Sony’s Funimation buys Crunchyroll for $ 1.2 billion – what happens now?

On Wednesday, Sony Pictures Entertainment Inc. announced that AT&T and WarnerMedia have agreed to sell Crunchyroll to Funimation. Although rumors of the takeover had been around for a few weeks, it wasn’t clear how the deal would come about or if it would even be. The purchase price for the transaction was estimated by Sony at 1.175 billion US dollars.

“The Crunchyroll team has done an exceptional job not only to grow the Crunchyroll brand, but also to build a passionate community of anime fans. Crunchyroll’s success is a direct result of the company’s culture and dedication to its fans, ”said Tony Goncalves, CRO of WarnerMedia, in a statement. “By combining it with Funimation, they will continue to have a global community and offer more anime to more people. I am incredibly proud of the Crunchyroll team and what they have achieved in digital media in such a short amount of time. You have created a continuous global ecosystem for this incredible art form. ”

“We are proud to add Crunchyroll to the Sony family,” added Tony Vinciquerra, chairman and CEO of Sony Pictures Entertainment. “Through Funimation and our great partners at Aniplex and Sony Music Entertainment Japan, we have a deep understanding of this global art form and are well positioned to bring great 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 harness the power of creativity and technology to thrive 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 increases their impact on the Japanese anime industry. By adding crunchyrolls 70 million free members and 3 million paid subscribers With its portfolio of anime streaming and production companies, the company aims to capitalize on the growth of anime overseas, which in both 2017 and 2018 amounted to nearly half of the industry’s total revenue of over 2.1 trillion yen (approximately 19 billion US dollars). Dollar) has grown.

Although Sony’s entry into anime streaming seems sudden, the company has been in anime production for decades. In 1995, Sony Music Entertainment Japan (SMEJ) founded Aniplex, a subsidiary established to manage anime and music productions. In 2005, Aniplex started his own animation studio, A-1 Pictures, to animate shows like Kaguya-sama: love is war and Sword art online.

Over the past 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 bought the Australian anime distributor Madman Anime and its streaming service AnimeLab. A year earlier, a separate subsidiary, Sony Pictures Television, had taken over the American anime distributor Funimation. In 2019, Aniplex and Sony Pictures Television consolidated all of these streaming services under the name Funimation 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 when they revealed that episodes of the series Fate / Grand Order – Absolute Demonic Front: Babylonia would have a 30-day exclusivity on Sony’s international streaming services before they were available on other platforms. The English dub would have one year of exclusivity. The anime series was produced by Aniplex, animated by CloverWorks (an animation studio owned by Aniplex). 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 is not based on its being the market-leading simulcast streaming service, but on how it will expand Sony’s vertical integration with overseas anime production. Although Aniplex already has a North American distribution, game publisher, and merchandising arm in Aniplex of America, the non-streaming portions of Crunchyroll’s business have expanded in many ways that Funimation and Aniplex of America have not done before.

Image: Crunchyroll

In 2017, the company launched its own annual convention, the Crunchyroll Expo, and has been the main sponsor of AnimeNYC since its opening event that same year. They also started producing new shows like Kemono friends, and Cinema trip – the beautiful world -, before the “Crunchyroll Originals” branding for in-house produced shows was announced in 2020. Many of these shows would be done in collaboration with Japanese animation studios like MAPPA and Production IG, though shows like Onyx Equinox will come from the newly founded Crunchyroll Studios.

In 2018, Crunchyroll also established its own game publishing label, Crunchyroll Games, to localize and distribute previously released Japanese mobile games based on popular anime characteristics in English-speaking markets. And in 2019 the company bought the European branch of the manga publisher and anime distributor Viz Media. Sony now owns it all.

Where things will develop from here for industry and consumers is difficult to predict. At the end of last year, I wrote about complications Anime faced while the streaming warsand predicted that streaming services would be more involved in producing shows, not just licensing. Much of my prediction was based on the idea that competition between the various anime streaming services would require investing in their own exclusive shows in order to entice consumers to subscribe.

Netflix has been content to produce its own exclusive shows at the rate of one to three per season and later license other series after they air for their international catalog. As predicted, Funimation and Crunchyroll had fought for licenses for 30 to 40 new shows per season, often participating in the productions to secure the simulcast streaming rights.

However, since this suddenly no longer happens, not much should change in the short term, other than consumers may only need to subscribe to one or two services to simulate new shows (compared to the four or five you only get for a few Years ago). In the long term, however, the Sony Crunchyroll deal has the potential to reduce the number and budget of future anime productions.

However, given the assessment of the acquisition and the growth of the market in recent years, it is likely that new players will fill the positions once occupied by the Funimation and Crunchyroll production committees. Though the only place you can probably see their simulcast is in Funimation / Crunchyroll.