Most major entertainment companies looking for the pole position in the global streaming road race have a go-big-or-go-home strategy — they’re building massive vehicles with broad, four-quadrant appeal.
Sony has taken a different tack. Its primary direct-to-consumer streaming video business is Crunchyroll, geared to the Japanese art forms of anime and manga. Instead of pouring tens of billions into content to vie against the likes of Netflix and Disney Plus, it is flooding the zone for a distinct and passionate fan subculture.
“The thesis is quite simple: We aspire to be everything to someone, not something to everyone,” says Colin Decker, CEO of Crunchyroll. “We’ve always been by and for anime fans and creators.”
Adds Decker, “Our business has more in common with fans of the NFL than users of Netflix.”
This month, Sony took a big step toward making its anime division an even larger global force: Starting March 1, Crunchyroll subscribers have access to library and simulcast content previously available exclusively on Funimation, which Sony Pictures Television bought in 2017.
The move brings more than 1,600 hours from more than 50 newly added titles in Funimation’s lineup to Crunchyroll, which Sony bought for $1.18 billion in cash from AT&T last year. At the same time, Sony says it won’t be raising prices on Crunchyroll’s packages.
That consolidates the company’s anime efforts around Crunchyroll, which now stocks more than 40,000 subtitled and dubbed episodes — the biggest bucket of anime available anywhere. Anime fans can watch favorites like “My Hero Academia,” “Tokyo Ghoul,” “Yu Yu Hakusho,” “Cowboy Bebop” and “Mushoku Tensei: Jobless Reincarnation.” This week, Sony added three popular Dragon Ball anime series, formerly exclusive to Funimation — comprising more than 500 episodes — to the Crunchyroll lineup as well.
The 28-year-old Funimation brand is set to be phased out: Future new anime series will be exclusive to Crunchyroll starting April 1, and Funimation will continue to add new episodes of current series only. Sony is committed to building on Crunchyroll’s momentum. Today, Crunchyroll has more than 1,000 employees in 14 offices worldwide and is looking to hire more than 100 staffers.
But don’t call anime a “genre.” Where the Western entertainment sensibility thinks of it as a niche, Decker says, “the anime community thinks of it as a lifestyle — it’s a POV on the world. It’s much more than linear entertainment.”
As a form, anime encompasses numerous genres like horror, sci-fi, rom-coms and dramas, says Decker: “There’s an anime for everyone.” And the anime industry provides a steady and prolific output of high-quality material; Crunchyroll and Funimation have presented 20-30 simulcasts of new Japanese anime shows per quarter, according to Decker. “People enjoy kind of the infinite depth,” he says. “It’s like an achievement to get through these shows with hundreds of episodes.”
The core Crunchyroll business revolves around streaming video, but the brand also extends to mobile games, theatrical film releases, merchandise, live events (like the Crunchyroll Expo, set for Aug. 5-7 in San Jose) and DVDs.
“We certainly have hit shows and franchises — but really, the value proposition is belonging to a community,” Decker says.
Sony does own some other streaming businesses, including SonyLIV in India and Pure Flix, a Christian-content streaming service it acquired in 2020. And Sony Pictures continues exploit the streaming economy as a content wholesaler: Last year, for example, it cut a rich, multiyear movie-output pact with Netflix. But Crunchyroll is Sony’s main owned-and-operated field unit in the streaming wars.
If you want to call anime a niche, it’s one of the most successful niches in the world — attracting more fans than other interest-based entertainment services geared around, say, horror or faith-based programming. As of August, Crunchyroll had more than 5 million paying subscribers worldwide and 120 million registered users in 120-plus countries. Decker won’t say what those numbers are today, but it’s a good bet they’re higher now that Sony is steering Funimation users over to Crunchyroll.
Indeed, the Justice Department’s antitrust review of Sony’s purchase of Crunchyroll took more than six months. The concern was that the combined entity would harm competition. Decker insists that it’s a very competitive space. “It was a matter of helping them understand the dynamics of the market,” he says.
To be sure, streamers like Netflix, Hulu, HBO Max and Amazon’s Prime Video have sought to capitalize on anime’s popularity by adding a selection of content (some of it sublicensed from Crunchyroll or Funimation).
And AMC Networks is also hoping to cash in on anime, and expects to step up competition with Crunchyroll. In January, the cable programmer acquired Sentai, which operates the Hidive anime streaming service. “The anime audience has historically been underserved by linear TV,” says Miquel Penella, president of streaming services at AMC. Sentai’s business has historically been focused on content licensing, but going forward AMC’s primary goal is to expand the content and reach of Hidive.
A priority for AMC in developing Hidive and its other streaming services like Acorn TV, Allblk and Shudder is to remain authentic in the eyes of the target fanbase. “We don’t want to go to the broad market,” Penella says. “These are audiences with unique sensibilities.”
Anime is “an area Sony should dominate,” maintains Gen Fukunaga, founder of Funimation, who sold the company to Sony for $156 million. Fukunaga, who left Sony in 2019 after serving as Funimation’s chairman and is now a venture investor, notes that the company was smart to set up the anime division as a joint venture between Sony Pictures Entertainment and Aniplex, a subsidiary of Sony Music Entertainment Japan.
Crunchyroll may be outbid by major streamers for some of the hottest anime titles, he observes. Today, some of the bigger shows can have production costs that run $200,000-$300,000 per television half-hour, he says.
But “the big boys tend to be hit-focused,” he says. “If you’re a true anime fan, Crunchyroll is the only game in town.”
(Pictured above: “My Hero Academia” Season 5, dubbed versions of which came to Crunchyroll this month after previously being available only on Funimation)