Crunchyroll's $100 Million Contribution to Japanese Anime

The U.S.-based streaming platform has plowed royalties back into the industry, invested in new productions and is moving into original content.

San Francisco-based anime streaming platform Crunchyroll has contributed more than $100 million to the Japanese industry through royalty payments in the 10 years it has been operating.

Starting out as a user-uploaded streaming site created by a group of engineering graduates from Berkeley in 2006, Crunchyroll initially drew the ire of the Japanese anime industry for allowing pirated, fan-subbed shows to be streamed. But in the summer of 2008, Crunchyroll's management traveled to Tokyo in the hope of licensing anime and providing fans in the U.S. and further afield with high-quality, professionally subbed shows soon after they were broadcast in Japan.

Meeting with TV Tokyo — the smallest of Japan's television networks, but the biggest screener of anime — turned out to be pivotal, and Crunchyroll opened its first office in the Japanese capital later that year. A deal was signed in January 2009, after "drinking a lot of sake together," explained Kun Gao, Crunchyroll co-founder and general manager.

"There was some resistance to us working with these "pirates" who people thought were hell-bent on destroying the industry," recalled Hiroaki Saiki, head of global distribution at TV Tokyo.

The first batch of shows included Naruto, the iconic manga and anime franchise that runs to 220 episodes.

TV Tokyo's openness to allowing simulcasts of anime was crucial to the site's success, according to Gao, who says 80 to 90 percent of its shows are now broadcast simultaneously with Japan or after a very short delay.

Crunchyroll now licenses anime, and some anime-related live-action dramas, from all the major Japanese networks, but also invests in new series, even joining the production committees. Most Japanese films, dramas and anime are backed by a production committee, often consisting of studios, TV networks, newspapers, publishers, radio stations and advertising agencies.

"We have invested directly in more than 40 productions, including many shows that wouldn't have been made," said Gao. "We have an amazing relationship now with the creators. The animators want to learn about global audiences and what they want."

"Everyone wants to learn more about their audience and what the data is saying; we have a lot of deep data," added Gao.

Animators aren't deliberately tailoring their anime to fans outside Japan, but Saiki says that creators do sometimes ask if things such as religious symbols or characters smoking are OK with global audiences.

Crunchyroll is proud of the contribution it has made to both popularizing anime and to its finances, according to Gao, who said fans are also pleased their subscriptions help support the industry, "They know their money is going directly to creating more content; it's very transparent."

Although anime is still seen by many as having a male-dominated fan base, women now make up half of Crunchyroll's subscribers, while female fans are now prized in Japan.

"There are more female-oriented shows in Japan these days, as women spend more money on anime-related events," which are an increasingly important source of revenue, explained Saiki.

Beyond its U.S. base, the U.K., Spain, France, Germany, Russia and Arab nations are all now important markets for Crunchyroll, according to Gao. With 20 staff in its Tokyo office, Crunchyroll's global head count has now reached 300, including more than 100 at the back-end tech operations in Moldova.

As well as investing in Japanese anime, Crunchyroll is also making the move into original content, but with its own slant.

"We are doing some original programming now, with a U.S. creator working with a Japanese animator," said Gao. "We're not doing originals to do more of the same of what Japan is already the best in the world at making."