I am wondering, why I cannot I remember any anime musicals? There is music in anime, but it's always playing the second fiddle. I'm thinking something like animated Producers ("Springtime for Toro in Ja-a-a-pan!" and "Make it gay, make it gay, make it gay!" -- surely anime fans would love that).

It's not just the expense of the animation, I think. Disney has done this before, remember Beauty and The Beast. It was profitable, although in entirely different universe.

One problem here may be that anime is dominated by series, and there aren't that many movies overall. Avatar reminded me that Excel Saga had a musical episode, although I cannot recall what it was. So, clearly the thought visited heads of creators, but something did not quite connect for a feature to be funded.

UPDATE: DiGiKerot writes:

The reason you might not remember the musical episode of Excel Saga precisely was because it was only the opening sequence of the last episode - Nabeshin ended up overriding it in favour of porn due to the expense.

Funny you should mention the idea visiting the creators heads, though, as Nabeshin directed Nerima Daikon Brothers a few years later, which actually was a TV anime musical. ADV released the show last year if you want to see it (fansubs were pretty much non-existant), though I'd probably recommend only getting the first DVD - it gets old pretty quickly due to the necessary recycling required for them to actually be able to afford to do it. The first episode was fantastic, though.

Hmmm, it would seem I posted about the first DVD way back:
http://www.beta-waffle.com/blog/?p=341

I thought it would be more feasible as a feature, or a 3 episode OVA like R.O.D.

TheBigN had a review of sorts.