Moélympus Has Fallen
What Sony's purchase of Crunchyroll means for all of us, the egg on everyone's faces, and what they eat next
The thing we all knew was going to happen has happened. For those not in the loop, Sony has opted to buy U.S. anime streaming platform Crunchyroll for a little more than $1 billion dollars. Some industry pedants might point out that it’s technically streaming competitor Funimation buying Crunchyroll, but these people are just inexplicably doing the work of Sony and CR PR flacks for them. Funimation is owned by Sony (just like how CR is owned by AT&T) and its name was put on the paperwork deliberately to downplay the optics of what this really is: a major multinational corporation doing horizontal as well as vertical integration of an already-small market.
The subsuming of Crunchyroll into the Sony empire is the perfect expression of something I’ve been harping on more than once in this newsletter: Never underestimate the power of all of your competition simultaneously shitting the bed, withdrawing from the market, and letting another competitor win everything by mere virtue of being the only one left standing. In case anyone was somehow still under any illusions, competition in contemporary capitalism is less about rising above the competition through some sort of genuine innovation in technology, customer service, or logistics/supply chain efficiencies and more about amassing the most capital behind your brand, be it by fundraising or acquisition by a conglomerate. Especially in small niche markets like anime, where most players operate on shoestring budgets and wafer-thin margins, being the one turd in the toilet big enough to not get flushed is often enough.
The wages of anime
But why $1.175 billion dollars? Aniplex, Sony’s anime production brand, Aniplex, had a cumulative operating profit of $1.18 billion for the past three years. While the details on hazy -- as they often are when it comes to the financials of Japanese corporations -- on whether that figure reflects the full extent of profits for Aniplex and all its subsidiaries, it’s still a reflection of the pricetag AT&T put on the product and the fact that Sony busted out its wallet.
For those of us who’ve been actively paying attention to anime not just as media but as an industry for longer than a minute, the idea of a U.S. publisher/distributor of anime getting a billion-dollar valuation would’ve been preposterous even just five years ago. Saying it would be Crunchyroll would get you laughed out of the room. After all, this is the site that started out in the late 00s as a shady streaming service for fansubbed anime, proceeding to solicit donations from users and then run ads against that fansubbed content. The brand quickly developed a reputation for finding itself in the proximity of every other controversy in anime or anime fandom. A terse, evasive Anime News Network interview with one of the cofounders in 2008 didn’t do much to shake this reputation. For anime fandom, Anitwitter in particular, it became one of the greatest hate objects since Streamline or 4Kids. (the hatred arguably way more intense as CR at this time was not even a legal actor in the space) A popular pastime in such circles was to predict when Crunchyroll would finally walk the plank and disappear under the waves, either by massive copyright infringement lawsuit or simply collapsing under the weight of its own ballooning operating expenses.
Of course, that never happened. At the end of the 00s, as the worst recession the world had seen since the Great Depression (at that point) was eviscerating every economy tied into the neoliberal world order, CR announced its deal with Gonzo to distribute some of the studio’s titles. At the time the anime literati reacted to this with incredulity and mirth, that Gonzo didn’t know who it was getting into bed with. After that in 2009 CR the formally “came in from the cold,” signing a deal with TV Tokyo to get exclusive streaming rights to Naruto Shippuden and pledging to purge all fansub content and go legit. Since then they’ve gone on to land a series of similar streaming licensing deals, to the point of arguably becoming the streamer of first resort for “keeping up with the TV season”, and acquisitions by large conglomerates. All the while CR doomsayers kept saying “that’s it, they’re toast,” with more and more vehemence, looking more and more like the shriveled Wojak in the “It’s 4pm, time for your dick flattening” meme, until we reach the point we’re at today.
The real reason CR was valued at a billion is because of how well it fits into Sony’s emergent Sony Anime Empire. Sony has spent several years building out its anime operation into a fully vertically integrated unit that can gatekeep and monetize on every aspect of anime including production, digital distribution, Japanese television rights, videogame spinoffs, and anisong production and rights.
I put together a basic chart of the Sony Anime Empire below with a breakdown of some of the major elements nested just under Aniplex alone:
CR has also made genuine inroads in anime coproductions as well as diversification efforts that Funimation and Aniplex of America have failed to imitate. By integrating those existing coproductions and the institutional experience in co-production into the Empire, Sony effectively reintegrates more of the creative control over anime projects into Japanese hands. This isn’t to characterize it as some kind of ethnonationalist move at all, as Sony is the epitome of Multinational Conglomerate. It’s an issue of practicality: the more of the creative process is under your direct purview, the easier it is to craft sprawling decade-plus-spanning grand strategies that border on the megalomaniacal. After all this is the company who deliberately designed its next gen gaming console to be as physically imposing as possible -- an eyesore some might say -- so as to require customers to leave it free standing with nothing stacked on top or around it, thus becoming the uncanny centerpiece of their entertainment center whether they wanted it to be or not. I feel like this has to be something of a reflection of how Sony sees itself and how it sees its station in the world and the lives of the consumers it markets to.
Add onto that CR’s expansions into online manga licensing and distribution and physical events marketing with Crunchyroll Expo. I went to the first CRX a couple years ago. While you could lob any number of small logistical nitpicks, like the fact that I was able to ghost the entire expo without being subjected to an entire badge check, it would be silly and salty not to admit that the level of presentation, programming, and general production value are lightyears ahead of any fan-run con on the west coast at least. Is Sony interested in rolling up U.S. anime cons under its umbrella? A market that may now be under existential threat and already shrinking down to a more easily digestible size now that COVID made all of 2020 a wash for large in-person events? I have no idea, but the route for them to pursue it is open if they want it.
On top of all of it is CR’s 90 million registered users. In my experience of tech acquisitions such moves are made less to absorb the target’s existing revenues -- i’m not sure if CR’s ad revenue and 3 million premium subscribers even register to Sony -- and way more to get access to preexisting list of customers and their data. Think about it: is it more cost effective to build up Funimation as a direct competitor to CR, fighting for exclusive streaming rights and expanding in the same ways CR has with no guarantee of success, all to try and cannibalize some of those 90 million RUs when you can just shell out and get immediate access to them lockstock? That’s 90 million more users you can market other goods and services produced in other parts of the Empire to. On top of that, that’s 90 million active consumers of anime whose every choice and habit on the CR platform has been captured and stored. What those users watch and don’t watch, how they watch it, when they watch it, and what they do before and after watching can all be integrated into Sony’s overall strategy and guide what kinds of anime get produced, localized, and distributed in the Anglophone market, and how they’re marketed. Those insights alone have the potential to cover that $1 billion price tag.
What does it mean for us?
In the immediate short term? Probably nothing.
One of the things people are starting to wonder about though is whether Sony merges Funimation and Crunchyroll into a single unit or keep them as separate entities operating independently. Keeping them separate would probably be the dumbest possible decision and therefore among the more likely decisions Sony will make. Running separate brands that perform the same service but with different titles and/or dubbed versions vs. subbed versions would be discombobulating. Merging the two, even with an incremental price hike on the monthly subscription, (which would be almost certain to happen) would at the very least give users a unified experience and provide a sharp traffic and domain authority spike to whatever URL they 301 redirect the old site(s) to. At that point it would just come down to figuring out which brand has more established domain authority and SEO equity on non-brand organic search terms or, more realistically, how adamant Sony executives are about maintaining the existence of Funimation, “their” brand in American anime streaming.
On the more important side of things it’s hard to imagine whatever decision is made won’t include a judicious amount of “rightsizing” of rank-and-file and middle management staff in one or both organizations. That always comes with the territory of any corporate acquisition. Especially when the purchaser has several existing businesses in its portfolio already that cover many of the same functions. “Redundancies” abound.
On the content side, Sony has publicly stated that it wants to adopt the Disney multimedia strategy but for anime -- basically the anime you watch, where you watch it, the anisong from it you listen to, and the toys and merch of it you buy will all be made by Sony and hawked at a point-of-sale wholly owned by Sony too. I honestly don’t think this is going to affect the material nature of anime, especially TV anime, that much. The vast majority of mainstream anime is already so derivative and driven by base trendchasing that even if Sony was to apply deep learning and data analytics technology to determine that every anime should be Demon Slayer or Sword Art Online that’s really not going to be all that different from the landscape we have now.
Does anime matter anymore though?
I’ve been saying for a while that anime is an increasingly peripheral element to the anime industry as a whole. Big name anime directors like Mamoru Oshii have been opining about how hard it is to hire animators these days as everyone is going into gaming instead. You need only look at recent examples like Granblue Fantasy: Versus, whose elaborate 3D animation effects look better than much of what shows up in the average TV anime:
Astral Chain not only has similar animation quality and anime aesthetic and sensibilities, but combines them with intriguing style and writing that would likely never be greenlit for the contemporary anime market. Works like these aren’t just pastiches of anime, they are straight up superior to most of what’s going on in anime today.
And the idea that the Japanese have any kind of monopoly on the anime aesthetic is long gone. Chinese gacha games Arknights, Girls Frontline, and Genshin Impact have become international hits combining said aesthetic with unexpectedly nuanced, sometimes hard-edged, stories and writing that are very hard to imagine popping up in contemporary anime.
Finally, one of the most recent and striking examples of this continued deemphasizing of anime proper is the virtual YouTuber boom. Vtubers represent a complete break of the anime aesthetic and moé away from scripted and prerecorded content altogether. The vast majority of contemporary vtuber content consists of unscripted where the performer uses the playing of a videogame, a parlor game, or 3D motion capture as a backdrop for improvisation and real-time audience interaction. This is one of the few wholly new and emergent forms of entertainment derived out of the anime sphere, and thus far outside significant agencies like Nijisanji, Cover Corp, and newer ones like American startup VShojo, it’s still driven by networks of independent creators and artists.
It’s obvious that Sony is taking the videogame aspect into account. Gacha smash hit Fate Grand Order is part of the Sony Anime Empire after all. But it remains to be seen if or how vtubers will be integrated. I don’t think it’s outside the realm of possibility that Sony makes a play to acquire Cover Corp and/or Nijisanji in the near future should more and more people continue to derive the “benefits” of anime content from sources other than actually watching anime. Even if their revenue streams are comparatively lower to the other verticals in the Empire, the growth numbers and buzz around the scene may be enough to garner attention from corporate. And that worries me.
Where does this shit go next?
In a way the billion-dollar valuation and purchase of Crunchyroll is a mini apotheosis of anime streaming platforms, of the 2010s American anime industry, and of the steaming pile of cartoon anime poo that was the Trump era. Just as Trump the president was a product of the 2010s but only possible after the politics of the 2000s, CR in its current corporatized incarnation was a product of the fragmented small potatoes English anime market of the 2000s.
We all thought they were absolute toast up until the moment they weren’t. Now all of a sudden the planets align and they control everything. Trump may be out of office and CR as it exists currently may not be intact much longer, and the little people who worked for them may be facing some extreme job security anxiety in the near future, but the brands themselves will live on. Nothing was learned, justice was not served, and we Joe Schmoe consumers in the bleachers can do nothing except notice a shadow passing over us, look up at the dark machinations happening over our heads like Evangelions fighting each other, and guess at what kind of uncertain future it all predicts. Chances are you are not going to find the answers you seek will not be inside the giant robot.
If we insist on continuing to view these world-spanning movements of global capital only from the perspective of a simple Consoomer then yes, a slow encroaching all-consuming darkness really is all we can expect. But I’m not joking when I say that the path towards some kind of tangible hope becomes apparent when you force yourself, push yourself, to historicize all of these events. To view them in context to one another and in context to the larger trends that drive the course of history and, in turn, filter down into the things outside of you that color the nature of your everyday life. These things are all connected, the bullshit in your life doesn’t solely originate from inside your own, and the sooner we can acknowledge that the sooner we can start to realize what needs to be done -- organizing workers, creating spaces for artistic expression outside of conglomerate control, scaling the production of creative media to have more worker-owned organizations. For those of us outside of the cockpit of the giant robot, that’s the real path forward.