December 22, 2008

A while ago, the folks at Crunchyroll (known online as the "YouTube of anime") asked us if we would like to interview them about their upcoming changes in programming. I jumped on the chance. I spoke with business development manager Vu Nguyen about the anime industry, Louis Vuitton, and DRM.

Crunchyroll started in 2006, and by 2008 it has already changed focus, from fan-produced content to legitimate licensed media. At what point in that short time did you start thinking about changing that focus?

A long time ago, we realized that a huge community was aggregating itself onto Crunchyroll. We also felt that it would be a shame if anime companies couldn't somehow leverage that audience, but we didn't know where or how to begin approaching anime companies. Not until after we left our jobs to work on Crunchyroll fulltime were we able to start getting traction with the industry. Our first licensed simulcast was in April 2007 with Gonzo, which is the first major milestone of the transition, but it actually began long before then.



Draw a thumbnail sketch for our readers that shows them what things are like at Crunchyroll. What is a normal day like for you?

There really isn't a normal day, every day is unique and different because we're doing so many things that haven't been done before. Crunchyroll is still a small operation compared to the companies that have been functioning within this industry for years. So, in a sense, we have to get more done with less, so we rely heavily on our community and users to help. For myself, I put in about 12-16 hours a day doing everything from meetings with producers and advertisers, press releases, interviews, managing servers, coordinating materials and approvals, encoding videos, drafting contracts, and/or talking to users. There is still so much we need to do, but we're making tremendous progress. I think the best is yet to come for Crunchyroll and the industry.

How do you see your role changing once this change happens? Will you be more hands-on, or will you rely even more on the rest of the staff?

We are growing quickly as a company in order to work with all the publishers to bring great content to fans. Everyone on the Crunchyroll team is dedicated to making Crunchyroll the best place online for anime fans, and I rely on each and every one of them, including all our community moderators, and all our supporters to make it happen!

The anime industry is losing profit. A lot of people blame fansubs for that. What is your opinion?

I think it would be naïve and unfair to focus blame on any one reason. The popularity of anime may have grown too quickly for its own good, and I'm sure much of that can be attributed to fansubs early on. The anime industry was enjoying some great growth and revenues a few years ago, especially in new overseas markets. This led to the industry producing and investing in more and more titles in a race to capitalize on the growth, but that ended up saturating (and possibly over-saturating) the market instead. Then the bubble burst which caused a lot of anime companies to lose money. And in those situations, there's never really one simple cause but might be compounded by the shift in consumer behavior and demand. The important part is to learn and adapt to where and how the market is moving and not resist the consumer's natural habits.

Do you think that Crunchyroll is a model for what the anime industry should be doing to thrive?

One of the bright lights is that there are more anime fans than ever before, so if the industry can figure out the right way to tap into the fan base, then it will and can definitely thrive again. We are trying to be part of that solution. Crunchyroll is building a platform for anime companies to interact and communicate directly with fans. Through our platform, they can promote their content to help drive digital sales, DVD sales and merchandise. The internet allows communication to travel faster than ever before, so anime producers have the power to develop a strong community and marketing campaign for their franchises because there are no longer time slot constraints as with television. Every creator has an equal shot at creating the next big thing more easily than ever before. So once anime companies figure out the right way to leverage that, then the biggest hits to come are just around the corner.

Crunchyroll mentions DRM and your desire to keep your new media content DRM-free. Why is this so important to you?

We have nothing against companies wanting to protect their IP. They certainly have every right to do so. But it's important to take a look at the present world reality and study what is happening. DRM has been ineffective in preventing piracy and only frustrates legitimate consumers. DRM makes it extremely difficult or often times impossible for legitimate consumers to view content how they want it – whether it's on Windows, Mac, Linux, iPod, Zune, or a DVD player because it only works with DRM-supported hardware. DRM also has not prevented pirates from figuring out a way to bypass the protection. So the reality is that it's very difficult to expect consumers to choose legitimacy over piracy if the legitimate alternative is crippled relative to the legitimate product. Imagine Louis Vuitton putting out handbags that aren't as good of a product as the knock offs – how could they expect to compete?

Are there any other major changes coming to Crunchyroll?

Crunchyroll is always evolving and making a lot of exciting changes to our site for the benefit of our users and community. In January, we're launching a anime subscription plan (starting price $6.95/month-in conjunction with our launch of NARUTO SHIPPUDEN, GINTAMA, SKIP BEAT!, SHUGO CHARA and many more titles yet to be announced) that will allow fans to get access to content subtitled in English straight from Japan with earlier access, no advertisements and at higher viewing quality. We hope that anime fans will embrace the effort that the industry is putting forth to make this content available to them on an unprecedented schedule. The revenue is being shared directly with the producers and creators. If this program proves successful, then it will be easier for us to persuade companies to simulcast new anime.

For more information, check out Zac Bertschy's interview with Vu Nguyen at the Anime News Network, the company profile, or the site's Alexa traffic statistics.


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