On Wednesday, Sony Pictures Entertainment Inc. announced that AT&T and WarnerMedia agreed to sell Crunchyroll to Funimation. Though there had been rumblings of the acquisition for a few weeks, it wasn’t clear just how the deal would go down or if it would at all. The purchase price for the transaction was estimated by Sony to be $1.175 billion.
“The Crunchyroll team has done an extraordinary job of not only growing the Crunchyroll brand but also building a passionate community of anime fans. Crunchyroll’s success is a direct result of the company’s culture and commitment to their fans,” said Tony Goncalves, WarnerMedia’s CRO, in a statement. “By combining with Funimation, they will continue to nurture a global community and bring more anime to more people. I’m incredibly proud of the Crunchyroll team and what they have been able to accomplish in the digital media space in such a short period of time. They’ve created an end-to-end global ecosystem for this incredible art form.”
“We are proud to bring Crunchyroll into the Sony family,” Tony Vinciquerra, Chairman and CEO of Sony Pictures Entertainment, added. “Through Funimation and our terrific partners at Aniplex and Sony Music Entertainment Japan, we have a deep understanding of this global artform and are well-positioned to deliver outstanding content to audiences around the world. Together with Crunchyroll, we will create the best possible experience for fans and greater opportunity for creators, producers and publishers in Japan and elsewhere. Funimation has been doing this for over 25 years and we look forward to continuing to leverage the power of creativity and technology to succeed in this rapidly growing segment of entertainment.”
At first glance, Sony’s acquisition of Crunchyroll from AT&T might put them in a better position to compete with Netflix, but the move actually grows their influence over Japan’s anime industry. By adding Crunchyroll’s 70 million free members and 3 million paid subscribers to their portfolio of anime streaming and production companies, the company intends to reap the rewards of anime’s growth overseas, which in both 2017 and 2018 grew to nearly half of the industry’s over ¥2.1 trillion (about $19 billion) total revenue.
Although Sony’s move into anime streaming might seem sudden, the company has been involved in anime production for decades. In 1995, Sony Music Entertainment Japan (SMEJ) established Aniplex, a subsidiary created for managing anime and music productions. In 2005, Aniplex started its own animation studio, A-1 Pictures, which would go on to animate shows like Kaguya-sama: Love is War and Sword Art Online.
But over the last five years, Sony has strengthened its portfolio of international streaming services through acquisitions, starting in 2015 with the French anime streaming service Wakanim. In 2018, the company purchased the Australian anime distributor Madman Anime and its streaming service, AnimeLab. A year earlier, a separate subsidiary, Sony Pictures Television, acquired American anime distributor Funimation. Then, in 2019, Aniplex and Sony Pictures Television consolidated all of these streaming services together under Funimation’s name as a joint venture between the two subsidiaries.
Along with the announcement came a demonstration of how vertically integrated Sony’s anime business had become, as they revealed that episodes of the series Fate/Grand Order – Absolute Demonic Battlefront: Babylonia would have a 30 day exclusivity on Sony’s international streaming services before being available on other platforms. The English dub would have a year of exclusivity. The anime series was produced by Aniplex, animated by CloverWorks (an Aniplex owned animation studio,) much of the show’s music was from SMEJ artists, the English dub was produced by Funimation, and the series is based on a mobile game produced by Aniplex.
Crunchyroll’s billion-dollar acquisition price tag comes not from being the simulcast market leading streaming service, but from how it will expand Sony’s vertical integration in anime production overseas. Although Aniplex already has a North American distribution, game publisher and merchandising arm in Aniplex of America, the non-streaming parts of Crunchyroll’s business have expanded in many ways that Funimation and Aniplex of America had yet to.
In 2017, the company launched its own yearly convention, Crunchyroll Expo, and has been the major sponsor of AnimeNYC since its inaugural event later that same year. They also began co-producing new shows like Kemono Friends, and Kino’s Journey -the Beautiful World-, before in 2020 announcing “Crunchyroll Originals” branding for shows produced in house. Many of these shows would be done in partnership with Japanese animation studios like MAPPA and Production I.G, although shows like Onyx Equinox will come out of the newly formed Crunchyroll Studios.
In 2018, Crunchyroll also created its own games publishing label, Crunchyroll Games, to localize and distribute previously released Japanese mobile games based on popular anime properties into English speaking markets. And in 2019, the company purchased the European branch of manga publisher and anime distributor Viz Media. Sony owns it all now.
Where things go from here for the industry and consumers is difficult to predict. At the end of last year, I wrote about complications anime faced during the streaming wars, and predicted that streaming services would become more involved in the production of shows not just the licensing. Much of my prediction was based on the idea that the competition between the different anime streaming services would necessitate the investment in their own exclusive shows to entice consumers to subscribe.
Netflix has been content to produce its own exclusive shows at a rate of one to three every season, then later licensing other series after they finished airing for their international catalog. As predicted, Funimation and Crunchyroll had been vying for licenses to 30-40 new shows each season by often becoming involved in the productions to help secure the simulcast streaming rights.
However with that suddenly no longer the case there shouldn’t be much change in the short term aside from consumers potentially only having to subscribe to one or two services to simulcast new shows (compared to the four or five you needed to only a few years ago). In the long term, though, the Sony-Crunchyroll deal has the potential to shrink the number of, and budgets of, future anime productions.
But given the valuation of the acquisition, and the growth of the market over the last few years, it seems likely new players will step in to fill the spots once occupied by Funimation and Crunchyroll production committees. Although the only place you’ll likely be able to watch their simulcast will be on Funimation/Crunchyroll.