tackle taboo subjects rarely seen in mainline film, such as war crimes and unethical business practices. The Heisei Badger War (1994) vividly depicted modern environmental destruction.

One could argue that independent films and the repetitive products of the Big Three filmmakers are both irrelevant to modern Japanese cinema. Porn and anime are overwhelmingly where the money and the audiences are. Japanese anime are the industry's most profitable export item. Those by the renowned producer Miyazaki Hayao (the director of 1997's hit Princess Mononoke, the highest-grossing Japanese film ever, and The Heisei Badger War) rise to a very sophisticated artistic level, yet unlike independent films, they are loved by the public – not only the Japanese public but young people worldwide.

Yet, as great as their success has been, even in anime we can see the telltale marks of stagnation. For one thing, anime never developed technically: while Japanese studios continued to paint pictures on celluloid with skills little changed from the 1930s, Pixar and Disney were inventing brand-new digital technology with dazzling visual effects that amazed the world in Toy Story, A Bug's Life, and Fantasia 2000. Furthermore, nothing can disguise the fact that in the end anime are essentially a children's medium. The really big hits, such as Pokemon and Sailor Moon (a favorite of the early-teen girl set), have none of the intellectual or aesthetic appeal of the famed works of Miyazaki Hayao – they are simply cute screenplay for little kids, and their very success underscores the vacuum at the adult end of the spectrum. In his closing years, Kurosawa sighed in an interview, «There is no hope for Japanese film companies. They have to be destroyed and rebuilt... The people accept only films they can understand, and what they can understand are only films with cats and dogs in them, not the modern world.»

Cinema provides a superb window into Japan's modern troubles, because all the patterns that afflict other aspects of national life come together here. One is monopoly. Three large companies-Toho, Toei, and Shochiku-have controlled most of the theaters and monopolized the business. They are shackled by the same seniority system that rules the rest of corporate Japan, with the result that producers prefer to work only in-house or with established directors with whom they have long-standing ties. In contrast to the frenzied telephone calling and «pitching» of new ideas that goes on in Hollywood, a deathly calm rules in Japan's studio offices.

We can sense the dead hand of bureaucracy weighing upon cinema: for decades, zoning rules made it hard to build theaters in suburbs and newly grown «bed-towns.» Cinemas did not benefit any branch of officialdom-so they haven't been built. In contrast, pachinko is a huge source of income for the police, whose retired officers run pachinko associations. (The police also profit massively from prepaid pachinko cards through their ownership in the card finance companies.) Therefore every tiny village and hamlet must raise a pachinko parlor.

Monopoly bred boredom among the public, and this actually had some good results in that the Big Three ceased to rely on their own products and started to buy independent films and put their own logos on them. This has been one way that independents break through. The other way is to find motion picture houses that are unaffiliated, and quietly these are increasing. After 1996 the number of movie theaters began to grow, for the first time in half a century, as American-style multiplexes entered big-city suburbs. Most of these, however, have foreign backing, such as Warner Bros., so it remains to be seen what these new theaters will do for the domestic industry.

By the end of the century, the Big Three were quietly running out of money. The budgets of Japanese films ran to a few million dollars at most, a scale of magnitude smaller than Hollywood's. In 1997, Shochiku reached the point where annual receipts from its entire movie division totaled only ?3.4 billion-approximately $30 million, which would hardly produce one modest Hollywood feature. By 2000, Shochiku had given up: it sold its famous studio complex at Ofuna, fired most of its production staff, and retired from filmmaking, keeping only its distribution licenses. The Big Three had become the Big Two. As funds dried up, technological advance in film simply ceased. There were few inventive minds to spur innovation and no money to pay for it.

In 1995, I helped prepare the English subtitles for a Shochiku film, and I visited the famous Nikkatsu studios where so many of Japan's postwar films have been produced. I felt I'd stepped into a time tunnel: machinery decades old, cameramen standing on old orange crates to get height, piles of wires snaking over earthen floors, almost no computerization, no advanced lighting techniques – all in an aluminum Quonset hut.

There are other problems besides lack of money and outmoded technology, notably the degraded environment. The cities and countryside are so changed that it is difficult to produce a film with a beautiful backdrop, which Kurosawa complained about in his last days. When he directed the van Gogh episode in his Dreams (1990), he had to scour the entire country to find a site with no modern buildings or electric pylons where he could reproduce a French cornfield. Most other directors don't have the time, the budgets, or the obsessive perfectionism of Kurosawa, so they make do with painted backdrops, close-ups of leaves and running water, well-manicured temple and shrine grounds – hence the stilted, artificial quality of most recent Japanese films that take place in a natural setting.