After the event Crunchyroll Expo 2022the magazine that focuses on business and finance, Forbespublished an article analyzing the transition from Crunchyrollwhich started as an illegal anime distribution site, turned into a dominant distribution company in the West, even more so with the merger with Funimation, its main competitor in the market. For this article we will compile the most important points of the investigation in question.
Crunchyroll began life in 2006 as a barely legitimate “aggregator” site featuring original language and translations of Japanese anime that were unavailable elsewhere in the world, usually without the benefit of licensing agreements with content producers. The site’s popularity showed producers and distributors that there was a huge international demand for high-quality, diverse content produced in abundance in Japan, and encouraged the producers to open up new revenue streams through licensing.
Over time, a series of owners improved Crunchyroll’s operations, turning it into a popular streaming service with a huge catalog of completely legal anime series spanning a wide range of genres and styles. At the end of 2020, the owner of the WarnerMedia, AT&Tgot ready Crunchyroll along with other sub-brands aimed at niche markets, which they saw as a drag on their conversion effort HBO MAX on a unitary platform for the supermarket.
Sony, which was taking the opposite direct strategy of pursuing niche markets with specific audiences, acquired the service in a deal worth $1.175 billion and merged it with its own successful service, Funimation (founded in 1994), instantly creating the biggest anime scene in. The world. The shock to the market was that the merger prompted passing interest from the US Department of Justice’s antitrust division, but anti-competitive concerns were partly mitigated by looking at the growing investments in anime from streaming platforms such as Netflix, Amazon Prime Video Y Hulu.
Over the past year, Crunchyroll has been working on the ins and outs of combining content catalogs and subscriber lists to give users access to all content on both sites, building up a library of more than 16,000 hours of content and more than 44,000 programs. episode. Meanwhile, mass streaming companies like Netflix have hit the limits of growth, raising questions about whether their levels of investment in original and licensed niche content like anime are sustainable. This dynamic has left Cruchyroll in a fast growing and influential corner of the market.
The company makes money through various channels: streaming and theatrical release of new anime content, sales of home entertainment products (DVD boxes, etc.), product licensing, and secondary distribution. Mitchell Berger, senior vice president of Global Trade, says all four areas of the business are now strong, describing them as “flying” that keeps the revenue engine running. «We acquire the rights from licensors and filmmakers in Japan, some for direct distribution [a través de Crunchyroll] and others for theatrical release through Sony Pictures“, Explain. «Anime is in fashion for many reasons. The audience is younger, and young people are passionate about everything: merchandise, collectibles, action figures and games. In fact, there is a lot of overlap between anime fans and gamers.».
When asked about adult content, Gita Rebbapragada, director of marketing, says it’s important to make sure the content fits the Crunchyroll brand. Travis Page, CFO, says concerns about market consolidation and monopoly influence are unfounded. «Many services are spending heavily on anime. They are just one or two. There are also great actors like Disney. And frankly, we welcome a variety of providers in the market because it grows the audience, and sooner or later, the fans will come to us because we have the deepest catalog.».
Page said Crunchyroll still has incentives to invest and innovate as Japanese licensors continue to control content and renew licenses season by season based on outlets that can provide the best reach and revenue. «In order to maintain a good relationship with Japanese studios, we try to be a copyright-based SVOD service, so we share our success with them. It motivates us to keep offering to fans, because when content is successful on our platform, it comes back to Japan [y mantiene nuestro acceso a los títulos]».
Ironically, former pirate site Crunchyroll considers piracy to be one of the biggest competitive threats, not only to their own revenue, but to the entire industry. «Our studies show that piracy represents a large number of views, and will always be a factor to consider» said Page. «We work with Sony and our partners in Japan to create as safe an environment as possible for content, and we offer an affordable service so that going to pirated sites is not worth the risk.».
Whatever Crunchyroll is doing to expand the market in North America seems to be working. Anime conventions like the Crunchyroll Expo were among the most popular categories of fan events before the pandemic, and the audience seems ready to come back in force. Manga, the Asian comic book source material for many anime titles, has seen triple-digit growth in the US since 2012, and is a key driver of the 60% YoY growth seen in comic book publishing in 2021. The increase in manga sales closely follows the release of new anime seasons and titles.
Crunchyroll is now well positioned to ride this wave no matter how high it gets. «We are focused on delivering a great experience for fans, increasing the diversity of our content, and respecting creators and content.» said Rebbapragada. «This audience is special. They represent the future, and that’s important for every entertainment company».
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