[News] Daisuki Shutting Down and Funimation Acquired by Sony Pictures

Some pretty big industry news over the last 24-48 hours that warrants enough attention for a post of its own. For those not aware, two “bombshells” were dropped that are likely to give indication if not shape the future of the US anime industry and abroad for the next few years. More after the jump.

Daisuki Ends Streaming Service and Shuts Down

Daisuki announced on August 1, 2017 that they are planning to shut down their entire streaming services as of October 31, 2017 Japan Standard Time. Daisuki is an international streaming platform focused on anime titles similar to Crunchyroll though on a smaller scale. To be honest, there were many signs that this was going to happen sooner or later. The most apparent ones being:

  • Daisuki had a gradual attrition of titles exiting their catalog the last few months (e.g. Haifuri aka High School Fleet)
  • Crunchyroll acquiring a number of titles that already exist in their catalog (e.g. Gundam titles, Love Live! Sunshine!!)
  • Bigger name companies entering the anime streaming market, namely Amazon (Anime Strike) and Netflix
  • Daisuki continues to rely on an ad-heavy business model even for premium membership

The above four indicated that Daisuki had struggled to make a name for itself despite its inception in 2013. Whether it was actually profitable is a separate question but even if it was the margins probably weren’t great or the growth wasn’t there if it’s closing up now. However, if it’s the smaller company closing up shop, why is this significant?

  • This was a project managed by Anime Consortium Japan, Inc. and to see it fail could imply a couple things, including challenges in penetrating and growing in markets outside the US since Daisuki did have a slightly bigger name there. A lot of major animation studios contributed to the site, which may hurt future plans to experiment other projects abroad
  • Loss of exclusive titles, which will need to either be reacquired or rescued. Not all titles, however, will be rescued and it will of course take time. Examples include ONE PUNCH MAN, The IDOLM@STER Cinderella Girls, Beyblade Burst, and vintage titles like Nagasarete Airantou to name a few
  • Could this spell trouble for Crunchyroll? That depends. Crunchyroll will benefit with one less competitor in the market as the space continues to grow more competitive. However, with corporate giants like Netflix and Amazon starting to steal market share, Japanese producers may consider cashing in on the bigger names rather than a niche platform like Crunchyroll.
  • Extending on the previous bullet, in the short term, Crunchyroll has the advantage due to its target audience and more well established foothold in the market. It’s pricing structure and simulcast business model also benefits considering Netflix relies on binge watching (for now) and Amazon’s Anime Strike requires additional subscription on top of prime membership. In the long term, as the latter two build out their catalog, some consumers may start to shift with the mentality of avoiding paying for multiple subscriptions as Anime remains more discretionary relative to other forms of television programs for most people.
  • Daisuki was a big sponsor of Japanese guests in the US over the last couple years, particularly for Anime Expo and Anisong World Masturi. Could this impact the content next year and beyond?

Overall, Daisuki leaving the market will have a relatively small impact for most consumers of the anime streaming market in the US. It’s product wasn’t exactly great, the app was buggy, and it didn’t really distinguish itself that much from existing services. Plus, no one really wants to be paying for more than one service anyway. The biggest losers are likely the international (outside US) market so it will be interesting to see what other players will do now given Daisuki is out. Will we see Crunchyroll, Netflix, and Amazon attempt to aggressively penetrate or will local companies keep them out through physical sales? Keep in mind, that excluding Japan, China, South Korea, and Southeast Asia continue to be largest consumers of anime worldwide and most are actually still watched via physical goods or pirated in those markets. Streaming hasn’t really been fully embraced in any of those markets though it is growing particularly due to Netflix.

The obvious winners here are Amazon and Netflix. Both just entered the market and are picking up some big titles. They will be the ones to watch out for in the next 6-12 months to see if they are able to rack up a simulcast catalog similar to Crunchyroll both in quantify and quality.

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Funimation Acquired by Sony Pictures

The other big news of the day was Funimation selling a majority stake of of the company to Sony Pictures. The key word here is Sony Pictures and NOT Sony Music, the latter of which owns Aniplex. Sony Pictures is the arm focused on movie and “Hollywood” productions. Here’s my take on this:

Pros:

  • Potentially allows Funimation greater access to more resources for their simuldub and dubbing projects
  • Allows Funimation to focus more on the English dub and home video market while leaving the simulcast and web streaming to their partners at Crunchyroll
  • Offers opportunity for original content production for both Funimation and Crunchyroll, especially with Crunchyroll entering this space
  • Unlikely to have significant negative impact in the short term

Cons:

  • Depending on how Sony sees Crunchyroll, this could mean cutting short that partnership or recalling some of the recent Funimation titles added to Crunchyroll’s catalogs
  • Potentially more awful Hollywood live action adaptations of anime titles
  • While Sony Pictures’ parent is Japanese based, Sony Pictures may as well be an American operated company so any international connections should be taken with a grain of salt
  • Sony as a company is not in great financial shape, which could potentially drag Funimation down with it through poor business decisions. This isn’t the first time for Funimation either.

There are a lot of ifs in the above but at this point it’s likely too early to fully quantify the impact especially without knowing the full terms of the agreement. All we can do is wait and see.

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