Answerman

What Does The Deal Between Crunchyroll And Kadokawa Mean?

Notorious2122 asks:

I'm a little confused by the recently-announced deal between Crunchyroll and Kadokawa. Does this mean that CR will get all of the anime that Kadokawa publishes in Japan? Do publishing companies in Japan make the deals with American companies or do the primary producers? Does this affect who gets to release a DVD or Blu-ray of these shows? What about existing shows?

The deal between Kadokawa and Crunchyroll is what's known as an "output deal." These are extremely common in the entertainment world outside of Japan -- it's how most network TV shows are sold overseas, for example, and how Dreamworks movies get distributed within the USA. It's basically a pre-arranged "whatever we make, you distribute" agreement that covers a certain period of time, number of shows, and/or amount of revenue. But while there have been several attempts at constructing similar deals in the anime world, very few of them have panned out.

There are a few reasons for this. The biggest one is that the production committee system and the way Japanese law gives an inordinate amount of power to the original creator (gensakusha) means that deals like this are incredibly hard to hammer out in advance. All it takes is for a show to come along where a lone committee member or one original creator won't agree to the terms of the deal, and it all falls apart.

Conversely, Japanese licensors are very used to having a huge deal of leverage over the publishers, and exercising a great deal of control over what they do with a given show. The implicit threat is that if they don't do what's asked of them, they're not going to get any more shows from that licensor for a while. Having an output deal in place doesn't do much to change the nature of relationships that go back a decade or more, so if some aspect of the release of a particular show results in a quarrel, that output deal will fall apart.

This particular deal, however, goes a little deeper, and doesn't last very long: it only covers the next year's worth of shows (I can't tell if this means starting with winter 2017 shows specifically), and it introduces Crunchyroll as a co-producer. This implies that Crunchyroll may, in fact, get a seat at the production committee for those shows. That's a much deeper connection than most output deals. It's a given that Crunchyroll paid a TON of money for this privilege, but only very trusted business partners are allowed to become that involved in anime production. So I don't think that this particular deal will fall apart.

This is, however, a test -- it only lasts for a year. If it's successful for everyone, it could be the start of something far more long-term. Or not. This isn't a small thing. To my knowledge, it's the first time a non-Japanese anime company has been brought into the production process of an entire slate of productions as an ongoing partnership. It makes sense that the steps being taken are somewhat tentative ones.

Right now, there's more that we don't know than we know. We don't know what titles these will be -- they're shows that are coming next year, so they're not announced yet. We don't know if it's every Kadokawa show or just some of them. (Being a large company with very active licensing and publishing divisions, Kadokawa tends to act as licensor for pretty much every show they're involved with.) As for what will happen to the home video rights with these series, we also don't know. With Crunchyroll on board as a producer, they will almost certainly have control of home video rights for North America, but whether they sublicense these titles or attempt to distribute discs themselves is still an open question.

Kadokawa is being very proactive in getting more involved with the North American distribution business. This week the company also announced that they'd bought a 51% share of Yen Press to further get involved with manga and light novel publishing. Whether the two new partnerships will fit together at some point is also an open question.

This business is changing so fast, it's making my head spin.

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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.