Is it really all that different than how pornhub strong-armed the porn industry into making them legit only after letting millions of people host illegally ripped movies, or how Youtube convinced the record labels to give them favorable terms after letting millions of people upload random songs on the platform for years? How about Spotify saturated the entire world in streaming music until the record companies finally realized that this was the new paradigm and signed deals with them? (Spotify did what Napster couldn't) Or how uber ignored local laws in some places that made private taxi services illegal until everyone saw how much better it was and forced politicians to look the other way? (becoming so ubiquitous that now the mere threat of removing uber from a city is enough to change the law) The first person who breaks the law gets to keep the jewels - then they help change the law so nobody else can do the same.

To answer your question directly, the business proposition led to more continuing profits than the lawsuit against the investors would have raised. An offer they couldn't refuse.

What always confused me though was why crunchroll remained dominant even after Japanese saw there was demand. Why couldn't another company convince them that it's time for a new business model, or start competing services? Vic Mignogna for example should have lots of contacts in Japan. The Japanese companies themselves could simply stream their original content in a region-unlocked form and get subscribers from all over the world. Maybe let users upload subs the way YouTube used to do.