A billion dollars is not bad for a site that started as a fake-it-til-you-make-it piracy site. I only know the story 4th-hand. But, my understanding is that it started as a user-upload site (I.e. piracy with disclaimers). And, of course, the seed users were actually employees with puppet accounts pirating media to their own site.
That kicked off real users who competed on getting the highest quality subtitle jobs uploaded quickest after the first broadcast of a given show in Japan.
Once viewers outside of Japan learned that they could get episodes same-day as Japan, they flocked to CR. Of course, this was only possible because CR did not attempt the impossible task of convincing the producers to allow this to be possible.
Once the CR audience was high enough, there were two obvious consequences: 1) They were too big to fly under the radar and were likely to be sued soon. 2) Their audience was large enough to be offered in negotiation with the publishers for a legit contract. So, that's what they did. They offered a fair revenue split with the publishers in exchange for being a legitimized distributor.
There are lots of ways that this could have gone badly. Most piracy sites do as much as possible to exploit the material and the viewers for short-term gain. Most publishers reasonably lawyer-stomp such sites as fast as is feasible.
But, in this case it worked out. There's no way CR could have negotiated with the publishers up-front. They were starting with nothing at all to offer. No audience. No reputation. No capital. Nothing.
Their approach was not legal. But, it was small and respectful-ish enough to not be worth suing until it was large and respectful-ish enough to be worth negotiating with.
Do not recommend this business plan. Glad it worked out for them.
Anime fansubs have been around for 3-4 decades (ever since the early Amiga could overlay subs) and digital for 20+.
Interesting that it worked out for them, unlike what happened with music distribution, and then the Napster/iTunes/Spotify evolution. Probably helped that there was only extremely slow and expensive legitimate distribution channels and actual work was required to make the content accessible in other languages.
Rakuten's Viki service is another interesting model - they license content, then give people early access and crowdsource the translations, where the only benefit of translating is getting the $5-10 monthly service for free.
I think that Crunchyroll was successful because Japanese media companies considered the US market a joke. The companies that distribute anime in Japan never tried to sell into the US, they just assumed we weren't interested. Crunchyroll could then show up, say they had some customers willing to pay, and decided $LOW was better than $FREE.
It's still this way; you can buy anime box sets in the US for an entire series that costs less than a single episode in Japan. (They segment the markets by burning English subtitles into the actual video. No self-respecting Japanese person would buy that, right? Ironically region codes don't work because Japan and the US are in the same region! DRM fails again.)
>It's still this way; you can buy anime box sets in the US for an entire series that costs less than a single episode in Japan.
Clearly you have never bought anything published by Aniplex of America (not that I'd blame anyone for that). PERSONA5 the Animation Blu-ray is $300 (allegedly down from $400 retail) for 28 episodes.
Japanese animation blu-ray are often, as strange as that may sound, even more overpriced:
After a quick look, Perdona5 seems to have at least 10 boxes. Not ridiculous since they tend to contain 2-3 episodes. But each is 6600 JPY. That's more than 600 dollars.
Even in VOD, I've seen some website that make you pay 150 JpY per episode... And 4000JPY for the last one.
The US prices are high compared to France ones (we can get 100 episodes of Monogatari Séries for 90€, but that is a discount compared to the japanese price)
Wow. I had no idea. On Amazon.jp, sold by Amazon.jp, Persona5 anime is broken into volumes, each with 2-3 episodes: Volume 1 is ¥5,958 and has 2 episodes, volume 2 is ¥6,695 with 3 episodes, etc. It's priced like you're buying a limited edition movie as 3 episodes might be roughly the same length. Browsing other ANIPLEX releases on Amazon.jp, it doesn't appear to be all that unique to Persona either. SAO Alicization appears to be similarly priced and released in small 2 episode volumes. It might be somewhat unique to ANIPLEX but I do see other anime sold this way. That Time I Got Reincarnated as a Slime (Season One) is only broken into two parts, ¥5,198 and ¥6,061 each on Amazon. This seems more reasonable. In Canada it retails for roughly CA$50 each part, though reviews complain that the boss fight isn't over until you watch part 2 of the season and reviewers say they prefer buying a box set with the full season rather than just one part...
>It might be somewhat unique to ANIPLEX but I do see other anime sold this way.
The unique part of Aniplex isn't its Japanese prices, but rather its attempt at exporting its Japanese pricing to the US. Compare that 28-episode $300 Aniplex of America release to something like the Sentai's Shirobako release (24 episodes), which allegedly retails for $90 and is available on Sentai's own store for $45. And that's not even counting the fact that Shirobako is the better anime of the two.
Do most japanese people actually consume these series like this or use some free broadcast / website to see it with ads like most TV is done? Or far cheaper rentals?
I imagine most Japanese people just watch it on TV / record it. I believe DVRs are still popular in Japan. The 12th most popular TV/video product on Amazon.co.jp is a 1 TB Panasonic Blu-ray recorder.
When I visited Japan I was astounded by the high price for animation. I naively expected that buying from the source would be cheaper but... think 5000~7000 JPY for one DVD disc of a seven disc series.
For DVD at least, Japan is region 2 (same as EU). I don't know about Blu-ray.
Wells it's a niche, for something where the entry cost seems high. I recall some low-estimate of how much a 25 minute episode costs that was around 80k$ for entry-level quality. It's hard to know if that's right, but if it is, that puts a season into the million-dollar investment range even for low quality stuff.
There aren't that many potential buyers plus entertainment in Japan is expensive, so they price it high. So even fewer buy it.
But due to fans being ready to spend those amounts, I wouldn't be surprised if they found a maximum for profit at those price tags.
I don't know if there's just that:
Many French anime physical release, especially those handled by the now dead Déclic Images (they started selling something they did not have the right for as a counter-offensive against those that bought the rights, if I remember well), are quite cheap. And are soft-subbed. To the point where I often hear it as an explanation of why so few animes get DVDs in France.
But at the same time, Wakanim sells DRM-free episodes that are soft-subbed for 1€/episode. We are talking about a 95% discount compared to Japan here. Hope this won't change with this new quasi-monopoly.
It's still this way; you can buy anime box sets in the US
for an entire series that costs less than a single episode in Japan.
Yes -- this was their main fear. Japanese audiences "reverse importing" discs sold in overseas markets.
Western markets may be "a joke" in terms of sales for exported Japanese-market anime, but it's also essentially free money for the makers of that anime. ADV, Disney, and others wrote some fairly big checks to license series back in the day.
They produce a show for the Japanese market, and if they are lucky they can score some nice checks from overseas distribution for essentially no additional effort on their part.
They segment the markets by burning English subtitles into the actual video.
I'm sorry, but this is mistaken. I've been collecting this stuff for decades and was once a reviewer who got quite a few review copies from ADV and others.
Perhaps there have been a few specific examples I'm not aware of but I've never once seen this. Well, except for the VHS era when obviously soft subtitles were not an option.
This was never a problem in the DVD era, but started happening again with several Blu-ray releases. In most cases, these are simply "locked" rather than truly hard-subbed. (The subtitle images aren't mixed with the video, they are a separate track that cannot be disabled.)
Japanese and rights management and growth just don’t coincide in a same sentence without some negatives.
People pay great attention in discovering unfairness by random search and devising punishments for it ad-hoc, not much else. ATRAC3, Blu-Ray, it’s always the same; DRM makes product unusable, but technically fair, and as long as it’s technically fair and balanced, they don’t care even if a group of industries were sinking together.
As I understand it, some of the older fansubbers went "legit" as well (ADV, perhaps?). The basic distribution model is as you described, starting with an Amiga Video Toaster or other titler. Then, local anime clubs and other distributors would send them blank tapes, which the fansubber would dub with the latest episodes. Finally, people would send blank tapes to that distributor, who would dub a copy for them. After a few generations of this, the quality was quite bad in some cases.
Back in the 90s I would send VHS tapes + some return postage money to get fansubs of animes not available in the US. It was an amazing community and no one took a profit from it.
Yup. You could sometimes find scene release group names in the metadata when Spotify beta launched. They cleaned it up in the "great purge" where 90% of my playlists became empty :)
Good summary. I actually did not know about CR's grey-market roots.
That kicked off real users who competed on getting the
highest quality subtitle jobs uploaded quickest after the first
broadcast of a given show in Japan.
This has definitely been a thing since before CR!
Before CR "went legit" the non-Japan market for anime was severely underserved. You could download illegal fansubs for free, often within 24 hours of its broadcast in Japan. Or... you could pay major $$$ for official US releases years later. And a lot of series were never released here at all.
* VHS/DVD/BluRay sales clearly indicated that plenty of folks wanted to pay for this stuff.
* Fansub torrent stats clearly indicated that plenty of folks wanted this stuff sooner than the industry was giving it to them.
And yet, somehow, it took about 15 years for the industry to bridge this gap. As somebody on the fringes of the industry, it made me want to scream. It didn't exactly take a major leap of cosmic brainpower to realize that while not all fansub-downloaders would pay for this stuff, this was the hardcore segment of the fanbase and certainly some of them would.
I don't know if this is true, but I read somewhere that Pornhub/Mindgeek was a "fake-it-til-you-make-it piracy site", and still is for studios that aren't active about takedown requests, except with their money they were able to buy a lot of the IP from studios that had shut down due to streaming.
That's more or less true of all the tube-style porn sites (of which Pornhub ended up the biggest an Mingeek ended up owning most of them), but it's also a little different in that, much like YouTube, they were ostensibly intended to allow people to upload their own videos that they'd created and quite a few did. Honestly, I think the commercial porn industry saw that as just as much of a threat as the actual piracy and a lot of the hostility came from permitting this kind of user-created content.
There are so many examples pro and con. Theranos is a good example of both, weirdly enough. Although it all ended rather badly, and in a spectacular way, it worked well (for certain interpretations of that word) for a long time before that. If they were able to actually leverage the billions they got into materializing the technology claims they made, they would have survived, and the crooks at the helm would still be extremely famous and well off.
That's probably worth considering when thinking about the people at the helm of a lot of these large companies, especially the ones that lose money quarter after quarter until they eventually don't. That's not a position that seems like it rewards integrity.
I know where the bodies are buried for a few businesses with successful exits, and the story they tell the world vs. reality can be quite different! There is a personality trait I call “hustling” - the ability to do whatever it takes to succeed. Many successful entrepreneurs are hustlers. Another way to look at it is “the ends justify the means”, especially when the ends are life-altering wealth.
Mixed feelings. On the one side, there's a similar brouhaha about Yahoo (?) being able to acquire Google back when. On the other, if it was bought at that time by Sony, it probably would not have gained the traction that it does nowadays.
From 2013 to 2017, there was Daisuki, which many thought was another pirate streaming site. But it was actually a project funded by the government of Japan and some major banks via the Cool Japan Fund.[1] The Japanese government has an organization to promote Japanese culture as a form of soft power. They're worried about K-Pop. They're currently funding Sentai.[1]
This is interesting because it means the two big distributors of anime in the US are now one. It's creating a monopsony from the perspective of the anime studios, though I suspect a rival will emerge shortly.
A lot of people that enjoy anime-style games are unhappy with some of the censoring that Sony has done on the PlayStation. I expect that they will bungle this up as well.
I've actually noticed Netflix adding more 'big' anime titles to their offerings. Mind you, that's in NL where Funimation is not available and Crunchyroll has limited offerings, so license wise it may be a different thing.
Yes that's right AnimeLab is owned by Sony. I wonder if they are going to consolidate the two into one service. There is currently a lot of overlap between the two catalogues and I can't imagine that's good in the long term...
This doesn't strike me as that strong of a monopsony. There are already other well established streaming services; and it isn't that uncommon for users to use multiple services.
If Sony tried doing anything crazy with their monopsony power, studios could just license to Amazon or Netflix (or try out any number of the smaller services). This hypothetical fight would probably hurt both crunchyroll/funimation and the studios; but it would be an existential threat to crunchyroll and funimation.
This is a good thing. Anime outside of Japan is still niche. I don't want N competing streaming services. Even with a Funimation+Crunchyroll subscription, I still have to resort to less-than-legal means to watch some of my favourite material.
Well... With this, in France, we now have the three big services owned by sony, and each makes you pay 5€/month. Don't think that because they bought Crunchyroll, they will merge rights and subscription. Why would they, that would make less money.
Maybe they'll make more of their library available in my country. CR expects me to pay exactly the same subscription fee as in the US, but allows me to watch less than 1% of their library. Of course, I can always try to find a residential US proxy, but I ain't doing it to get access to a _paid_ service, sorry.
Needless to say, I continue to enjoy the convenience and non-discrimination of torrent trackers.
As a french, not quite fan of this...
We have only three big platforms for anime streaming (outside of Netflix, which catalog is still small here).
One of them, Wakanim, was acquired by Aniplex, which is owned by Sony, years ago.
The second, ADN, is owned by Kaze, which was bought by Crunchyroll.
So now that Crunchyroll is part of Sony, they have a near-monopoly on both VOD and physical releases.
We are lucky in that Wakanim is allowed to sell DRM-free episodes for 1€, I hope this won't change with this and the ongoing talks about removing geologist in the EU.
Westerners appear to under estimate how much the anime industry is about connections, yet its challenge going west has been for lack of users. Sony's consolidation is all about getting users.
Years back Bandai funded "daisuki" anime, which folded. In fact I worked in the same office as the executive who needed to fold down that division. Daisuki failed due to lack of users, not content. Likewise Sony tried a home spun distribution platform too, and folded it as well.
Now years later with all that industry experience in hand Sony is moving in and consolidating. Bandai is licensing their stuff to Netflix domestically, as is Sony. Yet those contracts can switch in a moment if a domestic conglomerate secures the users. Sony appears to be making those moves and could establish Japan's strongest beachhead in the streaming wars.
Japan cannot compete with Americans easy access to Hollywood negotiations, but likewise a Japanese platform should have strong negotiations securing anime.
I think the reason they couldn't find enough users is that their offering just wasn't convenient/good enough compared to piracy. Not only was pirated content more accessible, it also often had better subtitling. Official subtitles seem to have way more localization than fansubs. This might be great to capture a broader audience, but it also means that the fans that are already there don't want to use your subs. Sometimes they'd just rather not watch a show than put up with your subs.
What they probably should've done is what Qidian ended up doing with webnovel.com. They should've approached the fansubbers and the release groups and offered them a job. That way they would've retained the expertise and fanbase. It would've likely caused a lot of issues like Qidian did, but they would've likely had far more success.
Alternatively, putting anime on places like Steam could've also been a good choice.
Honestly I never understood why Netflix didn't make a stronger push to acquire them, it's such a great addition to their existing offerings and would boost their customer base as well.
I think Netflix's anime push is really strong if their goal is to get non-anime-dorks to watch anime. Most anime is pretty terrible, not unlike most tv, but unlike mainstream tv in that it has tons of uncomfortable sexism or weird pedo-inclinations. I find Netflix tends to only grab the better chunk of whats out there, and is funding some really strong original content, which I think is above the quality threshold of some of their live action shows (Great Pretender, BNA, Aggretsuko come to mind).
I don't typically expect to like a random anime, but I'm trending towards changing that opinion if I encounter it on Netflix and I don't see a tasteless panty shot of a young girl in the first 30 minutes.
If I had to guess, I would say because they would rather spend more cash on creating new content than acquiring niche content distribution that’s already out there.
On top of that, the target audience has a big overlap.
People who use crunchyroll most likely have Netflix accounts already. So it probably wouldn’t benefit them significantly.
I wonder if they are going to merge content like they had before, or if they aim to segment the market in some way. I know Funimation is more known for rapid English dubs, for example.
That kicked off real users who competed on getting the highest quality subtitle jobs uploaded quickest after the first broadcast of a given show in Japan.
Once viewers outside of Japan learned that they could get episodes same-day as Japan, they flocked to CR. Of course, this was only possible because CR did not attempt the impossible task of convincing the producers to allow this to be possible.
Once the CR audience was high enough, there were two obvious consequences: 1) They were too big to fly under the radar and were likely to be sued soon. 2) Their audience was large enough to be offered in negotiation with the publishers for a legit contract. So, that's what they did. They offered a fair revenue split with the publishers in exchange for being a legitimized distributor.
There are lots of ways that this could have gone badly. Most piracy sites do as much as possible to exploit the material and the viewers for short-term gain. Most publishers reasonably lawyer-stomp such sites as fast as is feasible.
But, in this case it worked out. There's no way CR could have negotiated with the publishers up-front. They were starting with nothing at all to offer. No audience. No reputation. No capital. Nothing.
Their approach was not legal. But, it was small and respectful-ish enough to not be worth suing until it was large and respectful-ish enough to be worth negotiating with.
Do not recommend this business plan. Glad it worked out for them.