The December issue of Reason has a surprisingly accurate article on the rise of Japanese animation in America. If you came here from 1996, you'd be surprised. There's an entire section of DVDs at Best Buy and an entire section of manga at Borders. The growth had many sources, but at first, it was free distribution by fans that allowed anime to break from a cult following into the mainstream.
There were roughly three generations of anime distribution. In the 80's, fans were happy with anything they could get. That was the generation of traded raw videos described in the article's third paragraph. Then came the 90's, with the rise of fan-subtitlers. Some titles had been acquired by American specialty companies, but far more was promoted only by fans. A group, perhaps a college anime club, would pool resources to buy a laserdisc box set from Japan, pay native speakers to translate, and add subtitles using home computers. These clubs would also distribute subtitled anime, either copying to blank tapes submitted by interested fans, or shipping the tapes for the cost of media and shipping. The results of these groups are in evidence by looking at the several video tape holders in my living room.
Finally, in today's market, there are many companies releasing titles, to the point that fans aren't happy with the release of lower-quality titles. Still, free distribution helps spread the word about anime, this time via internet file sharing. BitTorrent can be used to find and download countless titles. While some groups focus on the latest and greatest shows out of Japan, many of which will be acquired and released by American companies, others focus on the forgotten and older titles.
As the article discusses, little of this free distribution benefits the copyright holders. The rarest of fans might buy the releases or some licensed products from Japan (or via dealers at an anime convention), but that's it. That's it, of course, until an American company pays to acquire the title for release in the American market. The fans spread the word about the series, and the Japanese companies can see what's popular and act accordingly. It's hard to believe a series like Marmalade Boy would ever have been released without the efforts of fans. The fans were viral marketers before that term was coined.
Really, ten years ago, anime was far from the mainstream. Adults then may have seen anime in their youth, without knowing it was anime, with titles such as Speed Racer and Voltron. Some anime was available commercially, but primarily through specialty stores. Then Pokemon and Yu-Gi-Oh! proved to be big hits, and more and more young people began to follow the genre. Now, there are significant hours devoted to anime on Cartoon Network, and digital cable shows anime 24/7.
There was another crucial factor enabling anime to grow, and it's one you might not have ever thought about. It's NTSC. The television standard established in the United States was also adopted in Japan. That means a video recorded off Japanese television could be watched on an American television set without problems, with no conversion required. (I've seen a PAL-to-NTSC conversion, and a lot of quality is lost.) Without the same standard, the Nth-generation copies of raw unsubtitled anime could never have been traded, and that first generation of fans couldn't have built for the future.