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Crunchyroll Takes Aim at Its Next 1M Subscribers

Crunchyroll, the anime-focused subscription VOD service, reached a major milestone earlier this year when it surpassed 1 million paid subscribers.

The big challenge on the horizon for the service, majority owned by Otter Media (the over-the-top video joint venture of AT&T and The Chernin Group), is to keep its growth engine stoked and pursue its next 1 million subscribers.

Though Crunchyroll was initially developed to serve a niche audience of anime fans, the genre has evolved to include crossover series and titles that have helped Crunchyroll resonate with a much broader audience. Crunchyroll was the eighth-biggest subscription OTT service as of third-quarter 2016, according to a Parks Associates study released last year, putting it ahead of Showtime’s direct-to-consumer OTT offering as well as CBS All Access.

“At this point, anime is really having a moment in mainstream awareness,” Colin Decker, Crunchyroll’s chief operating officer, said.

That moment has been long in coming. Crunchyroll launched in 2006, seeking to connect with an underserved audience that was passionate about anime, following a somewhat underground movement in which fans would tape shows in Japan and send them to the U.S. for anime meetups.

“There’s no question that somewhere in 2015 and 2016 we really saw an inflection point,” Decker said, noting that Crunchyroll’s recent climb past the 1 million mark followed year-over-year subscriber growth of about 36%. “We really are hockey-sticking.”

Some of that expansion, he said, is thanks to breakout crossover hits such as Shelter, a short film written and executive produced by electronic dance music artist Porter Robinson, along with A-1 Pictures and Crunchyroll; and Yuri on Ice, a serial drama that has drawn a significant audience of young adults.

“We made the market in terms of telling the story about how rich and deep anime is, with a ton of different genres,” Decker said. “Anime is now transcending the perception that it is a single genre. It is, in fact, in as many genres as mainstream American television.”

Still, surpassing 1 million paid subcribers (Crunchyroll also has 20 million registered users) doesn’t mean the service can simply rest on its laurels. The SVOD market is exploding with options, including more direct competitors such as Anime Strike, a $4.99-per-month curated subscription service from Amazon Channels that launched in January and undercuts Crunchyroll’s premium-service price of $6.95 per month.

The emergence of Anime Strike means Crunchyroll must continue to build up its video library while sprinkling in exclusives, but will also need to keep expanding its community-building aspects and to “superserve” its audience.

“If we went with just a tonnage library play, I don’t think we would have that special relationship with our audience,” Decker said.

Crunchyroll is looking to tighten those ties through efforts that extend well beyond its baseline SVOD service, including the first-ever Crunchyroll Expo (set for Aug. 25-27 in Santa Clara, Calif.) and its annual Anime Awards. New to the mix is Anime Movie Night, a partnership between Crunchyroll, Screenvision Media and KAOS Connect starting in April that will screen select series episodes and theatrical features in hundreds of theaters on a quarterly basis.

“The convention experience is very important to these fans,” Decker said. “We’ve crossed that tipping point where it’s in our hands to take that next step and build a definitive anime experience … Any way [that] we can facilitate a way for fans to come together, and bring new fans with them to evangelize this experience, was a no-brainer for us.”

Crunchyroll’s success has hinged on its ability to serve as a champion of anime and sell directly to consumers. But it’s also pursuing other emerging channels, including SVOD aggregation services.

Crunchyroll is part of VRV, a recently launched SVOD aggregation service from Ellation, an Otter Media portfolio company that sells Crunchyroll as a one-off or as part of a steeply discounted bundle.

It’s too soon to say how many Crunchyroll subscribers have come through VRV’s door, Decker said, though he’s pleased with the response and engagement seen with VRV so far.

Another possible entry point is the set-top box, as Comcast, Dish Network and other pay TV providers continue to embrace OTT services and integrate them into their platforms.

Crunchyroll hasn’t announced any deals putting its service on MVPD set-tops, but it hasn’t eliminated that possibility.

“We’re interested and excited to look at any of those opportunities as they come up,” Decker said.