I really can't wrap my head around why school girls and the best thing since sliced bread. Speaking at times, it seems like their anime is taken more seriously than even their movie industry, you'd think there would be more interesting stuff floating around.
Aside from children's and family oriented anime, there's little mainstream demand. The rest can be somewhat comparable to the comic/graphic novel industry in the US.
The problem with the latter is that they're unable to monetize it well. Nowadays, most TV shows air very late at night, so there's no money made on broadcast (the production companies pay for the slots themselves....there's no outside sponsorship). Since the business model consists of selling expensive DVDs and related merchandise, the otaku who really get into the characters are often the only ones willing to pay.
In the end, it's a vicious circle. As the anime industry shrinks, producers target the paying customers more. However, this in turn narrows the type of content that's available, making it difficult to attract new fans. Unless things change, the industry will gradually creep toward death.