Internal struggles and exterior pressures are driving an anime giant into a corner as Crunchyroll struggles to keep ground, according to a recent report by Bloomberg. Any anime fan worth their salt is well-versed in the fact that giants fall, even if at one point those giants seemed a lot like heroes. Crunchyroll is one such giant, ceding ground to Netflix in 2024 and giving up its dominance over the anime market to competitors on all sides.

For years, Crunchyroll has held total dominance over the anime market as the go-to licensor for exclusive anime and simulcasts. In years past, every enthusiast who accessed anime through legitimate means, more-or-less, subscribed to Crunchyroll. What's most interesting about developments with Crunchyroll is that the enthusiast market is hardly going anywhere—much bigger tide shifts in the anime distribution market have dethroned the anime streaming king, which seems intent also on unseating itself, according to the new report published by Bloomberg.

A Brief History Of Crunchyroll's Acquisition

Crunchyroll's Problems Really Started After Being Acquired By Sony

The story of Crunchyroll's difficulties, per Bloomberg, can partly be traced back to its acquisition by Sony. In 2021, Sony acquired Crunchyroll for a hefty sum of $1.2 billion dollars. In hindsight, the move was perfectly reasonable. The COVID pandemic of 2020 led to massive demand for anime as more people found themselves stuck indoors. Being at the top of the industry, Crunchyroll made for a natural acquisition for any profit-minded firm looking to capitalize on the newfound intrigue.

Unfortunately, the move was also accompanied by other difficulties. In the past few years, Crunchyroll has been subjected to several mergers—some, of course, messier than others. In 2017, Sony already acquired Funimation, which previously distributed large part of its titles through Crunchyroll. In 2018, the two companies dramatically parted ways as Crunchyroll removed hundreds of Funimation titles from its service, as Funimation no longer d with third-party streaming services.

For years, Funimation reigned supreme on the anime circuit as one of the top North American distributors of anime. The company even had its own streaming service. In April 2024, Funimation closed its doors and merged with Crunchyroll as a consequence of both being acquired by Sony.

Crunchyroll also swallowed up long-time anime retailer RightStuf, a cornerstone of the industry since the late 1980s, merging many of its products into its own Crunchyroll Store. The take-home here is that ever since being acquired by Sony, Crunchyroll has been hellbent on cornering the industry, leveraging its influence and market position to effect colossal changes to the industry's landscape. A recent report by Bloomberg, however, sheds some light on how and why the anime streaming giant is now struggling to maintain its foothold.

Crunchyroll Faces Interior Struggles And Mismanagement

The Funimation Merger Led To Structural Changes That Haven't Played Out Well

Since 2021, Crunchyroll's subscription base has tripled in size. However, this number doesn't for the fact that anime in general has exploded in popularity in the last few years. In view of anime's much wider viewer base, Crunchyroll is actually struggling. It all goes back, at least partially, to the Funimation merger. As Bloomberg puts it in their new report on Crunchyroll:

Current or former employees describe Crunchyroll’s new management–primarily from Funimation–as out-of-touch with employees and the anime fans the company once prioritized. Some executives write off anime as “kids’ cartoons,” they said, and resist hiring job candidates who describe themselves as fans. Customers weren’t too happy either. Some were furious when Crunchyroll announced that digital copies of anime they had purchased through Funimation wouldn’t survive the transition to the new platform.

Suffice to say: the Funimation merger didn't go off without a hitch. One of the first points of conflict comes from internal changes, which is perhaps to be expected, considering Bloomberg's declaration that Crunchyroll employees, once upon a time, would say "at least we don't work at Funimation"—a timely and unfortunate reminiscence. Primarily, Bloomberg's report focuses on the case of Markus Gerdemann, the senior vice president of creative marketing who Funimation courted due to his success at Netflix despite his lack of experience with anime, and who was absorbed into Crunchyroll with the merger.

In many ways, Gerdemann is emblematic of the cultural shift and mismanagement at Crunchyroll since the merger. Bloomberg's interviews with multiple current and former employees of the streaming platform revealed that many employees believe Gerdemann to lack the experience required for his role, and troubling accusations have arisen regarding his impact on Crunchyroll's work environment. Gerdemann has soured Crunchyroll's relationship with major industry movers like Toho and Toei, and he has contributed to Crunchyroll's lessened bargaining position relative to other major streaming services like Netflix.

Tempting though it may be to read into Bloomberg's reportage of Gerdemann a villain who, through incompetence and/or malice, snags control away from the good folks at Crunchyroll, a much more realistic reading is that Crunchyroll has come to be mismanaged. Gerdemann is only one cog in the machine—a machine that Crunchyroll employees past and present describe as lacking in direction in Bloomberg's report, and where figures like Gerdemann are given free rein to make decisions that "cost the company money". Crunchyroll's acquisition, for better or worse, has contributed to its being another big-money-backed player hungry for dominance in a field where anime industry giants appreciate and desire competition—and where missteps aren't much appreciated.

It goes without saying that there's been plenty of competition, too. As platforms like Netflix, Hulu, Max, and Disney+ work to expand their anime catalogs, they're also taking up more of the market share. Licenses have become increasingly sought after, and exclusive licenses are ever more valuable. Crunchyroll's position has always been slightly crowded by companies like Hulu, which for over a decade has been host to a massive anime catalog. But for more niche offerings and simulcasts, Crunchyroll was the main game in town.

Bloomberg's report specifically cites a major turning point to be Jojo's Bizarre Adventure's licensing by Netflix, and by extension, Netflix's control over Stone Ocean's production and release. In another recent report from Parrot Analytics, Netflix has emerged as the leading anime streamer for North America, proving that Crunchyroll's time at the top has perhaps come to an end.

Exterior Forces Threaten Crunchyroll's Dominance

Competitors Are Trying To Take Crunchyroll's Throne, And It's Working

Since the pandemic, Netflix and other American streaming platforms have tried hard to harness the growing interest in anime by licensing and marketing major IPs. Meanwhile, the report implies that because Crunchyroll failed to secure an exclusive license for Dandadan, Gerdemann put out an order to halt its promotion altogether. These kinds of moves, beyond being petty and shortsighted, also speak to a mounting anxiety over Crunchyroll's dominance in the anime market. These sporadic actions, by a company that resonates far less with the general audiences the companies churning out anime want to attract, have naturally led to Crunchyroll's steady loss of market share.

Especially as companies like Toho try to expand their operations to North America through purchases of distributors like GKIDS, the situation will likely only grow more dismal for Crunchyroll and, by extension, Sony, whose incredibly expensive acquisition of Crunchyroll threatens not to pay off. In response, Sony has tried to bring Crunchyroll to underserved markets like India—but the catch is that the subscription price there must be set too low to be profitable.

Meanwhile, Netflix is booming thanks to anime. They're just one example of several streaming platforms that have been riding the anime wave successfully, while Crunchyroll is barely treading water, turning over many subscribers to them. Bloomberg's report on Crunchyroll and the state of the anime industry is foreboding news for Sony, but anime fans might just see history repeating itself—provided they've been around long enough to see countless industry goliaths tumble to the ground because of their own missteps.

Source: Bloomberg