How Crunchyroll gets 750,000 people to pay for anime

“What we realized — and this wasn’t obvious in the beginning — is that our content appeals to a much broader audience,” said Gao. “The folks watching [our content] don’t necessarily have to understand Japanese.”

Crunchyroll is not just a digital media oddity: It is owned by Ellation, which is funded by The Chernin Group and AT&T’s Otter Media joint venture.

The way it gets users to subscribe is by following what is becoming a tried-and-true method in the niche streaming space: offering a deep catalog of content in a specific category and pairing that content with exclusive content and member perks.

Crunchyroll has 20 million registered users, who have a username and password and can access most of the service’s library for free — as long as they’re willing to sit through ads.

On the subscription side, the service has two tiers priced at $7 and $12 per month. For $7, users get access to the latest episodes of Japanese shows within minutes of their broadcast in Japan as well as access to the service’s entire video library and manga (Japanese comics) collection — all ad-free. The $12 “premium-plus” package offers even more perks. Subscribers get discounts on merchandise in the Crunchyroll store and VIP access during meet-and-greets with Japanese creators at fan conventions around the world.

This content-plus-perks strategy is employed by other niche streaming services like DramaFever, Con TV and Shudder. The key to all these: passionate fans.

“People spend a lot of money on their hobbies and deep interests,” said Tom Pickett, CEO of Ellation. “If you can find the right way to go deeper with these passionate audiences, there is a willingness to pay.”

What also helps is that it would be almost impossible to build something like Crunchyroll on linear TV. A traditional TV channel can’t offer social forums that allow viewers to message each other about their favorite shows, a store where they can buy merchandise about their favorite shows, or even give viewers the chance to pay more for more perks.

“We are offering more value than TV,” said Pickett.

While the tiered membership model has helped grow subscribers, in the past year, Crunchyroll has also been using a more traditional method for user acquisition. It’s been running ads.

The service has aired ads across TV channels like Comedy Central and Syfy as well as YouTube, Facebook and Instagram.

“We’re trying to find where else our audience is — reach people who already know about us or don’t know but could be interested and show them why we’re a compelling place for them,” said Gao. “Also, it helps build our brand.”

Images via Funimation