Tuesday, December 30

The story of Crunchy Roll

As the new year fast approaches, the news across the anime industry looks persistently bleak: downward-spiraling overseas DVD sales coupled with decreasing profits at home, a shrinking domestic labor force combined with an ever-expanding menu of file-share freebies--and, of course, an anemic global economy for all.

But there is a silver lining on the horizon, and you can test its brightness and durability beginning exactly one week from today.

Next Friday, Jan. 2, California-based Crunchyroll.com, one of the largest and most popular of the so-called "fan sites," or Internet portals for free anime uploaded exclusively by and for fans, is going legit: legal and fully licensed for producer profit.

If you follow this column, this is not the first you've heard of Crunchyroll's foray into unchartered bandwidth. In September, I conducted a phone interview with Vu Nguyen, the site's cofounder and vice president of business, development and strategy. Nguyen recounted for me his team's trips to Japan at the start of 2008 to obtain digital strategies directly from the front offices of Japan's anime producers.

The result? They had none.

"So we decided to give them strategies," Nguyen told me. "Because they're frustrated, too."

I was impressed by Crunchyroll's proactive approach to an industry whose upper management tends toward intransigence. In many of my interviews with anime executives, the mere mention of hemorrhaging profits via the Internet inspired winces at best, and at worst, outright antagonism--as if I'd inserted an obscenity into the conversation.

No doubt, Nguyen and his colleagues have benefited from their timing. While DVD sales figures have been slipping in all media, for anime, North American numbers have dropped precipitously, by an estimated 200 million dollars or more from their peak roughly five years ago.

The news isn't much better inside Japan. Years of declining birthrates have produced a shrinking youth consumer demographic, one that can hardly pick up the slack of their otaku elders. Young Japanese, distracted and enthralled by their ubiquitous high-tech cell phones, are no less Web-savvy than their overseas counterparts. And recent changes to Japan's employment and corporate structures mean that many of them are working longer hours for less money than their parents did. Why pay for what's free?

Which is exactly the question I put to Nguyen earlier this week. If it was difficult convincing Japanese producers to provide official content to a foreign-based fan site, how hard will it be to persuade foreign consumers to pay for that content--when it was nothing more than a mouse click away days earlier?

Crunchyroll's approach is firm, if not outright draconian. "By the end of this year [next Wednesday], we are disabling user uploads for anime and dramas and removing any content from those sections for which we have not obtained rights. We are transitioning the site from a user upload model to a licensed model, working directly with the producers in Japan."

On Jan. 2, the site's content rollout begins in earnest: "We will be airing several new simulcasts every week," Nguyen continues, "with titles including Naruto Shippuden, Gintama, Shugo Chara, Skip Beat and more. We will also be launching our subscription plan that gives members earlier access to the shows, great video quality and no advertisements. The episodes will be available the same day with English subtitles an hour after Japan broadcast, exclusively on Crunchyroll for subscribers. Episodes will also be available for free with advertising support for everyone up to a week after."

The gamble is obvious: Fans will value quality content and immediate access over the contents of their wallets. Crunchyroll also plans to offer various social networking opportunities to entice subscribers. But here's the rub: "The fans genuinely want to support creators and the industry," Nguyen claims. "They just haven't been educated on how the industry works. We're doing our best to inform them."

In 2009, the Crunchyroll story could prove a fascinating test of the Internet's capacity for self-monitoring behavior, whatever the content: Can human beings in a virtual world put group survival and sustainability ahead of short-term self-gratification?


Personally I think this is future of anime, more and more Net consumers preferred to stream shows rather than using torrents to download them and then watch it while at the expense of the HDD space. The industry might be watching this effort since they are truly worried that declining youth population in local market forced them to "outsource" market so they can stay in business. Some commentators noted that current Japanese anime industry is bloated (50 series a year, unprecedented rate) might suffer another bubble burst just like Japanese real estate scene soon. Economic depression might just do the job.

Interesting concept so far.

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