Where your Crunchyroll dollars really go: An interview with the CEO


This month, anime bloggers dragged Crunchyroll’s name through the mud. But CEO Kun Gao couldn’t be more thrilled.

“In no other part of the entertainment business would you find such passionate fans who care so much about supporting the industry,” Gao told me. “I absolutely think their hearts are in the right place.”

I Skyped with Gao this week to chat with him about a viral blog post, Crunchyroll: Is it worth subscribing? The post posits that pirating anime (and then hopefully buying the DVD afterward) would be a better way to support the industry than buying a Crunchyroll membership. But, as the blogger told me on Twitter, they weren’t able to get in touch with Crunchyroll to verify.

I went down the list of assumptions with Gao, and learned quite a few things about Crunchyroll that I never knew before. Here are six of them:

Most of your money goes straight to the industry

Gao couldn’t reveal to me how much of your Crunchyroll payment goes back to anime publishers because of nondisclosure agreements. But he did say that publishers are “ecstatic” about the revenue they receive, and that publishers probably wouldn’t agree to work with Crunchyroll in such large numbers if they were getting such a bad deal.

“This season, we have over 40 simulcasts—more than we’ve ever had. And most of those shows are coming from repeat publishers who’ve been with us from day one. Publishers get the majority of the money [from your subscription] and they’re very happy with what they’re getting.”

The thing is, Crunchyroll makes revenue in a lot of different ways aside from your subscription payment, or ads if you have a free account. That frees up the money you give to Crunchyroll to go right back toward the industry. Basically, hiring more employees and other business costs don’t take away from the portions that anime publishers receive.

You vote with your views

Seventh Style’s blog posts assumes that Crunchyroll splits your subscription payment between all 400+ shows it offers. But the reality is far more interesting than that.

“If you watch just Naruto, your subscription money goes toward supporting that show. If you watch more than one show, the money is split proportionately among those shows depending on which ones you watch the most,” said Gao.

So if you’re watching Kill La Kill 75 percent of the time and Golden Time the other 25 percent, that means Kill La Kill’s publisher gets 75 percent of your money. On Crunchyroll, the more anime you watch, the more publishers you support.

Crunchyroll tries to license everything

Inspired by a Twitter follower, I asked Gao how Crunchyroll picks which shows to license and stream. The answer: whatever they can get.

“Our licensing approach is very straightforward. We make an offer on every single title,” he said.

Of course, it’s not that easy. Crunchyroll has to pay up front and hope it gets the title—for every title it makes an offer on. So if you’re trying to “follow the money” with Crunchyroll’s revenue, this is one of the major places you might end up.

It’s a former fansub site made good

I knew this fact, but I didn’t know the whole story. Gao said that he and his partners started the site in 2006 to be like “YouTube” for Asian TV, and invited fans to upload their favorite shows, minus the license. But a few months later, they traveled to Japan to try and change that.

At first, publishers were reluctant, and didn’t see the value in bringing shows online.

“When we first started, publishers doubted anime viewers would pay online to support the anime industry,” he said. “We showed them that anime fans are decent people willing to support the anime industry directly by subscription or ad support and that piracy is really a last resort for when they really love the content but can’t get it any other way.”

Miraculously, TV Tokyo, the largest anime publisher in the world, accepted Crunchyroll’s offer. Shortly afterward, Crunchyroll went, as Gao said, “from YouTube to Hulu overnight,” streaming only the shows they had licensed and removing everything else.

Fewer than 10 percent of users are subscribers

I wasn’t surprised to hear that the male-female Crunchyroll user split is about 50-50. Or that a bit fewer than 50 percent of users are international, from Latin America, Spain, Portugal and France. But I’ve been a subscriber since 2010, and I had no idea how unusual that was.

Out of Crunchyroll’s 10,000,000 monthly visitors, only 200,000 or so actually pay for the service. That means more than 90 percent never give Crunchyroll any money. That’s not a problem for Gao or the anime industry, however. The ads free members see make up the difference, so publishers earn just as much as they would with subscribers.

Comparing Crunchyroll to DVDs is like “apples and oranges”

Even if you agree that supporting Crunchyroll is supporting the anime industry, how do you know that you couldn’t be a better consumer by buying DVDs and Blu-rays? According to Gao, it’s not really something you can compare.

“For each DVD, publishers might see a few dollars at most just because there are so many middlemen. Half of it goes to Best Buy or Amazon. The distributor only gets half or less. DVDs are just one more way to support the industry.”

But if you prefer DVDs to digital streaming, Gao says to go for it. The point is that you care about supporting anime publishers, and you’re actively doing something about it.

“I don’t think it makes sense to tell fans to do digital, to do DVDs, as long as they do commit dollars knowing they’re supporting the industry,” he said.

For me, Crunchyroll is worth it. But at the end of the day what matters is that we’re supporting the anime industry in any way we can. What’s your preferred method of consuming anime?

(Photo via ReviewFix.)

  • http://omonomono.com omo

    While the 7thstyle article highlights a common community perception, it’s pretty dumb and basically misses the point–fansubs give zero dollars back, and it’s not like $10 a month will make a difference in terms of how many DVDs or Blu-rays you buy in the big picture (ie., if all you can afford are 2-3 Blu-ray sets (which is about $120), then you might as well just watch free CR and give the gift of ad revenue).

    Personally I buy tons of anime and I still watch anime on CR, just because it’s so much easier to get almost all the anime in one place, on most of my devices, at HD. CR is first selling convenience, not any of this other stuff. But this is my first-world self talking, with LTE streaming so I can watch CR even on the go…

    I think they also sell one more thing that I hope they ramp up: a legitimate way for fans to connect with creators. Because fansubbing is just not a good way to do this. It’s cool to see people like Mamare Touno show up on 4chan and take questions, but short of being a baller creator I think there’s room for CR to help everyone out here. I don’t think it’s fair to your favorite creators to have them cross the illegal distribution bridge just so we can have a Q&A.

    • Aereus

      I don’t see anywhere in the blog article that he claims watching fansubs is better. He is merely pointing out that whatever revenues CR may be giving to publishers, that it’s mostly a placebo effect for subscribers, and they don’t have a right to look down on people who watch fansubs who may actually be importing figures, R2 DVDs, etc that give far more total money.

      • Scaramanga

        Neither is the OP claiming that the blog claims that watching fansubs is somehow better. I can’t tell if you straw-manning or just confused. And I’m sorry but I’ve never seen a CR subscriber look down on a FS-only viewer (other than maybe to point out “hey you aren’t exactly helping much”). And your claim that somehow these people who refuse to pay for a simple $8-10 service are then willing to shell out even BIGGER bucks for R2 imports seems pretty thin.

      • http://omonomono.com omo

        If you think “having to pay license cost” is a placebo effect, that’s a harsh way to put it. I guess it’s only fair after being called a thief all day, but it’s equally true. As in, both are simply exaggerated and untrue.

        If you or anyone is lashing out at people on the internet for talking down on you, please do it back to exactly the specific individuals. Don’t label all CR subscribers in the same category.

        • Aereus

          That was in response to the “fansubs give zero dollars back” part. It’s not that fansubs give them money, it’s that the person could be giving back via other ways that don’t involve CR or US media purchases.

          It’s a placebo effect, because if you are watching 6-10 shows on CR per month, you’re giving like $2 to the publisher of the show. And then if you are further interested in specifically the author? A tiny fraction of even that.

          • BruceMcF

            Though Crunchyroll also sells merchandise and DVD’s. It is not, after all, either/or. Since international home video distributors can market to people directly on Crunchyroll, while they cannot market to people on bootleg sites, there is more prospect to sell to the audience that grows as a result of Crunchyroll viewing than to the audience that grows as a result of bootleg viewing.

            And the flipside of the smaller contribution is that Crunchyroll attracts large number of subscribers who were never previously in the market … if there had been 100,000+ people in North America buying even 1 BD/DVD series a year, the BD/DVD market would be massively bigger than it actually is, so it may be a small amount per subscriber, but for the large majority of subscribers, its NEW contributors who were not previously buying BD/DVDs. So its growing the numbers in the paying audience.

            Combine the two, and Crunchyroll and similar legit streaming sites offer the greatest opportunity to slow the decline in sales of anime DVD/BDs in the North American market, and the greatest opportunity to open up markets in regions of the world that are presently totally dominated by bootleg BD/DVDs that contribute no royalties to the producers of the anime.

  • Eadwacer

    I’m a CR subscriber. I also watch fansubs of anime that CR doesn’t carry. Based on what I’ve watched, I buy the DVDs of what I consider the best shows (I’d say a minimum of six programs a year). DVDs are too expensive to buy blind, so if I couldn’t watch, I wouldn’t buy, at least not so much.

    • J M

      This exactly! I love using crunchy to screen what shows I will be buying. And how on earth is not supporting crunchy which does something for the industry better than supporting fansub releases that do literally nothing for the industry except exposure (no less than crunchy). The blogger is just speaking out of ignorance.

  • http://www.maverynthia.com Maverynthia

    Interesting to know that what I watch goes to the industry, but still part of that money does go to license shows I’d rather they not give any money towards.

    What I really wish they’d do is offer downloads of the anime as sometimes I don’t have internet or sometimes I just want to watch a bunch of stuff without the buffer/streaming. Considering all of the stuff is on torrents anyways (for free and up to 1080p VS the LQ CR free, and actual CR rips completely), it’d offer more people an incentive to subscribe. It’d even be cool to have a “download all” for series that have finished. Also it allows for people that like to add filters to their anime (sharpen/soften, subtitle styles, etc.) to be able to enjoy it the way they want.
    Formats offered could be the MKVs with softsubs and MP4s with the hardcodes.

    • http://www.animenews.biz Humberto Saabedra

      They did offer a download to own option until 2010. They killed it because it was poorly promoted and it was rather lame since it still had DRM.

      • http://www.maverynthia.com Maverynthia

        And there’s the problem, fansubs are both Free and DRM Free. :/

        • BruceMcF

          French anime fans now, and UK anime fans shortly will have an opportunity to buy DRM-free downloads from Wakanim. Of course, the rights of the creators to say who can and cannot make a copy of their original work include the right to specify that they only be sold under short-sighted rules such as DRM for download to own.

    • Scaramanga

      When you buy DVDs from a R1 (making assumptions here) licensor you are also probably paying for other shows you may not want licensed. That’s just the nature of the business.

      • http://www.maverynthia.com Maverynthia

        I’m not into the habit of buying DVDs as they are LQ and BLu-rays still cost too much money given it’s still a disc medium. I just wish streaming sites did better and thought about what they are trying to replace.

    • BruceMcF

      However, YOUR money does not go to the series you don’t want them to license, as long as you don’t watch them. That’s the benefit of getting everything they can and rewarding them based on viewership.

      Its the same thing as the smaller access in countries outside the US … unless they use a VPN, their money can only go to series that are licensed for their country.

  • herp

    I don’t use crunchyroll for two reasons: slow internet means streaming doesn’t work, and after the show is done, I don’t have a copy of it. By purchasing DVDs or downloading fansubs, I can take a favorite show with me, on the road, on a plane, or over to a friend’s house.

    • Riss

      Because… you can’t possibly purchase a DVD after you’ve watched it on CR?

    • Morten

      You could do all this if their app was proper. I remember trying it, but nope. With time maybe. I’ll check back in a year.

      • BruceMcF

        Its not a question of their app being “proper”, its that they are acquiring streaming rights. Digital distribution rights would be substantially more expensive.

  • Paul Record

    I have been an All-Access Member since 2009 and I do not see that stopping anytime soon. Cruncyroll is a great thing for the industry and as anime fans we should do what we can to support said industry.

  • Zoe Le Loir

    I’ve been very happy with my Crunchroll premium membership. Lauren actually told me about them and gave me a guest pass. After watching a bit on the day I activated it, I just signed up and have been happy with supporting the industry and getting to watch titles in 1080.

    I’m glad you posted about this, Lauren. It’s nice to have the question of how much money goes to support the industry.

    I always prefer to stream from Crunchyroll over pirating a title. I still do that some so I can see a title CR doesn’t offer. But, like others stated, it’s a good way as well as CR to find titles I’ll be buying on CD at a latter point.

  • Anonymous

    Friendly reminder Crunchyroll only became big because of fansubs, and gave nothing back to the fansubbers who made them big.


    • http://www.otakujournalist.com Lauren Orsini

      @Anon, interesting image you’ve shared. Is this your personal story?

      • Anonymous

        Probably not, otherwise he would have just posted his story as a comment rather than an image.

    • Ryan

      This post is completely misguided and ignorant. Fan subs are not a noble calling, it is the work of hobbyists who have no legal, moral or monetary right to their creations. To turn a collection of illegal content, take it to the producers of the original content and turn it around into licensed property takes dedication, organisation and moxie that this poster isn’t even aware of existing.

    • Riss

      Media pirates: finding whatever ways they can to justify their practices since the dawn of the internet.

    • Anon

      I agree that CR broke the “rule” that fansubs were not supposed to be uploaded to streaming sites. But as to giving back, the contracts don’t allow anyone to say but it is widely believed that CR hired translators from the fansub community.

      • Anon

        addendum: I’ve been reminded that now CR contracts with AnimeSols for many of their translations. That itself is legitimizing the activity that was previously occupied by fansubbers. Why would any up-and-coming translator now want to work with a bunch of amateurs for free when they can be paid for their work?

        CR has effectively killed fansubbing. The reasons it existed in the past: limited availability, low-quality translations, and spreading awareness of anime through word-of-mouth, they’re all gone now. CR may have cheated to get a head start (and they were not, in fact, the first to attempt digital distribution of anime) but they certainly are winning the race. What are called fansubs now are just pirates the same as people who upload Game of Thrones to usenet. And for the reasons I stated above, the translations are lower quality. Most don’t even do their own translation but copy from CR. There is no ethical reason to watch English-language fansubs these days.

      • Anon

        They did. I’m one of ’em.

    • Rob

      They gave nothing back? They’re giving them free anime, in turn giving money to the industry which enables studios to produce more anime. As fans, that’s all they should want. Hell, they should be proud they had a hand in it. The industry is thriving and anime is now more accessible than ever at a cheaper price. Wasn’t that their goal all along? Mission accomplished, I’d say.

      I don’t know what you’d expect them to give or how you’d expect to measure what each fansubber should receive anyway.

    • BruceMcF

      And Crunchyroll could not make money by allowing members to upload “unlicensed” fansubs, and could never keep up with the licensed bootlegs uploaded against their Terms and Conditions, so had the choice of either shutting their doors or going legit.

      The way that bootleg leech streaming sites get around the cost of hosting is that they use free streaming sites in violation of their Terms and Conditions, and redirect the stream to those sites.

      Indeed, if benefiting from fansubs without giving back was an actual concern, the focus would be on the leech streaming sites that have been parasites on fansub groups over the past four years, and not on a site that has made it possible for the most committed and effective fansubbers to turn their volunteer activity into a paying job.

  • Fish

    I used to be a CR Premium Member, but am no longer for 1 reasons: their anime database is very low 1)The variety and amount of anime offered doesn’t stand out among all the other free sites. If I want to watch an old anime or a non-mainstream anime, I often can’t find it. 2) Unless you’re a Premium Member, you’re going to watch commercials.

    Overall these annoyances made me switch to a better website that offers a staggering amount (I would say 10x if not more anime than CR) of anime for free without commercials in HD quality. If members are willing to settle for these sub-par standards under the justification that they’re supporting the industry then that’s their business. For me, it simply didn’t make any sense to pay for less anime in lower quality, and watch commercials (if you’re a free user).

    My personal preference of supporting the industry would always be in the form of DVDs because of the bonus features such as commentaries and behind-the-scene explanations.

    • mina

      Well, yes, it’s pretty easy for “other websites” to be able to afford to provide HD streams when they keep all the ad revenue and don’t have to pay millions of dollars in license fees and royalties. Unfortunately legit services like Crunchyroll don’t have that luxury.

    • Aereus

      I’m not exactly a fan of CR either, but I still have to scoff at your statement here. Of COURSE a pirate site is going to have a much larger selection — their only costs are the bandwidth you use. Basically pirate site maintenance costs = $0. Kinda hard to beat that as a business that has to pay for their licenses.

      • Krono

        Not to mention that a pirate site doesn’t have to contend with someone else owning the streaming rights, or a company that wants older episodes removed, and so on. It’s the same reason that Hulu doesn’t have every episode of every TV show ever, while a pirate website can, the pirate doesn’t need permission from multiple different companies.

      • BruceMcF

        The bootleg sites don’t even pay for their bandwidth ~ they either use free video streaming hosts, uploading in violation of the hosts terms and conditions, or they use torrent distribution, and only pay for a tiny fraction of total video distribution bandwidth costs.

        And all of the work to maintain the site is performed for free by volunteers.

        In return, the site owner gets all of the banner and click through advertising revenue. The smallest may run at a loss or break-even, but the largest generate a tidy income for the site owner, with 99% of the work done by unpaid site volunteers, unpaid fansub groups, and unpaid commercial anime creators, many of whom work for absurdly low piece rate wages.

    • Kaldar5

      Fish, you used to be a premium member, but you aren’t anymore because “reason 2:” non-premium members have to watch commercials.
      WAT? Calling shenanigans.

      I lived through the time when you sent off blank VHS tapes for someone to make a copy of their fansub.
      Crunchyroll is like a dream; you people don’t know how good you have it.

      They do good subs, simulcast subbed anime the day it’s aired, and get money to the producers.

      WTF are people complaining about???
      Fansubbers have always dreamed of the community becoming legit for *decades*, and here it is for $7 or free with commercials.

      • BruceMcF

        Those fansubbers who were saying that and meaning it aren’t complaining. They are among the supporters.

        Fansubbers who were offering that as an rationalization, well, when called on that rationalization, it becomes necessary to invent new ones. Streaming on a commercial site has to offer bitrates that enough of its potential customers can make use of, so its “eye-bleeding video quality” compared to a bootleg download. The small revenue streams in many countries and rival licensees in some countries means its most often not available worldwide outside Japan, so settle on region restrictions to complain about (often from people who have access to far more legit streams than most of the world).

        Its human nature to make up excuses for the things we are in a habit of doing that we know some people might criticize but we don’t want to stop.

      • indifference84

        @kaldar5 – I have to agree with you. It’s funny reading these posts from people complaining who didn’t have to suffer through 80’s/90’s VHS and Laser Disks, paying out the ass at Suncoast Video per VHS(no bundles or complete series), and watching 2nd gen+ bootlegs you got in the mail.

        I dreamed of the day when I could just beam the latest anime right to my house.. and look, no ugly yellow subtitles either.

  • Lee Jackson

    I used to be a premium member and would resubscribe if it wasnt for the DISGUSTING practice they have of instantly cutting people off who unsubscribe, no matter if it is one day or 20 into your premium subscription.

    I know of no other business who does this and suspect it is purely for their own profit at the expense of their customers. I’m still angered and disgusted by it.

    • http://www.crunchyroll.com Baker McDonald

      Hey Lee!

      I’m the head of the Customer Service department over at Crunchyroll.

      Just to note, when cancelling it’s clearly stated that if you have less than 30 days remaining on your Membership it will cancel immediately.

      That said, it is something that I’m working to have changed!

      Sorry that we’ve offended, but we’re working to grease the wheels!


      • Lee Jackson

        Tell you what Bjaker, why don’t you credit EVERYONE that you have ever done this to with the time the had remaining and throw in a few couple of weeks free as an apology for being complete s******s?

        You lost a repeat customer for the sake of a few bucks; you’ve generated bad press and word of mouth for yourselves since I post my experience with you whenever this comes up; I tell my friends, I tell my family. Heck my kids are now boycotting you on my behalf since they were amazing at how scummy this was!

        All the marketing effort it takes to get ONE customer; all the free days you throw at people with guest passes and free trials and then you pull this stunt at the end of a subscription?

        Someone at CR is a complete idiot.

        • Nathan

          Hey calm down, y’all. It’s not a great practice but of course it’s done for their own profit! What do you expect? Anyway he said they’re working to change it, and I for one am impressed this guy bothered to come over and respond to the comment at all. Let’s be a bit more welcoming and not be jerks to those willing to converse with us. Your complaint is akin to shouting at the McDonald’s cashier because they don’t give free refills on fries! Okay, maybe that’s not a fair comparison but come on! Let’s be civilized.

          • Lee Jackson

            That WAS civilized! Its a scummy way to conduct business, its a scummy way to treat your customers. Companies who fail to treat their customers with respect deserve to be called out on it.

        • Kaldar5

          No calling people scummy, idiots, and “complete s******s” is NOT civilized.

          Guy comes on here apologizing cause YOU didn’t read the terms of the agreement and canceled (prob your free trial anyway) at an non-optimal time; just gets abuse for it.

      • Lee Jackson

        Oh, PS, good luck with getting it changed. I’m sure that its frustrating from a CS perspective.

      • Aereus

        I’m honestly just not understanding how this becomes a policy in the first place. I’ve never heard of any subscription service before where discontinuing service didn’t leave you active until the next renewal date. It’s trivially easy to code against. I don’t get it?

    • BruceMcF

      You have the option of turning off the automatic renewal, and then you get the full amount you paid for. So why would you cancel rather than turned off automatic renewal if what you wanted was the effect of turning off automatic renewal?

    • kantros

      I decided to never use the site again for the same reason, it’s simply a sleazy and disgusting business practice and even though I’d like to support the anime industry I’d never want to support a business that is so blatantly trying to profit off a customers forgetfulness.

  • nighsparrow

    Thanks for this interview. I’ve been a CR subscriber for several years now, and it’s interesting to know that my subscriber dollars go specifically to the anime I’m watching. I suspect I’ll keep that in mind in the future when I run across a series I don’t really care for–it’s better to drop it and look for something I really enjoy.

  • Keirnoth

    “Having paying customers is definitely something normal, all despite the fact that many of the subscribers (paying or not) tend to think that they are somehow superior to the faction of non-crunchy users and would often use it like some sort of a bargaining chip. This is not even to mention the unscrupulous attitude of the founders themselves, who originally started the site as an illegal streaming haven (but that’s another story).”

    From the SeventhStyle article. I pretty much agree with this sentiment. The level of superiority people apparently feel towards those who prefer to get their anime through fansubs and the narrowminded point of view that everyone’s just a filthy pirate doesn’t address WHY there’s this giant divide in the anime community.

    Personally, if I can get my episodes as digital downloads (like MP3s) at the highest quality possible with subtitles using proper typesetting, etc, I’d definitely buy. Currently, the service that the fansub community is providing for others is of a far superiority quality to that of Crunchyroll. And they’re doing it for free. Crunchyroll is doing this as a business.

    I think the issue here is that we’re having to deal with a middleman we don’t want to pay. If the site in question didn’t have such dubious origins I’d think this would be less of an issue, but I don’t think the people defending use of the site wholly understand WHY fansubs exist.

    We need something like what happened to the music CD industry to happen to the Western anime market, or similar to what Steam did for PC gaming. You will always have piracy, there’s little one can do to stop that, but if these companies were willing to provide a better SERVICE (which is why Crunchyroll is popular), I’m pretty sure they’d be able to make much more money from the Western fanbase than they (aren’t) now.

    I don’t know if the Japanese corporate heads understand that if there was a proper digital distribution in place where ultimately results in you OWNING a digital copy of the product, they could be raking in some serious dough from the Western market.

    • BruceMcF

      However the sense of moral superiority from those who respect the rights of the creators toward those who trample the rights of the creators is independent of how effectively the anime industry takes advantage of the modest revenues presently available from digital distribution, insufficient on its own to sustain production of anime, and acts in our view overly protecting of the old way of doing things, which was a proven means of sustaining the production of anime.

    • mike lowrey

      I don’t think you understand WHY fansubs exist either; it was originally because anime simply wasn’t available any other way. That obviously isn’t true anymore.

      The fact that we have people fansubbing shows that are legally streaming is absolutely ridiculous. Fansubs are no different to piracy of music and movies; its wrong, and if enforcement of the law isn’t possible there should at least be a social cost to people who do it.

    • Jeremy Barnes

      Did it really take you all that to say if someone provided a better service than Crunchyroll that people would use that?

  • Aereus

    I think it’s worth noting that while I’m pleased at learning the way they pay publishers, there is another layer to this:

    The publisher is most likely happy with that revenue, because either the show isn’t licensed overseas so it’s “free money”, or they bank on that streaming revenue + later DVD revenues.

    From a fan standpoint: It would be enlightening to hear what the profit breakdown is from sales in Japan. Because the general feeling is that the money is just a drop in the bucket. (IE: Naruto manga sales in the US are like 5% of Japan) Even if you watched a show for 3 months and the publisher got say $10 of your CR money over that period — that is much less than what they would make off selling an entire JP BD set for $400.

    Or to extend it even further: Many anime are used as a marketing tool for the original manga/light novel. So we would much rather support the author directly if possible via those sales, than pay Aniplex or something. Especially since that’s what often happens in Japan too: Related anime sells 10k, while the original light novel sells 600k or something.

    Overseas fans are looking to mature into a market like the home market in Japan. While apparently they want to market anime as a primary merchandise, which just won’t happen.

    • BruceMcF

      Video streaming is a volume business. Remember that 3,000 ultra-premium “rental price” Japanese buyers is the core revenue stream for many “late night” anime, and the broadcast is funded by the ads of the home video distributors, and 3,000 sales at much more modestly priced North American home video for a sub-only release is a successful release …

      … we are talking about over 100,000 North American subscribers.

      100 people contributing $3 royalty income is worth just as much as 1 person contributing $300 in royalty income.

      And even if only 2%-5% of those new viewer are converted into home video buyers, that is both new subscriber income and new home video sales.

    • Jessica

      If you look at the Publisher’s Annual Reports it’ll show you how much they are making from their overseas sales. However. And this is a BIG however. Most of the time, these revenues are reported as “other” because it isn’t significant enough to place in it’s own category when reporting their financials. Either that, or they are including their overseas sales with domestic sales. Japanese publishers don’t exactly market overseas. What they do is license their stuff to overseas distributors and the distributors (like CR) do all of the marketing.
      Japanese business is pretty much all about the status quo and making steady gains. They’re not ones for making big risks (foreign or domestic). As the international anime market is still small (compared to the general population) it can be risky to market anime on their own, especially in foreign markets.

  • sunriser

    CR is alright, but I prefer to support sites that are direct studio contractors from Japan, like Daisuki. Young as it is, it has the gap of licenses and archived titles, even dub language tracks – LEGALLY, that just aren’t up for grabs anymore by Western companies. Like the vast archive of Sunrise titles after Bandai-Ent dissolved. And they distribute them on several platforms and for some newer titles this season, like **Kill la Kill**, in many more languages than CR offers. For as new and young as it is, you can’t talk about maximizing your $ or ad revenue to going directly to a production studio and not mention Daisuki…

    Plus you don’t need your credit card or paypal account for anything other merchandise perchases or premium titles, paid by episode, rather than rolling charges month by month…

    • Royal Conquest

      So I could pay like 20 bucks to watch one anime, and that adds up like crazy if you want to watch more than one, or I can pay 7 dollars a month to watch as much available anime as I want? Your pro over con is sheer nonsense.

  • Sam

    Well, for one thing, having seen CR rips as ‘HorribleSubs’ I can say definitely that Crunchyroll doesn’t hold a finger to the majority of fansubs in terms of quality. Even though they hire TLs from the fansub community, the fact is, they speedsub and therefore the TL is always lacking. Same with the typesetting, it is normally just the translation next to the sign while fansubs will generally mask the original to make it as convincing as possible. I’d go into how their video always has artifacts, blocking, banding and is cropped wrongly but I realise that this isn’t their fault, since their source comes straight from the studio (probably as HDCAM) while fansubs get their sources from transport streams (.ts).

    Anyway, my point is, they still have a lot to improve before they’ll manage to persuade long-term fansub watchers to switch over to them.

    • http://twitter.com/JacobYBM JacobYBM

      Subtitles should be readable, but trying to blend them in with the video like fansubbers try to do is awful. Subtitles are not how to view something, you should be reminded that they are not a part of the film or series. If it is difficult to tell what is actually apart of the video than it will provide false information to the viewer. Knowledge is power and subtitles should not be used in such a manner.

      • McWhite

        I don’t like this from an immersive perspective. Being taken out of the experience from something that stands out all the time shouldn’t be the way to go.

    • Andy

      I agree i mean i would love to see some subs on the endings or openings! love anime partly beacuse of the beautiful music! artists! it creates that magical atmosphere!. CR has NOT translated some of the op/ED in their anime they stream!.Some of their translations i have noticed are not correctly or cut corners!.Many of some subs have done a great job in subtitles and posting notes on some terms when the characters say in reference to J culture!. I know the do wrong i know i do wrong in watching but old animes are great(no cr there)no option of download, you get logged out in PS3, soemtimes it doesn’t work on a certain ep.Oh and i watch anime in spanish so there’s still no coverage in latin america in ceratin countries or some just don’t have the money. Non the less i have been a CR premium user and will continue to use it but will stick with some latinamerican fansubs for now.(sry for my grammar this is my second language still learning).

      • Jessica

        Oh! I saw one of the CR employees answer this question! They said that the opening and ending songs have different licenses and CR doesn’t own the rights to those songs, therefore they can’t translate some songs.
        Yeah, I catch them on some of their translations as well. I used to help a magazine translate their Japanese-English-Spanish. At the time, I knew enough Spanish to help with the Spanish to English translations.
        But anywho, your English is really good! Keep learning and practicing! Hopefully CR will expand their coverage to your country and others around the globe. There’s a lot of international laws and rights that can and do get in the way. As CR gets bigger and more experienced, I’m sure they’ll be able to expand more content internationally.

    • http://omonomono.com omo

      Pardon me because I am going to do some nerd gate keeping.

      As an actual “long-term fansub watcher” (predating digisubs at least) I find your statements exactly the thing I dislike the most about people who are only digisub watchers. I really don’t like fancy karaoke or overly elaborate overlays. At least these days it can be done via softsubbing so I could turn it off if it gets excessive; just go back a couple years and it’s all hardsubbed and in some occasions I had to go grab a raw just to see the original image that was unaltered by overly eager subbers, ruining the experience. Then again if I can put up with fast-forwarding 14 minutes worth of TL notes in the beginning of VHS fansubs, this is a minor complaint. So is not having karaoke subs, or having subbing credit pasted over the pretty OP visuals. Or having romanji, kanji and English translation covering the ED visuals. I can put up with that extra crap. Just speaking for myself. Just like how I can put up with CR not crediting the subbers. To you apparently it’s a huge deal, if you don’t get the video and subs exactly the way you want? I can respect that, but it is not really an advantage for most people.

      Second, it’s well stated by Quarkboy and others that CR actually do not “speedsub.” They usually have at least a week lead time, although as short as only a few days. In either case that’s longer than the average fansub today, speedsub or not. Plus, official subbers have not just the CC stream to reference to, but the actual script. As for encoding and source, your words are just as good as anyone else’s short of linking to some detail proofs.

      Third, the translation quality…unless you are fluent in Japanese how are you able to criticize them? From what I can tell you are parroting just the usual nonsense from people not in the actual know.

      • Anon

        TL review: http://8ths.in/fall-2013-fansub-comparison-reviews/
        The author is credible (fluent in both Japanese and English) and explains the various mistakes that both CR and groups make.

        It’s also very easy to spot the horrendous video quality that CR has.

        • BruceMcF

          So, in other words, no, you are not fluent in Japanese and are just repeating what one person fluent in Japanese has said. Given that there are others who are fluent in Japanese who say that most Crunchyroll subtitles are just fine, you have no basis for deciding which one to believe except for the one that says the thing that you want to believe.

      • Carole

        Some things one doesn’t need to be fluent in Japanese to know are wrong. Many of the translated subs have English language errors such as: omitted words (ex: “You should heard”), misspelled words, grammatical errors (ex: “Didn’t you cared for them”), common errors (it’s vs its. yours vs your’s. There vs Their.)

        To be fair though, the majority of such errors are found on the shows they licensed in their early days(ex: Naruto). Recent seasons have much better quality! So I wouldn’t be surprised if the majority of the HorribleSubs were from shows that date back to early streaming.

  • Erin

    I absolutely love Crunchyroll to death. If it weren’t for CR, I would’ve never been able to watch as much anime as I have. I want to be able to watch anime in high quality while supporting them. And honestly, $7 a month is chump change. I would much rather spend that money on CR than an expensive coffee drink. If I find an anime that I absolutely love to death and want to support directly, I will purchase their merchandise and DVDs. CRFL <3

  • Sam

    Oh, I actually never knew that CR has a week in advance, still doesn’t explain how their releases are so bad :P

    Also, the reason that they can’t sub the OP and ED songs and ‘karaoke’ them is because the songs are licensed by different companies. I seem to remember reading somewhere that CR only has the license to sub the actual show.

    • BruceMcF

      They often are … when the production committee commissions the song, full rights pass through in the license, when the production committee only licenses performance rights to the song, then the rights to subtitle the song require a separate license. For most Japanese songs, it seems likely that karaoke rights would be pricier than international streaming rights to the anime itself.

  • http://animeviking.wordpress.com/ Marow

    I’d like to thank you for this article, since it cleared up the odd mess. Plus I learned something new! I had no idea the money goes to the show you were watching. I imagined that the most popular titles got some extra money, but not that it was distributed like this.

    One thing that piqued my interest was regarding the licensing:

    ““Our licensing approach is very straightforward. We make an offer on every single title,” he said.”

    How does it work when it comes to different regions and licensing? Why aren’t more anime worldwide? Is it a money issue? The Japanese publishers? And so on.

    Seeing how I live outside of USA, I’d love to learn more about it.

    • BruceMcF

      They ask for every anime for every country outside of Japan, and take the anime and the regions that the Japanese licensors are willing to grant.

      When the license is granted to a North American home video producers, they seem to ask to sublicense it, and Sentai (Section23/TheAnimeNetwork/SeraphimStudios), Aniplex of America and NIS American usually agree. In those cases, they can only get the streaming region that the North American home video distributor has asked for. Previously, those sublicenses were limited to either North American or “English Speaking Countries” (North America, Oz/NZ, UK/Eire and South Africa), but this season a majority of Aniplex of America titles were also licensed to Latin America, Spain and Portugal.

      They may push for broader region rights, and several series in the Fall 2013 season got region expansions announced after the original series announcement, but in the end they get the regions that the people they sign the contract with are willing to or able to grant.

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  • Danjimaru

    It makes absolutely no sense to sell licenses over different regions of the world specially if the content is identical and the media is digital streaming. Do you think that digital copies of media pay taxes to the countries they are available to?

    There is no reason to sell licenses to regions other than to maximize gains. And if the content remains the same it is discrimination. Thank god there are VPN and DNS tunnels to bypass that and as long as I see stuff like this count me out of these “schemes”

    • Danjimaru

      In other news, both tunlr dns have been blacklisted again by CR this sunday.

    • Subarunyon

      It’s because we have a relic of old distribution method, who employs different licensors in every country. It makes sense because you can’t exactly charge the same to US and Malaysia, the demand and supply forces doesn’t work the same way in different countries.

      I think we will see it changed in perhaps 10 years…. The industry is unbelievable slow to respond to digital, which is why we still have those dns services.

      • Jessica

        Lol I just had to change my DNS to keep watching on CR.
        I agree, the industry is REALLY slow to react to anything.

  • Subarunyon

    I’m really impressed with CR CEO’s response to the whole thing. Makes me proud that I’m a subscriber as well.

    Personally I have not bought dvd in a long time due to space concerns. DVD’s being as thin as they are, takes way too much space for me. When I moved across the country I had to throw out basically all the cases of every cd / dvd I own and put them in a cd sleeve.

    These days I digitize everything I own as much as possible and keep backups.

    I buy shows that I think is exceptional, except fate/zero since the price of the official release cost as much as a month’s groceries (or three years of crunchyroll, where I can watch the show over and over anyway…)

    • bravejaf

      I am in the same situation. I used to buy a lot of DVDs but now they just take up space. I only buy the absolute best of the best these days.

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  • dann

    On unrelated anime/licensing note: My question to CR CEO is who is Shinji. I was with CR since before it became legit. Honestly saying i feel like subscribing to one shady company with lack of transparency honestly.

  • http://none. nemoskull

    i pay for crunchyroll, and i really like the lack of commericals (hint hint, hulu).
    but crunchyroll is so damn slow, for a paying member half the time i get frustrated and just torrent the damn show. you really, really need to be comprable to the other streaming sites. even fansubs sites that are not legit have fewer problems streaming.
    i really want to support the anime industry, but CR needs to move in to the current centrury. i have not had ‘buffering’ problems since the days of AOL.

    • Jeremy

      I…honestly have never seen buffering on CrunchyRoll. At least, not that inhibited me watching anything and I almost always watch at 1080p. Granted, our locations, networks, and setups are likely very different.

    • Jeremy Barnes

      I haven’t seen buffering either. Occasionally there is a hiccup.

    • OtakuSama

      I had the same issue as you man, then I upgraded my PC. Never had that issue again.

    • privatemale

      I used to have buffering issues when watching from my PC on a cheap DSL connection. I’d actually switch to my phone sometimes. That was a couple years and ISPs ago though… Haven’t had an issue since I moved / switched ISPs.

    • bravejaf

      I have more trouble with Funimation than Crunchyroll. I have both apps on my PS4. With Funimation I cannot watch anything during peak hours without significant lag. I rarely have that issue with Crunchyroll.

  • GingFreecss

    I use crunchyroll and I love it. No ads, loading is virtually gone, cleanest streaming anime ive ever experienced and to top that off it costs less than netflix or hulu. Thanks Crunchyroll team!

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  • Zenos

    Gonna buy a subscription when I get a job. For now, I use HorribleSubs….. But I am more than likely going to continue using HorribleSubs even after getting a subscription. I want to keep the episodes.

  • bmxracer23

    I’ve been watching anime since 2011. But til the last three months or so, I haven’t really seriously watched it. I may have watched anime every other week or every other month but now it is every day. And seeing how popular Crunchyroll is, and how much it actually provides, it is a very useful thing to have. When you ask a friend what anime they recommend they would say the title, and you would ask “Where can I watch this?” and normally it’d be something such as Netflix or Crunchyroll. And to have a common answer of Crunchyroll is amazing. Anyways, to the main point of this:
    This article has inspired me to pursue getting a Premium membership on Crunchyroll.

    Thank you for publishing this article, Otakujournalist!

  • Kchorrex

    My only big gripe with CR is that, depending on the region you live, some shows are restricted because of stupid licensing issues, and therefore the selection of titles is far less varied. So, for example, last year you couldn’t watch Attack on Titan in Latin America (c’mon, that one is a hook in any country). As far as I know the restrictions are ip-based and not account-based, just like with Netflix, so you’re screwed unless you know how to fake your IP, which is obviously not worth the hassle for the regular joe.

    • Marlon Ivan Carranza Barriento

      netflix is extreamly ease yo be acses to there are literal chromes apps that alow you to do it instead crunchy rolll has security that makes the pentagon looks like a baby with candy. thankfully this season they had all the anime that i wanted.

  • Bryan

    My preferred method of consuming anime would be with you! but that can’t happen.. ;~;

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  • Jessica

    This is amazing! I love how you were able to speak with the CEO of Crunchyroll and how he was able to answer your questions with clarity. It makes me happy that I’m a subscriber and know how my money is split up between my favorite shows. I’m actually writing an international marketing research paper on TV Tokyo and your blog has helped me so much! Even though my paper is mostly about TV Tokyo, I’m including a section on Crunchyroll and how they help market TV Tokyo’s material around the world. (Don’t worry! I’m definitely giving you credit along with the source.) I really respect your blog. It is really hard trying to explain how the anime industry works concisely with the assumption that your reader has no prior knowledge on the subject. I could have chosen something easy like Coke or Starbucks, but all of this hard work is worth it! I’ve learned so much since starting this paper, and it only makes me want to support the anime industry even more. (I’ve also learned that I should probably learn Japanese….because I have cried more times due to finding good-looking information that I can’t translate because it’s all in kanji…. in a PDF…)

    But anyways, Thank you so much for your blog!

    • http://www.otakujournalist.com/ Lauren Orsini

      @disqus_nxah1H8qAk:disqus I’m so glad to hear my blog was able to help with your paper! I would love to see it when you’re finished—even as a fan who tries to keep up on anime, there’s so much I don’t know about the way the anime industry works! =)

      • Jessica

        Of course, I’ll send it to you! I’m excited that you’re interested in my paper. :)
        I agree, there’s so much to learn about the industry!

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  • http://darkangelights2009.tumblr.com/ darkangelights

    Thats good

  • melvin2898

    I would never pay for it. It’s really slow. The fansubs are way faster.

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  • Soul Reaper

    Crunchyroll is so annoying. I live in the UK and a lot of good anime like one piece are not available in my region so I can’t watch it.

    • Royal Conquest

      That’s not Crunchyroll’s fault. >>;; You’re blaming the middleman. They get whatever licenses they can. It bases out of the United States what obligation do they have to you to make it international? Ungrateful entitled brat.

  • wyrmmage

    I’m afraid I’m not sure if I understand how money is given to shows based on how much you watch them, but CR pays licensing fees up front. The article says that “Crunchyroll has to pay up front and hope it gets the title—for every title it makes an offer on,” which makes it sound like they’re paying a fixed cost for the title. How then does CR pay based on your views? Is it that CR pays one cost to license the show, but then later it divides some portion of your monthly payment between the shows that you watched and gives it to them as additional revenue?

    Sorry, I’m new to this :)

    • http://www.otakujournalist.com/ Lauren Orsini

      @wyrmmage:disqus I think your money (or the money Crunchy makes on the ads you watch) is what is evenly divided based on the shows you like best.

      • wyrmmage

        Okay, thanks :)

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  • Chaos Network

    I am still supporting the Anime industry by buying apparel correct? I
    would also like to invest in Ani-song, but there is no proper outlet for
    that yet. I do not buy DvDs because I do not necessarily re-watch
    Anime. To show that I have watched an enjoyed an Anime, I would buy some
    apparel or a poster. I would like to double check and make sure that I
    am still supporting the industry this way.

  • Spier Dalaj

    Never gave a penny to crunchy roll and never will I hardly ever use it cuz it hardly has anything. If I use it then its probably in collage cuz its not safe filter blocked. It has small amount of animes available which is a – for an elitist such as me. It has slow streaming speed. Stuff on the website is way 2 overpriced(figures/dvd) and its Americanized means that its pointless for me to buy dvd there cuz its region locked anyway, crunchy does not try to make it international even like he said its almost 50% of users so fuck it why should I care. I rather continue what I do stream anime. Buy DVDs from within my local area/ebay/amazon or japan, import figures for yen cuz its freakin cheap conversion rates.

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  • et1296 .

    I am the ten percent.

  • http://www.themacretrolution.blogspot.com spiceyweasel

    I love Crunchyroll, but they have been double billing me often over the last several months. What gives?

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  • Joel Clark

    I prefer to watch on crunchyroll, buy DVDs is a waste of time, and they’re more expensive.