San Francisco-based video startup Crunchyroll just surpassed 100,000 paying subscribers with its blend of Anime, Korean drama and Asian live action content, and the company is now reaching a total of eight million viewers per month. Validated by this kind of success, Crunchyroll is now looking to expand into other niches, the company’s co-founder and CEO Kun Gao told me a few days ago. “There is a huge demand for hyper-targeting users of other verticals,” he said.
Crunchyroll began as a labor of love five years ago, when its founders were still working for Slide Inc. The site initially adopted a YouTube-like model, asking users to upload clips, many of which were Anime and other unlicensed Asian content. Crunchyroll’s team radically changed course in 2009, deleting all user-submitted content and instead striking licensing agreements with TV networks and studios in Japan. That complete reboot went remarkably well, said Kun, given the fact that sites like Mininova struggled with similar strategies. “It was a very different transition to us,” he recalled.
Part of the reason was that the Anime fan community was underserved. The only way to legitimately get access to many popular shows was to buy DVDs months or even years after episodes first aired in Japan. That’s why most fans got their Anime fix from unlicensed sites, where so-called fansub groups would post videos with English subtitles transcribed and translated by enthusiasts. “Piracy was just rampant,” said Kun.
Crunchyroll viewed this as an opportunity and struck deals with rights holders, and lots of them: Today, the service shows between 80 and 85 percent of all Anime content that airs in Japan, Kun told me, adding: “We legitimized an iTunified the Anime space.” And most of that content is available on the site the same day it airs on TV in Japan – to premium subscribers anyway, who pay between $7 and $12 per month, and in turn also get to enjoy videos in HD. Free users on the other hand have to wait a week for their Naruto Shippuden fix.
Part of getting to 100,000 paying subscribers has also been Crunchyroll’s embrace of new platforms, some of which are limited to paying subscribers as well. Crunchyroll doesn’t just have its own apps for iOS, (s AAPL) Android and Windows phone, but also Roku, Boxee, Google (s GOOG) TV and the Playstation (s PSE) 3 – a platform that Kun is especially proud about: “We are literally the only startup on the Playstation,” he told me.
So what’s next for Crunchyroll? Kun told me that the company is eyeing other territories after localizing the service for Latin America earlier this year. And then there’s the idea to add other niches to Crunchyroll’s service. Kun didn’t want to reveal any details yet, but said that the hyper-targeted approach with perks like same-day access would work for other things as well. “We think it’s very applicable to other content verticals,” he told me.
Crunchyroll is based in San Francisco and has an office in Tokyo. The company employs around 30 people, and has raised around
$8.5 $7 million from Venrock, Bitway and strategic content partner TV Tokyo.