In the past few years, the growth of streaming services has produced an over-abundance of options. Although services like Netflix offer a varied catalog of shows and films while others like the horror-focused Shudder specialize in specific genres, many of these subscriptions can seem over-priced due to their limited offerings. However, the recent merger between two anime-streaming giants, Crunchyroll and Funimation, presents what initially appears to be the perfect solution to this issue.
By combining the collections of both services onto Crunchyroll, the merger allows users to access hundreds of programs on a single platform rather than paying for two separate services. Unfortunately, the recent changes made to Crunchyroll’s platform suggest that both the company and the entire anime-streaming market may be heading in a dire direction.
The merger of the two companies began after Sony purchased Funimation for $143 million in 2017 and Crunchyroll for $1.1 billion in 2021, thereby uniting the companies under one umbrella. However, to prevent the competition between the two streaming services from dividing its consumer base, Sony consolidated its preexisting anime services (Funimation, VRV and Wakanim) into Crunchyroll. This allowed the company to centralize its control over the anime-streaming market through one brand.
It is worth noting that this merger has benefited consumers in some respects. Besides preventing anime fans from balancing multiple subscriptions, Crunchyroll’s library added Funimation-exclusive shows like the cult-classic comedy “Nichijou” and English dubs for popular series like “Dragon Ball Z” and “My Hero Academia.” The Japanese versions of some shows have also been released for free when they previously required a subscription to watch on Funimation. These practices help make current and future shows available to a broader audience without requiring a high cost.
Despite the current benefits of this merger, it came at the cost of a healthy competitive market that prevents a single service from holding a monopoly over the anime-streaming industry. One of the essential aspects of any enterprise is competition between companies, incentivizing them to attract customers through lower costs or higher quality products. However, too much competition in the streaming service industry results in exclusive programs scattered across various providers. This can lead to consumers paying for multiple streaming services to access a small selection of specific shows. As a result, having a limited yet still varied form of competition is the best possible approach.
The competition between Crunchyroll and Funimation provided an excellent example of this dynamic, as each service attempted to distinguish itself through specific gimmicks not offered by the other. Funimation held the rights to most English dubs that were only accessible through cable channels, Blu-ray releases and its streaming service. Crunchyroll countered with a broader selection of older and currently airing series.
The latter was primarily known for their “Simulcasts” (simultaneous broadcasts), which allowed premium subscribers to watch new episodes the day after their premiere. At the same time, free members only needed to wait a week to access an ad-supported version. While each service exhibited distinct strengths and weaknesses, they incentivized one other to create high-quality experiences while remaining at an affordable price.
With Sony now dominating the anime-streaming market through Crunchyroll, this incentive is no longer a prevalent factor in its business decisions. This has already led to changes such as the recent limitations on their simulcasts for free users. The one-week delay for new episodes was replaced by a “seasonal sampler,” which restricts free users to only view the first three episodes of certain shows during a limited time. After this period ends, these episodes will also require a subscription to view.
The push for users to pay for Crunchyroll subscriptions is understandable from a business perspective. Still, the aggressiveness of this approach highlights how Sony understands its control over anime-focused streaming. Without significant competitors in the industry, the company can begin hiking up prices or finding new ways to charge its customers.
This practice is commonly associated with monopolies, but the Sony-owned Crunchyroll proves complete domination of the market isn’t required. Primary services such as Netflix and Amazon Prime also boast exclusive anime, but they lack the singular focus of Crunchyroll. Even other anime-focused apps like RetroCrush and HIDIVE struggle to compete due to their focus on older and obscure anime rather than recent releases.
While there is undoubtedly a distinct audience for these works, it is much smaller than that of their larger, mainstream competitors. As a result, Crunchyroll may not officially be a monopoly (as determined by the U.S. Department of Justice), but its power over the industry presents a concerning future.
Sony may not continue with its changes to Crunchyroll, yet its recent actions echo Netflix’s growth over the past few years. Since 2014, Netflix has continued to increase its subscription prices on a nearly biannual schedule. This allows it to test how much money consumers would be willing to pay for its services, which will likely only stop when it sees a significant profit decrease.
While competition usually halts companies from raising costs on such a frequent basis, Netflix is currently the most successful streaming service globally — by a large margin. According to a CNBC report from 2021, Netflix boasted 208 million subscribers while its closest competitor, Disney+, reported less than half that number with only 103.6 million subscribers. Like Crunchyroll, Netflix dominates far more of its respective market than its competitors, allowing it to be less cautious with its business practices.
Crunchyroll’s merger with Funimation will likely benefit consumers in the short term. Unfortunately, it also risks that Sony will follow Netflix’s example and continually push its customers to pay more. However, as the anime industry becomes more prominent in the eyes of the Western market, it is also possible that another large company will succeed in challenging Crunchyroll and prevent it from taking this aggressive approach. Ultimately, the future of anime streaming is uncertain, but the decisions of Sony and other distributors will likely shape it — for better or worse.
