Why Anime Is Becoming Undeniable in Hollywood

0:00Before we start today, I want to give a little plug for my upcoming awards season event. It's called Stories of the Season, and it is a showcase for some of the biggest actors, artisans, talent of the awards season. We've got a bunch of the top contenders for this year's awards season. I'm doing a live edition of The Town with Chloe Zhao, who has directed Hamnet, one of the big awards contenders. We've got an actors panel with Elle Fanning, Will Arnett, Tessa Thompson, Jesse Flemons. My colleague Lauren Sherman at Puck is doing a costume design panel. bunch of other things. This one's for awards voters, but I do try to allow some listeners of the town to attend.

0:35So what I'm going to do is the first five people who email the town at spotify.com and request two tickets to this awards event. It's Friday, the 14th of November at five o 'clock in Hollywood. First five people who do that will get an invite to join us. So if you're interested in that, give me an email and we'll get you in. This episode is brought to you by LinkedIn ads. Ever invest in something that seemed incredible at first, but didn't live up to the hype? Marketers know that feeling. They optimize for the numbers that look great, impressions, reach, and reacts. But when they don't show revenue, well, that's a not so great conversation with the CFO.

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2:31Demon Slayer Infinity Castle. It opened to a whopping$70 million in this country. It's grossed nearly$600 million worldwide so far. It's the biggest domestic opening and the highest grossing movie of the season. that was released in Japan in July. And Chainsaw Man, the movie, is number one during its debut weekend in this country, and it's grossed$150 million worldwide. What do these movies have in common? Both released by Sony Pictures, the Hollywood studio arm of the Japanese electronics company, and they're both anime titles. You don't need me to tell you that anime and manga is huge and a growing business.

3:07Once considered niche or hard to find, the Japanese animation style is increasingly popular, Everything from Spider-Verse movies to K-pop demon hunters, especially among young people. And certainly having a moment. In 2023, anime made up$5.5 billion of global streaming revenue in about 6 % of all content genres, according to Parrot Analytics. A combination of changing demographics, people's willingness during the pandemic to sample other kinds of content, and the rise of global streaming services that give easy access to movies and shows from all over the world. It's fueled a sustained bump in viewership and the ability to open these titles big, even in the U.S.

3:48There's another one from Sony called Jujutsu Kaisen that's coming next month. There's also something about the content itself that lends itself to these somewhat darker times. We'll get into that. As a result, streaming platforms have responded. Netflix now has subtitled anime in 33 languages. And of course, K-pop Demon Hunters is now its biggest movie ever. Hulu, Prime Video, even Disney, the originator of the American-style feature animation, they're in the anime game a little too. Maybe the most influential player is Crunchyroll, streaming service for anime deep cuts. It has about 17 million subscribers, small by general service standards, but big number considering it's not available in Japan.

4:29And since 2021, Crunchyroll has been owned by, yes, Sony Pictures, which merged it with its Funimation unit. that makes for some nice synergies when anime titles can jump from TV streaming to a full-blown global theatrical hit. I will admit I don't know much about anime. I think a lot of people in Hollywood don't. I'm not a consumer, and until recently, I haven't been following the business of anime, so that's why I wanted to get Rahul Perini on the show. He's the president of Crunchyroll, longtime anime executive, and we're going to get into it. Today, it's the anime explosion, why it's working so well lately, what the future may hold for this growing genre of entertainment.

5:06From The Ringer and Puck, I'm Matt Bellany, and this is The Town.

5:14Okay, we are here with Rahul Perini, who is the president of Crunchyroll, a Sony Pictures company. Welcome, Rahul. Thank you, Matt. Glad to be here. On a scale of 1 to 10, the annoyance scale, How annoyed do you get when Crunchyroll is not included in discussions of the big streaming services? I wouldn't say annoyed. I think it would be. I would be annoyed. What, have you guys got 17 million subscribers now? Yes. So we announced back in May that we've crossed 17 million subscribers. That's not nothing. That's pretty good. It's definitely not nothing. It is pretty big, and it's a reflection of how big the anime fandom is around the world.

5:59I want to talk about this subject because I am a novice. I will say up front, I'm not an anime person. I like the Spider-Verse movies. My kid's into K-pop demon hunters, but I am not an anime person. And I have been, frankly, surprised by some of these box office successes that we have seen over the past couple of years. and so much so that it's not even really a surprise anymore. But so just give me a lay of the land of the biggest players in anime right now, just for a novice. Yeah, like, look, I think in terms of global anime footprint, Crunchyroll is one of the biggest, is the biggest platform that's servicing the anime fans exclusively, right?

6:47But anime is also available on most general entertainment platforms. Netflix has been doing a lot more. Netflix has been in anime for a long time, and they have a lot. But other general entertainment platforms around the world have anime. Anime is obviously huge in Japan, but it is also massive across the world. We are serving about 200-plus countries and regions outside of Japan and China. And we have the single largest catalog of anime. So that gives us an advantage when we interact and reach this audience. And who is the Crunchyroll subscriber? What do you reveal about your demos and where you are?

7:30We've only announced the number of paying subscribers on the platform. We share a lot of data with our partners in Japan in terms of demographics and things like that. We published research that is done by third party in terms of the anime fandom. The anime audience, Matt, to your question, is it's across demographics. So our latest research shows that 44 % of general entertainment fans in the age group of 13 to 54 are anime fans. They watch anime regularly. So it is a pretty large group of folks. But as you get younger, so as you get to Gen Z and Gen Alpha, that becomes close to 59%. So 59 % of Gen Alpha are very regular anime viewers and consider themselves to be anime fans.

8:19So larger as we get younger, but it's a full spectrum of the age demo. That's amazing. Why didn't Disney buy Crunchyroll? Why did Disney miss this? Because they got to be looking at the box office of these anime titles and K-pop Demon hunters and the success there and thinking, we're the animation leader. We should be doing this. And to my knowledge, they're not. So, Matt, like anime, as you know, has its origins in Japan. Sony is a Japanese company. Sony has had anime in their DNA for a long time, both on the production and even on the linear television side. And Sony Pictures saw the opportunity and the growth in anime back in 2017 and acquired this company out of Texas called Funimation.

9:16Right. That's where you worked. That's where I was. And so almost eight years ago, Sony Pictures saw the opportunity and the growth in anime and acquired. And then obviously several years later, back in 2021, we acquired Crunchyroll and put both of those two companies together. Yeah, I just feel like that's a missed opportunity for Disney, but good for Sony. Good for you. You guys have been killing it in this arena lately. And I want to get a sense of the growth markets here. Where is anime biggest outside of Asia? US is the biggest in terms of audience size. And why is that? Is that because we have a large population from Asia?

10:01What is it about the U.S. that has made it such a key market, other than the size? I think it's a couple of factors, Matt. One is availability of anime. So for a long time now, for over 30 years, a lot of companies have worked to bring anime from Japan to U.S., localize it into English, and make it available to fans, first on VHS, then on DVD and linear television. and with the advent of streaming, there's been a lot of focus to make anime available to audiences in US. And I think that is a big factor in why the fandom is so large. It's the same reason why people are watching more subtitles, whether they're watching crime dramas from Europe.

10:42And this stuff is so available and easy now. You used to have to get a DVD with some fan-made anime, you know, US version. And now it's like, if the algorithm knows that you like it, you're going to get it served to you. Exactly. So I think accessibility is a big factor. I also think the stories that the Japanese creators tell through anime have resonated with younger audiences. That I want to get into because that is super interesting. And it's sort of a darker, more dystopian, correct me if I'm wrong here, like what is it about the storytelling that is appealing to young people? If you think about anime, most people think about the visuals, the color, the animation.

11:27And those are amazing. Those are all things that appeal to audiences globally. But if you dig deeper into why do audiences connect with anime, why do younger audiences connect with anime, there are two things that stand out for us. Number one, they tell us that the stories that the Japanese creators tell in anime are real and different. They don't see those themes and those plots being told in other forms of entertainment. What does real and different mean? Meaning it is relatable. They can relate with the characters. They can relate with the plot and the themes. But they're also different. The other thing about anime is it's not a genre.

12:07It's a medium. It has every single genre in it. Everything from action to sci-fi to adventure to romance, comedy, slice of life. So there is a show for every anime fan, but it's also told very differently. The themes that the creators pick in anime are very different. The other side of it for the anime fan is what this content and these stories mean to them. Almost all anime fans tell us that, A, these stories help them connect not only with who they are, but with other people in the community. So they're both identity building and connection making. We have some research that says 30 % of anime fans say anime has influenced who they are as a person.

12:54That is huge, right? And also 78 % of them say their relationships are stronger because of anime. Really? That's interesting. I mean, you told the LA Times for a story earlier this year that anime allows us to process some of these really conflicting, difficult emotions we have. Is that a product of the times? Like the world's going to shit and anime is a more compassionate or more reflective medium than traditional animation? The world is complex. The young fans. You don't have to use the term going to shit. That's my word. Young fans are dealing with a lot. But I'm trying to get into the psyche of why it's appealing now.

13:38I think it is appealing now because of the things, right? Like anime stories are diverse. So audiences across the world can relate and see their diversity. They are inclusive, but they're also relatable for the younger audiences in terms of the struggles or the emotions that they are going through. The characters are relatable. The characters are going through something very similar. And so it's easy to identify, connect. And anime becomes a way of help. People find it as inspirational. People find it as comfort. So I think it's those three things. It is identity building. It helps with social connections.

14:19And it is a form of self-help for a lot of people. I'm now thinking of the Spider-Verse movies in a different context. Because I think it works so well with Spider-Man. because he is the most relatable of the superhero characters. Like, he has real problems, he's just a kid, and that form, that medium works well. Like, an anime-style Superman movie, don't think it would work as well. I think that's a huge part of the characters in anime, right? The other part of, like, why now is, as anime has become this popular, as the fandom has grown, one of the things that we've seen is, it is more a part of culture.

15:00celebrities, sports personalities, artists, right, all talk about their fandom and how anime has inspired who they are as a person and their craft. And so that has also brought it into a mainstream conversation. So fans that were not open to talking about their fandom now feel OK. Well, that's the whole Internet culture. They had an anime or a manga night at Dodger Stadium that I was there for, which I thought was fun. Very mainstream. Although a lot of Dodgers fans are now Japanese. Yeah, I think you're seeing that across the board. If you go to San Diego Comic-Con, we host a two-day anime music event.

15:41And it is full, right? You go to New York Comic-Con, half of the convention is featuring anime shows and anime characters. So it is pretty much mainstream pop culture. And it is huge. So why isn't Sony making big budget anime movies for a global audience outside of Spider-Verse? Why are they taking these franchises like Demon Slayer that originate elsewhere and bring them here and then redub them? Sony could make its own anime movies. We are actively working with our partners in Japan to produce shows and movies. But those are movies that typically debut elsewhere, right? I'm talking about something that would be under the Sony Pictures banner, that would be a big budget.

16:26What is the anime version of Frozen or Zootopia? Demon Slayer, I would. Yeah, that's what it is, but that just originates elsewhere. Yeah. For anime, a lot of the IP comes from manga, the Japanese comic. So I think that is their source. And that connection back to Japan is really important for anime fans. Japanese way of storytelling, the Japanese creators' method and approach. anime is a real part of what gives anime its authenticity. So I think Sony Pictures and us are very clear. Like, we work with our Japanese partners to produce these shows, to retain the authenticity, to keep that way of storytelling.

17:08Yeah, the authenticity does matter. Yes. Yeah, like, did you see this new studio that the Saudis are doing, where they bought some manga properties and owned some anime IP, and they're now trying to get U.S. producers to make movies based on this? Yes, we are familiar with the company. We work with them because when they produce content, we also partner to acquire some of it for our own platform. Middle East is huge in terms of anime fandom. They've actually announced that they're building a theme park around some anime IP. Oh yeah, Dragon Ball Z, right? Dragon Ball Z, yes. And there just was Esports World Cup in Middle East, where we actually had a pavilion, an anime pavilion that we hosted and sponsored.

17:56Huge attendance. So huge audience for anime in Middle East. So I'm not surprised there is a lot of focus on serving that audience with content that's uniquely made for them. I think in the wake of K-pop Demon Hunters, there is going to be a rush on the streaming services. Do you agree that they're going to all try to have their version of this. And I know that's a little different, you know, mixing in the K-pop element and with the anime style animation. But like, do you think in a year or two, we're going to see more of these releases, not just on Netflix, but on all the services? Yes, I think there will be a rush to serve this audience.

18:39Like I said, the audience is huge. They're young, they're passionate, they're willing to spend. So we're not surprised that more entertainment companies want to serve this audience. And so I agree. There will be a rush to create content and bring content for this global audience. Who's Crunchyroll's biggest competitor? When we think of competition, our biggest competition is for competition of time with our audience. No, but similar providers of doing what you do. Like, who's number two in the market? Globally, there are regional players that are pure play focused. Here in the U.S., there is High Dive, which is part of AMC.

19:21That is a pure play focused on anime. AMC theaters or AMC entertainment, the networks? AMC entertainment, the networks. But almost all general entertainment platforms have anime. Yeah. Like everything, Netflix and YouTube is the biggest competitor.

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22:10Severe side effects may include inflamed pancreas or gallbladder problems. Tell your doctor if you experience vision changes before scheduled procedures with anesthesia, if you're nursing, pregnant, plant-a-be, or taking birth control pills. Taking ZEPBound with a sulfonylurea or insulin may cause low blood sugar. Side effects include nausea, diarrhea, and vomiting, which can cause dehydration and worsen kidney problems. Talk to your doctor. Call 1-800-545-5979 or visit zepbounce.lily.com. So where do you see this business in five years? How big can this get? Is there a ceiling? Like, I would have said maybe a couple years ago that the anime business has a ceiling.

22:53It will always be popular and maybe growing, and the accessibility of the content is going to lead to more fandom. But given what we're seeing at the box office, it seems like there is a pretty big runway here. I agree. I think the opportunity and the runway is huge. For example, there's 1.5 billion people outside of Japan and China that consider themselves to be anime fans. Anime curious, anime interested. That number is projected to grow to 2 billion by 2030. So that gives you a sense of the growth that we can expect over the next five years. Combining that with the fact that younger audiences, Gen Z and Gen Alpha, are coming into this medium at a faster pace than the older generations.

23:34And when they get into the medium, they stick, right? Like, for example, Gen Z and millennials, more than half of that Gen Z and millennial audiences have been anime fans for more than five to 10 years. So they're sticky. So all of those factors means this fandom is only going to get bigger. If Sony ends up not being a huge player in this business, why will that be? What's the biggest hurdle? The biggest hurdle for this business is, I think, to fall, right? Like one, we need to retain the authenticity of these stories so that it connects to audiences the way they have connected. So the question becomes, as this audience grows bigger globally, how do we serve their appetite?

24:15How do we bring enough content to meet all their needs? Given what's going on in Japan in terms of production-constrained demographic changes, the biggest hurdle is can we keep up creating the kind of content, the authentic anime at scale to serve this audience? And I think a lot of the ecosystem, including us and Sony Group, are focused on making sure that that happens. I remember when Sony bought Alamo Drafthouse, the theaters, a lot of the commentary around that was that this kind of fan-driven niche theater chain might be a good fit to help promote Crunchyroll. Are you seeing those synergies there?

24:59Are you doing more with Alamo because of that? there is a huge overlap between audiences that go to Alamo and that watch anime on Crunchyroll or elsewhere. We have done a lot of campaigns, activations, including a program we call Anime Movie Nights, where the third Monday of the month, every third Monday of the month, we bring anime movies to theaters, about 200 theaters. And we started at Alamo Draft House, and it was really successful. And so we continue to partner with them to activate on that audience where there's a huge overlap. Well, it's an interesting business and I am in. I'm buying your stock.

25:44Thank you. Craig, are you in? Are you in on anime? Yeah, a lot of my friends love a lot of anime shows. So definitely something that I want to watch more of. And I know I sound like a complete Luddite on this and everyone's going to listen to this and be like, what a moron. Everybody knows anime is huge. But I didn't realize it was this bit. What age do people typically start to get involved with anime? Is that at a really young age? What type of demos do you have in terms of when people first watch anime? We see fans coming in at 9, 10 years old. There are shows that are really popular. Naruto is a great example of a show where nine to ten year olds get in and it is really big with that what's it called naruto naruto naruto all right i'm gonna i'm gonna put it to the test i've got a nine-year-old yeah i have a 10 year old and and where is this is this on crunchyroll it's available on countryroll all right i'm gonna have him watch it and i'm gonna report back to you a lot of fans get introduced to anime through their through their friends and family right i think the number is like 82 % find it on social media, but very close find it through friends.

26:57And so people get into anime at different age groups. We see people that are in their early 20s getting introduced to really great shows like Demon Slayer or Chainsaw Man or Solo Leveling. So there's not necessarily one age group, but we do tend to see that 9 to 13 is really the biggest age group where fans enter into the fandom for the first time. Hmm. It's too late for you, Craig. Is there a challenge to market anime or Crunchyroll? I think there are probably a lot of people out there, maybe like Matt, who kind of hear anime and think, oh, that's not for me. Is there any way that you're trying to put anime in front of people who wouldn't typically watch it because you think they might actually enjoy it if they do sit down and watch it?