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 there had been rumors about the acquisition for a few weeks, it was unclear how or if the deal would go through. Sony estimated the purchase price of the transaction to be $ 1.175 million.

“The Crunchyroll team has done an extraordinary job 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 its fans, ”said Tony Goncalves, CRO of WarnerMedia, in a statement. “By combining with Funimation, they will continue to nurture a global community and bring more encouragement 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 amount of time. They have created a global ecosystem from start to finish for this incredible art form. ”

“We are proud to add Crunchyroll to the Sony family,” added Tony Vinciquerra, President and CEO of Sony Pictures Entertainment. “Through Funimation and our excellent 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 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 succeed in this rapidly growing entertainment segment. “

At first glance, Sony’s acquisition of Crunchyroll from AT&T could put them in a better position to compete with Netflix, but the move actually increases their influence over Japan’s anime industry. Adding Crunchyroll’s 70 million free members and 3 million paid subscribers to its portfolio of anime production and streaming companies, the company intends to reap the rewards of overseas anime growth, which in both 2017 and 2018 grew to nearly half of the industry’s total revenue from overseas. of 2.1 trillion yen (about $ 19 billion).

Although Sony’s move towards anime streaming may seem sudden, the company has been involved in anime production for decades. In 1995, Sony Music Entertainment Japan (SMEJ) established Aniplex, a subsidiary created to manage music and anime productions. In 2005, Aniplex started his own animation studio, A-1 Pictures, which would go on to animate shows like Kaguya-sama: love is war Y Sword art online.

But over the past five years, Sony has strengthened its portfolio of international streaming services through acquisitions, starting in 2015 with French anime streaming service Wakanim. In 2018, the company bought 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 the Funimation 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 it would have a 30-day exclusivity on Sony’s international streaming services before being available on other platforms. The dubbing in English 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 music on the show was by SMEJ artists, the English dubbing was produced by Funimation, and the series is based on a game for mobile devices produced by Aniplex.

Crunchyroll’s $ 1 billion acquisition price comes not from being the market-leading simulcasting service, but from how it will expand Sony’s vertical integration into overseas anime production. Although Aniplex already has a North American distribution, game publisher, and merchandising division in Aniplex of America, the non-streaming parts of Crunchyroll’s business have expanded in many ways that Funimation and Aniplex of America had not yet. .

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 also started co-producing new shows like Kemono Friends, Y Kino’s journey -the beautiful world-, earlier in 2020 by announcing the “Crunchyroll Originals” brand for home produced shows. Many of these programs would be carried out in association with Japanese animation studios such as MAPPA and Production IG, although programs such as Onyx equinox will come out of the newly formed Crunchyroll Studios.

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

It’s hard to predict where things will go from here for industry and consumers. At the end of last year, I wrote about the complications anime faced during the streaming warsand predicted that streaming services would become more involved in show production, not just licensing. 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 entice consumers to subscribe.

Netflix has been content with producing its own exclusive shows at a rate of one to three each season, and then licensing other series after they finished airing for its international catalog. As predicted, Funimation and Crunchyroll had been competing for licenses for 30-40 new shows each season by often getting involved in productions to help secure simulcast rights.

However, with that suddenly no longer the case, there shouldn’t be much change in the short term, other than consumers potentially only having to subscribe to one or two services to simultaneously stream new shows (compared to four or two. five I needed in just a few years). behind). However, in the long term, the agreement between Sony and Crunchyroll has the potential to reduce the number and budgets of future anime productions.

But given the valuation of the acquisition and the growth of the market in recent years, it seems likely that new players will appear to fill the positions that once held the production committees of Funimation and Crunchyroll. Although the only place you will likely be able to watch its simulcast will be on Funimation / Crunchyroll.

Update (Aug 9): Sony’s Funimation Global Group announced on monday which has officially completed the acquisition of Crunchyroll from AT&T. According to Sony’s announcement, the company’s Funimation Global Group, a joint venture between Sony Pictures Entertainment and Aniplex, will unify Funimation and Crunchyroll into a single anime subscription in the near future.

“With the addition of Crunchyroll, we have an unprecedented opportunity to serve anime fans like never before and deliver the anime experience on any platform they choose, from theater, events, home entertainment, gaming, streaming, linear TV. , everywhere and in every way. they want to experience their anime, “Tony Vinciquerra, president and CEO of Sony Pictures Entertainment, said in a press release. “Our goal is to create a unified anime subscription experience as soon as possible.”