On Funimation’s recently-announced licensing plan change

Funimation recently announced that, due to its acquisition by Sony, they would be pulling all their shows from other streaming platforms — eliminating their groundbreaking Crunchyroll partnership deal (under which Funimation-licensed simulcasts would automatically be available on Crunchyroll & Funimation’s back catalog titles would periodically be added to Crunchyroll’s catalog).

While it’s unfortunate, this is also a return to the norm.

When Funimation started the Crunchyroll partnership only a year or two ago, it came totally out of left field — anime fans had already been spending years either dealing with the poor streaming support from Funimation exclusives, waiting for them to circulate onto Netflix just to have them playable, or simply ditching legal streaming altogether. We didn’t expect the Crunchyroll partnership to happen, and once it happened, we shouldn’t have expected it to last.

The more pressing issue is the Sony ownership: Sony is a frequent member of production committees, and often has a stake in shows that it isn’t producing by nature of owning UMG (and thus typically owning distribution rights for the soundtracks and drama discs). Sony might pressure the projects it has a stake in to favor Funimation for distribution — which, because Funimation’s streaming site is borderline unusable, ultimately means a whole lot more shows (and a lot of big shows — Sony owns Aniplex, for instance) being unavailable for legal streaming.

The Vaguely Unpleasant case scenario is one where Sony attempts total horizontal integration & has every Aniplex or Sony-produced show and every show with UMG-licensed music (including library music) distributed by Funimation — in other words, a world where Funimation has a total monopoly on all popular shows (since even KyoAni relies on UMG for music distribution) and a near-total monopoly on all other shows (since UMG is the largest record company in the world & therefore owns a lot of library music and sound effects), starving Crunchyroll & HiDive for licenses, while Funimation still doesn’t have pressure to fix their streaming service’s reliability and usability issues because nothing streams in Japan in the first place.

Such a world would be a return to 2003 in terms of availability of legal streaming: fandom would be totally gutted, and fansubbing would rush in to fill the gap in availability.

There’s no reason to believe that Sony will be so aggressive, but there’s also no particular reason to believe that Sony *won’t* be: they’ve been aggressive in the past, even in ways that were transparently stupid or myopic, and the key question appears to be whether or not such a strategy has occurred to them.

In the short term, we would expect the Crunchyroll deal to have been a bummer for Funimation: they have a huge exclusive back-catalog, & making it available on Crunchyroll probably substantially decreased subscriptions to their service. On the other hand, subscriptions to their service were bound to drop anyway: it stops making a lot of sense to pay somebody ten dollars a month when it’s nigh-impossible to get a video to play through its duration on their platform, and so most people are going to cancel their subscription as soon as they notice they’ll never get ten dollars worth of value out of it. In other words, the smart thing for Funimation to do is to drop its streaming platform altogether & make all Funimation titles Crunchyroll exclusives in return for a substantially higher royalty cut.

The one silver lining for this change is that it’s bound to be gradual: distribution licensing deals normally have renewal periods attached, so we should expect the only immediate effect to be the absence of new catalog titles from Funimation appearing on Crunchyroll & a lower number of new simulcasts available on all platforms for upcoming seasons. In the mean time, catalog titles will slowly rotate out of other streaming services. Not being privy to the actual details of the licensing deals, I would expect a lot of these shows to remain available for years. At the very least, all of Funimation’s catalog titles appear to still be available on Crunchyroll at the time of this writing.

(This article is adapted from an answer on Quora.)

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Resident hypertext crank. Author of Big and Small Computing: Trajectories for the Future of Software. http://www.lord-enki.net

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