Sony’s Deal for Anime Platform Crunchyroll Faces Uncertainty (Report)

Is it crunch time for Sony’s takeover of Crunchyroll? The proposed acquisition of specialized streaming platform Crunchyroll by the Japanese hardware and entertainment giant may now be facing an additional degree of regulatory uncertainty and delay.

Tech website The Information reported that the U.S. Justice Department has extended its anti-trust review into the deal. The move could delay completion of the deal by as much as six months, or even derail it completely.

The deal was announced in December last year with a price tag of $1.175 billion. It sees Funimation, a joint venture between Sony Pictures Entertainment and Aniplex, a wholly-owned subsidiary of Sony Music Entertainment (Japan), buying 100% of Crunchyroll operator Ellation Holdings from Otter Media, part of AT&T’s WarnerMedia cluster.

Sony noted at the time that the deal was subject to regulatory approvals, but it did not attempt to forecast when those might be completed. Sony had not responded to Variety’s latest enquiries by press time.

According to The Information, the Justice Department is reviewing the deal to see if it would give Japanese animation studios fewer options to distribute shows in the U.S.

Crunchyroll claims more than 3 million subscription VOD subscribers and some 90 million registered users across more than 200 countries and territories. It offers ad-supported VOD, mobile games, manga, events merchandise and distribution. Crunchyroll says it has more than 1,000 titles and over 30,000 episodes, which it claims represents the world’s largest anime library. In the U.S., Crunchyroll’s ad-free subscription service is $7.99 per month and includes simulcasts of Japanese anime programs as soon as one hour after they air in the country.

Anime fans have voiced fears that Sony would merge Funimation and Crunchyroll and reduce choice or increase prices. Others have questioned whether a shift of ownership from Warner to Sony would shake up content co-ventures between Crunchyroll and Warner such as VRV and Toonami. The fate of Crunchyroll relationships with VIZ Media and Webtoon for home video releases and manhwa licensing respectively is also unclear.

Sony, which lacks a global streaming platform like Disney Plus or HBO Max, may see the deal as addressing some of the disadvantage it currently operates at compared with other entertainment conglomerates that include a Hollywood studio and a direct-to-consumer video business. Sony may also see the proposed deal as bolstering its position in a specialist corner of the streaming universe and as its strengthening its position in a quintessentially Japanese product.

The U.S. market for anime is fragmented, with five leading companies including Netflix, Crunchyroll, Funimation, Amazon Prime Video and Hidive. Netflix, which is many multiples bigger than Crunchyroll in the U.S., is investing heavily in Japanese and Korean animation and may be on its way to becoming the market leader – if it is not already.

“If the DOJ decided to try to block the deal, the only impact would be to keep Sony, which owns no other streaming services in the U.S., a tiny player in streaming, while benefiting companies like Netflix and Amazon,” The Information suggested in an accompanying opinion piece.

 

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