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Could Patreon Be "Better For The Industry" Than Crunchyroll?

by Justin Sevakis,

Kasra asked:

Youtuber digibro has been against crunchyroll saying how it a garbage product. Their is so many bad anime they license(he also hates Netflixs)and their video still uses flash video which it is dying and that auto play hurts since it does not go where the customer want it to go. But he does mention pateron and how trigger has done it with some success and himself can make YouTube videos with crowd funding support. Do you think it is the best for anime get customer funding and will make gets shows that the customers want.

Let me preface this by saying I take no issue with Digibro himself. I agree with him about plenty of things, and appreciate his bringing attention to older and more artistic anime. Most of his analysis, that I've seen anyway, seems pretty fair to me, if a bit cranky and pessimistic. That said, having seen the video where he questions Crunchyroll's efficacy as an industry-supporting business, I have to say that most of his arguments about that don't make any sense.

In his video, one of the problems he brings up with Crunchyroll is that there is a lot of low-quality anime on there (they have stated outright in the past that they do try to license literally everything. Anime has the same gold-crap ratio as every other form of entertainment, so that means they pick up a bunch of forgettable stuff). He acknowledges that the service does pay based on how many people watch, but doesn't seem to like the way funds are distributed (based on a flawed understanding of it). He also hates Netflix, doesn't want to buy physical media or merchandise, and still wants to somehow support the one or two shows he actively likes. His proposal, which appears to be his ideal way of participating in anime, is to forego any legal streaming service, take what he wants from torrent sites, and give what he wants to his favorite production companies via Patreon.

Let's set aside the idea that he wants to donate to anime studios directly. While we attach a great deal of importance to those studios, they do not comprise a show's entire production, and usually don't make any of the major decisions regarding the show. They just do the work. Usually they don't own anything regarding the show. Donating to these companies directly is not how the industry is set up to operate. But, hypothetically, something could be set up with each production to donate on a series-by-series basis.

CAN anime production survive only on Patreon funding? No. Not even close. The site Graphtreon tracks top Patreon earners, and the top earner for the last several months is the political podcast Chapo Trap House, which brings in around US$100,000 per month. And after that, it's a pretty steep drop-off: the #5 earner takes in between $30k and $40k per month. That's a decent chunk of change if you're a 1-3 person team making a podcast, vlog or other amateur or semi-professional content, but simply not on the same planet as what actual, professional content needs to raise in order to exist. So, let's say a studio manages to get enough contributors to pull in $30,000 per month... which, assuming they're only making one series at a time, comes out to $7,500 per episode? That's almost nothing.

Digibro also completely ignores the fact that, while most Crunchyroll titles do pay "back-end" royalties based on how many people watch, the vast majority of the money they, or any other overseas distributor, contributes to the production is in the advance payment for the rights, also known as a "minimum guarantee." These can run from US$30,000 all the way up to US$200,000 PER EPISODE. Crunchyroll then builds in additional payments based on viewership, on top of that.

Since production costs generally hover around US$275,000 per episode, this actually has the potential to outright pay for an entire production (though there are other major costs that are not factored into that amount, like marketing and the right to adapt the show in the first place). This business model has been epoch-making for the anime industry, and similar deals in China and competition from Amazon has made it so that streaming anime outside of Japan can completely pay off a show's entire budget and then some. That doesn't happen for every show, and the bombs can still lose money for the production committee, but there has never been more money flowing from international fans to anime productions in the history of the art form.

All of the hand-wringing over Crunchyroll, which I've seen coming from prominent fans on YouTube and elsewhere, is part of a growing suspicion on the part of fans that their money isn't going in the directions they want it to. Animators still make a pittance, there's too many shows being made, and a shocking amount of it still suffers from production problems that impair the quality of the work. The fans themselves are seeking a deeper connection with their favorite shows, and hope to be part of the solution to those things. And as fans become less and less interested in collecting "stuff" (be it physical media, figures, wall scrolls, dakimakura or whatnot) they find themselves with fewer ways of doing that.

These are the next set of challenges that the business needs to address. But the nature of the entertainment business is such that there will always be a large amount of crap being made, compared to a few winners that everyone loves, and another few niche shows that a few people love. Producers will always try to scrape together a production with too few resources, and sometimes not quite pull it off. It will always be difficult to accurately predict the break-out hits and what hotly anticipated shows will completely face-plant before they finish their run. That's true of literally every type of entertainment. Companies will always have to make best-guesses as to what will hit and what won't, and nobody bats 1000. No matter what they may tell you.

Crunchyroll isn't a perfect company. Their technical development is not where it needs to be: its website is among the last major streaming sites to still use the increasingly deprecated Adobe Flash (likely due to the difficulty of developing styled subtitle support in HTML5, but that's just speculation on my part). Their translations aren't always as polished as they should be. But in terms of creating a platform that balances the needs of a demanding, young and often broke fan base with compensating the anime industry in a fair way based on interest and viewership, it's really hard to fault them in my estimation. What they currently have both predicts what shows will hit, and pays based on how many people actually watch. Both are very important.

Patreon, like Kickstarter, is both a means of fan engagement as well as funding. After a string of high-profile failures and disappointments, Kickstarter has pretty much settled into a place for one-time small and medium-level independent projects, and Patreon is simply a tip jar for small independent producers of ongoing content; neither are really growing much outside of those niches. It's a nice extra for the staff and the fans, but nowhere near lucrative enough to fund most ambitious projects. (Even most podcasters and YouTubers take sponsorships as a primary means of income.) There was a time where I thought that maybe someday larger-budget entertainment would be funded via voluntary contribution like public radio, but I don't think that anymore. There are quite a few fans who want to contribute, but far more who would happily freeload. Sometimes those are even the same person, with different shows. Money is tight for people, and often people tend not to value what they get for free.

I understand where Digibro is coming from. As a fan, he wants to use his money to support the shows he likes, as we all do. I do think Patreon might have a place in anime, as a way for creators and studios to interact more with Western fans if they're so inclined. However, as a replacement for the actual, real business of international distribution and monetization of anime, it's just not a workable solution.

Thank you for reading Answerman!

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Anime News Network founder Justin Sevakis wrote Answerman between July 2013 and August 2019, and had over 20 years of experience in the anime business at the time. These days, he's the owner of the video production company MediaOCD, where he produces many anime Blu-rays. You can follow him on Twitter at @worldofcrap.

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