Despite efforts by AMC, Disney and others to cash in on Japanese animation, the Sony-backed service is years ahead of rivals, experts tell TheWrap
Netflix, AMC and Disney are going after the increasingly lucrative and global anime market, seeing it as a way to broaden their appeal to younger audiences, but Crunchyroll remains the most versatile and formidable anime streamer in the arena, according to experts, who say it would take “years” for the streaming giants to get anywhere close to the Sony-backed company’s “borderline monopoly” status.
It’s not for lack of trying: Between splashy partnerships, expensive acquisitions and attempts to find a seat within the tight-knit Japanese production committee system, streamers are pushing hard against Crunchyroll. While none are quite ready to go up against Sony’s all-in-one anime streaming empire, the recent business moves rivals have made could even out the playing field over time.
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“Anybody who wants to go toe-to-toe with Crunchyroll and really compete with them — one, it would take a couple of years. No one is directly suited for it currently,” Justin Sevakis, the founder and editor-at-large of Anime News Network told TheWrap. “If any of the more moneyed streamers, the ones owned by major studios, really wanted to dedicate a huge portion of their time, attention and staffing to anime, they could do it. Nobody’s there yet.”
Crunchyroll has a huge library and a lot of resources
With a more than decade in the game and a library of over 1,000 TV series and movies, Crunchyroll, now owned by Sony, is the “it girl” of anime streaming. It got an early start in 2006 at a time when finding anime online largely meant trawling spammy, virus-laden bootleg sites. Now combined with Funimation, which Sony also owns, and anime merchandiser Right Stuf, Crunchyroll seems like an impenetrable force. Sony moved to lower subscription fees in many regions last summer, helping bolster viewership, and Crunchyroll ended the year with more than 10 million paid subscribers.
Sony’s advantage is that it’s almost “completely vertically integrated,” Sevakis said. “Between Sony Pictures and Sony Japan Music, they control Aniplex, which is one of the biggest producers of anime. They control Crunchyroll, obviously the biggest world distributor of anime. They control Funimation, which was the No. 2 streamer of anime and also the biggest dubbing production facility of anime. Then, with Right Stuf, they have the biggest retailer of anime and anime merch. That is a very hard machine to beat.”
Crunchyroll also has one thing the others don’t: a seat at the table in the Japanese production committee system. Production committees are groups of company-based investors who pitch in money or resources to produce a series or film, and reap the benefits if it’s successful. If a project does poorly, no one takes the full brunt of the financial blow. Committees are typically made up of four to six different companies, like licensors, toy manufacturing companies, a TV network or a manga publisher.
Sevakis called it a “boys club” which makes it “really hard for an outside company to come in and participate in that system.” Crunchyroll and Funimation both broke into the system after years of trying, while Netflix has been rebuffed.
Gita Rebbapragada, chief marketing officer of Crunchyroll, said the company supports a “sustainable, vibrant anime ecosystem,” while highlighting how Crunchyroll differs from the rest of the streamers that carry anime.
“We are trying to be everything to someone,” said Rebbapragada. “We are a streaming service, sure. But we have games, theatrical and home entertainment, collectibles, e-commerce. We’re trying to build a lifestyle and culture around anime versus being a pure-play streaming service.”
In order to get anywhere near Crunchyroll’s reign, Sevakis says it would take the right framework and an in-depth understanding of anime and its fans.
“They would need an infrastructure that would allow them to simultaneously dub a show as it’s coming out of Japan, which is not easy. This can be outsourced, but not all that well. They would need to have a staff that people would actually listen to who actually understand anime and understand American fans, which is a much harder order than you would think,” he said.
John McCallum, a senior researcher at Interpret focusing on the anime market, agreed, observing that anime watchers aren’t one-dimensional and their needs have changed over the years.
“There was a time when you could reasonably think of ‘anime viewers’ as a single segment of a broader entertainment audience, a more nuanced understanding of segments within the anime audience is needed. Otherwise, you can’t adequately differentiate yourself from all of these other streamers,” said McCallum. “Second, strong relationships with key stakeholders in Japan are still crucial. It can be challenging to get your foot in the door and understand this complex system of anime production.”
The downfall of U.S. companies trying to enter the anime market is typically their lack of understanding the intricacies of anime production, he said, like not getting the difference between a dub and closed captioning.
“The history of anime in the U.S. is littered with the corpses of major studios attempting to get in on the anime market and just completely face-plant because they didn’t understand it,” he said.
Netflix is a giant facing challenges
Netflix’s commanding lead in worldwide subscribers makes it a powerful player in anime, particularly for distribution outside the U.S. Netflix reported that half of its 222 million global subscribers watch some anime. However, when it comes to producing anime, even Netflix anime chief Taiki Sakurai has his doubts about how serious the streamer was about doing its own take on the Japanese art form before he joined.
Nevertheless, Netflix’s Japanese team has been collaborating with production houses, studios, publishers and directly with creatives since 2016. The service has worked with Production IG to access talent for shows like “Ultraman” and publishing company Shueisha to license shows like “Spy X Family” to build an impressive anime catalog.
“Currently, our model is to work with industry-renowned animation studios who produce anime titles exclusive to Netflix, instead of establishing an in-house production unit,” said Sakurai. “This allows us to support the work of longstanding publishers and production houses, and invest in their expertise and IP.”
With a slate of more than 150 Japanese animation shows and films and a recent non-exclusive agreement with Nippon TV to add 13 more anime titles, the streamer is making big investments in the field. “Record of Ragnarok” became one of Netflix’s most successful anime series, with Season 2 of the manga-adapted series debuting at No. 5 on Netflix’s Top 10 Non-English TV list with 29.2 million hours viewed. The show was produced by Warner Bros. Japan and the Japanese studio Graphinica.
Disney faces the Hulu question
Disney’s two major streaming services, Disney+ and Hulu, don’t cater to hardcore anime fans with a massive library or simultaneous U.S.-Japan debuts. But they do offer a place where it’s easy for newbies to encounter anime and seasoned watchers of the genre can find some of their favorites.
Hulu became a prime location for anime fans to watch shows like “Naruto,” “Attack on Titan” and “My Hero Academia,” after it struck a distribution and licensing deal with the now Sony-owned anime streamer Funimation in 2018.
Hulu has since maintained relationships with both Funimation and Crunchyroll to carry some of their titles. If Sony moves to bring titles back in-house as it merges its anime services, that could leave a hole in Hulu’s 300-title slate of anime content. Funimation’s anime library has already started moving over to Crunchyroll.
The uncertain status of Hulu, which Disney chief Bob Iger has said it could sell, complicates Disney’s corporate anime strategy, which might require funneling more anime deals to Disney+. In November 2022, Disney+ expanded its longstanding partnership with Japanese publishing company Kodansha to co-produce more anime originals and license exclusive anime titles for Disney+.
Then there’s Studio Ghibli. Disney has long controlled North American theatrical distribution for the maker of “Howl’s Moving Castle,” but Studio Ghibli licensed its catalog to HBO Max for streaming in 2019 amid reports that Disney and the anime studio were at odds. More recently, Studio Ghibli produced an animated original based on the Grogu or “Baby Yoda” character for Disney+, suggesting a detente between the partners.
AMC’s HIDIVE is an underdog with potential
In January 2022, AMC Networks acquired Sentai Holdings, which owned the HIDIVE streaming service and Sentai Filmworks, an anime producer. That gave AMC both a producer of anime and a distribution channel, making it a surprisingly formidable contender, experts agreed.
“AMC is an interesting player with its acquisition of HIDIVE,” said McCallum. He added, “HIDIVE offers a more curated and specific anime experience” but “is not at the scale” of competitors.
AMC said HIDIVE is the fastest-growing anime service in the world today, offering a variety of options and ways for fans to consume anime, including multiple versions of shows, from the original TV broadcasts to director’s cuts and high-quality dubbed programs.
“If anyone could scale up right now, it could be HIDIVE. But AMC is not doing so great right now. They’re in cutting-costs mode, so I don’t see that happening,” said Sevakis.
AMC said last year it expected to take $475 million in restructuring charges and laid off roughly 20% of its staff — which is not an encouraging environment to nurture a potentially promising investment in anime.
Raquel "Rocky" Harris