Answerman
What Should We Expect from the Sony Pictures TV - Funimation Deal?

by Justin Sevakis,

Lots of people asked:

I just saw the big news that Sony Pictures TV is going to acquire a 95% stake in Funimation, and I am really concerned. What will this mean for Funimation releases, their deal with Crunchyroll, their dubs, and their streaming platform?

Press releases about corporate buy-outs go out pretty early on in the process, especially when it comes to huge, publicly traded companies like Sony who are subject to government scrutiny whenever a deal like this happens. That means that right now, there's likely a whole lot to figure out for all parties involved. I don't have any more information on the deal than has already been made public. As Funimation has noted in their amusingly vague FAQ, nothing much is going to change immediately. These things take many months.

That said, I do know the companies involved and can provide some background and educated speculation as to what will happen eventually.

Sony Pictures Television (SPT) is a division of big Hollywood movie studio Sony Pictures, itself a unit of Sony Corporation. They're based in Culver City, CA (in LA's west side), and they're the biggest TV production and distribution company in the world, with a vast library of content that includes everything from Jeopardy!, Wheel of Fortune and Shark Tank, to The Blacklist, Breaking Bad, Seinfeld and Days of Our Lives. They own a handful of smaller cable channels in the US, but internationally run Animax networks that are primarily anime focused (though in many areas they've been phased out). They also own an also-ran streaming service called Crackle.

Funimation is an interesting fit for Sony Pictures Television, and Sony Pictures in general. Despite heavy competition, Funimation is still the biggest name in the space, and controls many of the most popular catalog titles. They are also exceptionally strong in physical media sales, which is especially interesting to major studios because the rest of the home video market has been struggling quite a bit in recent years. Despite those successes, the company has not done particularly well growing its own streaming platforms, and is reliant on partners for many of its streaming needs (currently from another Sony unit, replication provider Sony DADC), as well as distribution of its own physical media (currently handled by Universal Home Entertainment). Those are areas where Sony is an absolute monster. I expect FunimationNow will be fused behind the scenes, if not openly, with Crackle in pretty short order.

The real battle for supremacy with anime distribution won't necessarily be over any of those spaces, however. As entertainment becomes more and more globalized, Funimation, Crunchyroll, Amazon and other players have been jockeying to be a part of the production committees that produce the anime itself. By coming in as a co-producer they not only get to enjoy in a show's success in EVERY territory, but they actually get some say in what would be popular in their own territory. They also get to shut out the competition for any show they co-produce. However, Japanese production committees are very insular, and so getting into them -- especially the "cool" ones -- with any regularity has been difficult. With Sony, that's no longer an issue: being a part of one of Japan's biggest international conglomerates opens many, many doors. The press release even hinted that this was the main reason.

But that's a long term strategy. In the mean time, there will be many changes. I expect Funimation's distribution partnership with Universal Home Entertainment to come to a pretty quick close, as Sony Pictures' powerful publishing arm takes over. It's possible that other Sony Pictures divisions, such as Sony Pictures Classics, will work with Funimation to more effectively handle theatrical releases and other kinds of distribution.

I would be very surprised if Funimation's marriage with Crunchyroll lasts very much longer after this. Big studios are big on exclusivity, and would want to leverage Funimation's library with its existing Crackle service and other partners. I do expect that Funimation will continue to do deals with Netflix and Hulu, since Sony works with them both. But Crunchyroll? I suspect that they'd be thought of as competition, especially with ownership stakes from Chernin Group and AT&T. Any cooperation with players that big would be a result of dealmaking at a far higher level (though both SPT and AT&T share ownership of Game Show Network). Moreover, Funimation gave up a lot of control over content when they made the deal with Crunchyroll, and I would think its new owners would want that control back. Mind you, shows that are already split between the two companies are likely done so by contract, so any split wouldn't affect any already-announced shows, just new ones going forward.

I do not expect dub production to be moved out of Texas. Sony Pictures does not do dubbing in-house, and Funimation's operations are far more cost effective than using the LA-based dub vendors that Sony used in the past. They're also a well-oiled machine that can turn around an insane number of simuldubs as a matter of course -- something that most studios would really struggle with. It's possible that Sony will start using the Funimation crew to dub other international projects as well. However, a huge Hollywood studio may have trouble with SAG/AFTRA if they own a business that doesn't involve union talent, so there may be some adjustments to be made in that area.

I am concerned for Funimation's in-house DVD/Blu-ray production team, as well as their physical media wholesale team. Those areas are definitely redundant with Sony, and may be in danger. While the wholesale side of the business is not visible to fans (and was probably mostly handled by Universal anyway), I would definitely hate to lose Funimation's Blu-ray people, especially since Sony's anime releases to date have been spotted with mistakes that dedicated anime people would never make.

I expect Funimation's marketing system, which utilizes a unique method whereby a brand manager interfaces directly with the Japanese licensor and guides the product along the production process, to probably survive in some form. Working with Japan is difficult enough, and Funimation's ability to interface directly with customers is probably one of the main reasons Sony was interested. Depending on what happens to the production team, there's a chance they may not wield as much influence as they once did.

I expect some noteworthy anime titles in Sony Pictures' back catalog to get dusted off and get a new lease on life. The Cowboy Bebop movie, Memories, Tokyo Godfathers, Paprika, Blood-C, Nodame Cantabile and several others would really do well with Funimation's treatment, and may get re-released. Additionally, I expect the Animax moniker to show up SOMEWHERE, because Sony is really proud of that branding for some reason.

I do not expect Aniplex to have anything to do with the new company for a while. Aniplex is a division of Sony Music Japan, which is a separate division from Sony Pictures. If Sony's corporate culture is notorious for anything, it's for the fact that its multitude of divisions basically never talk to each other and don't work together very often. Perhaps that will change one day -- and lord knows, they're trying to fix that -- but based on what I've seen and heard over the years, anything beyond a grudging favor between the two would take a while to make happen. Beyond that, Aniplex USA basically has a completely opposite approach to the US market than Funimation does, and decided a couple of years ago to take their toys and go home, so any joining of the two companies might be contentious. Sony has commented that the goal will eventually be for all of the anime-related divisions to work together in concert with the Playstation division, but we have no idea what that would look like. On that front - what a unified Sony will look like after this - it's way too early to make educated speculation.

I also don't expect much difference in how Funimation works outside of North America, since Sony Pictures doesn't have a huge distribution presence elsewhere either.

In terms of anime industry shake-ups, this is a big one -- perhaps the biggest one since the "crash" of the mid 2000s. There will be a lot of upheaval from this buy-out, and a lot of adjustments over the next couple of years. It may be rough on the fans, and it might be even rougher behind the scenes. Personally, I don't expect that the two corporate cultures will be all that simpatico, especially at first. But for decades, anime has been on the precipice of mainstream acceptance in the US. If anyone has the might to finally push that into reality, it's Sony. Whether they have the wisdom to not wreck things in the process of doing so is still an open question. Buyouts can go well or poorly, and it's very hard to tell in advance how things will shake out. We'll all be watching together.


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Justin Sevakis has worked in the anime business for nearly 20 years. He's the founder of Anime News Network, and owner of the video production company MediaOCD. You can follow him on Twitter at @worldofcrap.


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