….
December 20, 2014 | Morning
….
What next?
That was the question lingered in Regal's movie.
[Superman] was already released.
And honestly, there were too many moving pieces demanding his attention.
[Harry Potter] third film will be released in December.
[Deadpoll] will hit theaters too in February.
[The Matrix] followed at the end of March.
Somewhere in between, the [Iron Man] sequel script needed to be started - one he would write, but not direct.
Then there was the publishing side of things. The launch of the sixth [Harry Potter] book. The debut of [The Chronicles of Narnia]'s first book, this time with his name listed as co-author.
On the technical front, he still needed to spend time with the Unique FX 3D team on [Kung Fu Panda]. And the [Harry Potter] game wasn't going to supervise itself either.
Indeed many things…
But, these are all something he will be just part of, and not something on the level of directing an entire film - which he hadn't decided on.
And that, at least for now, was intentional.
"So I really am taking a break from directing this year." He muttered, exhaling slowly.
There were ideas, of course. A few films he found genuinely exciting, and made to start outlining scenes before his brain could catch up - and resisting that impulse took effort.
The truth was simpler, and harder to ignore.
He pushed a little too far than he would like to admit the past couple years, and most importantly taking the people in his life for granted.
Maybe a small film will do…
Right. He was thinking of finally taking a small diversion to something similar to his first film - [Following] - like minimal crew, minimal working days.
I am a bit interested in acting too…
That idea could wait, though. He hadn't committed to anything yet, hadn't fully locked onto a project.
For now, there was something else that needed his attention over the next few months.
Regal took the firm hold of the notepad covered in Japanese characters and English notes, comparing broadcast schedules and licensing windows for anime series.
Beside him sat financial projections for various streaming platforms, acquisition costs, and growth models.
He had been researching this for three weeks.
Darren entered for their scheduled morning meeting and stopped when he saw the scattered papers.
"…Okay." he said, eyeing them. "What am I looking at here?"
Regal didn't look rushed. He glanced up from the document in his hand. "Something I want to go after."
Darren pulled out a chair anyway. "That sounds expensive already."
"The target I want to acquire is…" Regal said, looking up. "Crunchyroll. It's an anime streaming platform based in San Francisco."
Darren blinked. "You want to buy an anime company?"
"I want to buy an anime streaming platform, yes. Let me explain…"
….
Regal spent the next thirty minutes laying out his reasoning with the kind of detail that suggested weeks of preparation.
"Here is the situation." He began–
"Crunchyroll was founded in 2006 by UC Berkeley graduates as basically a MeTube for anime. Users uploaded fan-subbed content, most of it technically pirated.
"In 2009, they pivoted to fully legal after getting venture capital. Removed all unlicensed content, signed their first major deal with TV Tokyo getting the rights to major shows."
He pulled up subscriber data. "Currently owned by The Chernin Group, which acquired a majority stake in 2013. They have approximately 750,000 paid subscribers, growing at about 35% annually. 2014 revenue was around $50 million, and they are profitable."
"Okay." Darren said cautiously. "Why do we want this? You already have Netflix."
"Multiple reasons. First–" Regal tapped his notepad.
"I own MarvelDC Comics. We have been doing animated adaptations sporadically, but there is no cohesive strategy. Batman animated series here, Superman direct-to-video there. It's scattered."
"You want Crunchyroll to distribute MarvelDC animation?"
"That's one piece. But the bigger picture–
"Animation is an underutilized storytelling medium. Look at what anime does: complex narratives, multi-season character development, faithful adaptations of source material. Western animation is either kids' content or adult comedy. There is this entire middle ground anime occupies that we are not touching."
Regal pulled up another document. "As you know, I started my career writing webnovels. [Solo Leveling], [Omniscient Reader's Viewpoint], [Lord of the Mysteries], which already have Comic adaptations.
"All of those were originally web content I wrote before [Harry Potter] launched. Those stories work brilliantly as animation. Live-action would be prohibitively expensive or impossible to film properly."
"You want to adapt your own work into anime?"
"I want to build infrastructure that makes high-quality animation commercially viable in the West. That means distribution platform, production partnerships, audience development. Crunchyroll gives us the platform and audience immediately."
Darren was processing. "This is more ambitious than buying a streaming service."
"It's about building an ecosystem. Crunchyroll has 750,000 subscribers who pay $6.95 monthly for anime. That's $50 million annual revenue from just subscriptions.
"But they are capital-constrained - they don't have any big IP, they can't bid aggressively on exclusive content, can't expand internationally fast enough, or invest in original productions."
"And we can provide that capital."
"But there is another angle–" Regal pulled up his Japan contacts list. "I have relationships with creators in Japan. Kishimoto Masashi, for example."
"Naruto's author?
"Right. He is becoming a small name from the past few months. He was intrigued that a Western writer knew about the Japanese Manga Industry when it was barely known outside Japan. We have stayed in touch."
Regal showed Darren several exchanged emails, all in Japanese with English translations attached.
"We talk about storytelling, the manga industry, and cultural differences. He knows I respect the medium. That matters in Japan - credibility with creators, not just business deals."
Darren was beginning to see the scope. "You are not just buying Crunchyroll. You are positioning to bridge Western and Japanese animation industries."
"Yes. And the timing couldn't be better." He leaned forward. "Western audiences are already engaging with Japanese entertainment - they just don't always realize how much of it they are consuming:
"Dragon Ball games sell incredibly well in the West. Pokémon, Studio Ghibli films, Japanese RPGs - those doors are already open."
He continued, more focused now. "Even though Naruto only began serialization last year, and several other major manga are either about to be adapted or are already in early stages - One Piece included - I am betting this doesn't just grow. It explodes."
"Overall what I am trying to say is Anime is on the verge of mainstream breakthrough in the West, but there is no dominant platform positioned to capitalize."
"Crunchyroll is that platform."
"Could be. With proper investment." Regal leaned back. "I have done the analysis. Chernin Group is exploring strategic options because anime isn't their core focus. They would sell for the right offer."
"What's the right offer?"
"I am thinking of $180 million for full acquisition."
Darren's eyes widened. "That's... significant."
"It's 3.6x revenue for a subscription business growing 35% annually with 85% gross margins. That's actually reasonable, possibly cheap." Regal pulled up comparable acquisitions. "Streaming platforms typically trade at 5-8x revenue. I am offering 3.6x for one with better growth metrics than most."
"Where does that capital come from?"
"LIE Studios' profits, and some of my personal funds too."
Darren nodded.
That was the advantage of Regal's structure. LIE Studios was wholly owned, funded initially by his Harry Potter royalties and subsequently by film profits. He didn't answer to external investors or public shareholders.
If he wants to deploy capital this way, it's his decision.
"Like always, you really thought this through." Darren said.
"I have been thinking about it since I went to Japan. We are building something beyond just films. This is the next piece of infrastructure."
….
The next day, Regal flew to Los Angeles to meet with Chernin Group executives at their Santa Monica offices.
Peter Chernin himself attended, along with their CFO and the executive overseeing Crunchyroll's oversight.
"Mr. Seraphsail." Chernin began. "I will admit, when my team said the Hollywood director wanted to discuss Crunchyroll, I was intrigued. This isn't an obvious acquisition for someone in your position."
"That's exactly why it makes sense." Regal replied. "Everyone expects me to buy film production companies or theatrical distribution. Anime streaming is overlooked, undervalued, and positioned for massive growth."
"You have done your research."
"Three weeks of due diligence. I have reviewed financials, licensing agreements, subscriber metrics, competitive landscape, and Japanese industry relationships." Regal pulled out his analysis. "Crunchyroll is profitable, growing, and capital-constrained. You are getting solid returns, but anime isn't your strategic focus. You would rather deploy capital elsewhere."
"That's accurate." Chernin admitted. "We believe in Crunchyroll's potential, but we are media investors across multiple sectors. Anime is one small piece of a larger portfolio."
"For me, it would be a strategic cornerstone. I own MarvelDC Comics. We have extensive IP that adapts well to animation but lacks proper distribution infrastructure. Crunchyroll solves that problem while also providing access to the Japanese animation industry."
Regal explained his connections - the correspondence with Kishimoto, his understanding of manga and anime culture from his webnovel writing background, his vision for bridging Western and Eastern animation.
"You are trying to build an ecosystem?" Chernin observed.
"Close. And I am prepared to offer $180 million for full acquisition - cash, no financing contingencies, close within 45 days."
The room went quiet.
"You aren't holding back with your offer." Chernin's CFO said.
"I am serious about this. $180 million represents fair value based on current performance with significant upside if properly capitalized." Regal met Chernin's gaze directly–
"You have built something successful. I want to take it to the next level with resources and strategic focus you can't provide because anime isn't your core business."
Chernin considered this. "We would need to discuss this with Crunchyroll's management. This isn't just a financial transaction - we need to ensure continuity for the team."
"I am not planning operational changes." Regal said immediately–
"Kun Gao and his team built this company. They understand anime industry relationships and technical infrastructure better than I ever will. My role is providing creative capital and strategic support, not micromanaging content decisions."
"That's the right approach." Chernin acknowledged. "When can you meet with Kun?"
"Whenever he is available. I will fly to San Francisco tomorrow if needed."
.
….
[To be continued…]
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