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When you move less product, your prices have to be higher to make profit. It's doubtful that Section 23 could survive with a pricing scheme like Funimation's. Funimation also has something that Section 23/ADV does not (and did not), and that is a long running franchise that is ridiculously popular, so Funimation can safely predict fair returns and set its price lower.
Funimation is the Wal-Mart of the anime world. Section 23 is the niche store which tries to directly compete, albeit with its hands tied as Funimation not only gets a vast majority of the popular titles, but also the popular long-running titles. I cannot recall Section 23/ADV ever having a mega-popular long running title. The only thing close was their incessant re-release of Eva; they had no Fullmetal Alchemist equivalent, and they still don't.
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