Since the news Sony was closing in on a deal with Crunchyroll, every week, my planning for this column went like this:
“Maybe they’ll make a deal this week! …No? Guess I’ll have to think of something else…”
“Maybe they’ll make a deal this week! …No? Guess I’ll have to think of something else…”
“Maybe they’ll make a deal this week! …No? Guess I’ll have to think of something else…”
You get the idea.
Then the one week I was ready in advance, had it all written and looking good, the news was spreading like wildfire: Sony is buying Crunchyroll. The announcement would have broke around the time I got a BSOD while I was writing. How fitting.
Anyway, on December 9th, the announcement was officially made: for $1.175 billion in cash, Sony would fully acquire Crunchyroll. Well, technically, not Sony itself — Funimation is, which is co-owned by Sony Pictures and Sony Music’s Aniplex. Funimation, as you may recall, isn’t just the US company anymore: over a year ago, Sony combined two of its international streaming services under the Funimation name.
The press release makes it clear this includes all of Crunchyroll, which has been expanding its own portfolio over the years, like becoming the majority stakeholder in VIZ Media Europe, even changing the name to reflect Crunchyroll’s ownership.
A deal between Sony and AT&T was almost certain since no one else could negotiate for Crunchyroll, which may have been somewhat surprising since Sony found AT&T’s initial asking price of $1.5 billion too high. This purchase means that each of Crunchyroll’s three million subscribers is valued at about $392. That’s about what Crunchyroll was worth in 2017 but a better deal that what Sony paid for each Funimation paid member.
AT&T did get its $1 billion minimum that it wanted but I am a little surprised it did. The Nikkei Report said Sony “could” spend more than $957 billion for the service, and that would have been near the $800-900 million I predicted.
But, of course, “could” turned out to be “would”. And although it’s hard for a lot of us to fathom since the numbers are so big, $1.175 billion doesn’t seem that far off from $1.5 billion, a number Sony supposedly “balked at“.
Maybe Crunchyroll gained appeal since then. One reason perhaps is the Crunchyroll Premium revamp, which I said could be AT&T “trying to prop up the numbers (either in number of subscribers or revenue) to make it more appealing to potential buyers” — which at that time, was definitely Sony but may not have been limited to them just yet.
Another factor may be VIZ Media. Anime from them has been added to Crunchyroll’s service since the beginning of the year, but starting this summer, VIZ Media also been working with Funimation, and in September, they proclaimed there’s more to come. Maybe by Sony signing agreements with VIZ, navigating all the potential pitfalls and such in VIZ/Crunchyroll contracts is now a non-issue.
Otherwise, there are a lot of questions going forward. For instance, discs and purchasable downloads. Back in September, it was announced that Sentai Filmworks would be distributing titles like Granbelm for Crunchyroll.
It seems a little silly for Sony/Funimation to pay someone else to put their titles up for sale on physical and digital formats when they do it all the time. If Sentai Filmworks was smart, they would have included some sort of clause to give them priority for a while or something since they knew Sony/Funimation was likely to swoop in at some point. Maybe there’s something in that deal that makes Crunchyroll more valuable, as it gives Funimation indirect access to Sentai Filmworks — perhaps in hopes of buying them as well?
After all, Funimation is likely going to have at least temporary connection to Sentai Filmworks through VRV. For how long, who knows — Sony and AT&T didn’t give an estimated date to when the deal would be finalized, so Sentai Filmworks could still pick up some of Crunchyroll’s slack with VRV and distribution for a while yet.
However, based upon recent events, expect VRV to undergo changes. After launching in 2016, the service has shuffled content in its Combo Pack a lot. However, since mid-2019, the service had been stable until the removal of NickSplat in August 2020. But at least fans got a heads up about NickSplat’s departure. Fans were streaming Boomerang like Scooby-Doo!-related series early morning December 1st only to get errors, which turned out to be the removal of Boomerang from VRV.
That news strongly suggested to me that AT&T was preparing for Crunchyroll’s sale. After all, Boomerang is also under AT&T’s umbrella, although under a different subsidiary. NickSplat leaving wasn’t surprising since it’s owned by ViacomCBS, who currently has their CBS All Access (soon to be renamed Paramount+) service. But I wasn’t fully sure if VRV would go with Crunchyroll or if AT&T would restructure it. Mainly because Rooster Teeth is still available on VRV, and it’s also an Otter Media company like Crunchyroll. With Boomerang having its own service and also migrating content to AT&T’s HBO Max, Rooster Teeth could have become the new “face” of VRV.
However, looking at the current VRV lineup, it’s a far cry from the list of channels it had in its heyday. All the other offerings have their own owners, and it is possible they will want to renew contracts with a Sony-owned VRV. VRV, after all, could be a means for Sony to unite its Crunchyroll and Funimation bases, just as they had been a few years ago before HIDIVE’s arrival.
But HIDIVE…HIDIVE can’t be feeling good right now. Well, Sentai as a whole really. The Cool Japan Fund, after investing in the company in 2019, recently bought more shares as its CEO gave it a boost of cash as well.
But if Sony’s Funimation department is ready to lay down over $1 billion in cash, they have the power to squeeze Sentai into an untenable position. Again, depending on how long it takes for regulatory approval and to hammer out any final details, HIDIVE and the other channels could be available on VRV for a while. But I wouldn’t be surprised if subscribers wake up one morning to watch another episode from them, Rooster Teeth, or the others and find those channels unavailable. So if there’s something that has been on the backburner on VRV for you, this might be the inspiration you need to start watching.
In fact, I wouldn’t be surprised if VRV itself is shuttered, as it would be cheaper to continue with Funimation’s and/or Crunchyroll’s ecosystems than having to worry about updates on a second or third service that’s currently only open to the US anyway.
That is a question — how many services Sony will operate. Internationally, Sony has consolidated its streaming services under the Funimation name, but I doubt the Crunchyroll name is going away. Whether Funimation becomes the home of all the dubs, takes priority over all the upcoming seasons while Crunchyroll hosts older content, or if Crunchyroll is more for the manga and live action side of things, who knows. Obviously, more services = more apps = more upkeep. Several of the big media companies have multiple streaming services, but this would be an example of targeting the same market versus, say, Disney+ vs. Hulu vs. ESPN or HBO Max vs. Boomerang.
There are a lot of deals each anime streaming platform has made that are going to need to be regrouped or untangled, from HBO Max hosting Crunchyroll content to Hulu’s first look agreement with Funimation. Again, I doubt all of these will unravel as soon as or shortly after the deal is inked, but I imagine there will be a lot of slow changes over the next couple of years. Not all of them are bound to be good, and Funimation’s and Crunchyroll’s three subscription tiers are bound to be revamped once again — and considering Crunchyroll took away free shipping, that might be the first thing to go for Funimation. That’s if they even keep the store over letting Crunchyroll handle all direct-to-consumer orders.
But a lot of people were upset when Funimation left VRV (and had celebrated when it joined), so while the market has changed a lot since then, I’m sure it’s going to be the loudest voices being upset, but they may not be the majority. For those of you who have reservations about Funimation becoming a near-monopoly, consider boosting HIDIVE’s numbers by subscribing or supporting services like RetroCrush. Not saying I don’t want a Crunchymation (or Funiroll) to succeed, but while monopolies can have benefits, they also tend to come with a whole slew of risks.
However, speaking of monopolies, I have seen some people question whether the FTC or other governmental agency could step in. Of course they could, but it’s unlikely. One, Sony could argue this deal is meant to provide more competition to Netflix, who has been making deals with anime studios directly, and all the other streaming services who add anime to their catalog. Besides, while anime viewership has grown, it’s still a niche market. Two, assuming there are still free options to view anime titles (which is unlikely to go away because of the prevalence of pirate sites), it may be hard to argue the negative consumer impact it would have. After all, there’s no way to watch Netflix series for free, and sites like Tubi have found a foothold in the market.
For now, while changes are certainly on the horizon, it’s too early to weigh the actual positives and negatives. We’ll all just have to keep an eye on what Funimation does with Crunchyroll in the coming months and years.