Crunchyroll has reduced bitrate by 40-70%, damaging video quality to save money

Licensing contracts require these licensees to make the best possible effort to stop, or limit piracy of their content... or something to that effect (as each licensor's contract varies somewhat).

"Best Possible Effort" doesn't necessarily mean they have to be effective. So if HTML5 DRM isn't available to them, they are forced to use Flash DRM, even if it isn't effective.

The discussion with licensors goes like this.

Licensor: "You must protect the content so that it can't be downloaded."
Licensee: "You know that doesn't really work right? Anything we try to do is just a waste of time and effort, and it places annoying restrictions on our users."
Licensor: "Either you protect it, or we don't license it to you."
Friendly junior guy at the licensor company, in a hushed voice: "We know it doesn't work, just show that you're making the effort, that's enough."

I have sat in on this discussion more than once.

There's also the "legal hope" aspect that you need to keep in mind. Licensors won't remove this requirement because it might actually be important sometime down the road if&when effective DRM becomes available for streaming video.

Kun_Gao said:
You vote with your views

Seventh Style’s blog posts assumes that Crunchyroll splits your subscription payment between all 400+ shows it offers. But the reality is far more interesting than that.

“If you watch just Naruto, your subscription money goes toward supporting that show. If you watch more than one show, the money is split proportionately among those shows depending on which ones you watch the most,” said Gao.

So if you’re watching Kill La Kill 75 percent of the time and Golden Time the other 25 percent, that means Kill La Kill’s publisher gets 75 percent of your money. On Crunchyroll, the more anime you watch, the more publishers you support.