Crunchyroll Expo 2017 Interview: CEO of Crunchyroll, Gao Kun

One of the first rules of business is to identify a need. How did you know that there was demand out there for an anime and streaming service?

I didn’t know. I was an anime fan myself. I had a need and my friends had a need. So, we said “let’s build a website that we all can watch anime on,” and it started from there.

What would you identify as the key to your rapid growth?

We’ve actually grown every year since the beginning, doubling every year for many years. In the beginning when the base is small, it might not seem as impressive, but the growth rates seem extremely fast in the very beginning. I do think our growth has been in parallel with the growth of anime subculture; the more fans of anime grew, the more we grew and vice versa. I think Crunchyroll has grown because anime has become more popular.

Did you expect Crunchyroll to become so dominant in the streaming business?

That definitely wasn’t in the original plan 10 years ago. We’ve tried to stay true to our focus, which is giving fans what they want. We want to stay true to that and if we keep doing that hopefully good things will happen.

Crunchyroll has certainly grown in the last few years, and so have others in the anime streaming marketplace like Hulu, Amazon’s Anime Strike, and Netflix. But Daisuki–which got in the game in 2013–just folded. Do you think we have hit a saturation point?

I think we truly believe that the anime market is not saturated. We think that there is a really bright future for anime and that there are going to be a lot more fans of anime that have yet to discover it. We want to go find those fans. We think that even for the core fans today, there is so much more we could be offering. We think that anime as an industry can and should continue to grow. Now, in order to be a part of that ecosystem, we need to create value for our fans and we need to give our fans what they want. We need to create value for our partners and our content creators to really connect the two. It is really about what you think you can uniquely bring to this industry and for us it’s bringing fans closer to the creators.

We’ve also seen companies like Amazon’s Anime Strike and Netflix commission their own content. Crunchyroll has done the same to an extent with Shelter and the Porter Robinson video. Do you think that is part of a shift in the business model for production? Do you find it similar to the traditional network television model?

If you look at traditionally how anime has been distributed, it’s licensed. Japan makes something and distribution companies license it. The big step for us, about two years ago, we started co-financing, co-production of animation content in joint ventures with Sumitomo. To date we’ve probably co-produced 50+ titles, and it’s not a big, well-known fact, but what that means for the fans who are subscribers or viewing ads [on the free access side], is that their money is going directly to financing the future creation of anime. In that instance, it’s still what Japan wants to make and in some ways because their domestic business is declining and it’s harder to find funding, we are now able to step in and help the fans monetize and bring the next generation of animation.

You mentioned the next generation of anime creators. Where do you think they’ll come from? Do you think they’ll become as diverse as the anime fandom?

We think that there are a lot of creators in the US and around the world who grew up watching anime. They grew up to become creators themselves and they’re in Hollywood and they’re probably creating the next show for Cartoon Network, but they understand anime, they grew up on it and love the medium. We want to find those people and at the same time want to find the passionate Japanese creators who want to collaborate and bring their work to a more global audience. We want to put them together and let them make magic.

We’ve heard that In This Corner of the World used Kickstarter as a barometer to gauge interest in the project attract more funding. Is that a viable way to gauge the potential for a project’s success?

We have another way. We have the data and we know our audience and know what they enjoy. We engage with our audience online and ask them to be participants in this process [making an anime], and so that’s another way for us to get signals and to be able to say with confidence this is a project we think our fans will really enjoy watching.

It seems that a lot of studios are producing a lot more anime films for theatrical releases. Will Crunchyroll be carrying more theatrical releases?

I think it comes down to what the fans want and if this is something that they are really excited by then so are we. We started physical distribution of film with Crunchyroll Movie Night. Every quarter we go out to about 300+ screens and for one or two nights we screen a movie. The reception of that has been phenomenal. I think fans want not only to have that film experience, but to have the film experience with other fans.

We know you have a financial arrangement with many of the creators and publishers for the anime that you license because the industry is rather hard on artists. What inspired that decision?

Half of what we make goes to creators. Broadly speaking, the companies are financing the project, the companies are taking the risk, and as a production committee, they then share all that money back with those involved with making the content. Direct subscription dollars, advertising dollars, merchandise sales, a big part of every piece of that will be going back directly to the creators of the content.

We started off with you taking me back to the birth of Crunchyroll; what do you think about its future? When talking to people who don’t follow anime, I often refer to the platform as the Netflix of the genre. Is that what you’re going for?

If you think about Netflix, they are trying to be something for everyone and be the broadest possible service. We are completely the opposite. We are trying to make the most engaging, deep experience for only some people – and those some people happen to be anime fans. And for anime fans, we want to deliver to them the deepest, most complete experience possible. It certainly starts with subscription and our streaming service, but that’s not the end-all. We see it as an entire ecosystem of experiences, a 360 of experience. For example, we have very vibrant merchandise lines where fans can watch then buy the sweatshirt or the figure to the property they just watched, or come to our convention or attend other conventions that we are participating in. And we’ll bring the guests and the voice actors and the creators of the shows they love. We are doing manga, we are doing simultaneous manga release for some of our core properties so they can read along as they’re watching and then buy the merchandise and then go to the events.

What do you think is a big misconception about anime to those who don’t really watch it? Or, to put it another way, why should someone try watching it for the first time?

I think people see anime as a genre or they see it as kids’ animation. Anime is a medium. It is a medium of expression, a medium of art, and within that medium there is incredibly rich, deep and vibrant storytelling and characters and that is what draws people in. If I can convey that to people who don’t know anime and just get people to watch one show, then they can start appreciating the depth and the breath of animation as a medium rather than think about it as something more one-dimensional.

Do you have any tropes in anime that you like or dislike? Any pet peeves in anime?

I think that’s really up to the fans. When the fans can speak loudly to us and tell us what they want to see more of and what they don’t, we bring that message back to the creators and this is something that they are really ready to have a conversation about. It is just they don’t know, they do not have the experience, and they are not talking to US fans or global fans all the time. The more we facilitate interaction between fans and the creators – like when we bring creators to fans to do panels – the more we communicate with our audience online. Then we can really shape how creators are thinking about creating anime for a more global audience.

We are currently walking around your expo, the inaugural Crunchyroll Expo. Does it make you really proud?

Absolutely, but I think we cannot rest on our laurels. I think we can be doing so much more and we can do a much better job and that is what I’m most excited about.

Thank you Gao Kun for spending time with us and telling us all about where Crunchyroll has been and where you see it going in the future. You should be extremely proud of yourself and your company.