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

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Sony Pictures Entertainment Inc. announced on Wednesday that AT&T and WarnerMedia had agreed to sell Crunchyroll to Funimation. While there were rumors about the acquisition for a few weeks, it was unclear exactly how the deal would play out or if it would at all. The purchase price of the transaction was estimated by Sony at $ 1.175 billion.

“The Crunchyroll team have done an amazing job not only growing the Crunchyroll brand, but also creating a passionate community of anime fans. Crunchyroll’s success is a direct result of the company’s culture and commitment to its fans, ”Tony Goncalves, CRO at WarnerMedia, said in a statement. “By partnering with Funimation, they will continue to nurture a global community and bring more anime to more people. I am incredibly proud of the Crunchyroll team and what they have been able to accomplish in the digital media space in such a short time. They have created an end-to-end global ecosystem for this amazing art form.

“We are proud to bring Crunchyroll into the Sony family,” added Tony Vinciquerra, President and CEO of Sony Pictures Entertainment. “Thanks to 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 deliver exceptional content to audiences around the world. Together with Crunchyroll, we will create the best possible experience for fans and a greater opportunity for creators, producers and publishers in Japan and beyond. Funimation has been doing this for over 25 years and we look forward to continuing to harness the power of creativity and technology to succeed in this growing entertainment segment.

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 influence over the Japanese anime industry. By adding Crunchyroll’s 70 million free members and 3 million paid subscribers to its portfolio of anime streaming and production companies, the company intends to reap the rewards of the anime’s growth at overseas, which in 2017 and 2018 grew to nearly half that of the industry above ¥ 2.1. total revenue of trillion (about $ 19 billion).

While Sony’s shift to anime streaming may seem sudden, the company has been involved in anime production for decades. In 1995, Sony Music Entertainment Japan (SMEJ) created Aniplex, a subsidiary created to manage animated and musical productions. In 2005, Aniplex started their own animation studio, A-1 Pictures, which would go on to host shows like Kaguya-sama: love is war and Sword Art Online.

But 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 purchased Australian anime distributor Madman Anime and its streaming service, AnimeLab. A year earlier, a separate subsidiary, Sony Pictures Television, had acquired US anime distributor Funimation. Then, in 2019, Aniplex and Sony Pictures Television merged all of these streaming services under the name Funimation as a joint venture between the two subsidiaries.

Along with the announcement, a demonstration of how Sony’s anime business has become vertically integrated, revealed that episodes of the series Destiny / 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 one year of exclusivity. The animated series was produced by Aniplex, hosted by CloverWorks (an animation studio owned by Aniplex), much of the music on the show 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 $ 1 billion acquisition price isn’t because it’s the leading streaming service in the simulcast market, but how it will expand Sony’s vertical integration in overseas anime production. 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 grown in many ways that Funimation and Aniplex of America have not. had not yet.

The current range of Crunchyroll
Image: Crunchyroll

In 2017, the company launched its own annual convention, Crunchyroll Expo, and has been the main sponsor of AnimeNYC since its inaugural event later that year. They have also started to co-produce new shows like Amis Kemono, and Kino’s trip – the beautiful world -, before in 2020 the announcement of the brand “Crunchyroll Originals” for shows produced in-house. Many of these shows would be produced in partnership with Japanese animation studios like MAPPA and Production IG, although shows like Onyx Equinox will release from the newly formed 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 properties in English-speaking markets. And in 2019, the company bought the European arm of manga publisher and anime distributor Viz Media. Sony has it all now.

It’s hard to predict where things will go from here for the industry and consumers. At the end of last year, I wrote about the complications anime faced during the streaming wars, and predicted that streaming services would be more involved in the production of shows and not just the production. Licence. Much of my prediction was based on the idea that competition between different anime streaming services would require investment in their own exclusive shows to get consumers to subscribe.

Netflix has contented itself with producing its own exclusive shows at a rate of one to three per season, then licensing other series after the end of their broadcast for their international catalog. As expected, Funimation and Crunchyroll were vying for licenses for 30-40 new shows each season, often getting involved in productions to help secure simulcast rights.

However, with that all of a sudden that’s no longer the case, there shouldn’t be much change in the short term other than the fact that consumers potentially only have to subscribe to one or more. two services to simultaneously broadcast new shows (compared to the four or five you needed for just a few years). since). In the long run, however, the Sony-Crunchyroll deal has the potential to reduce the number and budgets of future anime productions.

But given the acquisition valuation and market growth over the past few years, it seems likely that new players will step in to fill the positions formerly held by the production committees of Funimation and Crunchyroll. Although the only place you can likely watch their simulcast will be on Funimation / Crunchyroll.

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