Ask John: How Effective Are Streaming Sites at Supporting the Anime Industry?

Question:
What do you think about streaming services like Daisuki or Crunchyroll? Are they a good response to the animation industy’s claim of insulating themselves against piracy and illegal downloading?

Answer:
North American-based or targeted anime streaming services including Crunchyroll, Daisuki, The Anime Network, and AnimeSols are undoubtedly a positive development from the anime industry as they’ve provided a greater degree of international distribution control over anime to Japan’s anime distribution industry than the industry has ever had before. But these streaming sites presently seem to be primarily a means of advertising and promoting anime more than an effective supplemental revenue stream. Crunchyroll, for example, hasn’t made any recent public statements regarding its profitability. While the site did claim to have reached a break-even point several years ago, there’s no certainty that the site is now profitable because the larger number of titles that Crunchyroll streams now engender larger distribution royalties and fees. Furthermore, the anime industry is primarily supported by revenue generated through home video and merchandise sales, yet none of the primary North American anime streaming sites presently sell DVDs or Blu-ray discs as a primary source of revenue.

AnimeSols is an ideal reference point for examination of North American anime streaming. AnimeSols is completely owned and operated by the YTV network and anime studios Pierrot, Tezuka Productions, and Tatsunoko Productions. The anime series streamed on AnimeSols are owned by AnimeSols, thus the site doesn’t have to pay any licensing fees. However, AnimeSols does still pay out large amounts of money for the right to stream anime because the site must pay risidual royalties to the affiliated studios, artists, musicians, and technicians that contributed to the production of these anime. Naturally, we can assume that sites like Crunchyroll, Daisuki, and The Anime Network that are streaming shows that they don’t own have to pay even more fees and royalties for the rights to publicly distribute these shows. Crunchyroll and The Anime Network charge minimal subscription fees. Sites like NicoNico, Daisuki, and AnimeSols don’t collect any fees for access. While advertising revenue offsets some of the expense of maintaining these sites, one can assume that many, if not all of the North American anime streaming sites are generating minimal profit, if any profit at all.

The advantage of official streaming sites is studios having the ability to oversee the translation and availability of their anime. Official streaming has made studio and distributor names like “Aniplex,” “Sunrise,” and “Toei” commonly recognized name brands in the international otaku community when these studios were not widely recognized brands among average anime viewers just five years ago. But consider that Crunchyroll now has over 200,000 paying subscribers. This year’s Anime Expo admitted 61,000 anime fans, yet typical domestic anime DVD and Blu-ray releases sell fewer than 5,000 copies. North America is home to over 520 million people, yet only roughly 35 of them volunteered to purchase Yatterman DVDs produced by AnimeSols. Anime streaming sites have been a tremendous boon to international anime viewers, and these sites have tremendously increased the international recognition of Japanese anime studios and their current productions. But these sites aren’t generating big profits that will sustain Japan’s anime industry. The producers of last season’s Karneval anime series recently announced that any possibility of a second season will hinge on home video sales; they didn’t mention support from streaming viewers because official anime streaming, at best, only manages to avoid losing money.

Like every other international otaku, I’m pleased that official anime streaming sites exist now. These sites have made great strides toward indoctrinating new anime fans and expanding awareness and respect for Japanese animation. So long as these sites continue to attract attention, they’ll continue to exist. But the goal of providing free or low-cost access to anime is to encourage home video sales that fund the anime production industry. And so far that goal is not being successfully met.