According to reports from Japan, both the sell-through anime and manga markets declined there last year.  A report released by the Japan Video Software Association sizes the 2006 market for Japanese animation at roughly 95 billion yen ($826 million), or 29% of the total video market.  That's down 2% from the 2005 total.  Home video sales were down roughly 11% in total, however, so the anime drop is lower than the market decline as a whole. 

Home video sales are under pressure in all developed countries, as the catalogue conversions from VHS to DVD are complete and the DVD market matures.  Downloading is also starting to be a factor.

The 2006 manga market in Japan was sized by a report from the Research Institute for Publications, reported in the U.S. by ComiPress, at 481 billion yen ($4.1 billion), down 4.2% from 2005.  This continues a ten year decline from 585 billion yen in 1996.  Print is under pressure in Japan, as it is here, from electronic forms of entertainment.  

Japan also has unfavorable demographic trends.  With a low birth rate and strict immigration controls, Japanese society is aging, reducing the pool of consumers in the teen and young adult age groups. 

The sales trends of manga and anime in Japan are certainly one explanation for why Japanese companies are looking to other countries as markets for their pop culture products.  And the Japanese markets for manga and anime are much larger, in both absolute and per capita terms, than the markets in the U.S., which may indicate considerable upside for the business here.