Answerman

Why Are Big Hollywood Studios Buying Anime Distributors?

I just read that Crunchyroll's parent company, Otter Media, was officially bought 100% by AT&T, who says they plan to integrate it into Warner Media (which is Warner Brothers). Sony Pictures bought Funimation last year. What gives? Do these big Hollywood studios plan on getting more into anime, or are they after remake rights? Why are they so interested in our little fandom?

This is an insanely chaotic time in the entertainment business. To understand where we are and why we're here, we need to understand the bigger picture.

The North American and international entertainment business is in a state of major upheaval. It's hard to see from the consumer point of view, but here in Los Angeles, people are freaking out. Competition from Netflix, the accelerating decline of cable television, the slow erosion of the motion picture business, overall globalization and internet-ization of entertainment content, and the collapse of traditional broadcast TV has led to a massive, massive shake-up in the entire entertainment business that has only just begun. People are bracing for mass layoffs, mega-mergers and the effective end of major companies that have been around for nearly a century.

How massive is this upheaval? Of the six major movie studios (Disney, Sony, Warner Bros., Paramount, Fox and NBC/Universal), two have been sold and are in the early stages of merging, and one is, as of this writing, embroiled in a ludicrous Game Of Thrones-esque fight over its future and possible merger with a major TV network. Disney now owns Fox, Warner Bros. is getting absorbed into AT&T (despite legal challenges from the Department of Justice), and Viacom/Paramount MIGHT be getting merged again with CBS.

This upheaval has been creeping in slowly over the last decade. As more and more entertainment consumption has moved to online streaming, traditional entertainment companies have been withering as theatrical, cable and advertising all decline. Netflix now has more money to spend on making stuff than any of them. Amazon Prime Video is growing. Hulu, who is partially owned by those traditional media companies, is a distant third. Apple, now the first trillion dollar corporation in history, is constantly making moves that seem to indicate that they're getting into the content business too, but never seem to actually launch anything.

Crunchyroll is one of the rarest birds in the streaming landscape: a truly successful independent niche player with strong connections in production and a strong userbase. There are virtually no other companies that have pulled that off. Combined with other Otter Media assets (indie film distributor Gunpowder & Sky, Reese Witherspoon co-founded production company Hello Sunshine, YouTube network Fullscreen Media, and indie studio Rooster Teeth), the value they bring to a company in the media space, and the amount of content they control, is quite extraordinary. Combined, the company represents over 75 billion video views to 93 million people globally this year alone, according to their press release.

And that's ultimately the game here. All of these giant media companies are basically in a content arms race. They're running scared of Netflix and their US$8 Billion annual content budget. All of these acquisitions that are happening are part of a strategy to stockpile control of as much valuable content as possible. It's why Sony bought Funimation, it's why AT&T bought Otter Media/Crunchyroll and Warner Bros., it's why Disney bought Fox. Anime is a small, but prominent piece of the puzzle. It may be a small market, but the big hits are huge enough, especially with younger audiences, to move the needle for a new service. It could be argued that Crunchyroll would have never ascended to the heights that they did without Naruto Shippūden. There aren't many Narutos out there, but there are plenty of smaller hits, and anime fans have a well-earned reputation as early adopters.

Warner Media is a newly-formed conglomerate under AT&T that comprises all of the former Warner Brothers-owned corporations, including HBO (HBO and Cinemax, including international and streaming versions of each), Turner (Cartoon Network, Adult Swim, Boomerang, CNN, ELEAGUE, FilmStruck, HLN, Super Deluxe, TCM, TBS, TNT, TruTV, Turner Sports, Great Big Story and iStreamPlanet) and Warner Brothers (including DC Entertainment, CW Television Network, New Line Cinema, and the giant network of film and TV companies with "Warner" in the name). They have stated outright that the Otter Media will be combined into Warner. Departing owner Peter Chernin noted that, once combined, AT&T will be in a place to deliver "every type of content delivered through every possible distribution channel."

I can only guess where we're going from here. With this much money at stake, we are only seeing the very beginnings of what promises to be a complete reshaping of the entire entertainment industry. Disney has already announced that they're working on a major Netflix competitor. What will AT&T do? Will they also try to become a one-stop streaming entertainment shop, compete with both Netflix and Disney, and fold Crunchyroll into it? And what will Sony do? Funimation and Crunchyroll are joined at the hip, due to co-licensing agreements, and can't be completely separated for the time being. Will they also launch a competing provider? Or something else?

All bets are off. Anime has gotten sucked into a much larger corporate battle, and there's not much anybody can do -- not the fans, not the anime distributor staff, and not the Japanese studios -- but wait and see.

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Anime News Network founder Justin Sevakis wrote Answerman between July 2013 and August 2019, and had over 20 years of experience in the anime business at the time. These days, he's the owner of the video production company MediaOCD, where he produces many anime Blu-rays. You can follow him on Twitter at @worldofcrap.