It's the kind of penny-wise and pound-foolish behaviour that happens in any large business. As you say, the productions cost dwarf the costs of subtitling so much it is ridiculous. Every unique frame of that show was literally hand drawn and colored by someone, to say nothing of all the writers, the voiceover, the marketing, etc. To refuse the light penny-shaving required to present the final product in a good light is completely non-sensical. If you have so little confidence then why are you licensing and paying for bandwidth to show it?

However, there is somebody in charge of subtitles, and they don't really care about overall business outcomes. So if they can reduce the budget of their department by squeezing typesetting, they win on an objective metric at the cost of a subjective (ie ignored) one.

While it's true crunchyroll has a lot of the anime market, there are more streaming platforms than ever right now, and people don't just consume a fixed amount of legal anime episodes per week, forever unchanging. If they have it in their head that they cannot gain or lose subscribers, that's extremely short-sighted.