We've Got Hollywood Covered

DVDs are Dying, But Not for Anime Distributor Funimation

The company generates $100 million in revenue and has a growing home entertainment business

As streaming services focused on narrow slices of content like Korean drama and Japanese anime continue to proliferate and find a critical mass of users, Hollywood can’t help but notice the appeal of devoted niche communities. They can get people to the theater — and perhaps more impressively, get them to buy DVDs.

Anime company Funimation distributed Japanese film “Your Name” in the U.S. last month, where it reeled in a respectable $4.7 million (the film made $354 million worldwide). And that’s hardly uncharted territory for the anime studio, whose “Dragon Ball Z: Resurrection F” grossed more than $8 million in the U.S. after its August 2015 release. And given “Your Name’s” limited release — it maxed out at 311 theaters its opening weekend — it packed an even stronger per-theater punch.

“We were actually the number four movie on a per-screen average,” Funimation Chief Operating Officer Mike DuBoise told TheWrap, mentioning the film’s strong opening. “We’ve now got two of the top 10 largest opening weekends in anime.”

The company brings in more than $100 million in revenue, more than doubling it since 2013, and Funimation’s passionate fan base has even allowed it to thwart the sinking tide of DVDs, as DuBoise said sales remain strong even as most of the home entertainment industry is seeing the discs fly off shelves much more slowly than they have in the past. Streaming services like Netflix have effectively filled the role that video rentals used to — except for anime, apparently.

“We’re continuing to have amazing sales of DVDs,” DuBoise said. “We see that the industry is going counter to that trend.”

In September, former Sony Entertainment CEO Michael Lynton touched on plunging DVD sales at TheWrap’s TheGrill conference.

“We do have to figure out a way to make up for the hole in the boat that the decline in the DVD business has shown,” Lynton told TheWrap CEO Sharon Waxman in a conversation at the Montage Beverly Hills. “It is definitely down double digits of late … it is significant.”

Funimation has managed to fill that hole with a passionate fan base that wants to own anime shows that they might have had a hard time accessing in the past. DuBoise said Funimation founder Gen Fukunaga, who started the company in 1994, had a correct long-term view that anime would be a rising genre in the U.S.

“He had incredible vision the 1990s that there would be a huge appetite for this content from the American audience,” DuBoise said. “What we’ve always been known for is translation and dubbing into English and making great shows more accessible to the U.S. audience.”

DuBoise also credits the internet for exposing anime fans to better content faster — and making them want to get their hands on it.

“The internet allowed anime fans to discover great shows much closer to when they air in Japan,” he said.

That’s led to the rise of anime streaming services like Crunchyroll, which topped 1 million subscribers in February. VRV, another streaming service owned by Crunchyroll parent Ellation focused on anime, animation and sci-fi, expanded its offerings this year as well — which includes a Funimation channel. And Funimation has its own streaming service, FunimationNow, which just launched in Australia and New Zealand.

While DuBoise underlined the importance of Funimation’s online fans and social media following, he said the fact that the company attends conventions and parties — and has products available in brick-and-mortar retailers like Wal-Mart — gives the brand resonance in the real world, as well. And event movies like “Your Name” are hugely important, too.

“We think it’s really important to be able to have this community shared activity on the big screen,” DuBoise said. “Fans love anime — they get out and support it.”

Not only that, they even buy DVDs.