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Video Startups Find Profit in Foreign Programming

Call it the “Moneyball” approach to the online video business.

While companies like Netflix and Amazon pay millions for the rights to top-shelf television content, a set of lesser known sites are accumulating relatively inexpensive and overlooked programming from around the world and finding audiences for it both in the U.S. and overseas. Companies including Crunchyroll, an anime-focused site, and DramaFever, which streams foreign-language dramas, are showing that even non-English programs with subtitles and niche animation genres can attract paid subscribers in meaningful numbers.

These sites, with their rapid growth and committed fans, have attracted interest from bigger media companies: Last December Chernin Group acquired a majority stake in Crunchyroll and the site was later rolled up into the company’s newly announced $500 million joint venture with AT&T. For its part, DramaFever has been a regular target of acquisition talks from several entertainment companies looking to establish their online presence, according to multiple people familiar with the matter.

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With YouTube, now under the direction of veteran Google executive Susan Wojcicki, the company has once again begun focusing on less user-generated content, according to multiple people who’ve been in discussions with the company. But the site has yet to take any meaningful steps to start bidding on the foreign-language content that Crunchyroll and DramaFever specialize in.

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As these companies continue to expand their international footprint, the looming threat could come not from Amazon and Netflix, but YouTube, which has a presence in virtually every country and a proven ability to aggregate large audiences.