Earlier today, Anime News Network reported that the Chernin Group officially purchased a majority stake in Crunchyroll. The company revealed that they will use the service to expand into other genres. The financial terms of the deal weren’t disclosed, but Variety reported that the investment valued Crunchyroll at “below $100 million” (Yahoo! Finance pegs the figure at “close to $100 million”). In addition, the Chernin Group mentioned that Crunchyroll’s senior management and investor TV Tokyo will retain a “significant” stake in the company.
I previously reported on this about a month ago, when the two parties were in talks of a possible acquisition. At the time, I mentioned that it was difficult to say how a Chernin-operated Crunchyroll would operate. I also stated that it’s hard to say how the company would operate in the case that the acquisition became reality. Today, we got a glimpse of what’s to come with the statement released by Peter Chernin:
We couldn’t be more excited about the future. Our plan is to continue to grow the anime vertical as well as launch new channels in different genres. Online video is growing faster than any other sector within media, and we feel that with Crunchyroll, we have a fantastic, anchor platform.
This is actually an interesting bit of insight on what Chernin hopes to do with Crunchyroll as a whole. He talks of two distinct, but interrelated strategies:
- Growing anime content vertically
- Launching new channels in “different genres
In plain English, we’re going to see Crunchyroll undergoing a few changes in the near future. From the statements released, it’s apparent that the Chernin Group is buying Crunchyroll for the platform, rather than the whole package. While the company will still offer the token anime acquisitions and service, Chernin has more interest in branching out into redder oceans in search of more “mainstream” customers. In plain English, this would be akin to buying out Redbox for its network of kiosks. As someone who works in technology, I can’t say this would necessarily be the wisest plan of attack. But I could be wrong – there are a lot of cloudy areas in this purchase.
The terms of the deal are still an unknown, at this point. We don’t know how Crunchyroll’s people were paid, be it in equity, cash, or otherwise. Likewise, we have no clue of how the company’s financials were going into the deal. What we do know is fairly vague, actually. According to All Things D, Crunchyroll has nearly 200,000 customers, paying “up to $7 a month, primarily for Japanese anime.” This doesn’t include the consignment, the daily deals, the various merchandise goods, or advertising revenues. That is just subscriptions, bringing in nearly $1.4 million per month in revenues (not profits mind you, revenues). However, this means little if Crunchyroll’s profits are low, or if the company is struggling to balance license fees with the revenues it takes in.
The sheer numbers do ensure that we’ll see some degree of support for Crunchyroll in the short-term, at the very least. New shows will be acquired and added, and updates will continue to roll out. However, we’ll likely see a tighter leash on the service, as Chernin seeks to fuel Crunchyroll’s expansion into other markets.
How tight this leash would be is difficult to say, without knowing the specifics of Crunchyroll’s financials. Depending on the monetary situation, I honestly wouldn’t be surprised if The Chernin Group started reducing funding to anime offerings, which would inevitably lead to fewer acquisitions and reduced licensing scope. Were this to come to pass, though, it would create a mass alienation of the 200,000 subscribers, who have more than a few alternatives in competing services.
This is a truly interesting time to be a watcher of the anime market. Chernin’s acquisition of Crunchyroll is, without a doubt, one of the biggest moves in the industry since FUNimation split from Navarre in 2011. The actions taken by both Crunchyroll and The Chernin Group will be something we should absolutely keep an eye on going forward.